🔵Crypto Asset Statement - Ether (ETH)

HBP LINK LTD. (HBP) believes that our users should have a better understanding of the background knowledge of the crypto assets they can trade through our OTC platform. Ether(ETH) is one of the major crypto assets available to clients. We summarize the history, features and risks of ETH so that you can understand the fundamentals and risks associated with trading it.

Background of Ether

Ether(ETH) is the token that facilitates operations on the Ethereum network. Similar to Bitcoin, ETH is an open-source public service that applies blockchain technology to enable smart contracts and cryptocurrency trading without the need for a middleman. In 2013, a developer named Vitalik Buterin proposed a new platform that would enable for decentralized applications. Ethereum was introduced in 2015 after an initial campaign, with 72 million tokens created. Ethereum enables developers to create a wide range of decentralized applications(Dapps).

How Ether Works?

Similar to Bitcoin, ETH is initially created by mining. However, ETH is transitioning from proof-of-work(PoW) to proof-of-stake (PoS), according to the Ethereum Foundation.

Proof-of-work is the consensus mechanism that allows the decentralized Ethereum network to agree on topics like account balances and transaction order. This prohibits users from "double spending" their tokens and makes the Ethereum chain extremely difficult to hack. The fundamental mechanism that determines the difficulty and rules for the work miners do is known as proof-of-work. Mining is the actual "labour." It refers to the process of adding valid blocks to the chain. This is significant because the length of the chain aids the network's ability to follow the right Ethereum chain and comprehend Ethereum's current state. The longer the chain and the greater the block number, the more certain the network can be about the current state of affairs

On the other hand, proof-of-stake is a consensus technique that blockchain networks utilize to reach distributed consensus. To become a validator on the network, users must stake their ETH. Validators, like miners in proof-of-work, are in charge of arranging transactions and constructing new blocks so that all nodes can agree on the network's state.

Features of Ether

(i) Decentralized

Similar to Bitcoin, ETH has no central authority, unlike traditional currencies, which are issued and administered by a central authority, which could be the government of a country or any other entities.

(ii) Transparency and Immutability

On the Ethereum network, each transaction is stored in a block that is linked to a previous block of transactions. Because blockchain technology is immutable, no entity can delete or edit any data on the network. Ethereum transactions are cryptographically confirmed by network nodes and recorded in the blockchain, which is essentially a public ledger. Because every transaction can be seen by the public, ETH is full of transparency, given that it is not traded in centralized exchange.

Risks of Ether

Although Ether is the most well-known crypto-assets, there are some risks when investing in Ether. These risks include: (i) price volatility; (ii) loss and theft; (iii) cybersecurity problems.

(i) Price volatility

ETH’s price follows the rules of demand and supply, the price of ETH may fluctuate for more than 10% within 24 hours, that means ETH can be more volatile than any other assets.

(ii) Loss and Theft

ETH wallet files containing private keys can be accidentally deleted, lost, or stolen. Because users are responsible for managing their own private keys, if the private keys or passwords are forgotten, or the electronic devices that store ETH are permanently broken, damaged or stolen, users will be unable to access the ETH wallets, resulting in a permanent loss of the ETH, given that they do not back up their private keys.

(iii) Cybersecurity problems

Although the Ethereum network is considered hacker-proof, users may lose ETH if their electronic devices are hacked, because hackers can obtain their private keys or passwords and transfer their ETH out of their wallets.

How HPB decides to list crypto assets

Before listing crypto assets, HPB considers their risk, utility, liquidity, demand and supply, and regulations. HPB's crypto-assets are currently provided by our liquidity providers. We decided to make ETH available for our clients to buy and sell because it has the highest market cap of any crypto-asset and has a massive supply and demand. Aside from that, we take into account a variety of other factors when evaluating crypto-assets in a comprehensive manner.

Regulatory Information

HPB provides over-the-counter (OTC) trading for users to exchange between crypto assets and fiat currencies . We do not offer users custody services or any crypto contracts. HPB is a licensed Money Service Business Company in Ontario that deals with virtual currencies. FINTRAC regulates HPB in order to serve Canadians.