$ETH Merge = Free Money??
We know that the $ETH merge is long overdue, but are you missing out on free money?
Nobody ever said holding BTC through the ups and downs was easy! The only constant with Bitcoin is that it continues to be noticed as a means of exchange outside the current financial system.
Obviously, this gives it value, and I’d argue more value than just about any other asset. I also believe that the necessity of this type of asset is getting stronger as geopolitical activities like sanctions, embargos, and asset freezes become more pervasive.
So, what happened this time? You can get all the details in my latest YouTube video — or by following along with me below!
Russia Adopting Bitcoin?
Earlier this week, the Bank of Russia and Russia’s Ministry of Finance reportedly agreed that Bitcoin would be a useful form of payment in international trade. To me, that makes it sound like they’re likely to approve it relatively soon.
Russia actually teased this idea back in March after the U.S. froze Russian assets, when the chairman of their Congressional energy committee said they were open to taking payment for natural gas and other exports in Bitcoin.
Obviously, this would be a huge step forward for Bitcoin if countries are willing to use it on a large scale in trade. We’ve already seen major progress of this in Iran. Back in early August, they actually paid for about $10 million worth of imports with Bitcoin.
It’s a bear market, so this news really didn’t get the attention it deserved. And with Bitcoin trading below $20,000, you’d never know that progress is being made. However, I believe the adoption of Bitcoin for global payments is not only inevitable, but blatantly obvious.
On one hand, it can be used strategically for things like bypassing sanctions, as well as protecting a country’s (or anyone’s) assets from being seized or frozen.
On a less controversial note, it’s just a better all-around payment system. It’s way faster, much cheaper, can’t be manipulated or deleted, there’s a permanent record of transactions viewable by everyone, and it’s enforced by millions of validators all over the world.
Merge Update
This time next week, there’s a very high chance that the Ethereum merge will be completed. Just to clarify, there’s no set date for the merge — it’s actually scheduled by something called “Terminal Total Difficulty,” or TTD.
To put it (hopefully) more simply, this is a way to measure the sum of all mining history on Ethereum. If more miners are active, TTD goes up faster, which means the merge would happen sooner.
At first, the expected date was September 19, but from what I’ve seen more recently, it’s expected to happen between September 13 and September 15.
Side Note: Wouldn’t it be something if it ended up happening on September 13? That’s the same day as the CPI report, and it was recently announced that Voyager would be auctioning their assets off that day as well. Somehow, these types of things have a way of happening right around each other!
To briefly go over what the merge is, it’s when the Ethereum blockchain moves from “proof of work” to “proof of stake.” This refers to how the blockchain proves its validity.
With proof of work, it’s proven via solving increasingly difficult equations. As a reward for solving them, miners are given ETH (also the case with coins like Bitcoin, Monero, etc.).
With proof of stake, it’s proven via ownership of the asset. People set up computers to validate (prove) the network, and they must be holding at least 32 Ethereum in order to do that. As a reward for proving validity, they earn ETH, which comes in the form of staking rewards.
When the merge happens, the current ETH miners have made it clear that they intend on sticking around. The way they’re going to try to do this is by maintaining an identical copy of the Ethereum blockchain, except it’ll continue to be proof of work rather than proof of stake.
This is called a “fork” of the network, and even though it sounds sort of extreme, it’s nothing new in crypto. In fact, the current Ethereum blockchain is a fork of what’s now known as Ethereum Classic.
Back in 2016, there was an issue where money was stolen from a huge project on Ethereum, called “The DAO,” and the Ethereum developers essentially created a copy (fork) of the blockchain to get the funds back. The blockchain that was hacked is now called “Ethereum Classic,” and its token trades under the ticker ETC.
With the merge coming up, ETC has gained extra attention. But I don’t see it really going anywhere as it’s been vulnerable to gigantic hacks repeatedly since the 2016 fork.
ETHW = Free Money 🤔?
Since another fork on Ethereum will be attempted following the merge, a clone of the Ethereum network will be created. This will just be proof of work instead of proof of stake, even though pretty much every crypto/DeFi organization — including Circle (creator of USDC), Aave, Uniswap, Compound, and many more — have already said they’re only going to support the new proof of stake chain.
In fact, I don’t think I’ve seen anyone at all say they’re siding with the proof of work chain — except for the miners, of course.
That means as an ETH holder, you have nothing to worry about. But the reason I bring all of this up is because everyone who owns ETH will most likely be “airdropped” a new token that will be mined, on the proof of work fork, with the ticker ETHW. In other words, if you own two ETH tokens, you’ll be given two ETHW tokens for free.
Thanks to the gambling nature of crypto traders, there are already live futures that are trying to speculate on ETHW’s price. At the time of writing, the futures cost $26.60, which isn’t exactly optimistic considering ETH holders will be given one ETHW for every ETH they own.
More specifically, you have to own actual ETH, as opposed to wETH, stkETH, cbETH, etc. Since a lot of people hold ETH on exchanges, the big question is whether or not the exchanges will pass along the airdrop to their users.
Again, everyone who owns ETH will be airdropped ETHW, but centralized exchanges can block these transactions. Obviously, this is one of the biggest downsides to centralization, as it’s essentially equivalent to blocking a money transfer.
Hopefully, these exchanges end up allowing ETHW to be passed through to users. I personally am optimistic that they will, because they all have ETC available for trading, and this will basically be another version of that.
If they allow it, they’ll probably let everyone know because it’ll be good PR. In that case, you would probably just see ETHW listed in your account like any other token, with the ability to buy and sell it.
But we’ll see, and I’ll keep everyone updated on how this progresses.
Action to Take?
In the case that the exchanges do pass ETHW along, you’re probably wondering what you should do with it. Of course, I can’t give you financial advice, but what I can do is tell you what I’d do.
I plan on selling any ETHW that I get, and I’ll tell you why…
The simple answer is because I don’t think the proof of work fork will be successful. I wouldn’t even be surprised if everyone sold their ETHW immediately and caused the price to crash to essentially zero.
Although, I hope that doesn’t happen because some free money would be nice! The more complicated answer is that I’d sell it because I think it’ll inevitably go to zero at some point.
One reason for this is because pretty much no Ethereum-based projects are supporting it. If there’s nobody to support it, how will it survive?
If you’re like me, you’ll answer that question with the following question: “Then how did ETC survive?” It’s a good question!
I think ETC was able to survive for a couple reasons. First, the 2016 fork was such a controversial decision that there was enough support to keep it alive. Second, and more importantly, Ethereum is way more prominent now than it was back then.
In order for a new blockchain to survive these days, it needs massive support. If people want to use/mine a proof of work version of Ethereum, they’re going to use ETC, not ETHW.
In fact, a few people out there have actually begun to use DeFi apps on ETC.
Source: DefiLlama
Note that this is in no way a recommendation to buy ETC or any related coins! I just want to point out that not only will ETHW be competing with ETH — which is already pretty much an instant loss — but even for the miners, it’ll also be competing with ETC.
So, there’s no doubt in my mind that if we do end up getting ETHW, I’d be a seller.
If you enjoyed this update, chances are you’re a trailblazer looking forward to what’s to come. That said, you will likely enjoy this update from Paul!👇🏻
Thank you Ian for this nice update
Thanks for that good update, Ian...good news onnBTC, any idea when we will receive Paul’s 60 blue chip growth stock list? Thank u!