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| “The greatest discovery of all time is that a person can change his future by merely changing his attitude.” – Oprah Winfrey |
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| | | Must Read Today’s most important story for crypto investors. |
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Australia to "Token Map" Crypto Ecosystem (Sydney Morning Herald): Call it the most forward-thinking approach to crypto regulation so far.
The Australian government will map out the many types of crypto tokens (as well as their underlying assets and code), then make this information available to the public to better inform investors.
Think of this as crypto education on a national scale.
Investor takeaway: Crypto is complicated, and not all tokens can (or should) be regulated the same way.
By mapping out the landscape of token offerings, the Australian government will be better educated itself, and better able to educate Australian investors.
We applaud Australia's thoughtful approach, which we'll call "educate before you regulate." We hope more countries follow suit. |
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| | | The Investor’s Guide to the Ethereum Merge by Stephen Robert |
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Summary: The Ethereum Merge will see the popular blockchain platform move from the energy-draining proof of work (PoW) consensus algorithm to the energy-saving proof of stake (PoS). How will this fundamental change impact Ethereum, and how can crypto investors profit? This guide will explain it all.
What Is the Ethereum “Merge”? The Ethereum Merge is simply the transition from proof of work to proof of stake. It’s called the “Merge” because the existing mainnet of the Ethereum chain will join (merge with) its new PoS layer called the Beacon Chain.
Although the blockchain has been using PoW since Ethereum launched in 2015, energy concerns and the need for sustainability gave the team a reason to move to PoS. The Merge was first announced in 2020. It has been a long, arduous process and the proposed launch date was pushed back several times.
Fortunately, The Merge won’t affect investor funds, smart contracts, or transaction history. According to Ethereum, nothing will be altered after the upgrade. From an investor standpoint, the switch should be seamless.
The Merge is one of the most significant events in the history of blockchain. Ethereum will shift from mining (PoW) to securing the network via ETH staking (PoS). This will ensure future scalability and sustainability, two of the biggest topics in the crypto industry.
The upgrade could dramatically boost the price of ETH as investors react to the increased scalability and sustainability of the network. |
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Why Ethereum Needs The Merge Proof of stake is less energy intensive than proof of work. Rather than have thousands of controlling miners agree to validate transactions and generate new blocks, PoS requires network participants to stake crypto (in this case, ETH) as collateral for new blocks to be added to the blockchain.
The PoS mechanism is similar to the model used by traditional banks. Banks take in customer deposits, then lend these funds out to borrowers. In PoS, the ecosystem circulates the crypto which keeps it running. This system minimizes energy use by 99% compared to PoW, which greatly reduces Ethereum’s contribution to climate change.
Impact on the Value of ETH
Accessible Yield: The stresses of setting up your computer as a mining node to validate network transactions and get rewards will be over. All investors need to do is stake ETH, which is being made even easier through liquid staking protocols like Lido and Rocket Pool.
Deflationary: The Merge could make ETH deflationary, meaning it may reduce the amount of ETH in circulation. With limited supply, the value of ETH could increase, along with interest in staked ETH. According to Christine Kim of Galaxy Digital, decreasing circulation may solidify the notion that ETH is a store of value and can serve as a hedge against inflation.
Growth: Analysts believe a successful upgrade will trigger significant growth for Ethereum. The Merge will put the blockchain in competition with other PoS networks like Solana and Cardano. Ethereum’s Total Value Locked and developer activity are up, suggesting people are excited about the upgrade.
Increased Decentralization: The core concept of crypto is decentralization. This is best achieved with a consensus mechanism like PoS because it allows everyone to participate in running the blockchain. Unlike bitcoin, you don’t need specialized hardware, which is expensive to purchase and maintain. It centralizes control with a few “mining collectives” who have the best equipment. With PoS, everyone can participate. Your ETH is what qualifies you to be a node validator.
Environmentally Friendly Crypto mining uses a lot of energy. Countries like Kyrgyzstan and Iran have shut down several crypto mining facilities due to prolonged blackouts and power generation issues. In June 2021, China banned crypto mining altogether. The transition to PoS will curb these environmental hazards and protect our climate by reducing energy consumption without compromising scalability or speed.
Investor Strategies for The Merge
Buy and hold ETH. ETH investors may be the biggest winners because the transition to PoS could lead to a new growth spurt for Ethereum. Wealthy individuals like Mark Cuban are anticipating that ETH will skyrocket and are suggesting prices like $10K. Vitalik Buterin, Ethereum's co-founder and developer, agrees The Merge is not “priced in” until it happens. |
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Buy and hold Layer 2 tokens. For example, MATIC investors could profit from The Merge since Polygon is built on top of Ethereum. Investing in a basket of Layer 2 solutions could be a winning strategy. Just know you’re placing “a bet on top of a bet” (L2 on top of an L1).
Buy and hold staking service tokens. Staking services are likely to grow increasingly valuable as an easy "on ramp" for most investors to stake ETH. Leading staking service Lido has quickly become one of the largest Ethereum holders in the world. For investors who understand the value of staking as a service, LDO is our top pick.
Bet against miners. The losers will be current Ethereum miners. They'll be under pressure to recoup their investments in expensive hardware and power. Some may go to bitcoin or other PoW chains, driving up the price. Some may elect to do an Ethereum fork, which will essentially be “free tokens” distributed to all ETH holders which you can sell ASAP.
Invest in the overall crypto market. The Merge, if executed successfully, may have a positive impact across the crypto ecosystem. However, if you plan to invest, do so with caution. A strategy like Steady-Drip Investing will help you avoid extreme highs and lows.
Investor Takeaway The Merge will usher in a new era of sustainability, improved scalability, and eco-friendly policies for the Ethereum network. The upgrade will be a model for other PoW chains to follow, which is good for the planet.
To investors and users, the upgrade will make life easier without affecting the core principle of decentralization. The simplest way to invest in The Merge is just to buy and hold ETH long term.
Read the full article: The Investor's Guide to the Ethereum Merge |
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| | | ICYMI In Case You Missed It |
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| After The Merge, expect "The Surge." |
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