Crypto Investing #65 – Investing In Ethereum Hard Fork (ETH) vs. Ethereum Classic (ETC)

This is the Charles Hoskinson I kept referring to in the video:

https://iohk.io/team/charles-hoskinson/

Tai Zen: What’s up guys. This is Tai Zen. I got the Skinny with me. Say hello Skinny

Skinny: Hello hello.

Tai Zen: In this video, I want to answer a few questions about the Ethereum investments, mainly about whether you should invest into Ethereum Hard Fork (ETH) or  Ethereum Classic (ETC) or you should avoid them altogether.

I’ll answer the last question first, which is whether you should avoid both of these. The answer is no. You should look into investing into Ethereum one or the other or both.

The first one is whether you should invest in Ethereum Hard Fork. Ethereum Hard Fork is the one that is led by Vitalik and his team – Ethereum Foundation.

Ethereum Classic is the project that is being led by Charles Hoskinson, the former co-founder of Ethereum Hard Fork.

Now, they are 2 competing Ethereum blockchains. One is led by a Vitalik and Ethereum foundation. As things are starting to formalize and coalesce, the other one is being led by the Charles Hoskinson, the CEO and the founder of a cryptocurrency-based company called IOHK which stands for Input Output Hong Kong.

On the last time I talked to him, his company has 4 or 5 dozen employees. They specialize in researching and building cryptocurrencies for businesses and for other people.

The Ethereum Classic price is $1.20 somewhere around there. The Ethereum Hard Fork price is around $12. As you can see, Ethereum Hard Fork has 10 times more value than the Ethereum Classic network.

Here are some of the reasons why you would invest in the Ethereum Hard Fork versus Ethereum Classic.

There are two biggest concerns I have about Ethereum Hard Fork:

The first thing is the legal issues from the DAO attack. I don’t believe that the legal issues have been resolved yet. I still believe that there will be some type of legal investigation record regarding the DAO attack.

Secondly, in addition to the legal investigations, another problem the Ethereum Hard Fork may have is it will transition into a proof of stake, which is a consensus algorithm. In order for them to switch over to the proof of stake from the current proof of work algorithm, they will have to do another hard fork. There’s no telling what’s going to happen to the Ethereum Hard Fork chain during that second hard fork.

That right there is 2 huge concerns for me that are keeping me from investing in Ethereum at the moment. What’s your thought Skinny?

Skinny: Here’s my question. When it hard forks to the new algorithm, what happens to exist Ether projects?

Tai Zen: The existing Ether projects will transition over.

Skinny: Just go on?

Tai Zen: Yeah. For sure, when they hard for this time, they are going to make sure that they include in the code to kill off the proof of work chain.

They were so arrogant and confident that everybody would jump over to the Ethereum Hard Fork that they never thought to put in the code to kill the original chain, which is Ethereum Classic.

They thought people would just automatically jump over to the hard fork version and ignore the old chain and let it die out. That’s what they thought and that was a huge mistake. That’s how Ethereum Classic was born.

Skinny: What’s the reason for changing to a new proof of stake algorithm?

Tai Zen: They’ve said from the very beginning that they were going to use the proof of work to get the project started.

In case you are new to this, the consensus algorithm is the mathematical algorithm that they use to agree upon that the transactions were correct before they get added to the blockchain.

They want to get away from that because that consumes too much electricity. Plus, it limits many nodes and miners available to process all the Ethereum transactions.

Therefore, they switch to a proof of stake algorithm, which is based on how many Ethereum coins or tokens that you have in your wallet.

For example, if I have 1,000 Ethereum Hard Fork tokens in my wallet, it will start mining. Each one will serve as kind of a lottery ticket. If you only have 100 in your wallet, the probability that I will find the next block is a lot higher than you.

Skinny: Yeah of course.

Tai Zen: It’s also designed to prevent around 51% attack that is still available in a proof of work blockchain.

Let’s say that if you own 51% of the network tokens, it would be counterproductive. It would be a conflict of interest for you to try to use all the tokens in your wallet to destroy the network. The reason is you would lose your value

Skinny: you lose your value and all your money

Tai Zen: Therefore, no one would do that. Whereas, in the proof of work algorithm, if someone has enough CPU power and graphics cards, they can overwhelm the system and do malicious things to the system because it does not hurt their own …………..

Skinny: financial state.

Tai Zen: Whereas, in a proof of stake system, they want you to have a stake in the system. The bigger stake you have in the network, the less likely that you will try to do something malicious and destroy the network.

I want you to be aware that the proof of stake consensus algorithm is not new. Everyone knows that from the very beginning. That’s not like a surprise and come out of nowhere.

Skinny: But it still requires another hard fork.

Tai Zen: It does. The thing was if it’s a technical fork, no one has a problem with that. I want to make that clear.

The problem that they had with the DAO hard fork was that it was a bailout. It was a bailout form the company called slock.it who built the DAO software.

Skinny: Right.

Tai Zen: They built the software and it did not work as planned. It was advertised by Ethereum to be unstoppable computer network that will process the code and run it the way it was written

It was a success because it did run the DAO code the way it was written. The downside to it is it was written poorly. It was a bad code. That’s how there was a recursive attack where the DAO was drained of its money by $30 million or something like that right.

Get back on track on whether or not you should invest in Ethereum Classic or Ethereum Hard Fork. Those are the concerns that I have is the legal issues and the possibility of another hard fork, which is going to create more confusion and chaos when it comes out.

If it’s successful, the price obviously will go up, but if it fails, the price will tank again.

Over the long term, I believe that it will continue to go up. However, there’s going to be an immediate term when the price drops and you have to take a lot of heat.

The other thing that you have to consider is Ethereum Classic has none of those issues.

Skinny: Right.

Tai Zen: You don’t have to deal with the legal issues because there was none. Plus, Ethereum Classic does not have any of the hard fork issues because they have chosen to remain on proof of work.

Skinny: Ok, but will there be any project?

Tai Zen: Charles Hoskinson is writing a new wallet in a different coding language. I’m not familiar with that. The other thing is with Etherum hark fork, there is no limit on how many Ether the system can produce. Nobody knows how much is going to be minted. It’s going to be an unlimited supply.

Whereas, with the Ethereum classic right now, they’re organizing it to come up with a finite number so that everyone knows that there’s going to be a finite number of Etherum classic coins.

Skinny: Right.

Tai Zen: It’s not going to continue just print new coins forever.

Another thing you have to be aware of when comparing these 2 is the chance of success of these tokens. You have to ask yourself whether Ethereum Hard Fork is going to get a 10X return or 1000% profit faster than Ethereum Classic. What are the probability or the odds that Ethereum Hard Fork or Ethereum Classic can get 10x return?

Right now everybody is building their software projects on top of Ethereum Hard Fork network. However, as soon as Charles Hoskinson and his team finish building out the wallet for the Ethereum Classic wallet, I believe that there will be teams that will start to build on top of the Ethereum Classic Network. That’s when the value will start going up.

Because the price of Ethereum Classic is so low, I believe that there’s a better chance of Ethereum Classic going up 10 times versus Ethereum Hard Fork in the short term.

That’s why I’m loading up on the Ethereum Classic right now and just kind of holding out. If Ethereum Hard Fork fell down to $5, I would have gotten into it. That’s the number I had to get into an Ethereum Classic, but it never got that far.

It’s ok if I miss it. There’s nothing wrong because I’m not going to hit every one of them. However, I can invest in the ICO that go on top of the Ethereum Hard Fork network such as Melonport.

Melonport is an asset management platform or a hedge fund platform. They just did an ICO today and it sold out in 5 minutes. I and Leon wanted to get into that, but we missed it.

There are so many ICOs coming out that. If we miss one, we’re not going to cry over spilled milk and just move on to the next one. You’ve got to have an abundance mindset. You can’t live in a world of scarcity, especially when you’re trying to make a life-changing profit.

Basically, those are the reasons I want to share with you about considering investing in Ethereum Hard Fork or Ethereum Classic. That will conclude this video.

Any last words, Skinny?

Skinny: No. I’m excited to see a new project from the classic chain. I mean that would be really needed.

Tai Zen: Ok. That will conclude these video guys on Ethereum Hard Fork versus Ethereum Classic.

If you want to follow us and get some more news and information as we do research on different cryptocurrencies, go to https://cryptocurrency.market/newsletter and sign up for a newsletter.

That’s where we send out all the new research and all the new vehicles that I have when we’ve come out with it.

If you have friends or family or relatives that are interested in investing cryptocurrency make sure you share our channel with them. Thanks for watching us. I’ll see you guys in the next video.

 

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