 Welcome to Digital Asset News to get top stories in crypto, current digital assets, and break them down to bite-sized pieces today. Pretty interesting stuff. First up, is Ethereum DeFi still far-fetched? Or is Ethereum really a viable option for DeFi and all the requirements it needs? And should we be looking to a different project to make decentralized finance an actual scalable solution? Also, Bitcoin price may surge as fear and uncertainty strain global markets, but is there that much fear and uncertainty out there? We're going to take a real deep dive into that question, which could lead us to the answer of where is Bitcoin cryptocurrency and the entire digital asset market going? Now to lead us into question today, we're going to go over what you could possibly do if you get hacked for 3.5 Bitcoin. And we'll go over that last, but first let's take a look at what's going on in the markets. Today it is Monday, September 28th. So what do we got? Sunday was not a great day. Mondays looking a little bit better. Bitcoin almost to the 11,000 magic mark. I like to see that maybe 10-9 today, up 1.6% for 24 hours. I will take those numbers. Ethereum blasting past the 350 up to 364, 3.4% up. Fantastic. Tether's tether. Nobody cares. XRP, 24 cents. Watch out. Bitcoin cash up to 2.6%, 232, nice. Polkadot making a massive run, 7.8% for a 24-hour period. I'd like to see that. And Chainlink, finally above $10 as it dipped massively from its all-time high over on $18, and now it's at $10.66. Hopefully we can see how far it can go. Maybe it's got a little bit more room to run. We'll find out. Finance coin up, up. Everything's up. Pretty big green day, except for Monero. 2.6. Don't understand why that would be, but there it is. 2.9 down for NEO. I used to own NEO. Don't do it anymore. 6% for Cosmos. Their interoperability, V-Chain up 6%. I'd like to see that. Iota, 7.8. Who knows what's going to happen with Iota? I don't know. Ethereum Classic after their 51% attacks. No big deal. 3.1%. Let me do synthetics. And then, oh, OMG Network, 31%. And OMG had this nice little rally because it was helping out Ethereum with a network and trying to deal with all the different gas fees. So that's a reason for what's going on, but I'd like to see that definitely. Basic attention token up 6%. Doge coin for you, Doge Holdings 0.5. Digibite. And I never talk about Digibite and I'll apologize now. It's a good project. Could do some good things. I don't own any, but maybe that could change. And Celsius Network almost breaking that dollar mark. I gotta tell you, I gotta tell you, Celsius is on quite its air. And I think they're up massively for the entire year. 23% for 7 days. And I see great things in the horizon. So we'll see how that works out. But let's jump into the day's top stories. So first up is Ethereum DeFi still far fetch. And this really lays out the scenario for what could happen if we can't use Ethereum for decentralized finance and what needs to be done to hit the criteria of what actually could make this sustainable. So what is this all about? So DeFi is the latest buzzword. Yes, we've heard nothing but DeFi for the last month to two months. Everything from synthetics to sushi to yam to whatever you name it. It's been there. I don't think it's right where it needs to be. But I see a massive potential. It just all depends on where's it going to be built and who's going to take over. Any other need for scrutiny into existing systems and Ethereum DeFi is top of the list. Martin Froller, a mathematician recently told the media that there is no doubt that Ethereum DeFi is simply the best platform. Now, this is just one opinion from Martin, but you gotta understand that there are many opinions out there and we're going to kind of go over everything that we can to see what's the best option. Anyhow, he states that DeFi is a global decentralized platform for money and any new kind of application. Ethereum DeFi is on the world's second largest crypto platform to capitalize on the market after Bitcoin. And that is true. I mean, it's great to have a massive market cap, a massive network. But the problem with just the colossal nature of Ethereum is that there are problems, there are bugs, there are slowdowns, there are gas fees which are astronomical that they need to address and they can address those things. It cannot work, period. So this is the sentiment on the flip side of that. And it states that all experts are in favor. Froller, who happens to be the founder of the MARFOR platform. So first of all, I was like, what the heck is that? I've never heard of that. So what's MARFOR? So I did a search and it came up with nothing. So I had to take a look at the LinkedIn profile for Froller here, Martin Froller. And it says, Gizli about features. And then the founder of MARFOR, M-O-R-P-H-E-R, not the other spelling. So then of course you go over here and MARFOR is a crypto stocks and forex exchange. So it's pretty interesting. I'm not going to go through it, but that's exactly what it is. So this is the CEO talking about an exchange. So maybe a little biased, just saying. So let's say DeFi products are reaching Ethereum, but experts say that the network is not yet able to, at its best, and its current capabilities are just not up to the standard. It's designed as such that everyone needs either to communicate with it, but they all have issues. The biggest hurdle in adopting on a large scale as would be the incapability to handle more than 15 transactions in a second. And as block time is more than 15 seconds. So that's a big problem. When you're talking about, I mean, it's okay right now. And it's even taxed right now as the limited amount that it is. But let's say we start to get all small businesses in. And let's say we start to get all types of people in all types of retail, all types of institutional investors, they all want to use DeFi. What would happen? It would collapse. There's no way that at its current state that this could actually be sustainable. It just cannot happen. So what do we need to do? Well, let's go on. Ethereum is a great decentralized platform. And Ethereum DeFi is a reality in the making. And that's what's going on right now with ETH 2.0. If you haven't heard, ETH 2.0 is going to be rolled out in phases. And it's going to take about two years. And the first one's going to come up in November, potentially even sooner. But there's really what it comes down to is three phases. Phase zero, phase one, phase two, phase zero is right around the corner. And phase zero is the name given at the launch of the beacon chain. The beacon chain will manage the Casper proof of stake protocol for itself and all of the sharded change. So this is where we're going to get to staking. This is where that magic number of 32 Ethereum is going to get to where you're going to be able to stake that Ethereum gain some extra tokens or gain some extra Ethereum or gas by what you stake in this type of format. And we're going to go from proof of work to proof of stake. And this is why it is so important. That is just phase zero. And that's just coming up right now. They've already gone off of the test nets. Everything went pretty well. So it looks like they're going to move forward. Now that only solves one issue, proof of work to prove a stake. The other issue is the transactions. And that won't be done until phase one. And we're looking at another year, six months to a year, I think another year. Correct me if I'm wrong. Put them in the comments section. But phase one will be shard chains. Shard chains are the key to future scalability as they allow parallel transactions throughout. And there will be 64 of them deployed in phase one over time. And then moving down phase two is just a point in time where the functionality of entire systems were to come together. Shard chains transition from simple data compared containers to a structured chain state and smart contracts will be reintroduced. So again, you're looking at a quite a timeline, looking over two years. And hopefully it all works out. But the question really has to be asked is what if it doesn't. So here's the problem right now, what they're trying to fix. Gas prices can need to rise, which is why Ethereum is not able to improve its performance, even though there is a dire need and bringing the users to lead the network because of the situation. CEO of a DEX one inch, Sergez Kuntz stated that Ethereum does not have the capacity to host DeFi. It's not so easy that everything gets fixed all of a sudden. Everything takes time. Obviously, we just talked about it. It's going to take at least two years. Lastly, Moneer Benchemlin, I'm sure I nailed that name, CEO of Tereswap expressed that considering Ethereum DeFi, we should also consider how layer two is unable to solve the user and problems and provide them a friendly environment. The biggest disadvantage would be that users have to worry about not being able to pay the funds immediately to the users, which we're talking about as far as layer two. And layer two, one of the most famous layer twos is the lighting network for Bitcoin, which is anybody using that. I don't think so. I mean, Jack Dorsey from Twitter is pushing it, but I haven't seen too much on it. Lastly, it states he believes that where some products may find Ethereum DeFi a suitable option on Ethereum 2.0, it may not be true for all DeFi projects. So here's the problem, or here's my final thoughts. Someone's going to solve this problem. Someone's going to solve this problem. It just takes a person way smarter than me and way smarter than a group collective, but it's going to happen. The reason why it's going to happen is because there's too much money at stake. There's too many things to fix. There's too much upside potential for someone or some group to not come out of the world where it can go, this is how we're going to solve it. Now, that may be Ethereum, that may be some other place that may be layer two, like MATIC. What's MATIC? MATIC Network brings massive scale to Ethereum using adaptive version of plasma with proof of stake based side chain. So all the people who hold MATIC congratulations, I'm sure you're going to make good investment there. But I don't know if that's actually the case either. Could it be other forms? Could it be a Cardano? Could it be other some of the cryptocurrency project? I don't know, but all I can tell you is this. I don't know where it's going to come from, but I'm hedging my bet and that's why I have a large plethora of baskets of different cryptocurrencies because Ethereum, if I had to put my money on it, someone had to put a gun to my head, I would probably say, yeah, Ethereum's going to solve it. They got a lot of smart people. They got a lot of leadership. They have a great community and they are gung-ho ready to do it. However, it's going to take a long time. Is there somebody else in the world could be? Don't know what it is, but I try to hedge my bets as best as possible, but at its current state, it cannot work. It needs upgrades. Let me know what you think in the comments section. Let's move on. Next up, Bitcoin price may surge as fear and uncertainty strains global markets and we have nothing but uncertainty lately for 2020. What a bummer of a year, huh? Anyhow, from a technical standpoint, a quick look at the CBOE volatility index shows that the implied volatility of the S&P 500 during the aforementioned time window increased dramatically, rising above the $30 mark, which means that there could be a big crash coming. Who know? It bears mentioning that the $30 mark serves as an upper threshold for the occurrence of world-shocking events, one of those being the coronavirus in March. Otherwise, during periods of regular market activity, the indicator stays around $20. So $20 and he's pretty good. $30, that's war, terrorist attacks, and of course, coronavirus and all the different problems that come along with that. However, when looking at gold, the precious metal lately has also sunk heavily, hitting a two-month low while Silver saw its most significant price drop in nine years. And I was listening to this, it was a YouTube interview and it was within the last two days and Robert Kiyosaki, which we all know, the rich dad, poor dad, and he's been touting the benefits of gold. And of course, Bitcoin, he basically said, hey, gold and Bitcoin are instruments of uncertainty. So when things don't return to a some type of normalcy, the price drops. And right now he says that there's not, he was weird. He's like, well, the uncertainty isn't as bad as I thought it would be. And I'm like, really? Every, everywhere I looked is about uncertainty. But I mean, hey, everyone's at the top of their opinion. Anyhow, for me, uncertainty, I mean, it's not great, but it does fuel the cryptocurrency asset market with the highest level of uncertainty. That's when you see the prices surge. And that's exactly what we've been seeing. Moving on, speaking of Europe, the continent as a whole is currently facing a potential economic crisis with many countries dealing with the imminent threat of a heavy recession due to the uncertain market conditions because of the coronavirus. And it's not just Europe. It's everywhere. Nobody is 100% certain right now, like, you know what? This can be our best year ever coming up. Unless you're Purell, who makes hand sanitizer, they're probably going to have a fantastic year. But if you look from, I mean, the presidential election coming up in the next 40 days, quantitative easing, who knows that's going to happen. Who knows there's going to be a stimulus package. Who knows if these small businesses are ever going to come back, looks like 20% up to 40% may not come back at all. And I mean, just everywhere it's just been hit massively. So when you're talking about uncertainty, I think this is the most uncertain times that I've been in outside of 2008 when the financial crisis hit. Moving down, Joel Edgerton, CEO of CryptoExchange Bitflyer, states this, the price movement is mainly driven by institutional business with retail customers continuing to buy the dips and accumulate assets. A key point to watch is the possible effect of the US election. And it changes the Fed's response from its current very accommodative stance to a more normal stance. And if you're not familiar, outside of the United States, we're going to have another presidential election. That'll be interesting. And it's going to happen the next 40 days. And right now, the Federal Reserve is pretty much buying up assets, buying up liabilities. And we all know about the quantitative easing. But if they shift from that position, it's kind of like pulling out the security blanket underneath from everybody. And they're like, Oh, now we got to do our own thing. We can't just rely on the Fed just to print money out of thin air and just bail us out. Well, that sucks. But that's what has to happen. So again, if we're going to talk about uncertainty, this is the time. Lastly, he thought that any changes the US tax code could also have a direct effect on the crypto market, especially as various states as well as the federal government continue to be on the lookout for newer tax avenues to make up for the stimulus packages that were doled by the Fed earlier this year. And this is what I've been talking about in this channel for many a time is that you cannot print money out of thin air and not have some kind of backup or pay for that price moving on in the future. So whether that be us or our kids or our grandkids, someone's paying that price. And the easiest way to get out of that or actually get some revenue is to raise taxes. So I think that's exactly what they're going to do. And I'm going to tell you why. So just on a little side note, this is from the Wall Street Journal. The IRS sets a trap for crypto tax cheats, which is a pretty good title, actually. So I'm not going to read it. Here's what's going on. So it goes like this. This is the new 1040 form. And this is on the very front of every single person's taxes. Now, this is going to ask the question and the time during 2020, as you receive sales and exchange or otherwise acquire any financial interest in any virtual currency, not cryptocurrency, not digital assets, virtual currency. So I don't know if you got any kind of like a virtual currency in World of Warcraft or something. I have no idea. But that's a very broad question. And this, they put this on the very front page because they wanted everybody to see it. And this is right next to your first name, last name, and address and everything else. So you're not getting away from this question, whereas opposed to it was actually buried, not really buried, but it was in another part of the form that you actually filled out at the 1040 SR, which was an attachment. So people like, Oh, I didn't see it. So I filled it out. But the problem was, and the problem is that they were sending out letters like this, which said, Hey, we're writing to you to state we have information that you have or had one or more accounts containing virtual currency, but may not have properly reported your transactions involving virtual currency. And this was just sent out by what was this August 14, 2020. So if you happen to have written no, you may have seen this form. And for everybody who's like, I don't ever find me, they'll never know. Well, guess what? If you want any kind of exchange, you fill out your social gave your driver's license, personal information, guess who that went to? Your government. So don't shoot the messenger. I'm just telling you right now, I've been through an audit. It's the worst of all time. You don't want to go through it. It just sucks. That's all I'll say about it. I didn't want to go through the whole process, but I'm going to at the very end of this video, I'm going to link to the video where I talk about how I don't pay crypto taxes. I'm just not going to. And this is why I'm going to use what's called iTrust and iTrust is a cryptocurrency IRA. That's what it is. And even if you have a traditional IRA, regular account somewhere else or an old employer plan, like a 401k, a 403b, a military TSP or a 457, and you want to move it over to cryptocurrency, you can do that tax and penalty free with iTrust. Here's all the different assets you can put your money into, which will be tax free. Now granted, it's when you take it out and all that stuff, but I go over that in detail in the video and I'll link at the very end. But the reason why I did a crypto IRA is because I have a feeling that Bitcoin and the rest of my assets are going to go up massively. And I'd rather pay a little bit of taxes right now than pay a boatload of taxes when I have to actually, you know, have capital gains and I'm not doing that. So that's what I'm doing. You can take a look. It's up to you. All right, finish this up. It says Contrary to one might think, according to data released by crypto analyst firm, sentiment, Bitcoin tends to see a big surge whenever online sentiment around is hovering in FUD, fear and certainty and doubt. I thought this was interesting. It said prices of Bitcoin and other crypto assets tend to bounce more precipitously when the crowd is demonstrating a high level of FUD. This is exactly what we've been seeing with Bitcoin, Ethereum and many alt coins. So when there's FUD, it's good, I guess. So I think I wrote this little note. I said, maybe we should be thanking Peter Schiff when he, you know, poo poo is all over Bitcoin. Maybe that's actually helping us, which is great. And lastly, it says generally the best by opportunities in crypto coming the average trader is down both psychologically and financially. That's what our metrics currently indicate. So here's the thing. It's going to be uncertain. It's going to be a rocky road. And if you, if you're a trader, I mean, God bless you. Good luck. I'm not, I just don't trade. I'm just an investor. I dollar cost average. I save some money back. And then when I see these dips, I buy the dips and I don't feel that tightness in my chest knowing that I just dumped a bunch of money into it because I didn't dump all ton of money. I just dollar cost averaged in. There's one thing that I always try to remember. And that is that you don't FOMO, you buy the dips as best as possible. And I remind myself that this isn't 2017 when it was just, you know, white papers and vaporware. This isn't just based on like theory. There's actually track that has been laid. There's institutional investors that are here. There's big name players that are talking about it. There is so many bright side up from what it used to be. It's just, it's like night and day. And if you're around 2017, you know exactly what I'm talking about. So I think 2021 is going to be a great year. I think we're all going to be happier than 2020. It's got to take time. So I'm just going to stay the course. And I think we're going to see fantastic results. All right. And one thing that could derail that whole process is you do all the things you're supposed to do, but then you get hacked and you lose all your crypto. So I'm going to go over a cue of the day right now. And this is important. So let's jump in the office. All right, everybody. Welcome back to the office. And I got a pretty good question today, which is all about loss and hopefully what not to do. So this should be pretty good. So this was from Garkon 2020 and Garkon States. He says, Rob, in the day show, you spoke of Ku coins loss of a major amount of crypto. Yeah, $150 million. That's a, that's a quite a sum, I will tell you. He or she states, I'm less than a year in and made an error in how I stored my coin and had three and a half Bitcoin stolen when someone was able to access my seeds. So that sucks. That shouldn't go to bed. And then waking up and you're like, wow, I just lost, you know, $35,000. I just like that. That's a bomber. And he states in all transparency, I learned to never store the seed words in a file on my phone. When I upgraded and back to my Apple to transfer all the data, it was within days. This action on my hard wallet had been completely raped of online Bitcoin. I went to the police and they certainly can't help. But what do I need to do? Can it be reported? Am I just SOL? Can I even take it as a loss? Like to hear your thoughts. And so here's my thoughts. First of all, it sucks. I'm really sorry that happened. There's nothing worse than, you know, getting screwed out of your money, whether that be from, from your fault or from someone else's fault, regardless, irregardless, it still sucks. So first thing is I'm glad you learned that don't do that. So when, when Garcon here is talking about taking screenshots or putting them into his phone, what he probably did was when he wrote down those mnemonic phrases for his nano ledger or for, you know, whatever kind of wallet that he had, he probably stored it in his phone in some way, shape, or form, either as a note, either as a picture or something like that. So don't do that. Anything connected to your phone can be hacked very simply, very easily by anybody who wants it. I try to keep everything offline as much as possible. That's why I use that shield folio book or stone book. There's a link in the description. You can check it out. That's where I store all my seed phrases. And actually, someone said they had a great idea. They have a backup of that book. They bought two of those books and they said one is in my, one is in my safe and one is at home for easy access. And I was like, it's a pretty good idea. Actually, I should probably do that. So don't throw anything on your phone. That is a big thing. So the next question is like, well, my SOL and can I at least claim it as a loss? Well, first of all, to answer the first question, yes, your SOL, sorry. And that's the problem with decentralization. Cryptocurrency assets is being your own bank means it really comes down to you. And there's the positives and there is a negatives. And this is one of those negatives about being your own bank. You got to be careful. And that's just how it goes. On the other side, though, the question is, well, can I claim it as a loss? And that is a great question. And because I'm at a CPA, in order to play one on TV, I reached out to my friend Shian Chandra Sakara. And you don't know Shian. He writes for a bunch of different publications, Cointelegraph and all those different big ones. And he's my he's my go to guy when I don't have the answers. And I sent him a message on Twitter. I said, Hey, man, I got a question from the subscriber. I believe the answer is that he can take the losses because what I thought, but one a second pending, here's the message. And I told him what it was. He goes, yeah, he goes, I actually answered this in a post. So go read that, which is, you know, good, he doesn't have to deal with me and my nonsense of, you know, going through the whole thing. So the post that he wrote was on August 7 2020. So very recently, and he breaks it down. He says, Hey, what's a theft loss? Well, according to the IRS, a theft is the taking and removal of money or property within the intent to deprive the owner of it. Since crypto treated as property for the IRS, a lack of crypto due to scams or an exchange hack meets the IRS theft loss criteria. So you're thinking, Great, this is fantastic. But wait, there's more because it's never simple because the IRS, right? First of all, sending crypto to an incorrect address or placing your private keys by your private keys by mistake. It is not theft. So if you screw up and you just lose your your private keys, it gets burned, it gets wet, it just goes away, you lose it. That's not theft. That's on you. And sorry, that's that's how it goes. So the amount of loss eligible for the deduction is a difference between the fair market value at the time of the loss versus the fair market value after the loss. For example, if you sent half a Bitcoin to the Twitter Bitcoin scammer, at the time you sent it was worth 5,000, your theft loss for tax purposes is $5,000. Now the deductibility, having a personal theft loss does not necessarily mean you can deduct it on your tax forms to get a tax benefit. Well, then that's suck. So you're like, Well, great. Well, at least I can, you know, claim there's a loss, which is fantastic. But no, prior to January 1, 2018, personal theft losses were deductible on your tax forms. Form 4684, Schedule A, no idea what that is. Sure. As a result of the tax cuts and jobs act TCJA, which I think was just passed recently, between January 1, 2018 and December 31, 2025, you can only deduct theft losses attributed to federally declared disaster areas. So if you're living in a disaster area, sure. Good chances though, might not have been. Unfortunately, crypto scams incurred on your personal crypto accounts during this period are not deductible on your tax forms. Let me read that again. Unfortunately, crypto scams incurred on your personal crypto accounts during this period are not deductible personal. So if it's just you, you have no small business, you really are so well. And that's the bomber. So losing the tax write off may not be detrimental. The tax code only allows you to write off a portion of your theft loss, as opposed to the full amount to arrive at the deductible amount, $100 plus 10% of your adjusted gross income is subtracting from your full theft loss. For example, if Mary has $5,000 and she loses it, but her adjusted gross income is $100,000, her deductible loss would be $3,900, which is $5,000 minus 100, 100,000 minus 100%. Very boring stuff. If you're kind of like lost, don't worry. Just give it to your CPA and they'll figure it out. So really what it comes down to is this, personal losses, you're still as well. Sorry. But if you have a business, business theft losses are still deductible. So for example, if a crypto mining company, which runs as a trader business, loses coins to scammers, they will be able to deduct that loss on their business tax return. So really you'd have to say like, why you are using cryptocurrency in your business, and then you can deduct it. Otherwise, you got to wait till between 2018, 2095, you just SOL. So that's why I'm always harping on these scams on this channel. That's why I'm always harping on ways to save your past raises. That's why I have a link for you for that shield, folio or stone book where you can store it. I just ordered my second one. So I'm waiting for that because I got to back everything up. Anyhow, I know it's a bummer of an answer, but it is the truthful answer and hopefully the answer is everybody's question. All right, let's jump back. All right, so that's it. So I hope that answers some question. Hopefully you can take some information that and learn from someone else's mistakes. You have to learn from mistakes. It's not to be yours. And I'm going to link that final video about how I'm not going to pay any crypto taxes because I refuse to do it and you decide for yourself. But that's it. So thanks for sticking with me. I really appreciate it. If you like the types of videos, it's going to be two months going to pop up left and right. I'll put one of those over there and YouTube's got to control the other one. So I don't deal with that. And that is all. Also, I'll be on Alex Maschioli's show in about 30 minutes and we're going to be talking to the CEO of BlockFi. So hopefully I can get him some good questions in because I know a lot of people have been saying that I need to check it out. So I thought, hey, what a better time to check it out than talking to the CEO. All right, so that's it. Thanks so much and I'll see you on the next one.