An update will be made to the Ethereum network this week. Two new Bitcoin ETFs have been launched in the US market. Inflation threatens central banks and investors. Worldcoin wants to scan the eyes of its holders.
Ethereum’s Altair update
Many of our readers still remember the Ethereum EIP-1559 update, which was a hot topic for several months. EIP-1559 was one of the updates included in the London Hard Fork two months ago.
Now we have a new Ethereum update coming up. This is called Altair and the update will be run on the Beacon Chain.
Beacon Chain is a blockchain of the upcoming Ethereum 2.0 version. It utilizes the Proof of Stake consensus algorithm. This is a significant difference from Ethereum’s main network, which operates using the Proof of Work consensus algorithm.
Anyone can become a validator to the Beacon Chain by staking 32 ETH. This will also earn you about 5.5% yearly rewards. The Beacon Chain was launched in December 2020.
You can find more information about the Altair update from the following video.
Altair brings three essential changes. The first of these is a so-called light client, which allows validators for creating a lighter node instead of a full node. Another significant change is the slashing penalty. This tightens the requirements for network validators. If the server does not perform its tasks 24/7, it may lose some of the staking rewards.
The Altair update prepares Beacon Chain for The Merge. This means merging Beacon Chain and the existing Ethereum blockchain. This will happen during 2022. After The Merge, Ethereum will become a Proof of Stake-based system.
Two new Bitcoin ETFs launched in the U.S.
Last week there was widespread news about the approval of the Bitcoin ETF for the U.S. securities market. The ETF became available for trading on the New York Stock Exchange. It is called ProShares Bitcoin Strategy ETF and it goes with the ticker BITO.
An ETF is a positive step for Bitcoin. It brings legitimacy to the currency and allows more institutions to step in. Despite this, the BITO ETF is only the beginning. The product is futures-based, which means it does not invest directly in Bitcoin.
In terms of Bitcoin’s price, the real jackpot would be a spot ETF. This ETF would buy real bitcoins from the market. However, such a product will probably not be available anytime soon.
There was also a second Bitcoin ETF was launched last week. It is called the Valkyrie Strategy ETF. See below what Valkyrie’s CEO Leah Wald has to say about the matter.
Valkyrie even tried to change the ticker to BTFD, which would have referred to the famous words Buy The F*cking Dip. However, the final ticker remained BTF.
Just like BITO, BTF is also futures-based. These two ETFs are direct competitors. In theory, their price development should be identical.
The target group of the published ETFs is American institutions and traders. For a regular buy & hold investor, these products aren’t interesting. There are significantly better products on the market for retail investors. Buying Bitcoin directly is also easy and cheap these days.
Jack Dorsey predicts hyperinflation
Rising inflation has been a hot topic of 2021. Inflation refers to the rise of consumer prices. This is a result of the endless money creation and loose monetary policy by the central banks. Every consumer can see the impact when buying food, petrol, services, and any other everyday needs.
Inflation is measured by how the U.S. CPI (Consumer Price Index) changes over time. The CPI is a basket of goods and products. Since the rest of the world is driven by the U.S. market, it makes sense to follow the CPI development in the United States.
According to many experts, actual inflation is up to 2x or 3x higher than has been implied. This is because the CPI calculations have been adjusted over the years. The official inflation is being manipulated down so that central banks can continue with loose monetary policy.
Now even Twitter founder Jack Dorsey is keen to warn about upcoming inflation. And not just that, but even hyperinflation!
Dorsey tweeted on Friday that “Hyperinflation is going to change everything. It’s happening.” Obviously, this tweet caused heated discussions.
The problem is that the market has been artificially supported with zero interest rates and QE for years. If central banks were to fight inflation, they’d have to raise interest rates. This, in turn, would lead to a collapse in the stock market. As a result, the cryptocurrency market would also go down.
The Federal Reserve has so far done nothing about the rising inflation. If the CPI does not start to go down by the end of 2021, they have few options left. At the same time, Bitcoin’s four-year halving cycle is coming to an end. This has typically been followed by a massive crash of 80% to 95%.
It is starting to look more and more likely that the stock market and the cryptocurrency market could see a gigantic collapse in 2022. This scenario is entirely possible.
News from the United States
Here is some news from the United States over the past week.
The Houston Firefighters Pension Fund has made an investment in Bitcoin. We are not talking about a small fund, as it manages more than $4 billion in assets. This is the first time a public pension fund has invested in Bitcoin in the United States.
Then we have also Walmart.
— CoinDesk (@CoinDesk) October 21, 2021
Many might not know that Walmart is the world’s largest company in terms of revenue. It has recently added 200 Bitcoin machines to various shopping centers. This is a pilot program together with Coinstar.
These machines make it possible for people to buy Bitcoin with cash. For now, the costs are quite expensive, but they are likely to decrease if the service becomes popular.
Then there is some news regarding investing in general. The U.S. Treasury Secretary Janet Yellen made comments over the weekend that the state is considering taxing unrealized gains.
See the video below for details.
From an investors’ point of view, the proposal is nothing short of terrible. It just shows how desperate governments are becoming when facing the mountain of debt they have issued.
It’s a crazy idea. Let’s say the value of your portfolio increased from $100,000 to $150,000. In this case, you would have to pay taxes for the $50,000 capital gain even if you didn’t sell any assets. Many investors would simply have to sell some of their assets to pay the tax.
According to Yellen, the tax would pay part of the three trillion dollar stimulus package planned by the Biden administration.
Worldcoin to scans users’ eyes
Recently, a project called Worldcoin has started to pop up on social media. Worldcoin wants to distribute cryptocurrency “in a fair way” for free all over the world. It sounds like an attempt for universal basic income.
However, there is no such thing as free lunch. To get some Worldcoins, you have to agree to a scan of your own eye. Below is a tweet from Worldcoin founder Sam Altman from last Saturday:
Introducing Worldcoin, a new cryptocurrency that will be distributed fairly to as many people as possible.
— Sam Altman (@sama) October 21, 2021
A biometric database of millions or even billions of people sounds scary. Edward Snowden has also tweeted his own concern about the project in point. Worldcoin does not store the original scans but the hash created from the scan.
This is a really big project. There are a lot of major crypto investors involved, such as Digital Currency Group, Coinbase Ventures, and FTX founder Sam Bankman-Fried.
We will certainly hear more about the development of Worldcoin in the coming months.