Connect with us

Ethereum

Risks abound with Ethereum and its Application Developers

Published

on

Ethereum is a public, peer-to-peer network with its own unique digital currency called Ether. It was created by Vitalik Buterin in 2014 and it aimed to be a platform on which smart contracts can be built and executed. The Ethereum blockchain is modeled in a way that would enable it to store different categories of data. The computer programs operating on the Ethereum blockchain accesses and uses this data. These computer programs are called decentralized apps, or “Dapps”.

Risks with Ethereum

Figure 1: Understanding Dapps

Applications of Ethereum

Several innovative applications are being developed using the Ethereum blockchain. These are:

  1. Improving the quality of web
  2. Establishment of virtual web
  3. Managing unique identity
  4. Shaping business models
  5. Micro-blogging
  6. Empowering artists
  7. Crowdfunding

Risks being faced by Ethereum and its applications

Even though the blockchain technology has earned a significant amount of popularity in recent times, there are several issues that it has been facing:

Infectious licensing:

One of the major issues that application developers face while using Ethereum is that of open-source licensing. Most of these developers do not pay heed to the risks of using open-source software. This particular risk of open-source licensing is unique to Ethereum as it is non-existent in the case of Bitcoin. Utilizations of Ethereum entail a number of business and legal issues. One of the most pivotal issues that an Ethereum based app developer is likely to face is that of the right to own and use Ethereum. The Ethereum Foundation declares that Ethereum is both open-source and free after the definition of the Free Software Foundation. This implies that the application developers will be granted the licenses to operate, copy, distribute and upgrade the software. After this point, however, uncertainty arises. That is because “free” software does not necessarily mean that the software would be free of cost. These restrictions are particularly disruptive and complicated in the case of the business model of Ethereum.

Open source software is divided into two broad categories namely permissive and restrictive. Unlike the permissive licenses which have minimal restrictions imposed on them, the restrictive licenses limit a licensee’s ability to distribute modified versions of the works under commercial or non-open source terms. Restrictive licenses also termed as copyleft licenses or “viral licenses” as these have the potential to “infect” a software product with the terms of the open-source software of the underlying copyleft programs. This leaves a licensee unable to distribute a modified or derivative version of the works. Hence the use of open-source software is laden with risks which need to be mitigated before the licensing any open-source product. The gravest form of risk that may arise out of the use of open source software is that an application developer may put the entire proprietary value of a project in jeopardy.

Conflicting views:

The Ethereum foundation currently uses a wide range of open source licenses, each of which corresponds to different components of Ethereum. The foundation has not yet decided on one definite open-source license which will be used to design the core of the Ethereum in the future. The Ethereum Foundation has stated that the core of Ethereum will be released under the three most liberal licenses namely Mit License, Mozilla Public Licence, and LGPL. However, the latter two are actually weak copyleft licenses. Currently, cpp – Ethereum’s core libraries are licensed under GPL which is a strong copyleft license.  This results in a conflict with the foundation’s indication that the license of the final core of Ethereum has not yet been finalized. The uncertainty regarding the finalization of the licensing scheme poses significant threats to the developers.

Technical risks:

  • Grayscale Investments report that there is no guarantee that the Ethereum Foundation’s proof-of-stake model named Casper will match up to the security and scalability level of the verified proof-of-work models.
  • Long-term security loopholes and some fundamental flaws are likely to be discovered in its applications.

Resource and cash flow risks:

  • The scarcity of funds is likely to be a limitation for Ethereum.
  • It has not succeeded in attracting sufficient VC investment.

Competition risks:

  • The existing market share and future business prospects of Bitcoin poses a major threat to Ethereum. Bitcoin already has established a strong foothold in China. And then you have NEO.
  • The threat of a potential new entrant in the market is another risk that Ethereum faces.

Regulatory risks:

  • Governments could restrict the market of cryptocurrencies.
  • Governments could demand permission system or provide institutional support to a rival system.
  • Governments could intervene in the issuance of assets, initial public offerings or crowd shares.

Barriers to adoption:

  • The PR mechanism of Ethereum is inefficient.
  • A large section of the general population is not familiar or interested in the concept of Dapps.
  • Ethereum still has not earned a place on any major stock listing.

A few other risks are:

  • The irreversible transaction of cash makes it a risky venture.
  • Ethereum is not accredited to any entity. Hence if somebody loses their Ethereum, the service provider can do nothing to refund him.
  • Finally, the size of its customer base determines its valuation. That means, if demand for Ethereum is generated from only a few people and businesses, its valuation will be diminished significantly.
  • Ethereum does not have a fixed supply cap. It is more volatile than other currencies as its valuation can move both up or down in a very short span of time. The 24-hour variance of Ether has been reported to be 11 percent.
  • A report from Grayscale Investments highlights that there are risks associated with large quantities of ETH being held by entities like the Ethereum foundation and the DAO hacker. The report has also cited issues with the fact that since a concentrated group of developers purchased 72 million of the 89.4 million ETH outstanding during the 2014 pre-sale, any fall in the ETH’s supply rate could result in concerns about the issue of centralization.

There are several risks abound with Ethereum.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.5 stars on average, based on 9 rated postsHira Saeed is a tech geek girl with a passion to write on latest technology trends. She is the Founder of Tech Geeks community in Pakistan and also runs her copywriting and social media agency, Digital Doers. Follow her on @heerasaeed.




Feedback or Requests?

Analysis

Crypto Update: Another Rally Attempt in Crypto-Land

Published

on

The major cryptocurrencies are all trading slightly higher today, following two bearish days that brought them back to last week lows, and for now, another breakdown has been avoided, despite the overwhelmingly bearish broader picture. The modest bounce left our trend model on sell signals across the board, and odds continue to favor new lows in the coming period, so traders and investors should remain defensive here.

The top coins are trading well below the weekend bounce-highs and without new swing highs, the short-term trend also remains clearly bearish, even considering the deeply oversold long-term momentum readings and the abysmal sentiment. So while a larger scale bounce remains possible in the coming weeks, perhaps following a failed breakdown pattern, bulls should still be patient until we sell clear technical improvements in the segment.

With that in mind, traders and investors shouldn’t enter positions even in the slightly stronger coins, and odds still favor the continuation of the bear market, with new lows likely in the coming days. That said, a successful test or a failed breakdown could trigger a larger scale correction, with the broader picture still being deeply oversold and with investor sentiment still being very negative. For now, there is no sign of an imminent rally, with all eyes on the $3000 in Bitcoin.

BTC/USD, 4-Hour Chart Analysis

Bitcoin rallied as high as $3450 today, but it failed to get close to the $3600 resistance and the weekend high, so the short-term downtrend remains intact despite the bounce. For now, our trend model is still on sell signals on both time-frames, and traders should stay away from entering new positions here, with the long-term picture also being clearly bearish.  Further resistance is ahead in the $4000-$4050 zone, while key long-term support is found near the $3000 price level.

ETH/USD, 4-Hour Chart Analysis

Ethereum is stuck below the key $95-$100 zone even following today’s bounce, keeping the coin on a short-term sell signal in our trend model. Odds still favor a move towards the next major support zone between $73 and $75, and only a quick recovery above the primary resistance zone could change the short-term trend.

The steep long-term downtrend is clearly intact in the coin, and traders and investors should still not enter new positions here, with further strong resistance zones ahead near $120 and $130.

Altcoins Avoid Breakdown but Strong Resistance Zones Lie Ahead

Dash/USDT, 4-Hour Chart Analysis

Despite yesterday’s weakness, last week’s lows held up even in the relatively weaker majors, and although that’s an early sign of stability, it’s not enough to warrant upgrades in our trend model. With still no bullish leadership present in the segment the continued technical weakness in the lagging coins, such as Dash reinforces our bearish long-term view.

XRP/USDT, 4-Hour Chart Analysis

Ripple only experienced a weak bounce, and although it continues to trade near the $0.30 level, the coin is still among the relatively weak coins from a short-term perspective and the renewed long-term sell signal is also in place.

We still expect a move towards the prior bear market low near $0.26, with a weaker support level found above that near $0.28, and traders and investors shouldn’t enter positions here, with resistance levels above $0.30 ahead at $0.32, $0.3550, and $0.3750.

Litecoin/USD, 4-Hour Chart Analysis

While Litecoin managed to hold up above its recent swing low and the $23 support level, it remains in steep short- and long-term downtrends, and we would need to see significant technical strength for even a short-term trend change.

Our trend model is on sell signals on both time-frames, and below $23, the next major support zone is found between $20 and $20.50 with strong resistance ahead near $26 and between $30 and $30.50.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
1 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 5 (1 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.7 stars on average, based on 414 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




Feedback or Requests?

Continue Reading

Analysis

Crypto Update: New Lows in Sight Again as Slide Continues

Published

on

The cryptocurrency segment continues to be under heavy selling pressure following the weekend rally attempt, and although all of the majors are still above last week’s lows, the strong short-term downtrend remains dominant. The long-term picture is overwhelmingly bearish as well, and there are coins showing meaningful relative strength, so sellers are clearly still clearly in control of the market, and the lack of leadership is still apparent.

With that in mind, traders and investors shouldn’t enter positions even in the slightly stronger coins, and odds still favor the continuation of the bear market, with new lows likely in the coming days. That said, a successful test or a failed breakdown could trigger a larger scale correction, with the broader picture still being deeply oversold and with investor sentiment still being very negative. For now, there is no sign of an imminent rally, with all eyes on the $3000 in Bitcoin.

BTC/USD, 4-Hour Chart Analysis

Bitcoin has been drifting lower ever since touching the $3600 level during the weekend, and the now the most valuable coin is close to its prior bear market low, pushing the total value of the market back below $110 billion. Today’s selloff took the coin below $3400, and a test of the next long-term support zone near $3000 is now likely in the coming days.

At least a move above $3600 would be needed for a meaningful improvement in the coin’s technical setup, but for now, sellers remain in control on both time-frames and our trend model is on clear sell signals both short- and long-term, with further strong resistance ahead in the $4000-$4050 zone.

ETH/USD, 4-Hour Chart Analysis

Ethereum is also close to last week’s bear market low and the coin is clearly stuck in a steep short-term downtrend with no sign of relative strength or bullish momentum since the failed weekend rally. The coin is also trading below the strong $95-$100 support/resistance zone, and with support just being found between $73 and $75, a new low is likely in the coming days.

Traders and investors should still stay away from entering new positions here, with further strong resistance zones ahead near $120 and $130.

Litecoin and Ripple on the Verge of Breaking Down

XRP/USDT, 4-Hour Chart Analysis

The major altcoins are all in week technical setups, and even Ripple, which is in a slightly better long-term position, is looking bearish from a short-term perspective. The second largest coin is trading below the $0.30 level, and a test of the next zone near $0.28 seems imminent.

The prior bear market low near $0.26 could also be in danger in the coming period, and traders and investors shouldn’t enter positions here, with resistance levels above $0.30 ahead at $0.32, $0.3550, and $0.3750.

Litecoin/USD, 4-Hour Chart Analysis

Litecoin is very close to breaking down below the $23 support zone today, and the coin is showing relative weakness compared to the other major, as it was the case ever since last week’s bearish shift. Our trend model remains on sell signals on both time-frames, and a new low seem very likely in the coming days, so traders shouldn’t enter new positions here despite the deeply oversold long-term momentum readings. The next major support zone is found between $20 mad $20.50 with strong resistance ahead near $26 and between $30 and $30.50.

Stellar/USDT, 4-Hour Chart Analysis

Since the key breakdown in Stellar, the coin remained relatively weak, and the strong selling pressure is still apparent in its market. The recent rally attempt failed to recapture even the $0.125 resistance, and now a dip below $0.11 and a test of the $0.10 level seems likely in the coming weeks. Further strong resistance is ahead just below $0.14 and traders and investors should still not enter new positions here.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
2 votes, average: 4.50 out of 52 votes, average: 4.50 out of 52 votes, average: 4.50 out of 52 votes, average: 4.50 out of 52 votes, average: 4.50 out of 5 (2 votes, average: 4.50 out of 5)
You need to be a registered member to rate this.
Loading...

4.7 stars on average, based on 414 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




Feedback or Requests?

Continue Reading

Altcoins

Ethereum Price Analysis: ETH/USD is a Sitting Duck Under $100; with Jitters Heading into Constantinople Upgrade

Published

on

  • ETH/USD is subject to further downside, as the price produces another range-block.
  • There is some nervous anticipation across the community heading into the Constantinople upgrade.

ETH/USD is a sitting duck underneath the big psychological $100 mark. Just like every other cryptocurrency, Ethereum (ETH) remains firmly on the back foot. Over the past five weeks, the price is down a chunky 63%, from the pick up in downside pressure on the 7th November. Despite a minor form of stabilization over this past few days now, ETH is still very much vulnerable. It has been moving within consolidation mode, as seen across the board, a range-block formation can be observed. This behavior suggests that is susceptible to a breakout south.

Constantinople Upgrade Jitters

Following the Ethereum developers confirming the Constantinople upgrade, there has been some concerns. It was last week noted after a developers call that this will take place in mid Jan 2019, as covered via Hacked . Across the community things appear to be somewhat jittery heading into the upgrade. One thing that has raised eyebrows is the reward for miners. This is anticipated to be brought down to 2 ETH from 3 ETH. Given the fact also the plummet in the Ethereum price this year, this in addition does not help things. There is also speculation that, should there be much disagreement, the network could even split, as an extreme case.

Technical Review – ETH/USD

ETH/USD 4-hour chart

Looking via the 4-hour chart view, price action has narrowed over the past four days. This coming after further intensity hit ETH/USD to the downside. As we have seen time and time again, such price behaviors following excessive movements. It tends to be exhaustion from the sellers, allowing time for consolidation of the price, before going in for the kill.

Price action is moving within a range-block, which is subject to another explosive move lower, as it currently appears. The psychological damage of ETH sitting below the big $100 mark does not help sentiment either.  Support to the downside within the current range, should be noted at $84. Near-term resistance is seen at the $100 mark.

ETH/USD weekly chart

As described, the major near-term support is seen at $84. A break to the downside could open the door to another wave of sellers. The weekly chart view looks worrying, as should a breach occur at the mentioned support, the price could plummet. Eyes would next be on the $65 territory; ETH/USD last traded her at the start of May 2017.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
2 votes, average: 4.50 out of 52 votes, average: 4.50 out of 52 votes, average: 4.50 out of 52 votes, average: 4.50 out of 52 votes, average: 4.50 out of 5 (2 votes, average: 4.50 out of 5)
You need to be a registered member to rate this.
Loading...

4.5 stars on average, based on 81 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




Feedback or Requests?

Continue Reading

Recent Posts

A part of CCN

Hacked.com is Neutral and Unbiased

Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

Trending