1 00:00:00,120 --> 00:00:03,400 Speaker 1: Hello everyone, and welcome to the latest episode from the 2 00:00:03,440 --> 00:00:07,360 Speaker 1: midweek edition of the coin bureau podcast. My name is Guy, 3 00:00:07,480 --> 00:00:09,879 Speaker 1: and every week I pick out two of my favorite 4 00:00:09,920 --> 00:00:12,960 Speaker 1: videos from coin bureaus YouTube channel to present to you 5 00:00:13,080 --> 00:00:16,520 Speaker 1: in podcast form. The audio you're about to hear is 6 00:00:16,600 --> 00:00:19,920 Speaker 1: from those videos I've chosen this week. Many of you 7 00:00:19,960 --> 00:00:21,919 Speaker 1: have been in touch to ask whether it's possible to 8 00:00:21,960 --> 00:00:25,040 Speaker 1: listen to our videos in podcast format, and so your 9 00:00:25,079 --> 00:00:29,000 Speaker 1: wish is my command. This week, I've selected our videos 10 00:00:29,040 --> 00:00:31,960 Speaker 1: on the efforts by a number of governments to restrict 11 00:00:32,120 --> 00:00:37,840 Speaker 1: retail traders access to cryptocurrency and Ethereum's upcoming merge event, 12 00:00:38,000 --> 00:00:41,240 Speaker 1: which is scheduled from mid September. In the first part 13 00:00:41,240 --> 00:00:43,960 Speaker 1: of today's episode, we look at how nothing seems to 14 00:00:44,000 --> 00:00:47,199 Speaker 1: irk the rich and powerful more than when the ordinary 15 00:00:47,240 --> 00:00:49,680 Speaker 1: person in the street is able to speculate on high 16 00:00:49,800 --> 00:00:53,040 Speaker 1: risk and high reward assets. Now, you may already be 17 00:00:53,080 --> 00:00:57,000 Speaker 1: familiar with the term accredited investor. If you're not, it 18 00:00:57,080 --> 00:01:01,320 Speaker 1: basically means someone rich in the US and elsewhere. Only 19 00:01:01,480 --> 00:01:04,800 Speaker 1: these rich accredited investor types are able to buy stocks 20 00:01:04,840 --> 00:01:07,640 Speaker 1: before they list on the open market, or invest in 21 00:01:07,680 --> 00:01:11,200 Speaker 1: companies at the early stages of their development. This is 22 00:01:11,240 --> 00:01:14,800 Speaker 1: how they're able to bank serious returns on those investments 23 00:01:14,800 --> 00:01:17,360 Speaker 1: further down the line. This is all done in the 24 00:01:17,440 --> 00:01:20,440 Speaker 1: name of investor protection, but it really just helps the 25 00:01:20,560 --> 00:01:23,240 Speaker 1: rich stay that way while the rest of us fight 26 00:01:23,319 --> 00:01:26,039 Speaker 1: for the scraps of what's left. This is the way 27 00:01:26,080 --> 00:01:29,760 Speaker 1: things have been since the Great Depression of the nineteen thirties. However, 28 00:01:29,880 --> 00:01:33,760 Speaker 1: retail investors have recently begun fighting back, and nowhere was 29 00:01:33,840 --> 00:01:36,680 Speaker 1: this better scene than with the game Stop Saga in 30 00:01:36,720 --> 00:01:41,360 Speaker 1: early one. Here, a coordinated group of investors banded together 31 00:01:41,400 --> 00:01:44,120 Speaker 1: on Reddit to pump the stock price of an ailing 32 00:01:44,240 --> 00:01:48,080 Speaker 1: video game retailer. The resulting price surge left many hedge 33 00:01:48,080 --> 00:01:51,400 Speaker 1: funds which had shorted the stock severely out of pocket, 34 00:01:51,640 --> 00:01:56,200 Speaker 1: and many rich and powerful people disconcerted. Moves were quickly 35 00:01:56,240 --> 00:01:59,360 Speaker 1: made to prevent such a thing happening again. And now 36 00:01:59,520 --> 00:02:03,280 Speaker 1: the site of lawmakers are being turned on cryptocurrency, which 37 00:02:03,320 --> 00:02:07,120 Speaker 1: is perhaps the very definition of high risk and high reward. 38 00:02:07,400 --> 00:02:11,040 Speaker 1: Countries from Canada to China and now starting to limit 39 00:02:11,280 --> 00:02:14,960 Speaker 1: how much crypto ordinary folks can buy, and many others 40 00:02:15,120 --> 00:02:18,800 Speaker 1: are taking notes. Then in the second part of today's episode, 41 00:02:18,840 --> 00:02:22,160 Speaker 1: you'll hear all the latest about Ethereum's upcoming transition from 42 00:02:22,160 --> 00:02:24,440 Speaker 1: proof of work to proof of steak, one of the 43 00:02:24,480 --> 00:02:28,959 Speaker 1: most significant events in the whole history of cryptocurrency, and 44 00:02:29,240 --> 00:02:33,000 Speaker 1: one that has been a long time coming. The implications 45 00:02:33,040 --> 00:02:36,240 Speaker 1: of this switch are huge for Ethereum and indeed the 46 00:02:36,240 --> 00:02:41,160 Speaker 1: whole crypto industry, and after many delays, it's almost upon us. 47 00:02:41,520 --> 00:02:44,200 Speaker 1: I'll explain exactly where we are in terms of what 48 00:02:44,320 --> 00:02:46,920 Speaker 1: is supposed to happen, what it all means, and what 49 00:02:47,080 --> 00:02:49,880 Speaker 1: to look out for as the big day approaches. I 50 00:02:49,919 --> 00:02:52,320 Speaker 1: hope you enjoy listening to these two pieces, and I'll 51 00:02:52,360 --> 00:02:55,120 Speaker 1: be back talking crypto with Mad Mike very soon, so 52 00:02:55,280 --> 00:02:57,960 Speaker 1: be sure to stay tuned, and if you want even 53 00:02:58,040 --> 00:03:00,840 Speaker 1: more content from coin Bureau, be sure to subscribe to 54 00:03:00,840 --> 00:03:25,560 Speaker 1: our YouTube channel and visit us on social media too. Recently, 55 00:03:25,680 --> 00:03:30,040 Speaker 1: the Ontario Securities and Exchange Commission set an annual limit 56 00:03:30,240 --> 00:03:33,480 Speaker 1: on how much regular Canadians living in the province can 57 00:03:33,560 --> 00:03:37,360 Speaker 1: invest in alt coins. Although this annual limit is not 58 00:03:37,560 --> 00:03:40,520 Speaker 1: a federal law, it is part of a growing trend 59 00:03:40,680 --> 00:03:46,960 Speaker 1: to restrict retail investors from cryptocurrency, both in Canada and elsewhere. Today, 60 00:03:47,000 --> 00:03:49,640 Speaker 1: I'm going to tell you why so many countries are 61 00:03:49,640 --> 00:03:53,960 Speaker 1: starting to make it difficult for retail investors to access cryptocurrency, 62 00:03:54,120 --> 00:03:58,960 Speaker 1: and what effects this could have on the crypto market. Now, 63 00:03:59,000 --> 00:04:01,440 Speaker 1: I want to start by taking you back in time 64 00:04:01,520 --> 00:04:04,840 Speaker 1: to the nine twenties. It's after the First World War 65 00:04:05,120 --> 00:04:08,960 Speaker 1: and the economies of Allied countries are booming. In the 66 00:04:09,080 --> 00:04:12,520 Speaker 1: United States, the stock market is roaring to all time 67 00:04:12,600 --> 00:04:16,400 Speaker 1: highs and millions of Americans are investing their life savings 68 00:04:16,400 --> 00:04:20,320 Speaker 1: into stocks, with many of them borrowing to invest even more. 69 00:04:21,240 --> 00:04:26,360 Speaker 1: Fast forward to nine the economy is suddenly not looking 70 00:04:26,440 --> 00:04:29,040 Speaker 1: so good, and the amount of debt that's been taken 71 00:04:29,040 --> 00:04:33,159 Speaker 1: on by speculators has hit record highs, but the stock 72 00:04:33,240 --> 00:04:38,760 Speaker 1: market keeps pumping, so it's totally fine. Suddenly, the stock 73 00:04:38,800 --> 00:04:41,880 Speaker 1: market begins to dip and everyone who took on excessive 74 00:04:41,960 --> 00:04:45,360 Speaker 1: leverage begins to sell, fearing that they wouldn't have enough 75 00:04:45,400 --> 00:04:48,919 Speaker 1: to pay back all their debts. By October, the stock 76 00:04:48,960 --> 00:04:51,760 Speaker 1: market is in free fall, with a famous four day 77 00:04:51,800 --> 00:04:55,320 Speaker 1: flash crash, bringing the Dow Jones down by a staggering 78 00:04:57,600 --> 00:05:00,280 Speaker 1: Over the next two years, the stock market goes onto 79 00:05:00,320 --> 00:05:03,520 Speaker 1: fall by another eight percent, bringing the Dow Jones to 80 00:05:03,600 --> 00:05:07,400 Speaker 1: a low of nine hundred points, a far cry from 81 00:05:07,480 --> 00:05:11,680 Speaker 1: its high of nearly six thousand points. Naturally, the people 82 00:05:11,760 --> 00:05:14,960 Speaker 1: in power blame the average person for the stock market implosion, 83 00:05:15,040 --> 00:05:18,520 Speaker 1: and the U. S Government subsequently establishes the Securities and 84 00:05:18,560 --> 00:05:22,960 Speaker 1: Exchange Commission, or SEC in four to make sure another 85 00:05:23,120 --> 00:05:27,840 Speaker 1: stock market crash of that magnitude never happens again. Upon 86 00:05:27,839 --> 00:05:32,040 Speaker 1: its creation, the SEC was tasked with three specific things. 87 00:05:32,360 --> 00:05:37,240 Speaker 1: Protect investors, facilitate capital formation, and maintain fair, orderly and 88 00:05:37,400 --> 00:05:41,040 Speaker 1: efficient markets. You'll know this if you've ever watched current 89 00:05:41,200 --> 00:05:44,760 Speaker 1: SEC Chairman Gary Gensler speak more about what that looks 90 00:05:44,800 --> 00:05:48,559 Speaker 1: like in the description. To that end, the SEC set 91 00:05:48,640 --> 00:05:51,960 Speaker 1: a series of regulations that made it very difficult for 92 00:05:52,040 --> 00:05:56,440 Speaker 1: regular investors to get access to high risk investments such 93 00:05:56,480 --> 00:06:00,560 Speaker 1: as real estate crowdfunding, equity crowdfunding a k a. Investing 94 00:06:00,560 --> 00:06:04,440 Speaker 1: in stocks before they list, hedge funds, and any form 95 00:06:04,560 --> 00:06:08,960 Speaker 1: of venture capital a k a. Early company investing. As 96 00:06:09,120 --> 00:06:12,880 Speaker 1: some of you will know, only so called accredited investors 97 00:06:12,960 --> 00:06:16,800 Speaker 1: are allowed to invest in these high risk vehicles, and 98 00:06:17,160 --> 00:06:19,800 Speaker 1: as far as I understand, this has been the case 99 00:06:19,880 --> 00:06:23,400 Speaker 1: in the United States since ninety three, when the Securities 100 00:06:23,440 --> 00:06:28,320 Speaker 1: Act was passed as part of the SEC's formation. Today, 101 00:06:28,520 --> 00:06:32,760 Speaker 1: almost every country has specific criteria for what counts as 102 00:06:32,800 --> 00:06:36,599 Speaker 1: an accredited investor. In the United States, you need to 103 00:06:36,680 --> 00:06:39,599 Speaker 1: either make more than two grand per year, have a 104 00:06:39,680 --> 00:06:42,560 Speaker 1: net worth of more than one million dollars excluding your 105 00:06:42,600 --> 00:06:46,159 Speaker 1: primary residence, or be an executive in a company that's 106 00:06:46,200 --> 00:06:50,640 Speaker 1: selling its equity. Fun fact, there is actually no test 107 00:06:50,920 --> 00:06:53,719 Speaker 1: to become an accredited investor, at least not in the 108 00:06:53,800 --> 00:06:57,920 Speaker 1: United States. Your status as an accredited investor is determined 109 00:06:57,960 --> 00:07:00,680 Speaker 1: on a case by case basis by the company that's 110 00:07:00,720 --> 00:07:03,120 Speaker 1: offering the assets you're trying to invest in, be it 111 00:07:03,160 --> 00:07:06,839 Speaker 1: a hedge fund or otherwise. Now, as all of you 112 00:07:06,880 --> 00:07:10,440 Speaker 1: will know, there's no risk without reward. Hence why this 113 00:07:10,560 --> 00:07:15,119 Speaker 1: accredited investor scheme has been heavily criticized. Besides the fact 114 00:07:15,200 --> 00:07:18,920 Speaker 1: that wealth isn't the best measure of knowledge or intelligence, 115 00:07:19,280 --> 00:07:22,240 Speaker 1: the fact that these opportunities are only afforded to the 116 00:07:22,400 --> 00:07:26,400 Speaker 1: rich means they only get richer. Take a second to 117 00:07:26,520 --> 00:07:30,520 Speaker 1: consider that many accredited investors have made hundred x gains 118 00:07:30,520 --> 00:07:33,880 Speaker 1: on regular stocks because they were able to buy before 119 00:07:34,040 --> 00:07:38,120 Speaker 1: they listed. Never mind the multiple thousand x gains that 120 00:07:38,240 --> 00:07:42,400 Speaker 1: vcs have made on many cryptocurrencies by buying before they 121 00:07:42,440 --> 00:07:46,840 Speaker 1: were readily available. Meanwhile, retail investors are lucky to get 122 00:07:46,840 --> 00:07:50,040 Speaker 1: the estimated average of ten percent per year on stocks, 123 00:07:50,200 --> 00:07:53,720 Speaker 1: which is barely enough to hedge against official inflation figures. 124 00:07:54,240 --> 00:07:57,960 Speaker 1: Never mind that the unofficial inflation figures suggest that it's 125 00:07:58,040 --> 00:08:00,160 Speaker 1: twice as bad as it's being made out to be 126 00:08:00,440 --> 00:08:04,880 Speaker 1: by politicians and the mainstream media. So now that you 127 00:08:04,920 --> 00:08:08,320 Speaker 1: know about the history of retail investors and accredited investors, 128 00:08:08,560 --> 00:08:11,160 Speaker 1: it's time to jump back in the time machine and 129 00:08:11,360 --> 00:08:13,920 Speaker 1: turn the clock back from today by about two and 130 00:08:14,000 --> 00:08:17,160 Speaker 1: a half years. It's the beginning of the pandemic, and 131 00:08:17,240 --> 00:08:20,040 Speaker 1: nobody knows whether it's the return of the Black Death 132 00:08:20,480 --> 00:08:24,600 Speaker 1: or just another flu. The scale of the uncertainty is 133 00:08:24,640 --> 00:08:28,240 Speaker 1: causing stock markets to tank, and the urgency is forcing 134 00:08:28,280 --> 00:08:32,320 Speaker 1: elected officials to shut everything down out of caution to 135 00:08:32,520 --> 00:08:36,760 Speaker 1: ensure that the economy doesn't completely implode. Central banks drop 136 00:08:36,800 --> 00:08:40,679 Speaker 1: interest rates to zero, and governments start sending out stimmy 137 00:08:40,760 --> 00:08:45,160 Speaker 1: checks around the world. Millions of people suddenly find themselves 138 00:08:45,240 --> 00:08:48,480 Speaker 1: sitting on more money than they had expected, mainly because 139 00:08:48,520 --> 00:08:51,160 Speaker 1: there isn't really anything they can spend their money on 140 00:08:51,440 --> 00:08:55,600 Speaker 1: besides food and rent. Assuming their rent payments aren't paused, 141 00:08:55,760 --> 00:08:59,480 Speaker 1: which was apparently the case in many places. After binge 142 00:08:59,480 --> 00:09:02,760 Speaker 1: watching flicks and completing every video game that's worth the effort, 143 00:09:03,160 --> 00:09:05,560 Speaker 1: millions of people start to wonder what they can do 144 00:09:05,679 --> 00:09:09,199 Speaker 1: next and notice that the stock market is rapidly recovering, 145 00:09:09,679 --> 00:09:12,360 Speaker 1: and so they download an app like robin Hood and 146 00:09:12,440 --> 00:09:16,959 Speaker 1: start reading about investing on Reddit. Fast forward to one 147 00:09:17,200 --> 00:09:19,800 Speaker 1: the number of robin Hood users has more than doubled 148 00:09:19,880 --> 00:09:23,160 Speaker 1: to over twenty million, the Wall Street Bets subreddit has 149 00:09:23,160 --> 00:09:26,920 Speaker 1: balloon to over ten million members, and retail investors make 150 00:09:27,000 --> 00:09:30,520 Speaker 1: up more than thirty of the quarterly trading volume in 151 00:09:30,640 --> 00:09:35,640 Speaker 1: the US stock market, a record high. Realizing that high 152 00:09:35,800 --> 00:09:38,120 Speaker 1: risk is the only way to get a high reward, 153 00:09:38,559 --> 00:09:42,200 Speaker 1: millions of newly created retail investors start shoving their stimmy 154 00:09:42,280 --> 00:09:46,880 Speaker 1: checks and savings into cryptocurrencies, volatile commodities, and tech stocks 155 00:09:46,920 --> 00:09:51,480 Speaker 1: with extreme leverage as in the nine twenties. Many of 156 00:09:51,480 --> 00:09:55,760 Speaker 1: them go into debt to invest even more. Then the 157 00:09:55,800 --> 00:10:00,559 Speaker 1: retail investors realize something. If they coordinate their collective investments, 158 00:10:00,800 --> 00:10:03,960 Speaker 1: they can create the kind of volatility that's required for 159 00:10:04,080 --> 00:10:08,440 Speaker 1: massive returns, and so the so called retail apes pick 160 00:10:08,480 --> 00:10:13,040 Speaker 1: a target. Melvin Capital a hedge fund that's aggressively shorting 161 00:10:13,240 --> 00:10:16,960 Speaker 1: game Stop, a video game retailer. Now, for some context, 162 00:10:17,120 --> 00:10:21,239 Speaker 1: shorting a stock typically involves borrowing it from a stockbroker 163 00:10:21,520 --> 00:10:24,960 Speaker 1: and immediately selling it on the open market while promising 164 00:10:25,000 --> 00:10:28,160 Speaker 1: to buy back and return the shares at some future date. 165 00:10:28,880 --> 00:10:31,880 Speaker 1: The assumption is that the stock will be cheaper at 166 00:10:31,880 --> 00:10:36,560 Speaker 1: that future date, and the difference becomes profit. What retail 167 00:10:36,600 --> 00:10:40,800 Speaker 1: investors did in January one was collectively by game Stop 168 00:10:41,000 --> 00:10:45,120 Speaker 1: stock so that its price went up. This forced Melvin 169 00:10:45,160 --> 00:10:48,240 Speaker 1: Capital into a short squeeze, forcing the hedge fund to 170 00:10:48,320 --> 00:10:51,600 Speaker 1: buy back the stock at a loss worth billions of dollars, 171 00:10:51,640 --> 00:10:55,679 Speaker 1: which caused gm to pump even more. As it happens, 172 00:10:55,840 --> 00:10:59,120 Speaker 1: Melvin Capital announced in May this year that it was 173 00:10:59,160 --> 00:11:02,240 Speaker 1: going out of business, citing the MEME stock short squeezed 174 00:11:02,320 --> 00:11:05,480 Speaker 1: as the main reason. As almost all of you will know, 175 00:11:05,679 --> 00:11:09,000 Speaker 1: gm E wasn't the only time that this collective investment 176 00:11:09,040 --> 00:11:12,240 Speaker 1: strategy was tried. There were attempts to pump other stocks 177 00:11:12,240 --> 00:11:17,120 Speaker 1: like Tesla, precious metals like silver, and yes, cryptocurrencies like 178 00:11:17,360 --> 00:11:20,760 Speaker 1: dos coin. Those who were able to ride the waves 179 00:11:20,760 --> 00:11:24,679 Speaker 1: of volatility became incredibly wealthy, and most of the rest 180 00:11:24,960 --> 00:11:28,720 Speaker 1: got wrecked. Now, there is definitely a discussion to be 181 00:11:28,760 --> 00:11:31,120 Speaker 1: had about this practice, but I reckon it's one of 182 00:11:31,160 --> 00:11:34,720 Speaker 1: the only ways that retail investors can create the same 183 00:11:34,920 --> 00:11:40,480 Speaker 1: risk reward dynamic afforded to accredited investors. What's crazy is 184 00:11:40,600 --> 00:11:44,199 Speaker 1: that most of these campaigns were successful, and collective action 185 00:11:44,280 --> 00:11:48,440 Speaker 1: by retail investors continues to this day. A great example 186 00:11:48,640 --> 00:11:52,560 Speaker 1: is Celsius's cell token, which has seen multiple short squeezes 187 00:11:52,760 --> 00:11:56,320 Speaker 1: since the crypto platform went bankrupt. You can find out 188 00:11:56,360 --> 00:11:59,760 Speaker 1: what happened there and what comes next for Celsius users 189 00:11:59,760 --> 00:12:03,439 Speaker 1: by clicking the link in the description. Now, it's safe 190 00:12:03,480 --> 00:12:06,760 Speaker 1: to say that the people in power weren't happy about 191 00:12:06,800 --> 00:12:09,680 Speaker 1: the game Stop saga. I mean it basically marked the 192 00:12:09,720 --> 00:12:13,320 Speaker 1: first time that retail investors were able to extract billions 193 00:12:13,320 --> 00:12:17,760 Speaker 1: of dollars from the accredited investors. Historically, it's happened the 194 00:12:17,840 --> 00:12:21,960 Speaker 1: other way around. This is arguably the real reason why 195 00:12:22,080 --> 00:12:24,840 Speaker 1: robin Hood went as far as blocking the purchase of 196 00:12:24,840 --> 00:12:28,480 Speaker 1: Meme stocks to prevent more collective investment from moving the market, 197 00:12:28,640 --> 00:12:31,560 Speaker 1: something that came as a huge surprise to its users 198 00:12:31,760 --> 00:12:34,959 Speaker 1: and isn't really in keeping with what the platform calls itself, 199 00:12:35,200 --> 00:12:39,080 Speaker 1: is it. What's not that surprising is that one of 200 00:12:39,120 --> 00:12:41,920 Speaker 1: the most popular members of the Wall Street Bets subreddit 201 00:12:42,000 --> 00:12:46,560 Speaker 1: was subsequently sued for allegedly coordinating the manipulation of game 202 00:12:46,600 --> 00:12:51,560 Speaker 1: stock stock, causing quote huge losses for select investors. I 203 00:12:51,600 --> 00:12:56,040 Speaker 1: think you can guess who one of those select investors was. Luckily, 204 00:12:56,280 --> 00:12:59,000 Speaker 1: it seems, the lawsuit was dismissed the following month, but 205 00:12:59,080 --> 00:13:01,760 Speaker 1: this fellow was ill hit with a four million dollar 206 00:13:01,840 --> 00:13:05,120 Speaker 1: fine for failing to disclose his game stop trades to 207 00:13:05,320 --> 00:13:08,760 Speaker 1: his previous employer, a fine which was reportedly paid by 208 00:13:08,800 --> 00:13:14,520 Speaker 1: his insurance company. The real trouble, however, came in April one, 209 00:13:14,600 --> 00:13:18,400 Speaker 1: after Gary Gensler was made chairman of the SEC. If 210 00:13:18,440 --> 00:13:20,880 Speaker 1: you watched our video about Gary in the SEC, you 211 00:13:20,960 --> 00:13:23,760 Speaker 1: might recall that the first thing he did was announced 212 00:13:23,800 --> 00:13:26,240 Speaker 1: that he would be going after robin Hood and other 213 00:13:26,440 --> 00:13:31,360 Speaker 1: retail trading platforms. Specifically, Gary said the SEC would be 214 00:13:31,400 --> 00:13:34,720 Speaker 1: going after the practice of payment for order flow, which 215 00:13:34,720 --> 00:13:36,720 Speaker 1: I won't get into here for the sake of time, 216 00:13:36,840 --> 00:13:39,680 Speaker 1: but feel free to watch my video from last year 217 00:13:39,800 --> 00:13:44,199 Speaker 1: which breaks it down into detail for you top left. Anyways, 218 00:13:44,280 --> 00:13:48,240 Speaker 1: a couple of months ago, Gary reiterated the SEC's intentions 219 00:13:48,280 --> 00:13:51,520 Speaker 1: to crack down on payment for order flow, and according 220 00:13:51,559 --> 00:13:55,880 Speaker 1: to crypto policy analyst Jake Chevinsky, the SEC is likely 221 00:13:55,920 --> 00:13:59,240 Speaker 1: to take a lot of enforcement actions near the end 222 00:13:59,280 --> 00:14:02,800 Speaker 1: of September, but as its fiscal year comes to a close, 223 00:14:03,040 --> 00:14:07,680 Speaker 1: given that it has historically done this in Europe. Meanwhile, 224 00:14:07,800 --> 00:14:11,600 Speaker 1: politicians are pushing an outright ban on payment for order flow, 225 00:14:11,880 --> 00:14:15,080 Speaker 1: and it seems there's only one thing holding them and 226 00:14:15,280 --> 00:14:20,640 Speaker 1: the SEC back public opinion. The average retail investor would 227 00:14:20,640 --> 00:14:24,000 Speaker 1: probably rather not see their favorite stock trading platform go 228 00:14:24,040 --> 00:14:27,600 Speaker 1: down the toilet. This is especially true because it seems 229 00:14:27,640 --> 00:14:32,120 Speaker 1: that most retail investors are still heavily invested. According to 230 00:14:32,160 --> 00:14:35,440 Speaker 1: a recent press release by trading platform e Toro, only 231 00:14:35,600 --> 00:14:38,920 Speaker 1: eight percent of retail investors sold when the crypto and 232 00:14:39,000 --> 00:14:44,240 Speaker 1: stock markets crashed in May and June six continued to hoddle, 233 00:14:44,320 --> 00:14:48,600 Speaker 1: and twenty eight percent bought the dip wild Now, while 234 00:14:48,680 --> 00:14:51,560 Speaker 1: e Toro is just one trading platform, I reckon it's 235 00:14:51,600 --> 00:14:54,760 Speaker 1: reasonable to assume that it's a similar story on others, 236 00:14:54,920 --> 00:14:58,680 Speaker 1: especially since another analysis by The Wall Street Journal recently 237 00:14:58,720 --> 00:15:02,800 Speaker 1: found that retail investors continue to pour record amounts of 238 00:15:02,800 --> 00:15:06,320 Speaker 1: money into the market. This is believed to be because 239 00:15:06,320 --> 00:15:09,840 Speaker 1: retail investors can see that the markets quickly recovered after 240 00:15:09,880 --> 00:15:12,680 Speaker 1: all recent crashes, and many of them are still in 241 00:15:12,720 --> 00:15:16,200 Speaker 1: the green overall due to the appreciation of house prices 242 00:15:16,280 --> 00:15:20,600 Speaker 1: and other assets they own. In other words, retail investors 243 00:15:20,760 --> 00:15:26,560 Speaker 1: haven't capitulated yet. That last word is key because it 244 00:15:26,720 --> 00:15:30,240 Speaker 1: suggests that the stock market is headed lower, and all 245 00:15:30,280 --> 00:15:33,800 Speaker 1: the bearish macro factors certainly suggest this is the case. 246 00:15:34,320 --> 00:15:38,040 Speaker 1: So riddle me this, what happens when the stock market 247 00:15:38,040 --> 00:15:42,840 Speaker 1: crashes by another twenty maybe even while all other assets 248 00:15:42,840 --> 00:15:45,920 Speaker 1: where the middle class store their wealth, like houses and cars, 249 00:15:46,360 --> 00:15:49,600 Speaker 1: start to crash. Two. That's right, you're going to have 250 00:15:49,880 --> 00:15:56,440 Speaker 1: lots of retail investors demanding regulation and retribution. If you 251 00:15:56,520 --> 00:15:59,520 Speaker 1: need any evidence of this order of events, look no 252 00:15:59,680 --> 00:16:03,560 Speaker 1: further than the crypto market. Since the crypto market crash 253 00:16:03,640 --> 00:16:07,000 Speaker 1: in May, we've seen no shortage of lawsuits alleging that 254 00:16:07,080 --> 00:16:12,720 Speaker 1: certain cryptocurrencies are securities, that certain exchanges engaged in market manipulation, 255 00:16:13,080 --> 00:16:18,440 Speaker 1: and other such shenanigans. More importantly, we've seen countries around 256 00:16:18,520 --> 00:16:21,240 Speaker 1: the world announced that they're going to start clamping down 257 00:16:21,240 --> 00:16:25,800 Speaker 1: on crypto or, to use their words, quote protect investors, 258 00:16:25,920 --> 00:16:29,640 Speaker 1: which is of course code for preventing retail investors from 259 00:16:29,680 --> 00:16:34,840 Speaker 1: accessing certain coins, tokens, and investment vehicles. The first country 260 00:16:34,840 --> 00:16:38,880 Speaker 1: to restrict retail access to cryptocurrency was actually the United 261 00:16:39,000 --> 00:16:44,040 Speaker 1: Kingdom in October twenty when our fabulous Financial Conduct Authority 262 00:16:44,160 --> 00:16:47,880 Speaker 1: or f c A banned the sale of crypto derivatives 263 00:16:47,880 --> 00:16:53,040 Speaker 1: to retail consumers. This included stuff like futures options and 264 00:16:53,120 --> 00:16:55,240 Speaker 1: even e t n s, which are like e t 265 00:16:55,480 --> 00:17:00,360 Speaker 1: fs for reference. Derivatives allow retail investors to take on 266 00:17:00,440 --> 00:17:03,880 Speaker 1: the same kind of risks that accredited investors regularly take, 267 00:17:04,160 --> 00:17:06,720 Speaker 1: but it also adds a lot of volatility to the 268 00:17:06,760 --> 00:17:10,840 Speaker 1: crypto market when over leverage long or short traders are liquidated. 269 00:17:11,040 --> 00:17:16,280 Speaker 1: More about that in the description I digress. In one, 270 00:17:16,560 --> 00:17:20,600 Speaker 1: we saw Hong Kong regulators proposed banning retail investors from 271 00:17:20,600 --> 00:17:23,920 Speaker 1: the crypto market, and a few months later, China began 272 00:17:24,040 --> 00:17:28,600 Speaker 1: its latest crypto crackdown, which likely affected most retail investors 273 00:17:28,680 --> 00:17:33,320 Speaker 1: and likely left many wealthy a k a. Accredited investors unscathed. 274 00:17:34,240 --> 00:17:37,720 Speaker 1: Following the crypto market crash that was caused by China's crackdown, 275 00:17:37,840 --> 00:17:41,520 Speaker 1: we saw regulators increase their scrutiny of the crypto industry 276 00:17:41,720 --> 00:17:45,280 Speaker 1: by forcing k y C on exchanges, banning tokens, peg 277 00:17:45,280 --> 00:17:50,040 Speaker 1: to stocks, restricting derivatives trading, and presumably pushing exchanges to 278 00:17:50,119 --> 00:17:54,520 Speaker 1: reduce the leverage they offer. Following the crypto market crash 279 00:17:54,680 --> 00:17:57,600 Speaker 1: this year that was caused by terrorist collapse, we saw 280 00:17:57,720 --> 00:18:01,720 Speaker 1: regulators return with the same screwed me with Dutch authorities 281 00:18:01,720 --> 00:18:05,800 Speaker 1: calling for crypto derivatives to be restricted to accredited investors 282 00:18:06,200 --> 00:18:11,000 Speaker 1: and Australian banks saying they will not quote endorse retail speculation. 283 00:18:11,880 --> 00:18:15,280 Speaker 1: In South Korea, regulators announced they would be cracking down 284 00:18:15,320 --> 00:18:18,760 Speaker 1: on crypto exchanges because of terror's collapse. Terror was from 285 00:18:18,840 --> 00:18:23,760 Speaker 1: South Korea, and regulators in Thailand demanding that crypto exchanges 286 00:18:23,920 --> 00:18:27,320 Speaker 1: delist meme coins, n f t s, and social tokens. 287 00:18:28,119 --> 00:18:32,520 Speaker 1: More recently, Singapore announced it wants to limit retail crypto investment, 288 00:18:32,640 --> 00:18:35,800 Speaker 1: and as I mentioned in the introduction, in Canada, the 289 00:18:35,880 --> 00:18:40,160 Speaker 1: Ontario SEC set an annual limit of thirty thousand Canadian 290 00:18:40,200 --> 00:18:43,480 Speaker 1: dollars on all coin investments for citizens of the province, 291 00:18:43,520 --> 00:18:49,560 Speaker 1: which presumably excludes accredited investors. I'll reiterate that most, if 292 00:18:49,600 --> 00:18:53,200 Speaker 1: not all, these restrictions are being encouraged, if not outright 293 00:18:53,280 --> 00:18:57,760 Speaker 1: called for, by disgruntled cryptocurrency investors, and our caution that 294 00:18:57,840 --> 00:19:00,119 Speaker 1: it's more than likely that we're going to see the 295 00:19:00,160 --> 00:19:04,120 Speaker 1: crypto market go much lower later this year, along with 296 00:19:04,280 --> 00:19:08,560 Speaker 1: the stock market. When this inevitably happens, you can bet 297 00:19:08,600 --> 00:19:11,400 Speaker 1: that there will be even more calls for crypto regulation 298 00:19:11,560 --> 00:19:15,560 Speaker 1: and retribution, most of which will inevitably result in retail 299 00:19:15,600 --> 00:19:19,359 Speaker 1: investors like you and me having even less access to 300 00:19:19,400 --> 00:19:23,440 Speaker 1: cryptocurrencies and all the different ways you can trade them. 301 00:19:23,600 --> 00:19:26,359 Speaker 1: What's even more concerning is that this will make it 302 00:19:26,520 --> 00:19:29,520 Speaker 1: that much more difficult for new crypto projects to get 303 00:19:29,560 --> 00:19:31,840 Speaker 1: off the ground, since there will be more exclusive to 304 00:19:31,880 --> 00:19:36,119 Speaker 1: accredited investors than ever before. Not only that, but it 305 00:19:36,160 --> 00:19:39,240 Speaker 1: will be even more difficult for quality crypto projects to 306 00:19:39,280 --> 00:19:42,600 Speaker 1: be created because all of them will have massive pre minds, 307 00:19:42,840 --> 00:19:46,679 Speaker 1: with most of the supply going to vcs and early investors. 308 00:19:47,280 --> 00:19:50,760 Speaker 1: In short, cutting retail investors out of the crypto market 309 00:19:50,960 --> 00:19:55,320 Speaker 1: could do serious damage to the potential of the entire industry, 310 00:19:55,560 --> 00:19:58,480 Speaker 1: and this begs the question of where this push to 311 00:19:58,520 --> 00:20:02,320 Speaker 1: remove retail investors is coming from and what you can 312 00:20:02,359 --> 00:20:04,840 Speaker 1: do to keep your head in the game. For as 313 00:20:04,920 --> 00:20:08,240 Speaker 1: long as possible. If you watched our video about the 314 00:20:08,320 --> 00:20:11,760 Speaker 1: top ten crypto partnerships from last year, you might recall 315 00:20:12,000 --> 00:20:14,919 Speaker 1: that New York Digital Investment Group or n y d 316 00:20:15,040 --> 00:20:18,440 Speaker 1: i G and the National Cash Register or n c 317 00:20:18,720 --> 00:20:22,320 Speaker 1: R entered a partnership to make it possible for commercial 318 00:20:22,359 --> 00:20:26,480 Speaker 1: banks in the US to offer cryptocurrency investing and trading. 319 00:20:27,440 --> 00:20:31,840 Speaker 1: This partnership happened because commercial banks could see that billions 320 00:20:31,840 --> 00:20:35,919 Speaker 1: of dollars were flowing from their balance sheets into cryptocurrency exchanges, 321 00:20:36,160 --> 00:20:39,520 Speaker 1: something they aren't happy about, because playing with the money 322 00:20:39,600 --> 00:20:43,040 Speaker 1: you've deposited in the bank is how commercial banks make 323 00:20:43,200 --> 00:20:48,080 Speaker 1: their money. Commercial banks thought that offering cryptocurrency investing and 324 00:20:48,080 --> 00:20:51,160 Speaker 1: trading in house would bring back most, if not all, 325 00:20:51,200 --> 00:20:53,399 Speaker 1: the money that had fled from their balance sheets to 326 00:20:53,480 --> 00:20:56,920 Speaker 1: coin based, robin Hood and others, and at first glance, 327 00:20:57,160 --> 00:21:02,120 Speaker 1: this strategy makes sense upon SA inspection. There's a problem, though, 328 00:21:02,200 --> 00:21:05,399 Speaker 1: and that's that commercial banks can't offer mid cap and 329 00:21:05,480 --> 00:21:09,600 Speaker 1: small cap alt coins for regulatory reasons. By now, you 330 00:21:09,640 --> 00:21:13,000 Speaker 1: should know that volatile alt coins are ultimately what attracts 331 00:21:13,000 --> 00:21:16,639 Speaker 1: retail investors to coin base and robin Hood. They aren't 332 00:21:16,680 --> 00:21:20,520 Speaker 1: there for BTC and eath case and point dose coin 333 00:21:20,560 --> 00:21:25,240 Speaker 1: trading accounted for a whopping fort of robin Hood's cryptocurrency 334 00:21:25,280 --> 00:21:28,440 Speaker 1: revenue in the third quarter of last year, and almost 335 00:21:28,640 --> 00:21:32,320 Speaker 1: seventy of trading volume on coin base was related to 336 00:21:32,400 --> 00:21:35,560 Speaker 1: all coins in the fourth quarter of last year. And 337 00:21:35,840 --> 00:21:39,600 Speaker 1: never mind all the billions flowing into stable coins. So 338 00:21:40,200 --> 00:21:44,200 Speaker 1: another question for you, what happens when your top competitors 339 00:21:44,240 --> 00:21:47,520 Speaker 1: are offering a product that you can't possibly hope to offer. 340 00:21:48,200 --> 00:21:50,560 Speaker 1: That's right, you throw your toys out the pram, go 341 00:21:50,720 --> 00:21:54,680 Speaker 1: crying to the regulators, and rile up disgruntled retail investors 342 00:21:54,800 --> 00:21:59,359 Speaker 1: by paying for mainstream media articles about how horrible cryptocurrency is. 343 00:22:00,040 --> 00:22:02,800 Speaker 1: That's why I don't think it's a coincidence that the 344 00:22:02,920 --> 00:22:07,639 Speaker 1: SEC is targeting alt coins and cryptocurrency exchanges offering said 345 00:22:07,680 --> 00:22:10,679 Speaker 1: all coins. Come to think of it, the real reason 346 00:22:10,720 --> 00:22:14,000 Speaker 1: why the SEC went after x RP could have simply 347 00:22:14,080 --> 00:22:18,800 Speaker 1: been because it was one of the most traded cryptocurrencies. Now, 348 00:22:18,880 --> 00:22:21,840 Speaker 1: in case you didn't put two and two together, restricting 349 00:22:21,920 --> 00:22:26,639 Speaker 1: retail investors from accessing alt coins and forcing cryptocurrency exchanges 350 00:22:26,680 --> 00:22:30,159 Speaker 1: to delist all coins is exactly how you drain the 351 00:22:30,200 --> 00:22:34,359 Speaker 1: cryptocurrency exchanges dry. It's the only source of revenue that 352 00:22:34,400 --> 00:22:38,119 Speaker 1: the commercial banks can't compete with. As I mentioned a 353 00:22:38,160 --> 00:22:41,320 Speaker 1: few moments ago, it also has the convenient side effect 354 00:22:41,359 --> 00:22:45,280 Speaker 1: of stunting cryptos growth and adoption. And I suspect that 355 00:22:45,320 --> 00:22:48,040 Speaker 1: the few coins and tokens which survive the scourge will 356 00:22:48,080 --> 00:22:51,840 Speaker 1: be those that accredited investors and Wall Street love the most. 357 00:22:52,200 --> 00:22:55,720 Speaker 1: I think you know which ones I'm talking about. As 358 00:22:55,760 --> 00:22:58,359 Speaker 1: far as I can tell, the only defense against this 359 00:22:58,480 --> 00:23:01,920 Speaker 1: will be to stick to truely decentralized finance, which will 360 00:23:01,960 --> 00:23:05,879 Speaker 1: continue to be accessible through various bridges and smart contract 361 00:23:05,920 --> 00:23:10,280 Speaker 1: cryptocurrency coins. Assuming the people in power don't take control 362 00:23:10,440 --> 00:23:13,760 Speaker 1: of the proof of stake blockchains, these defied protocols live on. 363 00:23:14,520 --> 00:23:18,720 Speaker 1: And don't even get me started about how the Financial 364 00:23:18,760 --> 00:23:22,080 Speaker 1: Action Task Force or fat F wants to eventually make 365 00:23:22,119 --> 00:23:25,640 Speaker 1: it impossible for you to withdraw any crypto by labeling 366 00:23:25,720 --> 00:23:29,919 Speaker 1: such activities as high risk. If you ask me, the 367 00:23:30,000 --> 00:23:32,760 Speaker 1: real question is whether regulators will go as far as 368 00:23:32,800 --> 00:23:37,520 Speaker 1: restricting retail access to other investments such as stocks. History 369 00:23:37,600 --> 00:23:41,199 Speaker 1: suggests that they will do exactly that if the market 370 00:23:41,200 --> 00:23:44,800 Speaker 1: crash is bad enough and the SEC is reportedly planning 371 00:23:44,800 --> 00:23:50,119 Speaker 1: on changing the definition of accredited investor already. One thing's 372 00:23:50,160 --> 00:23:52,360 Speaker 1: for sure, and that's that the people in power want 373 00:23:52,400 --> 00:23:56,240 Speaker 1: to make sure that retail investors can't collectively pump stocks 374 00:23:56,359 --> 00:24:00,840 Speaker 1: to the detriment of accredited investors. Ever again, never mind 375 00:24:01,000 --> 00:24:03,400 Speaker 1: that it could become a form of protest quite soon, 376 00:24:03,480 --> 00:24:07,480 Speaker 1: since financial loss is the only language they understand. For 377 00:24:07,560 --> 00:24:10,480 Speaker 1: what it's worth, We're unlikely to see a full on 378 00:24:10,720 --> 00:24:14,320 Speaker 1: retail trading ban, and that's simply because the World Economic 379 00:24:14,359 --> 00:24:17,920 Speaker 1: Forum wants retail investors to put their stimmies, savings and 380 00:24:18,040 --> 00:24:20,840 Speaker 1: loans into e s G, which is really just the 381 00:24:20,920 --> 00:24:26,960 Speaker 1: United Nations dystopian thirty sustainable Development Goals in disguise. You 382 00:24:27,000 --> 00:24:29,639 Speaker 1: can learn more about the dangers of e s G 383 00:24:30,040 --> 00:24:39,280 Speaker 1: using the link in the description. It's only a few 384 00:24:39,320 --> 00:24:42,840 Speaker 1: weeks away. One of the most consequential crypto events to 385 00:24:42,960 --> 00:24:46,280 Speaker 1: date is almost upon us. I am, of course talking 386 00:24:46,359 --> 00:24:49,800 Speaker 1: about the eth merge, the long awaited transition to a 387 00:24:49,840 --> 00:24:53,879 Speaker 1: new consensus mechanism that could have massive implications for the 388 00:24:53,920 --> 00:24:58,160 Speaker 1: Ethereum network. But there are also serious tail risks that 389 00:24:58,200 --> 00:25:01,320 Speaker 1: you need to know about. So my video today I'm 390 00:25:01,320 --> 00:25:03,840 Speaker 1: going to give you an update on Ethereum look at 391 00:25:03,880 --> 00:25:07,240 Speaker 1: the bull and bear cases and explain exactly what all 392 00:25:07,280 --> 00:25:13,000 Speaker 1: this could mean for the price of So don't go anywhere. Now, 393 00:25:13,160 --> 00:25:15,600 Speaker 1: in case you've been living under a rock for the 394 00:25:15,640 --> 00:25:18,280 Speaker 1: past year, and let's face it, rent rises are heading 395 00:25:18,320 --> 00:25:21,440 Speaker 1: that way, you'll know that the Ethereum network is about 396 00:25:21,480 --> 00:25:25,840 Speaker 1: to transition to proof of steak. The actual transition is 397 00:25:25,880 --> 00:25:28,760 Speaker 1: called the merg, and it's the first step in a 398 00:25:28,840 --> 00:25:32,639 Speaker 1: number of upgrades designed to make Ethereum more scalable and 399 00:25:32,720 --> 00:25:37,440 Speaker 1: hence more usable. Now I've covered the upgrades add nauseum 400 00:25:37,520 --> 00:25:39,680 Speaker 1: on the channel, and I'll link to a number of 401 00:25:39,760 --> 00:25:43,800 Speaker 1: videos below that go into it in much more detail. Now, 402 00:25:43,800 --> 00:25:46,479 Speaker 1: the merger has already been launched on a number of 403 00:25:46,560 --> 00:25:51,200 Speaker 1: public Ethereum test nets. These include the likes of Robston, Cipolia, 404 00:25:51,320 --> 00:25:55,480 Speaker 1: and most recently Girly. Girly made the merge on the 405 00:25:55,560 --> 00:25:58,359 Speaker 1: tenth of August, and while there was a slight drop 406 00:25:58,400 --> 00:26:01,880 Speaker 1: in the participation rate, it's still added up to another 407 00:26:02,040 --> 00:26:06,840 Speaker 1: successful merge dress rehearsal. Things were going so well on 408 00:26:06,880 --> 00:26:11,400 Speaker 1: the test nets that they've even gone through post merge upgrades. Cepolia, 409 00:26:11,480 --> 00:26:15,960 Speaker 1: for instance, recently underwent a simple yet important update the 410 00:26:16,119 --> 00:26:20,160 Speaker 1: stars appeared to be aligned, and following these successful test 411 00:26:20,200 --> 00:26:23,119 Speaker 1: net mergers, we got the news that the actual merge 412 00:26:23,359 --> 00:26:26,399 Speaker 1: could come even sooner, as the potential date for the 413 00:26:26,440 --> 00:26:31,480 Speaker 1: big day was moved from the nineteen September to This 414 00:26:31,760 --> 00:26:34,800 Speaker 1: was great news for the Ethereum community, which has arguably 415 00:26:35,000 --> 00:26:38,399 Speaker 1: grown a little jaded by all the memes of Ethereum 416 00:26:38,400 --> 00:26:42,840 Speaker 1: merged delays, however hilarious some of them may be. Now 417 00:26:42,920 --> 00:26:44,960 Speaker 1: there is a bit of nuance here, of course, from 418 00:26:45,080 --> 00:26:48,600 Speaker 1: the fact that the actual date is determined by blocks 419 00:26:48,720 --> 00:26:52,119 Speaker 1: rather than the deavs themselves, So with that in mind, 420 00:26:52,400 --> 00:26:57,120 Speaker 1: last week the Ethereum Foundation disclosed the official parameters for 421 00:26:57,240 --> 00:27:01,199 Speaker 1: the main net merge to take place. Firstly, on the 422 00:27:01,359 --> 00:27:05,680 Speaker 1: sixth of September, the Bellatrics upgrade will be implemented. This 423 00:27:05,840 --> 00:27:08,840 Speaker 1: is the upgrade that will be responsible for setting the 424 00:27:08,920 --> 00:27:12,800 Speaker 1: rest of the merge process in motion. The next step 425 00:27:12,880 --> 00:27:16,600 Speaker 1: after this will be the triggering total difficulty or t 426 00:27:16,600 --> 00:27:21,239 Speaker 1: t D. At this block over here, this could be 427 00:27:21,280 --> 00:27:24,879 Speaker 1: reached anywhere between the tenth and the twentieth, although the 428 00:27:24,920 --> 00:27:28,280 Speaker 1: devls have given that narrower timeline between the fifteenth and 429 00:27:28,359 --> 00:27:32,359 Speaker 1: sixteenth that I mentioned earlier. T T D is required 430 00:27:32,400 --> 00:27:35,560 Speaker 1: because this is the mechanism that will make it unprofitable 431 00:27:35,640 --> 00:27:38,800 Speaker 1: to mine the proof of work chain and thus force 432 00:27:38,920 --> 00:27:42,440 Speaker 1: the merge. Now, if all this sounds sort of familiar, 433 00:27:42,560 --> 00:27:45,360 Speaker 1: that's because t t D has also been rather more 434 00:27:45,480 --> 00:27:50,720 Speaker 1: excitingly termed the difficulty bomb. Now, of course, many miners 435 00:27:50,800 --> 00:27:53,720 Speaker 1: protested at this and threatened to fork and then mine 436 00:27:53,840 --> 00:27:57,879 Speaker 1: a proof of work chain. However, these aspirations appear to 437 00:27:58,000 --> 00:28:01,120 Speaker 1: have been short lived as stable coin issuers like Circle 438 00:28:01,200 --> 00:28:04,200 Speaker 1: and Tether signaled support for the proof of state chain. 439 00:28:05,160 --> 00:28:09,199 Speaker 1: Given how dependent defies on stable coins, this maybe the 440 00:28:09,240 --> 00:28:14,400 Speaker 1: death knell for any contentious forks. Okay, so that's where 441 00:28:14,400 --> 00:28:17,040 Speaker 1: we're currently at with the merge and its timeline, and 442 00:28:17,280 --> 00:28:20,359 Speaker 1: there's a lot of excitement around all this, no doubt 443 00:28:20,400 --> 00:28:24,000 Speaker 1: about it. However, in the past few weeks some of 444 00:28:24,040 --> 00:28:28,919 Speaker 1: that excitement has turned to concern, concern surrounding the concept 445 00:28:29,040 --> 00:28:34,640 Speaker 1: of censorship. Allow me to explain. On the eighth of August, 446 00:28:34,920 --> 00:28:38,920 Speaker 1: the Office of Foreign Assets Control o FAC, a department 447 00:28:38,960 --> 00:28:42,160 Speaker 1: of the U. S. Treasury, took the unprecedented step of 448 00:28:42,320 --> 00:28:46,680 Speaker 1: sanctioning code and by that I mean they officially placed 449 00:28:46,760 --> 00:28:51,040 Speaker 1: the Tornado Cash smart contract on the specially Designated Nationals 450 00:28:51,080 --> 00:28:54,960 Speaker 1: and blocked persons or SDN list. I won't go into 451 00:28:55,000 --> 00:28:57,360 Speaker 1: it in too much detail here, as I've covered it 452 00:28:57,400 --> 00:28:59,720 Speaker 1: in much more depth in a previous video and that 453 00:29:00,120 --> 00:29:03,520 Speaker 1: be in the top right. But the reason why this 454 00:29:03,640 --> 00:29:07,480 Speaker 1: had such large implications for the Ethereum network, specifically around 455 00:29:07,520 --> 00:29:12,520 Speaker 1: the merge, is how various stakeholders in the Ethereum ecosystem responded. 456 00:29:13,080 --> 00:29:16,320 Speaker 1: You see, because the Tornado Cash smart contract was sanctioned, 457 00:29:16,560 --> 00:29:19,320 Speaker 1: this meant that all of those users who had interacted 458 00:29:19,360 --> 00:29:24,200 Speaker 1: with it could potentially be violating sanctions. All those doubts 459 00:29:24,280 --> 00:29:27,840 Speaker 1: that allowed funds from the smart contract could be facilitating 460 00:29:27,960 --> 00:29:31,880 Speaker 1: sanctions of Asian Even those miners who mind a block 461 00:29:32,000 --> 00:29:34,960 Speaker 1: that had a Tornado Cash transaction in it could be 462 00:29:35,040 --> 00:29:38,600 Speaker 1: falling foul of the law. The result was a lot 463 00:29:38,640 --> 00:29:42,760 Speaker 1: of these services and companies blacklisting the addresses and restricting 464 00:29:42,800 --> 00:29:47,720 Speaker 1: support for them. Examples include UNI, swap, d y d X, 465 00:29:47,760 --> 00:29:52,840 Speaker 1: and r blocking front end access, Infura and Alchemy restricting 466 00:29:52,880 --> 00:29:57,680 Speaker 1: access to their RPC notes, Circle blacklisting all of the 467 00:29:57,680 --> 00:30:02,520 Speaker 1: addresses that were associated with made a Cash. However, none 468 00:30:02,520 --> 00:30:07,040 Speaker 1: of these threatened the immutability of the blockchain that's until 469 00:30:07,320 --> 00:30:10,640 Speaker 1: we learned that some miners such as ether Mine were 470 00:30:10,720 --> 00:30:15,680 Speaker 1: censoring transactions at the protocol level. They stopped including Tornado 471 00:30:15,760 --> 00:30:19,440 Speaker 1: Cash router transactions the moment that the sanctions were announced. 472 00:30:20,560 --> 00:30:24,400 Speaker 1: This is particularly concerning for the merge because when Ethereum 473 00:30:24,440 --> 00:30:29,160 Speaker 1: initially transitions, there will be a great deal of validator centralization. 474 00:30:30,400 --> 00:30:33,880 Speaker 1: You can see exactly who the largest validators are over 475 00:30:33,960 --> 00:30:39,920 Speaker 1: here coin Base, Binance, Kraken, and Lido Finance. Those validators 476 00:30:39,960 --> 00:30:42,480 Speaker 1: based in the United States will have to make a 477 00:30:42,480 --> 00:30:45,000 Speaker 1: decision as to whether or not they're going to censor 478 00:30:45,080 --> 00:30:49,560 Speaker 1: transactions related to the Tornado Cash smart contract. If enough 479 00:30:49,600 --> 00:30:52,440 Speaker 1: of them decide to do that, then you have censorship 480 00:30:52,560 --> 00:30:56,480 Speaker 1: at the protocol level. Coin Basis CEO has said that 481 00:30:56,560 --> 00:31:00,440 Speaker 1: if this hypothetical was a thing, then they would down 482 00:31:00,560 --> 00:31:04,440 Speaker 1: their staking operations instead of censoring. We'll have to take 483 00:31:04,440 --> 00:31:07,440 Speaker 1: his word for it on that now. Even in the 484 00:31:07,480 --> 00:31:10,400 Speaker 1: case of Lido, which is a DOW, a great many 485 00:31:10,440 --> 00:31:14,400 Speaker 1: of its backers are US based vcs. They may control 486 00:31:14,560 --> 00:31:17,040 Speaker 1: a lot of the supply and hence vote within the 487 00:31:17,120 --> 00:31:22,640 Speaker 1: DOW to censor these specific transactions. More signs of potential 488 00:31:22,760 --> 00:31:26,360 Speaker 1: censorship on the proof of stake chain came when flash Pots, 489 00:31:26,480 --> 00:31:30,120 Speaker 1: the developer behind MTV boost, confirmed that they would be 490 00:31:30,160 --> 00:31:33,800 Speaker 1: complying with the o fact sanctions. To give some context, 491 00:31:34,240 --> 00:31:36,800 Speaker 1: MTV boost is an optional piece of software for the 492 00:31:36,800 --> 00:31:40,240 Speaker 1: proof of stake chain which will separate builders who create 493 00:31:40,320 --> 00:31:44,400 Speaker 1: the blocks from the proposers who propagate those blocks. It's 494 00:31:44,440 --> 00:31:48,560 Speaker 1: basically software that will help validators extract mt V the 495 00:31:48,680 --> 00:31:53,000 Speaker 1: extra income that validators can earn by strategically selecting the 496 00:31:53,040 --> 00:31:56,520 Speaker 1: transactions that they add to a given block. Now, if 497 00:31:56,520 --> 00:31:59,760 Speaker 1: this is confusing, I'll leave some resources about MTV in 498 00:31:59,800 --> 00:32:04,600 Speaker 1: the description. Anyways, what the flashbot devs were considering would 499 00:32:04,640 --> 00:32:07,600 Speaker 1: be to censor the default relay that it used to 500 00:32:07,680 --> 00:32:11,840 Speaker 1: pass pre built blocks from builders to the proposers. However, 501 00:32:12,200 --> 00:32:16,680 Speaker 1: the flashbots would be coded to exclude those transactions involving 502 00:32:16,720 --> 00:32:21,280 Speaker 1: addresses that are linked to Tornado cash. This caused quite 503 00:32:21,320 --> 00:32:24,200 Speaker 1: a backlash in the community, so much so that the 504 00:32:24,240 --> 00:32:26,640 Speaker 1: devs decided that they should aim to get the code 505 00:32:26,680 --> 00:32:29,960 Speaker 1: into the developers hands earlier than planned so they can 506 00:32:30,040 --> 00:32:34,120 Speaker 1: choose their own relayers. But the fact that developers of 507 00:32:34,160 --> 00:32:37,600 Speaker 1: tools used in proof of state ethereum are already considering 508 00:32:37,640 --> 00:32:41,440 Speaker 1: censorship has ruffled a few feathers. It was also a 509 00:32:41,520 --> 00:32:44,640 Speaker 1: hot topic at the Ethereum Core Developers meeting on the 510 00:32:44,680 --> 00:32:47,960 Speaker 1: eighteenth of August. Many of the developers on the call 511 00:32:48,040 --> 00:32:51,320 Speaker 1: were adamant that the censorship resistant qualities of the network 512 00:32:51,360 --> 00:32:56,040 Speaker 1: should be upheld at all costs. For example, Marius van 513 00:32:56,080 --> 00:32:59,360 Speaker 1: der Veeden said quote, if we allow censorship of user 514 00:32:59,400 --> 00:33:03,760 Speaker 1: transaction on the network, then we basically failed. This is 515 00:33:04,120 --> 00:33:06,959 Speaker 1: the hill that I'm willing to die on. If we 516 00:33:07,000 --> 00:33:10,160 Speaker 1: start allowing users to be censored on Ethereum, then this 517 00:33:10,240 --> 00:33:12,880 Speaker 1: whole thing doesn't make sense and I will be leaving 518 00:33:12,920 --> 00:33:17,400 Speaker 1: the ecosystem. Despite this stance, though it wasn't immediately clear 519 00:33:17,600 --> 00:33:20,240 Speaker 1: what should be done before the merge in order to 520 00:33:20,360 --> 00:33:24,800 Speaker 1: prevent the censorship risks I just mentioned, some were calling 521 00:33:24,880 --> 00:33:28,640 Speaker 1: for slashing of those validations that would censor transactions, called 522 00:33:28,880 --> 00:33:32,000 Speaker 1: social slashing. Now. The best argument I've seen for this 523 00:33:32,120 --> 00:33:34,760 Speaker 1: is by researcher and blogger Eric Wall. He makes the 524 00:33:34,760 --> 00:33:38,800 Speaker 1: case for social slashing and an Ethereum user activated soft fork. 525 00:33:39,280 --> 00:33:41,480 Speaker 1: It's a really compelling piece, and I'll leave a link 526 00:33:41,520 --> 00:33:45,360 Speaker 1: to it in the description. Eric even polled many in 527 00:33:45,440 --> 00:33:49,040 Speaker 1: the ethereum community as to whether they would support social slashing, 528 00:33:49,040 --> 00:33:52,760 Speaker 1: and it seems as if most did support the idea. 529 00:33:52,920 --> 00:33:55,640 Speaker 1: The v dog himself also replied saying that he too 530 00:33:55,720 --> 00:34:00,280 Speaker 1: voted for it. So it's clear social slashing right. Well, 531 00:34:00,440 --> 00:34:05,040 Speaker 1: it's definitely not an ideal solution. You're effectively telling validators 532 00:34:05,160 --> 00:34:09,280 Speaker 1: that they should risk violating sanctions or have their stakes slashed. 533 00:34:09,719 --> 00:34:12,399 Speaker 1: If these were the likes of exchanges, for example, then 534 00:34:12,520 --> 00:34:16,640 Speaker 1: it's the innocent users who'll see their deposits lost. Moreover, 535 00:34:17,040 --> 00:34:19,680 Speaker 1: there's a risk of a chain split if enough of 536 00:34:19,760 --> 00:34:24,160 Speaker 1: the larger validators decide to go down the censorship route. Essentially, 537 00:34:24,440 --> 00:34:28,040 Speaker 1: by opting for the social slashing option, the developers are 538 00:34:28,080 --> 00:34:32,120 Speaker 1: asking larger validators to choose between continuing on the current 539 00:34:32,200 --> 00:34:35,839 Speaker 1: chain and breaching sanctions, or complying with o fac and 540 00:34:35,960 --> 00:34:40,640 Speaker 1: coordinating with other validators to split the chain. Now, this 541 00:34:40,760 --> 00:34:43,719 Speaker 1: is explained in more detail in this Twitter thread by 542 00:34:43,880 --> 00:34:46,560 Speaker 1: Justin Bonds, which I'll leave in the description for you 543 00:34:46,640 --> 00:34:50,760 Speaker 1: as well. It's definitely a messy situation and there could 544 00:34:50,800 --> 00:34:55,160 Speaker 1: be collateral damage. The main question then becomes if the 545 00:34:55,160 --> 00:34:58,080 Speaker 1: collateral damage is worth it. It will be interesting to 546 00:34:58,160 --> 00:35:00,920 Speaker 1: see how all this develops over the coming weeks as 547 00:35:00,960 --> 00:35:04,400 Speaker 1: we roll closer to the merge. It's also worth noting 548 00:35:04,480 --> 00:35:07,719 Speaker 1: that there is some political pushback against these sanctions to 549 00:35:08,440 --> 00:35:11,759 Speaker 1: lobby groups such as coin Center seem to be staging defenses, 550 00:35:11,800 --> 00:35:15,719 Speaker 1: and politicians such as Representative Tom Emma have also been 551 00:35:15,760 --> 00:35:19,280 Speaker 1: pushing back. This is a story that's going to run 552 00:35:19,360 --> 00:35:23,239 Speaker 1: and run, and its outcome will have enormous consequences for 553 00:35:23,280 --> 00:35:27,720 Speaker 1: all of cryptocurrency. Moving on, though, there is something else 554 00:35:27,800 --> 00:35:30,360 Speaker 1: to really look forward to about the merge, and that's 555 00:35:30,440 --> 00:35:34,600 Speaker 1: the change in Eath's tokenomics and their impact on the price. 556 00:35:34,920 --> 00:35:38,879 Speaker 1: So let's look into that, shall we. I'm sure you've 557 00:35:38,920 --> 00:35:42,200 Speaker 1: all no doubt heard about the triple harving. It's the 558 00:35:42,320 --> 00:35:45,760 Speaker 1: massive inflation reduction that will come to the Ethereum network 559 00:35:45,840 --> 00:35:48,759 Speaker 1: because of the move to proof of steak. With the 560 00:35:48,800 --> 00:35:53,080 Speaker 1: Bitcoin harving, we know that block rewards have every few years. 561 00:35:53,239 --> 00:35:56,960 Speaker 1: As we move closer to a protocol defined limit, this 562 00:35:57,239 --> 00:36:02,359 Speaker 1: cuts the inflation rate by about However, with Ethereum, there 563 00:36:02,400 --> 00:36:04,360 Speaker 1: will be a number of factors that are going to 564 00:36:04,400 --> 00:36:08,919 Speaker 1: be coming together that will seriously reduce ETH inflation. For one, 565 00:36:09,239 --> 00:36:11,720 Speaker 1: the move to proof of steak is expected to drop 566 00:36:11,840 --> 00:36:15,120 Speaker 1: ETH issuance from about four point one three percent to 567 00:36:15,400 --> 00:36:19,600 Speaker 1: zero point four nine percent post merge. This is about 568 00:36:19,680 --> 00:36:22,960 Speaker 1: a ninety percent reduction in the emission rate, which equates 569 00:36:22,960 --> 00:36:26,920 Speaker 1: to roughly three harvings. So that's where the saying comes from. 570 00:36:27,719 --> 00:36:29,880 Speaker 1: And if you subscribe to the school of thought that 571 00:36:30,000 --> 00:36:33,680 Speaker 1: bitcoin harvings are price positive, a triple eth harving should 572 00:36:33,680 --> 00:36:38,600 Speaker 1: make you like three times as bullish. Hey maths Now, 573 00:36:38,640 --> 00:36:41,640 Speaker 1: in all seriousness, thoth, a reduced supply with a constant 574 00:36:41,680 --> 00:36:45,000 Speaker 1: demand should be price positive. And then of course you 575 00:36:45,040 --> 00:36:47,720 Speaker 1: also have to take into account the impact that fee 576 00:36:47,719 --> 00:36:50,880 Speaker 1: burns will have on that supply. As a result of 577 00:36:50,960 --> 00:36:54,000 Speaker 1: the London upgrade from last year, a small bit of 578 00:36:54,080 --> 00:36:57,279 Speaker 1: eth base fees are burned, which also impacts on the 579 00:36:57,320 --> 00:37:01,600 Speaker 1: available ETH supply. These burns are of course variable and 580 00:37:01,680 --> 00:37:05,480 Speaker 1: will differ based on network use. Current burn rates are 581 00:37:05,520 --> 00:37:09,560 Speaker 1: about four k either year, which if consistent, would drop 582 00:37:09,600 --> 00:37:13,000 Speaker 1: the supply growth to a smidge under zero point two 583 00:37:13,000 --> 00:37:17,080 Speaker 1: per year. But the real kicker is that if network 584 00:37:17,160 --> 00:37:21,319 Speaker 1: demand on ethereum surges post merge, then this could lead 585 00:37:21,360 --> 00:37:24,040 Speaker 1: to a great deal more fee burns and ETH could 586 00:37:24,120 --> 00:37:27,880 Speaker 1: even become deflation ry. This is something you can actually 587 00:37:27,880 --> 00:37:33,200 Speaker 1: simulate for yourself over on ultrasound dot money. Negative issuance 588 00:37:33,360 --> 00:37:37,600 Speaker 1: means you will have a deflation recurrency, currency that's gradually 589 00:37:37,680 --> 00:37:42,800 Speaker 1: decreasing in supply and thus becoming much more valuable. Naturally, 590 00:37:43,000 --> 00:37:47,160 Speaker 1: this should be price positive. However, this may not have 591 00:37:47,360 --> 00:37:50,200 Speaker 1: an immediate impact post merge, as it will take some 592 00:37:50,320 --> 00:37:54,120 Speaker 1: time for the supply and demand dynamics to play out. Moreover, 593 00:37:54,480 --> 00:37:57,080 Speaker 1: there are a number of other factors that will impact 594 00:37:57,120 --> 00:38:00,480 Speaker 1: the price around the merge, some to the upside, some 595 00:38:00,960 --> 00:38:04,240 Speaker 1: to the downside. For this analysis, I'm going to borrow 596 00:38:04,280 --> 00:38:07,160 Speaker 1: from a blog post by the one and only Arthur Hayes. 597 00:38:07,840 --> 00:38:11,760 Speaker 1: It's called e flexive and I've linked to it below. Essentially, 598 00:38:11,800 --> 00:38:15,040 Speaker 1: in this piece, he tries to apply George Soros's quote 599 00:38:15,360 --> 00:38:18,840 Speaker 1: theory of reflexivity to the eth markets, especially as it 600 00:38:18,880 --> 00:38:22,440 Speaker 1: relates to the merge. This theory was something that Sorous 601 00:38:22,480 --> 00:38:24,960 Speaker 1: actually detailed in a book that he wrote called The 602 00:38:25,080 --> 00:38:28,799 Speaker 1: Alchemy of Finance. What the theory posits is that there 603 00:38:28,920 --> 00:38:32,840 Speaker 1: is a feedback loop between market participants and market prices. 604 00:38:33,320 --> 00:38:37,160 Speaker 1: Quite simply, the actions of market participants around a particular 605 00:38:37,200 --> 00:38:42,800 Speaker 1: event or situation could actually influence how the event plays out. Anyways, 606 00:38:42,840 --> 00:38:46,560 Speaker 1: In Hayes's reflexivity model, he has a number of inputs 607 00:38:46,600 --> 00:38:49,600 Speaker 1: and outputs. On the input side, we have the event, 608 00:38:49,719 --> 00:38:52,880 Speaker 1: which is of course the merge. Then you have the 609 00:38:53,000 --> 00:38:56,360 Speaker 1: structural flows that will impact on the supply. As I 610 00:38:56,400 --> 00:38:59,239 Speaker 1: mentioned earlier, the amount of supply is impacted by the 611 00:38:59,239 --> 00:39:03,040 Speaker 1: amount of burn, which is driven by usage. And when 612 00:39:03,040 --> 00:39:05,880 Speaker 1: it comes to that, there are two factors that investors 613 00:39:05,920 --> 00:39:09,120 Speaker 1: will need to consider when choosing which layer one network 614 00:39:09,160 --> 00:39:13,400 Speaker 1: to use. Firstly, you have mind share, which is basically 615 00:39:13,520 --> 00:39:16,200 Speaker 1: how well the network is known in the online sphere. 616 00:39:17,040 --> 00:39:20,240 Speaker 1: It's no secret that the interest in Ethereum, for example, 617 00:39:20,480 --> 00:39:24,200 Speaker 1: tracks the price. The higher eth goes, the more people 618 00:39:24,239 --> 00:39:26,640 Speaker 1: search for it, and the more mind share there is, 619 00:39:27,280 --> 00:39:30,560 Speaker 1: the more people buy, The higher the price, the more mindshare, 620 00:39:30,640 --> 00:39:34,400 Speaker 1: and so on and so on. Then secondly, you have 621 00:39:34,600 --> 00:39:38,840 Speaker 1: applications that's driven by how many developers are building on 622 00:39:38,920 --> 00:39:42,080 Speaker 1: the network. The number of developers is related to the 623 00:39:42,160 --> 00:39:45,160 Speaker 1: number of users on the network, and given that the 624 00:39:45,239 --> 00:39:48,280 Speaker 1: number of users is related to the price, that means 625 00:39:48,320 --> 00:39:51,359 Speaker 1: that the number of devs and depths must also be 626 00:39:51,480 --> 00:39:56,120 Speaker 1: related to price. This means that users and developers share 627 00:39:56,160 --> 00:40:01,120 Speaker 1: a reflexive relationship with now When it comes to the 628 00:40:01,160 --> 00:40:05,120 Speaker 1: outputs of this model, we have the amount of being burned. 629 00:40:05,680 --> 00:40:09,080 Speaker 1: As we've established, this is related to network demand, which 630 00:40:09,120 --> 00:40:12,440 Speaker 1: is driven by debt usage and number of users, which 631 00:40:12,560 --> 00:40:16,880 Speaker 1: is itself driven by price naturally by the transitive property. 632 00:40:16,960 --> 00:40:20,120 Speaker 1: That means that the level of deflation the burn has 633 00:40:20,239 --> 00:40:23,920 Speaker 1: a reflexive relationship with the price of E. In the 634 00:40:23,960 --> 00:40:29,400 Speaker 1: most basic of terms, a higher price translates into more deflation. Now, 635 00:40:29,440 --> 00:40:33,080 Speaker 1: there are two outcomes around the merge. It happens or 636 00:40:33,120 --> 00:40:35,839 Speaker 1: it doesn't. In the case of the former, there will 637 00:40:35,880 --> 00:40:39,840 Speaker 1: be a positive reflexive relationship between the price and deflation. 638 00:40:40,600 --> 00:40:43,720 Speaker 1: Will be bought today knowing that higher prices will translate 639 00:40:43,800 --> 00:40:48,040 Speaker 1: into higher burns using the logic we just explained. However, 640 00:40:48,400 --> 00:40:51,640 Speaker 1: if the merge doesn't happen, we will have a negative 641 00:40:51,719 --> 00:40:56,200 Speaker 1: reflective relationship. People will know that the expected deflation is 642 00:40:56,239 --> 00:41:00,000 Speaker 1: not coming and hence won't want to hold E. Now, 643 00:41:00,000 --> 00:41:02,200 Speaker 1: Hayes does, of course mention that there will be a 644 00:41:02,320 --> 00:41:05,960 Speaker 1: flaw here. That's because merge or not ethereum is still 645 00:41:05,960 --> 00:41:08,960 Speaker 1: the dominant layer one and has the vast majority of 646 00:41:09,000 --> 00:41:13,000 Speaker 1: debts built on it. Hayes thinks that won't go below 647 00:41:13,080 --> 00:41:15,720 Speaker 1: eight hundred dollars to one thousand dollars in this case 648 00:41:15,760 --> 00:41:20,640 Speaker 1: a reasonable assumption. So that's the theory of reflexivity. The 649 00:41:20,760 --> 00:41:23,560 Speaker 1: rest of Hayes's post goes on to look at the 650 00:41:23,600 --> 00:41:27,239 Speaker 1: market's view of a successful eth merge. He takes a 651 00:41:27,239 --> 00:41:31,200 Speaker 1: look at price futures, term structure, and futures open interest 652 00:41:31,440 --> 00:41:34,360 Speaker 1: to give a rough idea of how traders are positioned 653 00:41:34,440 --> 00:41:37,400 Speaker 1: and hedged. He then also looks at a number of 654 00:41:37,440 --> 00:41:40,040 Speaker 1: trading decisions that one can take in order to both 655 00:41:40,080 --> 00:41:43,279 Speaker 1: position for a successful merge and to hedge against an 656 00:41:43,320 --> 00:41:46,560 Speaker 1: unsuccessful one. For the sake of time, I won't go 657 00:41:46,600 --> 00:41:48,560 Speaker 1: into any of these here, but I do encourage you 658 00:41:48,640 --> 00:41:51,080 Speaker 1: to read the post at your leisure. It's well worth 659 00:41:51,120 --> 00:41:55,320 Speaker 1: your time. Now. We of course can't discount the potential 660 00:41:55,480 --> 00:41:58,480 Speaker 1: for a by the rumor kind of event around the merge. 661 00:41:58,800 --> 00:42:02,480 Speaker 1: That is, that prices could fall immediately post merge as 662 00:42:02,520 --> 00:42:06,920 Speaker 1: people sell the news. However, because of the unique dynamics 663 00:42:06,960 --> 00:42:10,719 Speaker 1: around the harving, this cannot be guaranteed, something I tend 664 00:42:10,760 --> 00:42:14,680 Speaker 1: to agree with. Hayes then concludes by saying that he 665 00:42:14,880 --> 00:42:18,560 Speaker 1: won't be reducing his position going into the merge or 666 00:42:18,600 --> 00:42:21,440 Speaker 1: after it In fact, he may even add to it 667 00:42:21,520 --> 00:42:24,920 Speaker 1: if the market sells off post merge, because quote, I 668 00:42:24,960 --> 00:42:28,520 Speaker 1: believe the best is not and cannot be priced into 669 00:42:28,600 --> 00:42:38,680 Speaker 1: the market today. Wise words from a trading sense. Okay, 670 00:42:39,040 --> 00:42:42,520 Speaker 1: time for some of my own thoughts on the eth merch. Firstly, 671 00:42:42,880 --> 00:42:45,799 Speaker 1: in case the merch didn't make it obvious, this is 672 00:42:45,920 --> 00:42:50,960 Speaker 1: all my opinion as a non financial advisor, so I 673 00:42:51,040 --> 00:42:54,000 Speaker 1: do encourage you to d y O R in conjunction 674 00:42:54,120 --> 00:42:58,640 Speaker 1: with your financial advisor. Having said that, I am cautiously 675 00:42:58,719 --> 00:43:02,320 Speaker 1: optimistic that the urge is going to go ahead as planned. 676 00:43:02,960 --> 00:43:06,319 Speaker 1: The deaths have been working tirelessly, and numerous test net 677 00:43:06,360 --> 00:43:11,240 Speaker 1: mergers have all gone off without any major issues. Moreover, 678 00:43:11,400 --> 00:43:14,680 Speaker 1: the threat posed by proof of work forks appears to 679 00:43:14,880 --> 00:43:19,680 Speaker 1: have been muted by the overwhelming institutional support for the 680 00:43:19,719 --> 00:43:24,040 Speaker 1: proof of stake chain. Yet that institutional support is a 681 00:43:24,080 --> 00:43:27,160 Speaker 1: double edged sword, and that's because of the unfortunate situation 682 00:43:27,200 --> 00:43:30,280 Speaker 1: we found ourselves in due to the Tornado cash sanctions. 683 00:43:30,760 --> 00:43:34,200 Speaker 1: It's still not entirely clear as to how the community 684 00:43:34,440 --> 00:43:37,400 Speaker 1: is going to deal with the risk of protocol level censorship, 685 00:43:38,280 --> 00:43:41,600 Speaker 1: but one thing is for certain. No validator is going 686 00:43:41,640 --> 00:43:44,200 Speaker 1: to risk thirty years in prison. No matter how strong 687 00:43:44,280 --> 00:43:48,520 Speaker 1: the need for a permissionless ledger, could the Ethereum developers 688 00:43:48,560 --> 00:43:52,239 Speaker 1: implement social slashing or is the centering of Tornado cash 689 00:43:52,280 --> 00:43:55,440 Speaker 1: transactions a choice that should be left up to the validators. 690 00:43:56,360 --> 00:43:58,400 Speaker 1: Is it something that will have to lay upon the 691 00:43:58,440 --> 00:44:02,200 Speaker 1: altar as a sacrifice for that holy institutional adoption. I 692 00:44:02,200 --> 00:44:04,840 Speaker 1: don't know, but it's something I'll be keeping a super 693 00:44:04,840 --> 00:44:07,560 Speaker 1: close eye on as we approach the merge. And of 694 00:44:07,600 --> 00:44:10,040 Speaker 1: course another thing that I'll be keeping an eye on 695 00:44:10,280 --> 00:44:13,560 Speaker 1: is the price. That triple harving is no joke, and 696 00:44:13,840 --> 00:44:17,160 Speaker 1: if the price is positively reflexive to the burn, then 697 00:44:17,239 --> 00:44:20,120 Speaker 1: we could see some serious upside potential as we roll 698 00:44:20,200 --> 00:44:24,400 Speaker 1: closer to the merge date. Higher prices drive more users, 699 00:44:24,520 --> 00:44:28,320 Speaker 1: which drives more depths, which drives more depths, which drives 700 00:44:28,360 --> 00:44:32,600 Speaker 1: more burn, which drives a higher price. It's a heavenly 701 00:44:32,640 --> 00:44:36,719 Speaker 1: cycle that maybe even George Soros himself is keeping an 702 00:44:36,760 --> 00:44:41,240 Speaker 1: eye on. With all that said, though there are still risks. 703 00:44:41,600 --> 00:44:45,320 Speaker 1: There is a non zero chance of a severe, even 704 00:44:45,520 --> 00:44:49,680 Speaker 1: cataclysmic event around the merge. No matter how many test 705 00:44:49,719 --> 00:44:52,719 Speaker 1: net merges one does, it can never really compare to 706 00:44:52,800 --> 00:44:56,600 Speaker 1: a live push hundreds of billions of dollars are on 707 00:44:56,640 --> 00:44:59,920 Speaker 1: the line, and there is only one shot that can 708 00:45:00,000 --> 00:45:04,000 Speaker 1: be taken. As such, if you are investing based on 709 00:45:04,040 --> 00:45:07,000 Speaker 1: a bull case of the merge, as I am, then 710 00:45:07,239 --> 00:45:11,600 Speaker 1: you have to be aware of these risks, never invest 711 00:45:11,880 --> 00:45:15,359 Speaker 1: more than you can afford to lose, and manage your 712 00:45:15,440 --> 00:45:20,400 Speaker 1: expectations accordingly. And that's it for my Ethereum update today. 713 00:45:20,560 --> 00:45:23,200 Speaker 1: It really is an exciting time and I would love 714 00:45:23,320 --> 00:45:25,279 Speaker 1: to get some of your feedback on it all. So 715 00:45:25,480 --> 00:45:28,160 Speaker 1: are you bullish on the merge or are you concerned 716 00:45:28,200 --> 00:45:31,879 Speaker 1: about transaction censorship? What are your price predictions? I'd love 717 00:45:31,920 --> 00:45:35,480 Speaker 1: to know in the comments below. Thank you so much 718 00:45:35,560 --> 00:45:38,400 Speaker 1: for listening to the coin Bureau podcast. If you'd like 719 00:45:38,440 --> 00:45:41,760 Speaker 1: to learn more about cryptocurrency, you can visit our YouTube 720 00:45:41,840 --> 00:45:45,200 Speaker 1: channel at YouTube dot com forward slash coin Bureau. You 721 00:45:45,239 --> 00:45:47,760 Speaker 1: can also go to coin bureau dot com for loads 722 00:45:47,760 --> 00:45:50,480 Speaker 1: more information about all things crypto. You can follow me 723 00:45:50,520 --> 00:45:53,560 Speaker 1: on Twitter at at coin bureau or one word, and 724 00:45:53,680 --> 00:46:00,520 Speaker 1: I'm also active on TikTok and Instagram too. To hold 725 00:46:00,640 --> 00:46:01,799 Speaker 1: kone hold con