Business & Investment

Bitcoin is competing with innovation

Cryptocurrencies arose in a time when many people were distrustful of the banking industry, with fresh memories of the 2008 financial crisis.

Crypto brings many elements together. It’s a currency that frees users from big banks, a low-cost payment system, a technology based on a shared, undamaged database, and puts everything together in a neat bundle. It’s an investment tool that fits into the ever-evolving range of the digital age. So how can you handle all emerging use cases with a single use of blockchain technology that stores and transfers value in the case of Bitcoin? Well, in short, you can’t.

Bitcoin itself adopted the blockchain and used it for a single purpose: peer-to-peer decentralized electronic cash. that’s it.

Ethereum (ETH), Polkadot (DOT), Cardano (ADA), and many other new cryptocurrencies are adopting blockchain like Bitcoin, but aiming for much more. : A form of smart contract that is competing to become a general purpose blockchain infrastructure that can perform complex operations.

Smart contracts use blockchain to enable peer-to-peer transactions without the need for third-party verification, responsible for the non-fungible token boom and a new crypto-based financial system called Decentralized Finance (DeFi). There is. Cryptocurrency lending, borrowing and interest earning are already taking place outside the traditional financial system.

“Cryptocurrencies and the blockchain technology that drives them are revolutionary in every way for global finance, just as Model T did for transportation. Also, Model T and mass production lines It’s as alien to most people as it was 110 years ago, “explains Sean Sanders, CEO of crypto investment platform Revix.

“That’s why diverse approaches to cryptocurrencies are absolutely essential. Technology is evolving at a blazing pace, with clear winners and losers. This is more than gambling individually. That’s why it’s even more important to touch a basket of diverse cryptocurrencies. “

The big debate about cryptography is directed at how to build a better blockchain that can handle more transactions, is more secure, environmentally friendly, more decentralized, and better than previous versions. The discussion assumes that the original Bitcoin blockchain is not well suited for all purposes. This is generally accepted as true.

There are six major debates within the crypto community that will shape the future of cryptocurrencies and blockchain technology.

1. Decentralization and speed

Blockchain technology architectures, such as those behind Bitcoin, emphasize resistance to decentralization and censorship rather than speed in processing transactions. Bitcoin is the most decentralized blockchain network that has ever existed, but it can only process about 4.6 transactions per second. In contrast, blockchains like EOS are much less decentralized, but can handle over 2000 transactions per second, much like Visa’s payment network.

“When buying coffee using Bitcoin, the speed at which transactions are processed on the network is important. No one wants to sit at Starbucks waiting 20 minutes for payment to complete, so the merchant sends you You need to receive what you’ve done in seconds, but if you’ve been holding Bitcoin for 20 years, or if you’re only using it for large purchases such as buying a house, the speed of that transaction isn’t that important. “Sanders says.

Most of the community believes that blockchain needs to be designed to speed up from the beginning, and it’s worth sacrificing some decentralization and security to achieve this speed.

“The real wisdom is knowing that no one knows what this will be. Thousands of different approaches have been tried, regulations have been drafted, and the entire space is evolving rapidly over time. The debate is important, and at this point it seems wise to spread bets on different crypto projects and blockchains targeting different points in this spectrum, “says Sanders.

2. General and limited calculations

Bitcoin coding languages ​​have very limited functionality. It can be used to send Bitcoin somewhere and someone can see the transaction and its timestamp, and a few other tasks, but that’s it. Due to the programmer’s phrase, it is not “Turing complete”.

The decision to limit the Bitcoin programming language was intentional. Focusing on financial use cases, Bitcoin authors wanted to limit the potential for programming bugs. This is a common decision when working on software security design and is known as “Attack Surface Limitation”. The disadvantage of limiting the attack surface is that it also limits the extent that certain software can support.

In contrast, blockchains like Ethereum are intentionally designed to be Turing complete. That is, Ethereum (and other blockchains like Cardano and Polkadot) can handle a wide range of instructions, including conditional if / then statements called smart contracts, and multiple distributed applications (known as dApps). Platform for. More specifically, smart contracts are computer programs that automatically take the actions necessary to implement agreements between multiple parties on the Internet. They are designed to reduce the need for trusted intermediaries between contractors, reduce transaction costs, and at the same time increase transaction reliability.

The downside is that the more code you have, the more likely you are to have bugs and security holes.

“The feature and security debate may continue. We look forward to the success of both approaches because they offer a variety of features and trade-offs.“ Nokia vs. Samsung vs. Apple vs. Competitors. ” It feels like an era like that, “says Sanders.

3. Privacy

Different cryptocurrencies offer different levels of privacy to users. Bitcoin and many other blockchain transactions are pseudonyms. Transactions cannot be traced back to a specific individual, but can easily be traced to individual wallet addresses. This is similar to how a phone is tied to your phone number, but it is not always tied to your identity unless you choose to reveal it.

However, there is another batch of cryptocurrencies designed to provide complete anonymity. Transactions involving cryptocurrencies such as Zcash, Monero, and DASH can be intentionally hidden, mixed, or otherwise completely untraceable. Not surprisingly, regulators and central banks do not endorse these “privacy-focused” cryptocurrencies.

As with the speed vs. centralized debate, there are multiple views on what the best state of public blockchain is regarding privacy.

“I don’t know how this works, but I think it’s likely that the option to send private transactions will become the norm. Again, along the various stages of the privacy spectrum. The best strategy is to spread your bets across multiple coins, “Sanders adds.

4. Consensus mechanism

Every blockchain has a consensus protocol. This is a specially defined set of rules for reaching consensus among various actors on the blockchain. This is one of the core innovations that enable public blockchain.

However, there is a great deal of debate in the crypto community about the best way for networks to reach consensus. The use of Bitcoin’s Proof of Work (PoW) methodology, where miners spend extensive computing and power to solve complex mathematical problems, has proven to be effective and safe. Has been criticized for its high energy use and high cost. Another approach, where Proof of Stake (PoS) is best known, avoids this, but the track record is not well established.

5. Governance

Another argument is a good way to manage public blockchain. Many believe that the heart of public blockchain is that the code embedded in the blockchain is the law, and everything that the code allows is allowed in the chain. Others believe that the community surrounding a particular chain can interpret the law as appropriate.

This debate broke out well in the Ethereum community following the DAO hack. Hackers have stolen $ 70 million by exploiting a bug in the code of a smart contract hosted on the Ethereum blockchain. This eventually led to Ethereum’s “hard fork,” and most of the community agreed to cancel the transaction by creating a new version of the ledger that restores the stolen property to its original owner. This blockchain held the name “Ethereum”. However, not everyone supports this switch, and the old, unaltered network that supports the “code is the law” perspective continued under the new name “Ethereum Classic.” Ethereum Classic did not restore hacked assets. Today, both cryptocurrencies are of great value.

“This debate is evolving almost every day. Many new chains (such as EOS and Tezos) have created mechanisms to resolve conflicts on the chain. These efforts are seeing success as well as failure. The process of governance is an important and controversial issue currently underway in the battle for control of the blockchain, “says Sanders.

6. Specific future use cases

Finally, the increasing diversification of value among major cryptocurrencies reflects the evolution of use case targets for public blockchain technology.

Sanders continues: “All cryptocurrencies currently in our Revix Top 10 bundle [shown below] Either a versatile generalist coin or a monetary asset, coins further down the spectrum have specific use cases such as Filecoin, Prediction Markets (August), and Trading (0x). And every day, developers are experimenting with creating public blockchains for new specific areas that deserve various trade-offs and specializations. This trend is expected to continue and grow as developers explore all possible ways to leverage technology. “

Source: Revix

Conclusion

It is important to remember that we are still in the early stages of blockchain development. Some technologies can withstand this experiment, while others cannot survive. From time to time, competing protocols disappear and the world is locked into a single choice. VHS over Betamax, HD DVD over Blu-ray, or perhaps most obvious is TCP / IP over the early OSI of the Internet.

“Our view is that we don’t know the future. One of the things that makes monthly rebalancing, a market cap unweighted index very attractive, is what happened to the above experiment. But if the category is very successful, it’s about ensuring that the index works too. “

If you’ve invested in Revix’s Top 10 bundles in the last 12 months, you’ll see an increase of 537%, compared to an already staggering 201% just buying and holding Bitcoin. You can choose the individual cryptocurrencies to invest in, but even experts have a hard time choosing those cryptocurrencies that are consistently outperforming the entire market.

So it’s probably not surprising that a bundle of simple, low-cost solutions that can track the entire crypto market has become such a hit among investors. By buying Bitcoin, Ethereum, and much more in one go, you’ll be rewarded for success without being dragged too much when someone lowers the value.

Source: Revix

About Revix

Revix Bring simplicity, trust and excellent customer service to your investment. Its easy-to-use online platform allows anyone to safely own the world’s top investments with just a few clicks.

Revix Guide new clients to their first deposit and first investment through the sign-up process. Once set up, most customers will manage their own portfolio, but will always have access to the support of the Revix team.

For more information www.revix.com

This article is for informational purposes only. The expressed views should not and should not be construed as investment advice or recommendations. This article is neither an offer nor a solicitation to buy or sell any of the assets or securities listed here. You should not invest more than you can afford to lose. Before investing, consider your level of experience, investment objectives and seek independent financial advice as needed.

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Bitcoin is competing with innovation

https://www.moneyweb.co.za/in-depth/revix/bitcoin-is-competing-against-innovation/ Bitcoin is competing with innovation

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