What is Ethereum? The Ultimate Guide to Understanding the Crypto Platform

In this comprehensive guide, we’ll delve into the heart of Ethereum, demystify Ethereum 2.0, explore the remarkable realm of smart contracts, and examine the intriguing relationship between Ethereum and Bitcoin. Let’s dive deeper into the intricacies of Ethereum!

Ethereum: A Platform Beyond Currency

While Bitcoin is revered as the pioneer of cryptocurrencies, Ethereum emerged as a groundbreaking platform that extends the potential of blockchain technology beyond just digital currency. Vitalik Buterin, a Russian-Canadian computer programmer first described Ethereum in a white paper in November 2013 when he argued that Bitcoin needed the ability to provide application development.

Co-founder of Ethereum, Vitalik Buterin. (Credit: Harvard International Review).

Ethereum provides a versatile foundation for creating decentralized applications (dApps) and smart contracts, enabling developers to build a wide range of innovative solutions across various industries.

Smart Contracts: The Backbone of Ethereum

One of the most revolutionary aspects of Ethereum lies in its support for smart contracts – self-executing agreements where the terms are directly written into code. These digital agreements automate transactions and eliminate the need for intermediaries, promising increased efficiency, reduced costs, and enhanced trust across numerous industries, from finance and real estate to supply chain management and healthcare.

Ethereum vs. Bitcoin

Although Ethereum and Bitcoin both hold prominent positions in the world of cryptocurrencies, they serve distinct purposes and have unique goals. Bitcoin, as the first decentralized digital currency, has primarily focused on financial innovation and challenging traditional fiat monetary systems. Ethereum, conversely, has taken a more versatile approach, offering a platform for creating dApps and smart contracts that expand the possibilities of blockchain technology beyond financial transactions.

    The Ethereum Ecosystem: A Synergy of Components

    Ethereum’s robust ecosystem comprises several interrelated components, including its native cryptocurrency Ether (ETH), smart contracts, and decentralized applications (dApps). Ether, the lifeblood of the network, fuels transactions and incentivizes network participants.

    Smart contracts enable developers to create self-executing agreements that run automatically when specific conditions are met. Decentralized applications (dApps) built on top of smart contracts facilitate seamless and secure interactions between users, enabling a diverse range of use cases and applications.

    Ethereum 2.0: A Major Upgrade for Scalability and Sustainability

    The Ethereum 2.0 upgrade addresses some of the current limitations of the Ethereum network, such as scalability, energy consumption, and security. By introducing Proof of Stake (PoS) as a consensus mechanism and implementing sharding, Ethereum 2.0 seeks to significantly enhance transaction throughput, reduce fees, and bolster the network’s security and sustainability.

    Proof of Stake vs. Proof of Work

    The transition from Proof of Work (PoW) to Proof of Stake (PoS) in Ethereum 2.0 marks a significant shift in the network’s consensus mechanism. PoW, used by Bitcoin and Ethereum 1.0, requires miners to solve complex mathematical problems to validate transactions and secure the network.

    This process consumes vast amounts of energy and computing power. PoS, on the other hand, relies on validators who stake their Ether to propose and validate new blocks. This approach is more energy-efficient and environmentally friendly, making Ethereum 2.0 a more sustainable and scalable solution.

    The Future of Ethereum

    As Ethereum continues to evolve and attract more developers and users, its potential to revolutionize various industries and disrupt traditional systems becomes increasingly evident. However, the network still faces challenges like high gas fees, network congestion, and complex user experiences. Upgrades and innovations, such as Ethereum 2.0 and Layer 2 scaling solutions, may hold the key to overcoming these hurdles.

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    From Pizza to Penthouses: Why is Bitcoin Worth So Much?

    How Much is Bitcoin Worth?

    If you’ve been keeping an eye on the digital asset scene, you know that Bitcoin has gone from being worth mere cents to over USD$30,000 and is now known as a powerhouse in the world of investments. So, how did we end up here? Sit back and let’s dive into the world of Bitcoin valuation.

    Bitcoin: Digital Gold or a Mere Mirage?

    First, let’s address the question: why is Bitcoin valuable at all? The answer lies in its unique combination of currency-like characteristics and people’s perception of its worth.

    Bitcoin’s non-counterfeitability and easy transferability make it similar to traditional currencies, however, its limited supply is a key difference. Bitcoin’s value hinges on the demand that savvy investors and crypto enthusiasts place on it, much like other assets, like artwork, that derive value from their perceived worth.

    A New Asset, Not Backed by Traditional Means

    Unlike fiat currencies that have states backing them, Bitcoin does not enjoy the same support. Rather, Bitcoin is supported by its immense decentralized network of computers. Bitcoin’s value is often compared to gold, as both have limited supply and are considered valuable by investors. Gold has been a popular choice for centuries, and some believe that Bitcoin might take up a similar mantle in the digital age.

      The Rollercoaster Ride of Bitcoin Valuation

      Bitcoin’s value is driven by factors like mainstream and institutional adoption, regulations around transactions, and the safety of ownership. It is sensitive to news, both positive and negative, as well as regulatory developments. 

      For example, Bitcoin prices have been positively impacted by announcements from companies like Tesla and Square adopting the cryptocurrency as a means of payment and investment for their balance sheets. Meanwhile, events like the Mt.Gox hack, FTX bankruptcy, and China’s ban on cryptocurrency mining have had negative impacts.

      Navigating the Future of Bitcoin

      Predicting the future value of Bitcoin is like trying to predict the weather in Canada – it’s a tricky business. The cryptocurrency’s value depends entirely on public perception and a myriad of factors that can change quickly. However, as interest in Bitcoin continues to grow among both mainstream and institutional investors, it’s clear that this digital asset is carving out a place for itself in the world of investments.

      As the cryptocurrency landscape evolves, it will be fascinating to see where the future takes Bitcoin and how its value continues to develop. Who knows, maybe Bitcoin will finally rise above USD$100,000 before 2024.

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      How Many Satoshis Are in a Bitcoin?

      Today, let’s unravel the mystery behind the smallest unit of Bitcoin, the Satoshi (or Sats for short), and explore how this tiny denomination has made a significant impact on the world of digital currencies.

      What is a Satoshi?

      In the ever-evolving landscape of cryptocurrencies, one term stands out as the most microscopic unit of measurement: the Satoshi. Named after the enigmatic and pseudonymous creator of Bitcoin, Satoshi Nakamoto, a single Satoshi represents a hundred millionth of a Bitcoin (0.00000001 BTC).

      Why So Many Decimals?

      One might wonder why Bitcoin has such a large number of decimal places. The answer lies in its ingenious design. Unlike traditional fiat currencies that rely on central banks to control inflation, Bitcoin has a finite supply capped at 21 million coins. This limited supply ensures scarcity, which in turn drives up the value of the cryptocurrency over time.

      With such a limited number of coins and an ever-increasing global demand, it was crucial to create a system that allowed for smaller transactions. Thus, the Satoshi was born. This minuscule unit enables users to conduct microtransactions, paving the way for Bitcoin’s widespread adoption as a viable currency for day-to-day transactions.

        Satoshis in Action

        Let’s consider a real-life example to better understand the importance of Satoshis. Imagine you’re purchasing a burger for USD$10. With the current price of Bitcoin hovering around USD$30,000, that burger would cost roughly 0.00033333 BTC. By converting this figure into Satoshis, we arrive at 33,333 Satoshis – a much more manageable and understandable figure for a day-to-day transaction.

        Satoshis and the Future of Bitcoin

        As Bitcoin continues to gain traction worldwide, the relevance of Satoshis in everyday transactions will only grow. The Lightning Network, a second-layer payment protocol built on top of the Bitcoin blockchain, further enables the use of Satoshis for instantaneous, low-fee transactions. This network significantly expands the possibilities for Bitcoin to function as a true currency, enabling even the smallest of transactions to be completed efficiently and affordably.

        Embrace the Satoshi

          The Satoshi, both captivating and intelligent, is a testament to the foresight and innovation of Satoshi Nakamoto. By creating a system that allows for microtransactions, Bitcoin’s reach extends far beyond traditional fiat currencies, ensuring a bright future for cryptocurrency adoption in Canada and around the globe.

          So the next time you visit a HoneyBadger ATM, remember that you’re not just buying or selling Bitcoin – you’re investing in the legacy of Satoshi Nakamoto and the boundless potential of digital currencies. After all, it’s the little things – or in this case, the Satoshis – that can make the biggest difference.

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          What’s the Bitcoin Fear and Greed Index?

          The Bitcoin Fear and Greed Index is a popular tool that measures the overall sentiment and emotions surrounding the cryptocurrency market. It was first introduced by in 2018 and, as its name suggests, the index aims to capture the fear and greed of Bitcoin investors and traders by analyzing a range of factors.

          The index is calculated on a scale of 0 to 100, with a score of 0 indicating “extreme fear” and a score of 100 indicating “extreme greed.” Its score is calculated based on various metrics such as price volatility, trading volume, social media sentiment, and Google Trends data.

          The higher the score, the more optimistic investors are about the market, and the lower the score, the more pessimistic they are.

          In total, the five factors comprising the index are weighted as the following:

          • Volatility (25%)
          • Market Momentum/Volume (25%)
          • Social Media (15%)
          • Dominance (10%)
          • Trends (10%)

          *Surveys (15%) are currently paused from the list of factors.

          The main indicator within the index is price volatility, which measures the magnitude of price swings in the market. If the market is experiencing high volatility, the fear index will increase, meaning that investors are feeling more anxious and fearful about the market. Conversely, if the market is stable, the index will be lower, suggesting that investors are feeling more optimistic and greedy.

          Another key indicator that the index uses is trading volume. When trading volume is high, it indicates that there is a lot of interest in the market, which can lead to higher prices. If trading volume is low, it means that there is less interest in the market, which can lead to lower prices.

          The index also factors in social media sentiment and Google Trends data to gauge the overall sentiment of the market. If social media sentiment is positive and Google searches for Bitcoin are high, it suggests that investors are feeling bullish about the market. Conversely, if sentiment is negative and searches for Bitcoin are low, it indicates that investors are feeling bearish.

          The highest rating was on June 29th, 2019, with a Greed Score of 95. During this time, the Facebook Libra project hype was luring in risk-takers while the price was climbing to incredible heights before sharply correcting.

          The lowest rating was on June 19th, 2022, when Bitcoin’s price dipped below USD$20,000 for the first time since December 2020.

          The Bitcoin Fear and Greed Index Twitter account has over 670,000 followers and posts daily with the current day’s rating.

          Latest Crypto Fear & Greed Index

          Ethereum has its own Fear and Greed Index and Twitter account.

          While the Bitcoin Fear and Greed Index is a useful tool for understanding the overall sentiment of the market, it is important to remember that it is just one indicator among many. Investors should always do their own research and analysis before making any investment decisions.

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          who is on the bitcoin rich list?

          Who’s on the Bitcoin Rich List?

          Bitcoin, the world’s first cryptocurrency, has been making headlines for years. Despite the volatility and controversy surrounding it, Bitcoin has attracted a lot of attention from investors and enthusiasts alike.

          As Bitcoin continues to gain more mainstream acceptance, it’s worth taking a look at who the biggest players in the Bitcoin world are. Or as some people call the biggest players, “whales.” Here is an overview of the richest people, countries, companies, and institutions in terms of the amount of bitcoin they own.

          The Bitcoin Rich List

          • Satoshi Nakamoto – The mysterious creator of Bitcoin, who has never been identified, is estimated to have around 1 million bitcoins. At today’s market value, that puts his net worth at over US$24.4 billion.
          • Barry Silbert – Founder and CEO of Digital Currency Group, Barry Silbert is a prominent figure in the world of cryptocurrency. It is unknown how much he personally owns, but his digital currency investing firm, Greyscale, holds plenty which we will get to later in this article.
          • The Winklevoss Twins – Famous for their legal battle with Mark Zuckerberg over the ownership of Facebook, the Winklevoss twins are also major players in the Bitcoin world, They are the founders of the cryptocurrency exchange, Gemini and reportedly own around 100,000 bitcoins, worth over $2.4 billion.

          • Michael Saylor – CEO of business intelligence firm MicroStrategy, Michael Saylor is known for his bullish outlook on Bitcoin. He has invested heavily in the cryptocurrency and reportedly owns 17,732 bitcoins, worth over $432 million.

          • Chamath Palihapitiya – A former Facebook executive and founder of Social Capital, Palihapitiya has been an outspoken advocate for Bitcoin. He reportedly owns around 26,000 bitcoins, worth over $630 million.

          Countries Bitcoin Rich List

          • El Salvador – In September 2021, El Salvador became the first country in the world to adopt Bitcoin as legal tender. The country has purchased over 2,381 bitcoins so far, worth over $58 million.

          • Bulgaria – The Bulgarian government seized over 200,000 bitcoins from a criminal organization in 2017. The bitcoins are currently worth over $4.8 billion.
          • The United States – The US government has seized a significant amount of bitcoins in various criminal investigations. It’s unclear exactly how much the government owns, but estimates range from tens of thousands to hundreds of thousands of bitcoins.

          Richest Companies in Bitcoin

          • Tesla – In February 2021, Tesla announced that it had purchased $1.5 billion worth of Bitcoin. The company also indicated that it may purchase additional bitcoins in the future.
          • MicroStrategy – As mentioned earlier, MicroStrategy CEO Michael Saylor is a major Bitcoin bull. The company has invested heavily in Bitcoin and currently owns over 130,000 bitcoins, worth over $3.1 billion.
          • Square – In October 2020, Square announced that it had purchased $50 million worth of Bitcoin. The company’s CEO, Jack Dorsey, is a well-known Bitcoin enthusiast.

          Richest Insitutions in Bitcoin

          • Grayscale Bitcoin TrustGrayscale is a digital currency asset management firm that allows investors to gain exposure to Bitcoin through a trust. The Grayscale Bitcoin Trust currently holds over 630,000 bitcoins, worth over $15 billion.
          The Grayscale booth at the Exchange ETF Conference in Miami Beach, Florida, U.S., on Wednesday, April 13, 2022. Photographer: Eva Marie Uzcategui/Bloomberg
          • Binance – Binance is the largest cryptocurrency exchange in the world by trading volume. The company holds a significant amount of Bitcoin on behalf of its users, although the exact amount is not publicly known. As of November, Binance holds $74.7 billion worth of crypto in its reserves and approximately 40% are its own tokens.
          • Fidelity Investments – Fidelity is one of the largest asset managers in the world. The company has been exploring the potential of Bitcoin and blockchain technology and has reportedly invested in Bitcoin mining companies.

          *All prices are represented in US dollars.

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          Are Bitcoin and the Stock Market Correlated?

          Since bitcoin’s inception in 2009 to the late 2010s, it has shown a lack of correlation to the broader stock markets. Because of this, bitcoin proved to be an asset class for investors that remained largely independent of broader markets.

          However, with an increase in awareness from retail and institutional investors, beginning largely in 2017 when BTC pushed through the USD$10,000 threshold, its independence has waned.

          Increasing Interest Rates

          For most of the last twelve months, bitcoin has been fighting the same downward pressure that’s been impacting both the stock and bond markets. Major central banks around the globe have been on a quest to tighten monetary policy in a battle to tame inflation down to a target of two percent.

          Trailing twelve months comparison between bitcoin and the S&P 500 measured by percentage change. (Source: Yahoo!Finance).

          “The price of bitcoin is maintaining the $19,000 level, but with the FOMC’s minutes and CPI ahead this week, the market will likely refrain from taking risks, which in turn will likely put pressure on bitcoin,” said Yuya Hasegawa, crypto market analyst at Bitban.


          Rolling 90-business-day return correlation between BTC and stock indexes. Image note: Returns of bitcoin are represented by the Fidelity Bitcoin Index, U.S. equities by the S&P 500 Index, and U.S. growth equities by the NASDAQ Composite Index. All returns are in base currency (US$) and gross of fees. (Source: Fidelity Investments).

          Macroeconomic factors continued to play an important role in driving the prices of cryptocurrencies, as well as other risk assets. Throughout the third quarter, the correlation of bitcoin with major stock indexes remained high, at over 60%.

          For added context, a correlation above 50% is considered moderately strong and above 70% is very strong, while correlations between 30% and -30% are very weak. A value of 100% or 1 means that movements between bitcoin and the broader markets are perfectly synchronized.

          With rising interest rates, investors wanting to de-risk their portfolios have weighed on bitcoin’s price as reflected in a rather underwhelming yearly performance of negative 37% as of January 31, 2023.

          Some examples provided by Fidelity Investments of bitcoin’s price following macroeconomic announcements in 2022:

          • July 27: BTC increased by over 8% following the announcement by the Federal Reserve that it was raising interest rates by 75 basis points.
          • August 10: July U.S. CPI inflation came in below expectations at 8.5% (compared with 8.7% expected). BTC climbed 4% in the hours following the release of the CPI before slowing later in the day.
          • August 19: BTC plunged nearly 10%, falling in sync with traditional markets amid renewed fears that the Fed and other central banks will have to get more aggressive in fighting inflation. The decline started with unexpectedly high inflation data in Germany.
          • August 26: BTC dropped after Fed Chair Jerome Powell doubled down on restrictive monetary policy at the Fed’s Jackson Hole economic symposium.
          • September 13: BTC fell on the release of August U.S. CPI data, which showed an unexpectedly high 8.3% increase in prices (compared to 8.1% expected).

          With its widespread adoption, it is clear that bitcoin is no longer on the fringe of the financial system. Tensions between Russia and the West over the Ukraine war could continue to roil markets, from energy prices to foreign exchange. Bitcoin’s tighter correlation with broad markets means it will not be immune.

          Conotoxia Senior Market Analyst Daniel Kostecki gave his opinion on this correlation to CoinDesk last year.

          “It is what is happening in the arena of international relations that seems to be the main driver of the markets for both stocks and cryptocurrencies,” he said.

          2023 Bump

          As of January 31, 2023, the YTD of bitcoin is up approximately 39%, while the S&P 500 and Nasdaq Composite are up 5.9% and up 10.8% respectively.

          Analysts say that there is a multitude of factors behind bitcoin’s new rise in 2023, including the probability that interest rates will be lowered in the coming months, easing of short-term inflation, as well as massive purchases by large buyers, otherwise known as “whales.”

          The U.S. dollar has also lowered, with the greenback down 8.5% in the last three months in terms of its strength against a basket of other notable currencies, such as the Euro, Pound and Yen.

          If this is the case, bitcoin continues to show a coupling with macroeconomic indicators, despite showing less correlation with stock markets.

          As bitcoin’s adoption continues to increase along with the development of applications built on top of the blockchain it is likely we would see a decoupling between the cryptocurrency and stock markets in the future.

          “We expect them to not be as highly correlated going forward,” Ben McMillan, CIO of IDX Digital Assets said. “But I do think a positive correlation between bitcoin and risk assets, in particular things like technology stocks, is here to stay.”

          That said, bitcoin is still a relatively new asset class when compared to its counterparts, like bonds, stocks and gold. Its relationship with them and macroeconomics will be closely watched.

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          What Will Happen to Crypto in 2023?

          2022 was a tumultuous year for the crypto industry. Crypto markets have fallen over 50% since their peak in 2021, while stock markets and bond markets globally have fallen in double digits.

          Terra (LUNA)

          The Terra ($LUNA) crypto token crashed from $120 to $0.002, a 99.9% correction between May 11 to May 12. Along with LUNA, the TerraUSD ($UST) stablecoin endured a significant crash from $1 to $0.30. The Terra blockchain was a platform created to peg stablecoins to fiat money, initially founded by 31-year-old South Korean Do Kwon. 

          Combined, $LUNA and $UST had a market capitalization of roughly $50 billion, and the reasoning behind the crash is still unconfirmed. Interpol issued an arrest warrant for Kwan but was recently thrown out by a South Korean judge.

          Three Arrows Capital

          In June, Three Arrows Capital, a Singapore-based cryptocurrency hedge fund failed to meet its margin calls and repay the money lent from cryptocurrency broker Voyager Digital. The hedge fund subsequently filed for Chapter 15 bankruptcy in the United States. Not surprisingly, Voyager Digital declared bankruptcy the following month.


          Arguably the biggest crypto story of the year was the fallout of FTX, one of the world’s largest crypto exchanges and custodians led by founder Sam Bankman-Fried, also known as ‘SBF.’ 

          At the moment, SBF has pleaded not guilty in New York federal court to eight charges related to the collapse of FTX and hedge fund Alameda Research. He is facing charges of conspiracy to commit wire fraud and securities fraud, individual charges of securities and wire fraud, money laundering and conspiracy to avoid campaign finance regulations. In total, SBF is facing 115 years in prison.

          In sum, FTX was once valued as a $32 billion company that used QuickBooks for its accounting methods, freely transferred client funds back and forth between FTX subsidiaries and Alameda Research and spent millions of dollars donating to U.S. Democratic politicians and even shadow donations to Republican politicians. FTX filed for Chapter 11 bankruptcy in the U.S. in November.

          At this time, it appears FTX will be remembered as one of the biggest financial frauds in history. Depending on the total amount of money and crypto that bankruptcy auditors uncover, it will likely rank as the second largest financial fraud, right behind Enron.

          Scams in 2023?

          2023 has only just begun, and we are already hearing rumblings about further scams and potential defaults.

          Logan Paul and CryptoZoo

          Uncovered by a leading investigative journalist in the financial industry, Coffeezilla has put forward information that could incriminate famous YouTuber Logan Paul on his crypto game titled CryptoZoo.


              This may shock most of our readers, but those in the industry wonder if Binance is financially stable after the FTX collapse. Largely, Binance has never revealed its liabilities and in fact, Binance CEO, Changpeng Zhao (also known as ‘CZ’) has indicated that the big four auditors have difficulties auditing crypto firms.

              “Many of them don’t even know how to audit crypto exchanges” – CZ, December 2022 

              Binance originally invested as a shareholder in FTX in 2019 and exited while receiving $2.1 billion in its own stablecoin ($BUSD) and in $FTT (FTX Tokens) as part of the deal. Now if Binance is forced to claw that back to FTX creditors, one wonders if Binance can remain afloat.

              What Will Happen to Crypto in 2023?

              With 2022 behind us, let’s throw out some of our predictions on what will happen to crypto and Bitcoin in 2023.

              1) Bitcoin Sees Positive Returns

              Often regarded as a hedge against inflation, we were able to put Bitcoin to the test with elevated inflation levels across the globe in 2022. As it turns out, Bitcoin’s return performed worse than U.S. stock markets. That said, Bitcoin’s network and decentralized nature have remained strong throughout a tough 2022. Crypto’s reputation was dented by the crises and scandals, but the salability and strength of its network have cemented itself as here to stay for the long run.

              Even Cathie Wood, the CEO of ARK Invest who posted a 150% return on her ARK Innovation ETF in 2020, believes that Bitcoin’s price is still on pace for US$1,000,000 by 2030.

              Bitcoin’s price chart since 2013. (Source:
              2) Global Bitcoin Adoption

              Currently El Salvador and the Central African Republic (CAR) are the only nations in the world where Bitcoin acts as legal currency. That will change in 2023 with likely candidates Saint Kitts and Nevis, Venezuela and Paraguay. In November 2022, Terrance Drew, the Prime Minister of the Caribbean nation of Saint Kitts and Nevis indicated the country may adopt Bitcoin Cash (BCH) as legal tender.

              Venezuela is a likely candidate as over 10% of its population owns cryptocurrency while its current year-over-year inflation rate stands roughly around 155%. Bitcoin would be regarded as a more stable currency for Venezuelans.

              Paraguay is a possibility as Carlitos Rejala, a member of Paraguay’s Chamber of Deputies has proposed a bill to have Bitcoin as legal tender in the country. Whether the bill is passed is up for debate, but Rejala has indicated he is willing to run for President which would accelerate the possibility.

              3) Regulatory Battles

              With the fall of FTX, the Ontario Teacher’s Pension Plan wrote down its stake to zero, taking a US$95 million loss barely a year after initially investing in the company. The loss has a limited impact due to the size of the fund ($242.5 billion) but these losses catch the attention of regulators and politicians. 

              We saw a movement towards further oversight in December in Canada and we will likely see more. The Canadian Securities Administration announced that it will require all crypto exchanges seeking registration to sign undertakings before they are formally under regulatory watch.

              This will take time as the wheels of government take a strong push to move, especially in an industry as complex and new as cryptocurrencies. Will 2023 be the year that regulators finally reach their limit?

              4) Rebuilding Trust

              Not only in crypto, but in many other industries like tech, rising interest rates, high inflation and a looming recession has forced many businesses to cut costs and cut them quickly. Years of zero interest rates will do that to an economy, where founders, venture capitalists and angel investors were flooded with cash and invested in any startup with a pulse.

              The crypto industry in 2023 will have to rebuild and regroup. Over-leveraged firms and poor exposure to bad counterparties will not be tolerated in crypto anymore. New firms that come into the space will have to demonstrate integrity, trust and positive cash flows in order for the industry to rise again.

              5) The Rise of Self-Custody

              Trust is at an all-time low in exchanges, which inevitably will lead to a rise in users holding their crypto in self-custody wallets. When trust is low, incumbents will consolidate, pushing investors to obtain crypto from financially stable institutions and place them in self-custody, which ultimately lowers the risk of default for many retail investors.

              If you do not own the keys, do you really own your Bitcoin?

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              Cryptocurrency and taxes in canada is a complicated subject

              Simplifying Cryptocurrency and Taxes in Canada

              Is Crypto Taxed in Canada?

              The short answer, Yes. The Canada Revenue Agency (CRA) is quite transparent about the fact that crypto is subject to income tax.

              It is important to note here that crypto is considered a commodity by the CRA and not cash. Bitcoin and other cryptocurrencies are also not recognized by traditional banks and brokerages as legitimate currencies. This will be useful as you read through the guide.

              As crypto is a relatively new commodity, tax implications have and continue to evolve. The CRA has a full guide for cryptocurrency users and tax professionals. That being said, crypto and tax are complicated subjects and we would advise speaking to a tax professional for further questions and information.

              When Do You Owe Taxes on Crypto?

              From a high-level perspective, you owe taxes when disposing of your crypto. Examples can include:

              • Selling or trading it
              • Giving it as a gift
              • Converting it to government-issued currency, such as Canadian dollars
              • Using it to buy goods or services

              Other types of tax implications involving crypto include:

              • Mining cryptocurrency
              • Being paid by your employer in cryptocurrency
              • Staking crypto in Proof-of-Stake currencies

              Because cryptocurrency is considered a commodity, simply buying and storing the crypto in a wallet will not trigger a taxable offense.

              Most people will pay tax on cryptocurrency gains from the disposition of crypto assets. When filing your income tax return, you will need to know how to value your cryptocurrencies. Valuing the crypto depends on whether it was used as capital property or inventory. The CRA has more detailed information on the difference between the two.

              Transferring crypto is tax-free. (Source:

              Types of Taxes That Apply

              • Business Income

              Generally, if disposing of cryptocurrency is part of a business, the profits you make on the disposition or sale are considered business income and not a capital gain. Buying a cryptocurrency with the intention of selling it for a profit may be treated as business income.

              • Capital Gains

              If the sale of a cryptocurrency is not for carrying on a business, and the amount it sells for is more than the original purchase price or its adjusted cost base, then the taxpayer has a capital gain.

              • Goods and Services

              Where a taxable property or service is exchanged for cryptocurrency, the GST/HST that applies to the property or service is calculated based on the fair market value of the cryptocurrency at the time of the exchange.


              How To Calculate and Report Crypto On Your Taxes?

              It is very important to keep track of all financial records of your activities relating to your cryptocurrency. This information is vitally important when filing your tax returns for the 2022 fiscal year.

              Keeping full records of all crypto-related activities is absolutely necessary when filing tax returns.

              First and foremost, you should figure out whether your cryptocurrency earnings are capital gains or business income.

              Making profits while trading cryptocurrencies, such as Bitcoin or Ethereum is considered a capital gain, much in the same respect of stocks and gold.

              What does this look like? We’ll outline an example scenario below:

              Johnny purchases 1 Bitcoin, which at the time was valued at $2,000. He then decides to hold onto it for two years, during which the value of 1 Bitcoin comes to $5,000. Johnny decides to convert his lone Bitcoin into Canadian dollars.

              The difference in value when Johnny bought and sold is:

              $5,000 – 2,000 = 3,000

              Johnny has earned $3,000 from his cryptocurrency trading activity. His earnings are due to capital gains and thus he is taxable on 50% of the value, or $1,500.

              If Johnny had earned his 1 Bitcoin by mining, it would be a different scenario and actually be considered as business income. The CRA considers 100% of the amount you make from mining crypto for tax purposes and must be reported on your returns using a T2125 form.

              Avoiding Tax on Crypto

              You cannot outright avoid all taxes, but there are ways to reduce your tax bill. This may seem obvious, but at the moment you cannot directly invest in cryptocurrency through a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA).

              BUT, you can buy into an Exchange-Traded Fund (ETF) that invests in Bitcoin through a brokerage in these registered accounts.

              The gains on crypto ETFs in your RRSP are not taxed, provided you do not convert them to cash and withdraw the money. For TFSAs, your gains from crypto ETFs are not subject to tax on withdrawals.

              These crypto ETFs track certain coins and ultimately you would not own the actual coins, but shares in the ETF.

              Donating Crypto to Charity

              Donating crypto is rather interesting because it is viewed as a commodity, not as a currency, which complicates matters. An example of this is detailed below:

              You buy 1 BTC in December 2019 for $5,000. You then donate this BTC to a registered charity in December 2022 when the fair market value of BTC is $20,000.

              According to the CRA, the charity you donate to can only issue a $5,000 receipt for your donation and your donation is a disposition. You’ll need to pay Capital Gains Tax on the difference in value, so $15,000.

              Can The CRA Track My Crypto?

              Part of the essence of cryptocurrency is its anonymity. It’s almost 2023 and we still do not know the identity(s) of Satoshi Nakamoto, the founder and creator of Bitcoin. It is along these same lines that it may seem that the CRA will not find out if someone does not report their earnings or dispositions.

              The reality is, the CRA is very capable of tracking your income and finding out if you did not report all your income through audits and investigations.

              The consequence of failing to report any instance where crypto is taxable is the same with Canadian dollars: tax evasion. This should be avoided at all costs and it is wise to report your earnings as accurately and honestly as possible.

              Bitcoin Taxation in Canada Still Evolving

              It is important to understand that cryptocurrency is still a relatively new innovation for investors. The CRA does provide a detailed guide on the tax obligations associated with crypto.

              An area that could receive some attention is the possibility that a single Bitcoin transaction can include thousands of sub-transactions inside it. The idea of keeping track of thousands of transactions seems rather daunting for a single individual. Possibly there may be a solution to this in the future.

              Another example is the lack of consistency in accounting methods for Canadian crypto businesses, whether they use the First In First Out or Weighted Average methods.

              That said, the CRA is continuing to develop and correctly detail taxable instances for crypto.

              While much of the phrasing used by the CRA may not correctly correspond to the phrasing used in the cryptocurrency space, it is evolving and becoming easier to understand and apply than in prior years.

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              not your keys, not your coins

              The Meaning Behind Not Your Keys, Not Your Coins

              In the aftermath of the collapse of FTX, a cryptocurrency exchange led by Sam Bankman-Fried, who saw his net worth plunge from $16 billion to $100,000 in a week, a single phrase continued to be uttered online:

              “Not your keys, not your coins.”

              At the time of the collapse in November 2022, FTX was the third-largest cryptocurrency exchange by trading volume. Presently, the total amount of customer funds that have vanished from the crypto exchange has varied between USD $1 billion and $2 billion.

              There has been a difference in views of the situation, where the New York Times has touted the collapse as a result of mismanagement or as CoinDesk puts it bluntly, it was a variety of “conscious and intentional fraud intended to steal money from both users and investors.”

              Regardless of how FTX’s collapse happened, this is where the phrase, “Not your keys, not your coins” becomes important for crypto users, investors and advocates alike.

              Not Your Keys Not Your Coins Meaning

              How Bitcoin or any cryptocurrency is transferred from one individual to another is through the distributed ledger (blockchain). A wallet does not actually store one’s cryptocurrency, as opposed to a physical wallet that can hold credit cards and cash.

              A wallet is a device or a physical medium where one can securely keep their cryptocurrency. Once purchasing a wallet, it in fact comes with two keys: a public and a private key. They are both necessary and perform different functions.

              A ‘public’ key is used to send cryptocurrency into a wallet. The public key can be viewed as crypto’s version of a checking account number and routing number for direct deposits. This is information that can be public but does not allow an individual to withdraw or log into your accounts.

              To note, a public key and a wallet address are not the same. If you want to send Bitcoin to your friend, you would need their address, which consists of 25 to 40 alphanumeric characters. A wallet address is the final part of a public key.

              A ‘private’ key is only meant for the owner of the wallet. Private keys are numerical codes but to make things easier for the end-user, wallet providers can encode your private keys. A common example is through a “seed phrase.” A seed phrase is a series of random words that can be used to unlock funds from a wallet. The private key is hidden behind this series of words. 

              We would recommend writing down your numerical code or seed phrase on a piece of paper. This may sound old-school but paper is not susceptible to a cyber attack. 

              Read HoneyBadger’s guide on How to Set Up a Bitcoin Wallet.

              So as the saying goes, if you do not have the keys do you really own the coins?

              Bitcoin was founded entirely on the principle of a peer-to-peer electronic cash system without the need for a trusted third party. Bitcoin and a large portion of the cryptocurrency space tout the idea of a decentralized network. With this notion in mind, does it really make sense to hand over control of your wallet and funds to a third party like Binance, Coinbase or even FTX?

              Not owning one’s own keys goes entirely against the ethos that Bitcoin and cryptocurrency were founded on.

              The phrase was first touted by Andreas Antonopoulos, a technologist and serial entrepreneur at a Bloktex event in Kuala Lumpur, Malaysia in 2017.

              Loss of Control

              By holding cryptocurrency on an exchange, the risk is entirely placed on the security and trust of the company operating the exchange.

              This may seem strange, as you do have to log in to your account on your favourite exchange to view your coins. Seemingly it looks like you own the assets and you are in control, but this is far from the truth.

              The exchange owns the private keys and places limits on how much cryptocurrency you can buy and sell. The exchange can even pause all transactions for a variety of reasons, the most common being site maintenance. What happens when you are unable to access your account during periods of market volatility? This will impact your potential returns.

              A wallet on a centralized exchange does not truly belong to the account holder.

              There have been dozens of exchange defaults since Bitcoin’s inception in 2009.

              Crypto is not immune to hacks or exchange defaults as we discussed earlier with FTX. Mt. Gox was a bitcoin exchange based out of Tokyo that was handling over 70% of all bitcoin transactions worldwide. It abruptly ceased operations due to theft in 2014.

              Canada experienced its own share of exchange defaults. For example, QuadrigaCX filed for bankruptcy after its founder, Gerald Cotten had died and supposedly was the only employee with access to the exchange’s private keys.

              Trust is placed entirely on the exchange and as you may or may not know, most companies do not last as long as you will. You are safer to bet on yourself than on an exchange.

              How To Gain Control

              If you have made it this far, and believe in the saying, “Not your keys, not your coins,” you may want to purchase a wallet. You can find a variety of dedicated wallets here, which come in four distinct forms:

              • Mobile Wallets

              Wallets that run on your mobile device.

              • Desktop Wallets

              Wallets that run on your computer

              • Hardware Wallets

              These are physical devices that hold your private keys offline. They can look similar to a USB stick.

              • Lightning Wallets

              Wallets that are native to the Lightning Network

              Some types of wallets allow you to purchase cryptocurrency through them, such as Ledger, but in most cases, you would have to purchase the coins from centralized exchanges, like Binance and Coinbase, then transfer them to a wallet where you are the sole custodian.

              Holding your Bitcoin and your own keys alleviates yourself from any exchange default risk.

              Why HoneyBadger Believes in Owning Your Own Keys

              First and foremost, HoneyBadger’s business model is non-custodial. Any crypto our customers buy at our kiosks or online is sent and stored securely in their own wallets. They control their own assets and we have no access to them.

              All of our transactions are instant and we encourage our customers to follow the mantra, “Not your keys, not your coins.”

              Once our customers buy it, they own it. We believe in financial freedom and making cryptocurrency accessible to all Canadians.

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              bitcoin vs gold which is better?
              Buying Crypto

              Bitcoin vs Gold: Which Is Better?

              When it comes to deciding where to invest your money, the bitcoin vs gold debate comes up again and again.

              I am 27 years old and my parents are 69 years old. They are from the Baby Boomer generation and I am a Millennial. There is a MASSIVE generational gap between us in terms of technology. Frankly, it is hard for me to imagine showing up to work without access to a computer!

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