If you are an investor who dabbles in cryptocurrencies, or even are what we in the industry call crypto-curious, you know ethereum ETHUSD, -1.94% as the No. 2 cryptocurrency behind bitcoin BTCUSD, +2.60% and the blockchain imbued with the ability to write self-executing smart contracts right into the code underlying a transaction between parties.

What you might not know about is some of the complexities of how the ethereum blockchain functions, its challenges in terms of security, scalability and energy consumption. Ethereum has a market capitalization over $250 billion and at least five times greater than its competitors. But high fees and network congestion have degraded performance and priced certain activity out of the market, providing an opportunity for a variety of competitor blockchains to emerge. Conceived and funded in 2017, these blockchains are now jockeying to make inroads in the smart contract market by providing alternative solutions to some of its problems.

These blockchains, with names that certainly would fit into any horse race (such as Cosmos, Solana and Polkadot) each have their own competitive characteristics that have positioned them well against challenges for ethereum. (Bitcoin, as the first and biggest blockchain, is and may always be the No. 1 with its unrivaled status as digital gold.)

A big drawback that ethereum developers are seeking to shore up is that, like with bitcoin, its mining is incredibly energy-intensive. In the proof of work (PoW) consensus algorithm currently used by both bitcoin and ethereum, so much computing power is used to solve ever-more complicated equations that the University of Cambridge estimates the annual electricity usage of ethereum to be on par with the country of Ecuador, a country of 17 million people. Bitcoin would be similar to Argentinas annual energy consumption, according to these calculations.

Other blockchains have addressed this problem by using proof of stake (PoS) models in which cryptocurrency is used as collateral to secure activity instead of relying on computations typically carried out at massive data centers. Ethereum is now also speeding in that direction as well and should get there as early as the last quarter this year.

Another technical aspect that is hurting ethereum is congestion, where intense activity runs up transaction fees, known as gas prices. Here, ethereum is a victim of its own success attracting many more users than other competitor blockchains. In a way, its like a popular restaurant where patrons find it difficult to get a table.

Still, this has provided a window of opportunity for competitors as users look elsewhere for cheaper and faster alternatives. For instance, Solana, which announced last month a $314 million fundraising round, is much faster and cheaper to use due to its ultra-high scalability.

Congestion is also often created by traders bots written to do front-run and back-run ethereum mining transactions in ever-more sophisticated arbitrage activities. But here again, there is evidence that ethereum can stay ahead. There is a newly created research-and-development organization called Flashbots that has been undertaking activities to manage the arbitrage happening on networks, and already gas fees have fallen.

Ethereum has to move carefully to transition from PoW to PoS while its competitors build their proof-of-stake blockchains from scratch. To use another analogy, it is as if ethereum was a plane changing its engines in mid-flight while its competitors took off with the latest model already in place.

Still, ethereum is responding aggressively to keep its smart-contact crown. Ethereums developers and proponents are responding by improving the blockchains scalability. Initiatives have gained traction in recent months to reduce congestion. Known as layer 2 solutions because they manage activity away from the base-layer blockchain, these innovations batch transactions in a way that reduces pressure on ethereum to settle transactions so frequently.

As a result of Flashbots and the rapid adoption of these layer 2 solutions such as Polygon, average gas fees decreased by 80% on the ethereum network in the second quarter.

Other ethereum-boosting activities include enacting an upgrade in the next few weeks. EIP-1559, in crypto-speak, is one of the most highly anticipated updates of the network since its launch six years ago. EIP 1559 will change how ethereum miners are paid, with a base rate plus a tip, to better manage network congestion at times of peak demand. It also includes a fee-burning mechanism that will remove ether from circulation behaving almost like a stock buyback.

If you are just tuning into this as the news begins to hit even mainstream business publications this month, it might all sound very complicated. Just know that this is ethereum moving through some of the fundamental changes to upgrade its system to make it more functional, efficient and secure. Its possible these efforts will allow it to maintain its position against the challengers. But the coming months will tell.

Ethereum has a lot to do to move through its plan, and how this will change the competitive field will be important and exciting to watch. If you are interested to see how this plays out through ethereums efforts this summer, and then as we move into 2022, when ethereum transitions from PoW to PoS, here are a few blockchains to keep an eye on as this horse race plays out:

Ethereum: Its the smart contract blockchain of choice. Its also what is known as the settlement layer. While the blockchain itself is being upgraded, there are a host of other so-called layer 2 solutions, such as Polygon, Arbitrum, Optimism and so-called zero-knowledge based systems that are being released to help with scaling. They manage transactions offline from the ethereum blockchain, roll them up and bring them back to the ethereum blockchain to settle the accounts. This expansion of layer 2s has shown ethereums power, even as these new challenger blockchains also become a force of their own. Watch closely for the continued progress of ethereum, including the EIP-1559 update and toward a PoS model to see if the picture is coming together relatively quickly.

Solana: It offers the highest throughput smart contract platform. Its transaction throughput is orders of magnitude faster than the competition. The competitive advantage of Solana has largely been that it is the cheaper and faster blockchain. This advantage will begin to fade if ethereum manages its updates successfully. Besides, Solanas weakness is often perceived as its lack of decentralization. Blockchain believers prize decentralization as the way to keep networks secure because it reduces exposure to specific points of vulnerability.

Binance smart chain: Its similar to Solana fast and cheap. But more than any other competitor in the race, BSC is criticized for being too centralized because it is controlled by Asias dominant crypto exchange Binance. Decentralization is a fundamental element in making blockchains secure because it avoids single points of vulnerability that can be hacked.

Polkadot: It offers a settlement layer, which allows different blockchains to interact in a shared security model. Designed largely by one of the original architects of ethereum, Polkadot provides among the easiest ways for new projects to get a purpose-built blockchain out the door.

Cosmos: Like Polkadot, Cosmos enables developers to build app-specific blockchains using a standard software development kit (SDK). Cosmos recently released the interblockchain communication protocol, or IBC, which connects all of the different blockchains in the Cosmos ecosystem.

Tim Ogilvie is the co-founder and CEO of Staked, which provides infrastructure services for institutional investors wanting to earn rewards from blockchain staking.

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Ethereum, the No. 2 behind bitcoin, fights off challengers that offer cheaper and faster blockchains - MarketWatch

Bitcoin has slipped below $30,000 as calls grew among regulators in the US, Europe and Asia for tighter checks on cryptocurrencies, and the less volatile digi-currency known as stablecoins.

Bitcoin, the worlds largest cryptocurrency fell as much as 5% to $29,300, its lowest since 22 June, and investors said it was likely to test the $28,600 level touched last month, its lowest since early January, as it faced a variety of regulatory headwinds. Smaller cryptocurrencies such as ether and XRP also lost around 5%.

On Tuesday, European regulators outlined plans to make cryptocurrencies more traceable as part of a wider crackdown on money-laundering in the bloc.

The European Commission said companies handling virtual assets, such as bitcoin, should become subject to anti-money laundering rules, along with transparency requirements for transfers of crypto assets.

For example, a company such as a bank handling cryptocurrencies for a client would be required to include their name, address, date of birth and account number, and the name of the client. Anonymous crypto-asset wallets would also be outlawed. The proposals could take two years to become law.

Part of a wider crackdown on money laundering, the European Commission said: Given that virtual assets transfers are subject to similar money-laundering and terrorist-financing risks as wire funds transfers ... it therefore appears logical to use the same legislative instrument to address these common issues.

On Monday, US Treasury secretary, Janet Yellen, told regulators the US government must move quickly to establish a regulatory framework for stablecoins, a rapidly growing class of digital currencies.

A meeting of the nations top regulators agreed that stablecoins a type of digital currency that is pegged to established currencies such as the US dollar had the potential to be a useful means of payment. However, more regulation would be needed to protect stablecoin users and the wider financial system.

The secretary underscored the need to act quickly to ensure there is an appropriate US regulatory framework in place, the Treasury reported.

Neil Wilson, strategist at CMC Markets in London, said the price signals on bitcoin were horrid and he expected the currency to fall further after taking a beating on Tuesday.

Bitcoin has been locked in a relatively tight trading range in recent weeks, after investors sold heavily in May and June following a crackdown by China on cryptocurrency mining and trading.

But Tuesdays fall took its losses for the month to around 15%. It has fallen by more than half since hitting a peak of almost $65,000 in April.

Bob Seeman, a tech entrepreneur and author of the book Bitcoin: Unlicensed Gambling, said governments would begin to use existing licensing laws to combat what he called the bitcoin Ponzi scheme.

I believe that regulation will eventually overwhelm bitcoin,he said. Some governments may soon realise that they already have gambling license requirements in place to regulate and collect tax as a result of every bitcoin transaction having any connection to the governments jurisdiction.

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Bitcoin price slides amid EU call to make transfers traceable, and rise of stablecoins - The Guardian

Sad times for savers.

When I was a teenager, I remember staring in awe at the savings rates advertised in the window of my local bank.

If only I had a million pounds, I could live off the interest for life, I often thought to myself. And I wasnt wrong. With the Bank of Englands base rate never dipping below 5% in the 1990s, any millionaire could park their savings on the high-street and draw out three times the UKs average annual salary in completely free, airdropped money.

Better yet, real interest rateswhich are adjusted for inflationsoared above 4% for most of the decade. So savers werent just deluding themselves with high balances of a depreciating currency; they were actually growing their wealth in real terms.

Whether it should be so easy for millionaires to sit back and rake in free money is a debate for another day.

But, as far as ordinary people are concerned, keeping real interest rates in positive territory is an integral part of the unwritten social contract between governments and their citizens. As long as we are given the ability to preserve and grow our savings, we are unlikely to rage against the economic model of the day. Better to leave the government in charge and trundle along the winding path to prosperityno matter how disappointingly short a distance it takes us.

Nowhere is this more keenly felt than in the realm of childrens savings accounts. All of us want our kids to have a nest egg, anduntil the 2007 global financial crisissavings accounts were generally considered the best tool for the job.

By putting funds in a childs name and prohibiting him or her from touching them, you were guaranteeing that your kid would be better off in the long-runnot only because neither you nor they could waste the money, but also because the interest rates on these products are invariably the best in the market.

Its impossible to over-state the virtuous circle that children's savings accounts deliver to society.

Embracing financial responsibility at a young age has a profound impact on future quality of life and mental and physical well-being. Just as reckless borrowing on credit cards can ruin lives, so prudent saving can transform them for the betteropening doors to higher education; career freedom; a better work-life balance; private healthcare and so much more. And it all begins in childhood, when you learnor dont learnthe consequences of choosing to indulge versus choosing to be frugal.

All of which makes the global trend towards ultra-loose monetary policywhereby central banks crank up the money printers while slashing interest ratestruly stomach churning.

Supporters claim that this two-pronged approach has saved the global economy by prodding consumers and businesses to invest and spend.

In reality, the measures are not prodding but whipping. Real interest rates have cratered to -2.4% for Brits and -5.15% for Americans (calculated by deducting the latest CPI inflation figures for the two countries from their respective base interest rates). In this manipulated environment, the opportunity cost of holding cash is so great that individuals and institutions have little choice but to hurl their money at risk assetseverything from dodgy business loans to absurdly cheap mortgages to over-inflated stock markets.

This is nothing more than a gamble that stability will return and covid-19 will flutter away before lasting damage is caused by the profligacy. If the gamble pays off, central bankers will take all the credit. If it blows up, and if a wave of insolvencies engulfs the world, devastating economies, they will reject all accountability.

Instead, it will be individual citizenspeople who wanted to put their money in a savings account, but who were coerced against doing soleft holding the bag.

No-one epitomizes the short-sightedness of these policies better than Christine Lagarde, the convicted criminal who currently serves as president of the European Central Bank. This was her attempt to defend negative real interest rates in April:

I completely appreciate that people who are saving are not satisfied with the consequences of negative rates, but we have to look at the situation from a global point of view. We cannot look at a particular depositor or a particular category. We have to look at the whole economy.

In other words, in the world according to Lagarde and most central bankers, savers are an isolated group of citizensa particular categorywho have chosen to behave a certain way and who should face consequences for their behavior. (Consequences that are imposed by diktat and without a right of appeal.) These people do not, in her view, embody the virtue of financial prudencea positive trait that has been encouraged, in one form or another, since the dawn of money. They are not acting responsibly, and they should have their wealth diluted if they persist with their actions.

In such a demented worldview, its perhaps not surprising that little Timmy and his piggybank are seen as part of the problem. Thus British kids can earn no more than 1% on balances above 3,000 in an easy-access savings account, and no more than 2.5% in a Junior ISA thats locked away until theyre 18.

American kids are clobbered even harder thanks to higher inflation rates and lower savings rates: 0.55% is the market leader for balances above $1,000. (Alliant Credit Union describes that productin which deposits currently lose 4.85% of their purchasing power each yearas the perfect opportunity to teach kids about money. Touch!)

The simple truth is that the Bank of England and the Federal Reserve want it to be physically impossible for parents to do the right thing and put cash aside for their kids. Every penny stashed away in a savings account is a penny not being used to keep the global economy chugging along, blissfully ignorant of its woes.

That wont stop an eventual market downturn, of course. When an ill person numbs their pain with alcohol and refuses to see a doctor, their illness doesnt magically disappear. It festers. They deteriorate. The path to recovery becomes more arduous.

And if that doesnt worry you, perhaps this chart will:

Alright for some: the richest 1% of Americans have added $10tr to their net worth during the ... [+] pandemic (green line), versus just $700bn gained by the poorest 50% (pink line).

This is what happens when central banks arrogantly assume that pumping money into the economy via financial institutions will create a trickle-down effect for ordinary citizens. Big surprise: it doesnt. Since March 2020, when the Federal Reserve put its stimulus on steroids because of covid-19, the richest 1% of Americans have added $10tr to their net worth (green line). Over the same period, the poorest 50% have gained just $700 billion (pink line). Unfathomable amounts of money have poured into risk assets that are inaccessible to most citizens, deepening inequality and fueling dangerous bubbles in all corners of the economy. Mere scraps find their way to the pockets of those in need.

The final insult? Earlier this month, six of the biggest U.S. banks posted combined profits of $42bn for the second quarter of 2021. Thats $462m profit every single day. These are the same banks that say they cant afford to pay you or your kids positive real interest.

At the beginning of this article, I stated that citizens are unlikely to rage against the economic model of the day as long as they are given the ability to preserve and grow their savings.

Clearly, we are not being given that ability by Western governments.

In the headline of this article, I hinted that bitcointhe decentralized cryptocurrency launched in 2009 in response to central-bank excesses during the global financial crisismay offer a solution. It will surprise some readers that Ive waited until the end of my article to mention bitcoin again. But that is because understanding the problem is a lot more important than subscribing to any one solution.

Bitcoin, in my own, biased opinion, is the best chance that society has to create a stable, incorruptible currency for global citizens: its entirely free from central-bank manipulation; its deflationary by dint of its fixed supply, and therefore neither loses purchasing power nor has any need for interest rates; and its accessible to anyone with a mobile phonebe they a millionaire in West London, or a farmer in Equatorial Guinea.

Once you understand how and why central banks are impoverishing your children, it doesnt take long to start looking for ways to preserve your wealth. As Lagarde herself puts it: If there is an escape, that escape will be used.

Ill leave it up to you to investigate whether bitcoin is the most appealing escape hatch.

Financial disclosure: the author has owned bitcoin since 2013.

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Central Banks Have Killed Off Childrens Savings Accounts Can Bitcoin Resurrect Them? - Forbes

Bitcoin is the virtual currency which is needed to be stored in the bitcoin wallet. But the thing is that there are various bitcoin wallets that you can find on the internet, so it confuses the investors which one they should choose. If you are also starting to invest in bitcoin, then you need a bitcoin wallet for it which secures your bitcoin transactions and the coins as well. The people who want to involve in bitcoin trading on the Official Websiteis also advised to choose a suitable bitcoin wallet. There are a lot of things that you need to take into consideration or making the right choice of the bitcoin wallet.

If you have no idea about these essential things, you should surely go through the mentioned below points.

Security

Every bitcoin wallet claims to be very securely but just saying is not enough. You need to learn about the bitcoin wallet to know which one is offering you higher security. There are so many types of bitcoin wallets available like the paper wallet, web wallet, hardware wallet etc. if you are choosing the web wallet, then you need to check that the site has HTTP or HTTPS.

You need to know that the site which has HTTPS is more secure, and you should always choose HTTPS. The bitcoin investor should indeed check that the bitcoin wallet is strong and offering secure login to its user or not. one more factor that you should look for in a bitcoin wallet is two-factor authentication. Before you make any decision to buy a bitcoin wallet, looking for security features is a must for you.

The anonymity of the users

Another most essential factor which you should consider is that the wallet you are going to choose is maintaining the anonymity of the user or not. You must check that the bitcoin wallet is accepting only emails or require some more information from the user. These are the thing which you should look into a bitcoin wallet because the anonymity of the user is one of the most precious things, and the bitcoin user doesn't want to reveal their identity at any cost.

User interface

A good bitcoin wallet always offers easy-to-use features, and they provide the best experience to beginners also. It means that it doesn't matter you are using the bitcoin wallet for the very first time, but you will not face any of the issues in using it. So, the user interface which the bitcoin wallet is offering needed to be considered. It is also essential for you to check that the bitcoin wallet you are choosing is compatible with the iPhone and Android users or not.

Multi -sig

It is one of the most preferred methods which is included in the security of the bitcoin wallet. It helps in protecting your bitcoin wallet from the hacker and any other attackers. You should make sure that the bitcoin wallet which you are considering buying is offering you the feature of multi-sig. The multi-sign means that it requires multiple keys for permitting the transactions of bitcoins. It is crucial for the user that they should protect their multi-sig, which is used for authenticating the transactions so that they can be processed.

Reputed and reliable bitcoin wallet

It is always best for you to choose a bitcoin wallet that is reputed and reliable. This is important for you to research the bitcoin wallet on google in order to know about the reviews of the customers. You should make sure that you are choosing the reputed bitcoin wallet which has good reviews from the user.

Transparency

The bitcoin wallet should always be transparent so that it can explain its services, functions and security levels to its users. You should be looking for a bitcoin wallet that is completely open-source and is providing your bitcoin enough level of security. When the bitcoin wallet is no open-sourced, then it can be difficult to predict that it is reliable or not. You should not forget to check the security code of your wallet which you are going to select, and make sure that it is up to date.

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Factors To Take Into Consideration For Choosing The Suitable Bitcoin Wallet! - State-Journal.com