Many people feared the worst when KuCoin was hacked.
There was one reason why people were extremely worried
that this hackathon would lead to a deep depression for their bags.
Find out what their greatest fear was
and why it is not going to come true.
Then, instead of a nightmarish scenario,
we look at why Ethereum could end up
becoming a dream for investors.
Let’s get it.
Welcome to BitBoy Crypto!
My name is Ben.
And everyday, I tell you what is going on in crypto.
Today, we are gonna be jumping right into the top news
that everyone has been asking about---
the hack of the major Bitcoin exchange
KuCoin.
Then we will be examining how Vitalik Buterin,
the founder of Ethereum,
has declared war on Google.
Could Ethereum be a new competitor in the app development game?
We’re gonna take a look at how that could propel Ethereum to heights
never even imagined.
Did somebody say six figures?
But, first,
KuCoin.
On September 26, KuCoin,
a fairly large exchange,
reported a major security breach.
This was said to have affected the exchange’s Bitcoin,
Ether,
and ERC20 hot wallets.
In an official statement,
KuCoin Global CEO Johnny Lyu
confirmed a major hacking attack on September 26.
The breach affected the firm’s Bitcoin,
Ethereum,
and ERC20 hot wallets
after private keys were leaked.
Reports estimate the breach to have affected $150 Million in user funds.
Later reports are now showing figures close to $200 Million.
In the time immediately following the security breach,
the price of Bitcoin remain fairly stable.
Meanwhile, Ethereum,
most other top ERC20 tokens,
and the market in general
were more or less nonreactive to the news.
This is a noticeable departure
from other times throughout Bitcoin’s history
when the security breach of this size
has led to market-wide sell-offs
due to the fear of hackers potentially selling the proceeds.
In fact, in this instance,
many Ethereum traders have suggested
this might end up helping the price.
From what analysts have gathered so far,
the unknown hacker behind the KuCoin breach
is selling the stolen ERC20 tokens on
Uniswap.
But just because they are swapping all those stolen tokens
or Ether
on a decentralized exchange,
doesn't mean they're free to spend the money.
All the transactions on Ethereum’s network
are traceable,
using blockchain explorers,
meaning if the tokens are converted to Ethereum,
stolen amounts would still leave traces.
This means exchanges can
and probably will
suspend any exchange address
that is associated with the tainted funds.
How novel.
Just as anytime there are hacks, frozen funds,
hard forks or rollbacks,
the maximalists come out to remind us,
If something is truly decentralized,
you can't freeze it.
Amazing though, huh?
They're so quick to point out the issues with other projects.
To quote a God maximalist, Jesus,
take the log out of your own eye before you worry about the speck of dust in others.
And hey, I'm a monotheist myself,
but I'm no mono koinós.
That's blasphemy.
The point is, Bitcoin cannot scale.
If it had as many transactions running through its network as Ethereum did,
it would be full on broke.
Think about this,
the market cap of Ethereum is 20% of that of Bitcoin.
That’s about $40 Billion, while Bitcoin is at a crazy $200 Billion.
However, when it comes to transactions,
only one reign supreme.
Ethereum is king.
Now, a lot of this is thanks to DeFi,
but we've all known, if you've traded on Uniswap,
the scalability and transaction clock problems with Ethereum,
which we'll get to shortly,
but looking at current transactions and network congestion,
Ethereum is at 1/5 the network size
and is pushing 4 times more transactions than Bitcoin.
Currently, Ethereum is running through a million transactions per day,
while Bitcoin is running through 250,000 transactions.
That's pretty incredible when you think about it.
But here's the fact,
if Bitcoin were running a million transactions per day,
a tiny miniscule fraction of credit card transactions per day,
it would simply not work.
Transactions would take hours
or maybe even days
to actually process and go through.
So what Bitcoin gains in decentralization,
it loses in functionality.
So, yeah,
there's some altcoins out there that could fork, freeze funds,
yada, yada, yada.
They aren't perfect.
This is where you have to remember that decentralization is not a zero-sum game.
It’s a continuum.
Many people would make the argument that the fact China owns a whopping 65% of the hash rate of Bitcoin leads it to a level of centralization.
So think about this,
Bitcoin has the largest network.
That is what gives it the security and safety.
It’s nearly impossible at this point
for someone to 51% double-spend attack against Bitcoin.
The network is simply too big to get attacked in this way.
But 65% of that network size
is in one country.
Oh, yeah.
And we should probably point out,
that country is our biggest rival right now.
Its plan is to overtake the United States economically.
Now, there's a crazy stat out there that shows
almost every time one superpower takes over another
as the dominant world power,
that it almost always leads to military conflict.
If someone could find that stat,
that would be great.
If you could find it, drop it down below.
I would love that. I've seen it,
but I can't find it right now.
My Google skills are bad.
So, that'd be a big help if someone could do that
because I know there's a real stat.
But the issues between us and China are widely known.
So, China having access to 65% of the hash rate
is very troubling,
and what's more,
just last week, according to the New York Times,
China gave a warning to private businesses, telling them that if they abide by the rules and the wishes of the Communist Party,
the Party will help them.
While many may see this as China extending a helping hand to its people in businesses,
the truth is,
this is a veiled threat to all businesses in China.
China and its ruling party own your business.
And yes,
this includes all of the Bitcoin mining farms in China.
So, for all intents and purposes,
China, in a roundabout way, owns Bitcoin.
It doesn’t sound so decentralized now, does it?
And we could of course go into all the problems revolving around the company basically in charge of Bitcoin's development,
Blockstream.
There are a lot of conflicts of interest around Bitcoin’s current development,
which is why some former maximalists
have left for other forks and projects.
But that sounds like a topic for a different video.
That one will certainly get those maxis a little riled up, if they're not already.
But back to Ethereum.
We all know it has scalability problems.
I literally paid $70 for an Ethereum transaction
a couple of weeks ago.
What people need to understand is that the actual value of the transaction
has virtually nothing to do with the transaction cost.
Whether I send 10 ETH,
1 ETH,
or even 100 ETH,
to someone,
that should not matter.
The only thing that matters with these transactions
is the amount of congestion of the network.
Listen, let me lay this out for you.
Last week, I went to Disney World
on vacation with the fam.
We had a great time
and we're practicing social “Disneying”
together as a family of “maskateers”.
But the point is,
the lines were huge,
way longer than you've ever seen at a theme park before.
So, why were they so long?
Well, the answer is social distancing.
Every group of riders in a line had to be six feet apart.
This also meant
there were not a lot of people in the lines.
They just looked long.
While the lines were super long,
there was no congestion in the lines,
and they moved super quick because of that.
You basically started walking when you got in the back of the line
and ended at the ride.
You got to think of Ethereum transactions in that same way.
When they're moving fast, things are going great.
However, when they start to get congested,
at peak trading times,
Ethereum becomes almost unusable.
Now, I'll tell you, I've lost a ton of money
by trying to make transactions during those peak times,
and they ended up not going through.
By the time I could get a transaction through,
it was too late.
The prices had dropped and I lost money.
Sad. I know.
You all feel real bad for me.
But Ethereum has to solve its scalability problem pronto.
If it doesn't,
then it’s destined to end up like grandpa BTC,
usable as a store of value but not as a transactional entity.
But recently, another Ethereum 2.0 testnet was opened called Spadina,
a 3-day practice testnet.
You have to understand,
Ethereum 2.0 is vitally important to Ethereum speed in being able to scale.
If the Ethereum 2.0 mainnet solves these issues,
the sky is the limit for how high Ethereum can go.
But could that limit be as high as Google?
Could Ethereum overtake Google?
Well, some people think so.
Vitalik Buterin recently sounded the alarm bells
due to a hot rumor in the tech space.
The rumor is that Google is going to require all Android apps on the Play Store
to use its internal billing system for in-app purchases,
also known as IAPs.
Here's where the problem is.
Google will be now taking a cut from every purchase
before it gets to the producer of the app.
This is the type of centralization
cryptocurrency was designed to fight.
Overwhelming corporate behemoths crapping on the little guy,
or in my case, as what you say in the comments,
a big guy.
Vitalik suggested it is time to rise up
and create competition for the Google and Apple App Stores.
But the interesting thing here is that Vitalik says “we” in his statement.
It read,
We need more competition in app stores
and ultimately mobile phone operating systems,
and we need it now.
So, who is this “we” he is talking about?
Is it the collective cryptocurrency community?
Or is this Ethereum trying to add another trick up its sleeve.
If Ethereum can solve its scalability problem with Eth 2.0,
it could have enough power to do for app stores
what it has done for DeFi.
Could we be looking at Ethereum one day becoming more powerful and bigger than Google?
If this happens,
Ethereum can see heights
no one currently can imagine.
Instead of a six-figure Bitcoin,
what we could be looking at is a six-figure Ethereum.
That'd be hard to grasp.
It's hard to even fathom the numbers.
But who would have thought the little altcoin that could
would currently be the emerging center of finance in the world?
Crazy when you think about it.
Be blessed.
BitBoy out.