When interpreting the world, some people apply religious beliefs. Others view it through the confines of a political party or family upbringing.
Some people only have one filter through which they view the world: Bitcoin.
And at least a few have taken to Twitter to share their worldview with regards to the unfolding political situation in Afghanistan, a country that repeatedly repelled invaders well before the U.S. intervened in 2001—and one which will continue to beguile people now that the Taliban has taken advantage of the U.S. withdrawal to assert control.
Max Keiser, a self-proclaimed Bitcoin maximalist who hosts the Orange Pill podcast after years of shilling BTC on the Moscow-run RT network, started things off by sharing a video of Afghans running alongside—and even hanging onto—a U.S. Air Force plane as it evacuated. (Some then fell to their death.) Keiser’s caption? “Nocoiners after #Bitcoin crosses $100,000.”
Though Keiser had some defenders, most took Keiser to task, calling the post tasteless and crude.
Fellow Bitcoin podcaster Stephen Livera shared another BTC talking point from today, writing, “Under a Bitcoin standard, USA would not have sent troops to Afghanistan.”
Bitcoin was created in 2008, just seven years too late for the U.S. to adopt it and rethink its military strategy. But had it been available, the military surely could have afforded to buy some BTC and put in an order for rocket launchers on the dark web.
“Bitcoin is Saving,” an anonymous account with a healthy 184,000 followers, proclaimed: “Afghanistan’s best hope is now #bitcoin. It always was, but now everyone understands. Same goes for the rest of the world.”
Afghanistan’s best hope is now #bitcoin. It always was, but now everyone understands. Same goes for the rest of the world.
— Bitcoin is Saving (@BitcoinIsSaving) August 16, 2021
No, not everyone understands. In fact, most Afghans have never even heard of Bitcoin because more than half of Afghan adults are illiterate—a consequence of ongoing lack of access to safe education thanks to groups such as the Taliban.
In which case, there’s Ethereum, wrote ptoner.ETH, in a well-intentioned way:
If Afghanistan’s infrastructure was built on Ethereum there would be very little for the Taliban to seize as they roll back into town.
The banks would still work. Decisions could still be made via DAOs that involve the outside world. It wouldn’t stop working for even a second.
— ptoner.eth 🦇🔊 (@ptonerdoteth) August 16, 2021
It’s true. Little-known fact: The Kabul airport is still running because it’s built on Ethereum.
Never mind Ethereum, said @Trader4lyf, who claims to be a Wharton MBA and former investment banker. He explained the practicality of Bitcoin in a since-deleted tweet: “Imagine trying to flee Afghanistan and all you have are heavy gold bars. You either climb without the bars or get left behind. And most likely you won’t get past the metal detectors. #Bitcoin fixes this.”
Or, imagine leaving your home with the clothes on your back, fleeing a regime known for draconian punishments and the brutal suppression of women’s freedoms. And not only that, but trying to come to a country where people are free to spout whatever nonsense they want—and frequently do!
Just, maybe, when they arrive, treat the Bitcoin talk like a bank would treat a deposit: Put a hold on it.
SafeMoon, a crypto token that gained popularity via social media this spring, continues falling in price despite a recent market upswing.
It’s down 16% in the last day and has fallen out of the top 100 coins in terms of market cap according to both CoinGecko and Nomics.
SafeMoonwas one of this spring’scryptocurrency meme sensations, as theBinance Smart Chain-based coin came out of nowhere and rapidly blasted to a market cap above $6 billion in May. As thewider market stumbled, so too did SafeMoon’s price in the weeks that followed. But whileother coins are now rebounding, SafeMoon is only sinking further.
According toCoinGecko, SafeMoon’s price is down 16% today alone, currently sitting at $0.00000155 per token. It’s down more than 27% on the week, and this latest tumble has knocked the market cap down to $813 million—which means that SafeMoon is no longer one of the top 100 coins by market cap on CoinGecko’s list. It’s now ranked #109, although the rankings can vary by source.Nomics has it at #105, for example.
SafeMoon’s continued decline comes in stark contrast to the rest of the market. A quick glance at CoinGecko’s current Top 100 shows that only a handful of coins are down at all over the last seven days, with the largest drop sitting at just 1.6%. In fact, a vast majority of the coins on the list have seen double-digit percentage price hikes over the last week, including standouts likeSolana up nearly 70%andCardano up 46%. The wider market is mostly booming.
It’s not just a matter of meme coins and tokens struggling, either.Dogecoin, the leading meme coin, is up nearly 39% on the week and is currently ranked #7 overall in terms of market cap. EvenShiba Inu, anEthereum-based rival to Dogecoin, has seen a 26% price boost this week. SafeMoon’s price keeps falling, however, and it’s now nearly 86% off its May peak.
If the downward spiral continues, then SafeMoon certainly wouldn’t be the first coin to quickly rise to prominence and then fade from relevance, as we have seen a whole host of Ethereum andBitcoinknockoffs attempt to capture market magic over the years. Where SafeMoon varied from some of the past pump-and-dump tokens is in the way it incentivizes investors to hold on to the token long-term.
Essentially, SafeMoon users earn passive rewards simply by holding the token, with no need to actively stake holdings within the network. SafeMoon imposes a 10% tax on all transactions and then distributes a portion of that fee across all token holders as so-called “reflections.” It’s a way to gradually build up users’ holdings, although the tax for selling and using the token—along with manually “burning” or removing tokens from circulation—has raised concerns that the whole thing is a Ponzi scheme.
“The manual burns, alongside the company having a pretty large stake in the coins, just speaks to me of a manipulation risk,” London Capital Group Head of Research Jasper Lawler toldBloombergin July. “Whenever there’s some sort of mechanism to stop selling, that’s a bit of a warning sign.”
It’s a cryptocurrency built for holding, but with the price sinking and moving against most of the momentum of the wider market, SafeMoon’s holders seem to be selling. Daily trading volume for SafeMoon fell below $10 million for multiple days last week butnow tops $40 millionover the last day—the highest mark since May.
TheSafeMoon subredditis awash with posts about whales dumping their holdings, based on public blockchain data, and a wave of panic-selling could be amplifying the recent price drop. Still, despite all of that, the overall sentiment on Reddit is largely positive. After all, everyone else gets a small cut of those big sale transactions, even if the value of those tokens is dwindling.
SHOUTOUT TO ALL DIAMOND HANDS 💎 🙌 💎 WE APPRECIATE YOU 🚀🌕 #SAFEMOON
— SafeMoon (@safemoon) August 16, 2021
Meanwhile, the SafeMoon Twitter account—which counts nearly a million followers—tweeted“SHOUTOUT TO ALL DIAMOND HANDS” today, using a familiar crypto meme phrase to indicate holding firm and not panic-selling amidst volatility. Otherwise, most of the recent messaging concerns the impending August 28 release of an official SafeMoon wallet app, which generated some buzz when it wasfirst launched into beta testing in June.
We’ll have to wait and see whether the meme coin can recapture some of its spring hype—and if most of thereported 2.5 million unique wallet ownersholding SafeMoon maintain their “diamond hands” amidst the recent price struggles.
Up almost 20% in the past 24 hours, Solana (SOL) has been on an incredible rally across the board. In higher timeframes, the cryptocurrency records a 70% and 141% profit in the 7 day and monthly chart.
SOL on a rally in the daily chart. Source: SOLUSDT Tradingview
Perceived as one of Ethereum’s potential killer ecosystems, Solana continues to grow and attract attention from the crypto space. DeFi investor Daniel Cheung recently published a report on the fundamentals that support further appreciation for SOL’s price.
Cheung believes this cryptocurrency offers one of the “best” reward/risk scenarios for any crypto investments and predicted the arrival of the “Solana Summer”. This project has a straightforward pitch due to its high scalability and low-cost smart contract platform.
5 BTC + 300 Free Spins for new players & 15 BTC + 35.000 Free Spins every month, only at mBitcasino. Play Now!
In addition, it provides a high level of scalability in an ecosystem without solutions such as sharding. Cheung believes that these features allow the application build on Solana to have “synchronous composability”.
This matters because with a single shared state and synchronous composability every application on Solana can communicate with each other atomically.
As Ethereum moves forwards with its migration from a Proof-of-Work consensus algorithm to Proof-of-Stake, its DeFi ecosystem could lose this property. Thus, some applications could become less interoperable with each other or stop working altogether.
The Bearish Case For Solana, What Could Prevent More Gains
As NewsBTC reported, the Solana Foundation launched stake pools with the purpose of increasing the security of its network, make it more censorship-resistant, and provide SOL holders with more incentives to participate in the ecosystem.
Get 110 USDT Futures Bonus for FREE!
The latter has been one of the heaviest criticisms made by the project’s detractors in addition to the network’s level of centralization. Cheung believes this is part of the bearish thesis for Solana claiming the network “may never decentralize enough in the future”.
The second part that could prevent this ecosystem to gain further traction is Ethereum itself. This competitor still supports the majority of DeFi projects, has a high number of developers working on dApps and the development of the ecosystem, second layer solutions, and more.
Source: Daniel Cheung via Twitter
Cheung claimed Solana “faces a steep uphill battle vs Ethereum”. However, DeFi is one of the sectors where it’s more visible than the crypto industry is still in its early phase and could inevitably be heading towards a “multichain world”, as Cheung called it while he added the following:
It is still unclear whether smart contracts will be a winner-take-all market. While Ethereum is currently in the lead, data points increasingly point towards a multi-chain future, at the very least for the foreseeable future as this market plays out.
Moreover, on the centralization issue, the investor said that there is a lot of debate around when a blockchain has the right balance of decentralization. Cheung estimates that 1,000 or 10,000 nodes could be sufficient, this would make the criticism towards this network “invalid”.
Data presented by the investor claim that development activity in the SOL ecosystem are “trending very well” and has accompanied its price appreciation. The trend seems poised to continue in the coming months, as relevant figures in the crypto space, such as FTX CEO Sam Bankman Fried, are “heavily involved” with Solana.
Cheung claims that Bankman Fried has been making serious investments into this ecosystem. The exchange and its CEO have been making external investments in traditional finances, sports, and consolidating partnerships with other investors, politicians, celebrities, and others.
Thus, institutions from Wall Street are keener to jump into Solana and its ecosystem. Cheung concluded:
So with the bear arguments nullified, you are left with an asset that offers one of the best R/R in crypto right now, and one that offers practically unlimited upside in a bubble given its comped to $ETH which trades like its running to become the internet’s reserve currency.
The distribution of 6,000 Dogecoin contest winners offers a rough proxy for its regional popularity.
The grand prize winner hailed from Florida, which was otherwise underrepresented .
Who is buying Dogecoin? Celebrities like Elon Musk and Mark Cuban have praised the novelty coin—whose price has risen as much as 50-fold in 2021—but there has been little data about where its everyday fans reside. Now, a recent contest from Coinbase provides some clues.
The company ran a sweepstakes in June with over 6,000 prizes in the form of Dogecoin. And according to a list of winners released by Coinbase and its marketing partner, one part of the country is over-represented: California.
The sunshine state accounted for 18% of the Dogecoin winners, which is well above the approximately 12% share of the US population that California represents. Also notable is that more winners came from New York than from Texas or Florida, despite it having a smaller population. New Jersey, the 11th biggest state by population, came in at number 5 among the winners—suggesting that, overall, the Doge phenomenon is bigger on the coasts than in the south.
Here are the states that had the most winners of the 6,000 prizes of $100 in Dogecoin that Coinbase handed out in the sweepstakes:
The number of Dogecoin sweepstakes winners by state
The fewest winners came from Wyoming, West Virginia, and Vermont—no surprise given their small populations. Hawaiians were ineligible.
The sweepstakes outcome is hardly a perfect proxy for identifying Dogecoin buyers, of course. And nor does it explain why so many winners came from California. One theory may be the state’s reputation for embracing new fads, or perhaps a penchant among its residents for gambling—reflected both in their entering the sweepstakes, and their interest in the highly volatile currency in the first place.
Coinbase launched the sweepstakes shortly after it listed the Shiba Inu-themed token early this summer. The contest resulted in a class-action lawsuit last month brought by disgruntled Coinbase users who purchased $100 worth of Dogecoin to enter—the entrants claim the company did not provide fair notice that their was a way to enter without a purchase, which is a legal requirement for any sweepstakes program.
The contest awarded prizes of $30,000 in Dogecoin to ten winners, four of whom were from California. The winner of the grand prize—$300,000 in Bitcoin—was identified as “Richard B” of Windermere, Florida.
There is a lot of noise about the legitimacy of the stablecoin Tether (USDT), with claims of “pumping the price of bitcoin” being made.
The below is from a recent edition of the Deep Dive, Bitcoin Magazine‘s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.
There has been a lot of noise made in recent weeks, months and years about the impact of stablecoins on the bitcoin (and more broadly, the crypto) market. In aggregate, the total global supply of stablecoins continues to grow and make new highs, with a current tally of $110 billion in circulating supply at the time of writing.
In particular, a lot of noise has been generated on the legitimacy of the stablecoin Tether (USDT), with claims of fractional reserve or “pumping the price of bitcoin” having been made. The circulating supply of USDT is $62.9 billion at the time of writing.
On August 6, Tether made their reserves audit from June 30 public, in which they broke down the asset allocation and the maturity of the commercial paper held by the stablecoin issuer. This was a very notable step taken by Tether to increase transparency on the largest stablecoin in the crypto market.
Tether Reserves Asset Breakdown
Tether Reserves Commercial Paper And Certificates Of Deposit
With Tether increasing the transparency and the legitimacy of the market’s leading stablecoin, an interesting trend has emerged in the stablecoin and bitcoin markets.
According to a report from Dallas News, this sibling duo has been bringing in thousands of dollars mining Ethereum. While most kids are playing with their computers, siblings Ishaan and Aanya Thakur are making money with theirs. The bother-sister duo currently makes $32,000 a month from their Ethereum mining operation which they started in their garage.
The pair had gotten interested in cryptocurrencies after their father had told them about Bitcoin. At the time, the siblings were interested in buying the cryptocurrency, but because the price had grown so much, they opted for mining. But mining for bitcoin had become an oversaturated market, they found. Hence, they opted for the second-largest cryptocurrency by market cap; Ethereum.
Related Reading | Crypto Market Cap Inches Closer To $2 Trillion, What To Expect From The Market
5 BTC + 300 Free Spins for new players & 15 BTC + 35.000 Free Spins every month, only at mBitcasino. Play Now!
They had started by mining Ethereum using an old gaming laptop that they had. And in the first month of mining, they had made $1,000 from their small operation. This motivated the pair to take their activities to the next level, given the profits they had acquired using just an old gaming laptop. Crypto mining requires chips to mine and this is where the siblings ran into their first problem.
COVID-Induced Chip Shortage
Siblings Ishaan and Aanya wanted to expand their mining operations, but due to the pandemic, there has been a chip shortage. Manufacturers had not been able to keep up with demand due to countries going into lockdown and people not being able to go to work. So getting a chip required for mining has become harder than ever. The duo had two options; buy chips from resellers online at a marked-up price or wait for chips to become available. They chose the latter.
Related Reading | Why A Shocking Altcoin Season Could Be On The Horizon
Get 110 USDT Futures Bonus for FREE!
9-year-old Aanya and 14-year-old Ishaan signed up for supply updates from retailers like Best Buy and Micro Center. When chips and hardware needed for their mining operations were available, they would get alerted by email. And the siblings would line up outside the retailers before they opened the next day to be able to get the parts.
This strategy has proven to be profitable for them as the duo has been able to expand their mining operations beyond their home garage. Their rigs were generating too much heat to stay in their home garage and so now they have an air-conditioned data center in downtown Dallas where they keep most of their mining rigs. While they still keep about 30 cards in their garage.
Expanding The College Fund With Ethereum
The siblings save most of their returns from mining. But they have had to sell some portions of their crypto in order to pay for things like electricity and parts to expand their mining operation. Profits from the mining operation, Ishaan explained, go to their college fund. Both siblings have dreams of becoming doctors and want to go to the University of Pennsylvania, in the case of Ishaan, and the University of New York, in the case of Aanya. And they are hoping mining Ethereum will help them fulfill their dreams of going to college.
Related Reading | Ethereum Fee Burns Clocks $100 Million, Here’s Why The Burn Is Important
As for the cost of electricity, their returns far outweigh the power bill they get for mining. For the previous month, they had to pay a total of $2,500 – $850 for their home electric bill and $1,650 for their data center electric bill. This might be a high power bill, but it pales in comparison to the $32,000 that the siblings are bringing in for their mining operation.
Their current setup consists of 14 rigs, which have 82 processors used to mine Ethereum. Then five rigs with 12 processors which the siblings used to mine Ravencoin because these processors are not powerful enough to mine Ethereum. The siblings plan to grow Flifer Technologies, which is the name of their company and have currently ordered four additional mining rigs from China with built-in processors.
Ethereum price continues to trend above $3,000 | Source: ETHUSD on TradingView.com
Featured image from Dallas News, chart from TradingView.com
A man from Maryland has been charged with laundering 2,933 Bitcoin (BTC), worth around $139 million, from a US prison cell.
Ryan Farace, 37, has been accused by federal prosecutors of laundering money while serving a 57-month prison sentence for selling drugs on the dark web.
ADVERTISEMENT
Originally convicted in 2018, Farace was previously ordered to forfeit 4,000 Bitcoin, worth about $189 million at time of writing, and an additional $5.6 million in cash and property.
Farace reportedly operated under the moniker “Xanaxman” while selling Alprazolam, a generic form of the sedative drug Xanax.
According to the U.S. Attorney’s Office in the District of Maryland, Farace used a pill presser to turn the Alprazolam into more than 920,000 counterfeit Xanax pills between November 2013 through June 2017. Farace then reportedly worked with a co-conspirator named Robert Swain to use Bitcoin to launder his proceeds.
“Specifically, Farace used pseudonyms to contact a co-conspirator through dark web marketplaces and encrypted messages in order to exchange Bitcoin he received from his drug trafficking for cash. The co-conspirator would then mail or ship packages of US currency equivalent to the value of the Bitcoin received, less a fee, to mailing addresses provided by Farace…
During the course of the conspiracy, Farace received cash totaling more than $5 million, through the mails, which he had exchanged for Bitcoin earned from drug trafficking. In addition, Farace and Swain drove to New Jersey so that Swain could collect $200,000 in cash that Farace had exchanged for Bitcoin. During the in-person meeting on February 16, 2017, Swain provided a fictitious name to the individual he met and falsely stated that the Bitcoin and cash were his own. Farace and Swain later tried unsuccessfully to exchange Bitcoin for $400,000 in cash with the same individual.”
According to a report from the Baltimore Sun, the new indictment alleges that Farace and his father, Joseph Farace, laundered funds from drug operations between October 2019 and April 2021 while detained in prison.
The indictment does not specify whether the recently seized crypto assets were among the proceeds Farace was ordered to forfeit or whether they were assets that the government had not previously detected.
Don’t Miss a Beat – Subscribe to get crypto email alerts delivered directly to your inbox
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
ADVERTISEMENT
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
When El Salvador’s president, Nayib Bukele, announced his country would adopt Bitcoin as legal tender, Bitcoin holders the world over rejoiced—but they may be the only ones still cheering.
Following protests, lawsuits, and criticism from multilateral organizations, Bukele’s Bitcoin plans now face the scorn of the world’s top credit agencies. EchoingMoody’s concernsearlier this month,Fitch Ratings todaylikewise warned against the potential negative consequences of El Salvador adopting Bitcoin to its financial institutions and insurance sector.
According to Fitch, El Salvador’s Bitcoin law would basically leave these institutions with two alternatives to stay alive: Keep their Bitcoin, or adapt their entire infrastructure and sell their BTC as soon as they receive it.
In the event that institutions decide to hold Bitcoin for their day-to-day transactions, the exposure to credit volatility would sharply increase their risk, says the credit agency. “Insurers that hold bitcoin on their balance sheets for extended periods will be acutely exposed to its price volatility, increasing asset risk, which is a credit negative,” the firm’s analysts today wrote.
The firm argues that holding Bitcoin would only compound the risk to which insurers are exposed, which is already high because sovereign bonds are rated poorly.
On the other hand, institutions could adopt a fiat-only policy, but since El Salvador wants mandatory acceptance of Bitcoin, that would require immediately selling incoming BTC to the market. These kinds of sales would incur their own costs—and the more a given company invests in Bitcoin management, the less it can invest in other strategic areas.
“The ability of insurers to minimize their holding period will depend on whether the regulatory and operational framework allows for bitcoin to be immediately converted to USD, which is not clear at this time,” says the report. “Fitch anticipates that the adoption of bitcoin will require insurance companies to absorb new IT, operating and administrative expenses.”
Such costs may include the adoption of new internal technology protocols, increased security and anti-fraud measures, and the training of personnel who will handle cryptocurrencies.
In aprevious note, Fitch pointed out that the country’s fiscal deficit, combined with heightened IMF concerns following the adoption of Bitcoin, aren’t helping either.
Bukele controls his country’s legislature, which made it relatively easy to get this kind of law approved quickly.Fitch argues, however, that this resulted in an “unnecessarily rushed” law that left companies with little time to adapt themselves to the changes.
Last Week In Bitcoin is a series discussing the events of the previous week that occurred in the Bitcoin industry, covering all the important news and analysis.
Summary of the Week
After briefly dipping below $43,000 on Monday, bitcoin has remained relatively steady around $46,000 during the week, briefly surpassing $48,000 over the weekend. It may be too early to call, but it appears as if it’s time to get overly bullish for the short term. Over the past week, the U.S. Senate passed their controversial U.S. infrastructure bill, Bloomberg and Kraken’s CEOs seem to agree bitcoin is heading to $100,000 this year, and the president of Argentina says the country is open to adopting bitcoin as legal tender. Here’s last week in bitcoin:
Timeline Of Bitcoin This Week
Bullish News That Proves Bitcoin Is Heading Upwards
❶ On Monday, bitcoin mining firm Argo announced record profits for the second quarter of 2021. They went on to state they own 1,100 BTC and have no intention of selling their holdings. This bullish sentiment appears to be shared across the market as miners continue to hold most of the bitcoin they mine.
❷ On Tuesday, Reddit darling AMC Theatres announced they would soon start accepting bitcoin payments for movie tickets and concessions. Whether moviegoers want to pay with bitcoin remains to be seen; however the company currently sits on a cash reserves pile worth $2 billion, which would be able to buy nearly 44,000 BTC, a larger stockpile than Tesla’s.
❺ On Wednesday, a Bloomberg Intelligence report stated that bitcoin is still on track to surpass $100,000 later in this year. If that’s not bullish enough, Kraken’s CEO, Jesse Powell, shared a similar opinion, suggesting bitcoin may far exceed $100,000 in the months ahead. As mentioned before, I share this same outlook and bitcoin’s performance over the last two weeks seems to indicate that we’re ready for liftoff.
❻ Also on Wednesday, digital car insurance firm, Metromile, announced that they purchased $1 million in bitcoin with plans to purchase an additional $10 million. They also stated that they would enable bitcoin payments on the platform soon.
❼ On Thursday, Choice, an $18 billion investment firm, launched a new investment option through their app that will allow users to invest in bitcoin tax-free. Users will be able to hold custody of their bitcoin or have Fidelity act as its custodian. The platform, launched last year, already manages over 125,000 retirement accounts.
❽ Also on Thursday, one of Mexico’s richest men, Riccardo Salinas Pliego added laser eyes to his Twitter profile. The business magnate, worth over $15 billion, later tweeted “I think #bitcoin has a great future and it will change the world…. we will see.”
❾ Finally, on Friday, Alberto Fernandez, the president of Argentina, was asked if the country would follow in El Salvador’s footsteps in an interview with local broadcaster, Filo News. He responded by saying “I don’t want to go too far out on a limb […] but there is no reason to say no.” This may end up being very bullish. The country has long struggled economically and embracing bitcoin as legal tender could bring relief to its millions of citizens.
Bearish News, Although Bitcoin’s Price Doesn’t Care
❸ On Tuesday, Black Rock Petroleum announced plans to install up to 1 million bitcoin miners in Canada’s Alberta province. Although that may seem bullish, this is a company that still utilizes fossil fuels and it may lead to a long term negative sentiment regarding bitcoin’s energy use, a hot topic as of late. A million mining rigs is bullish; more carbon emissions associated with bitcoin, not so much.
❹ Also on Tuesday, the U.S. Senate voted and pushed through the controversial $1 trillion US infrastructure bill, choosing not to allow any of the proposed amendments to the “crypto clause.” All hope is not lost however as it still has to go through Congress and even if it does pass without amendments there, it’s only likely to be implemented sometime in 2023.
The Verdict: Bullish Growth Ahead
Bitcoin has shown steady growth over the last three weeks. It’s already up over 50% since dipping below $30,000 on July 21st and there appear to be no signs of stopping anytime soon. In just a few short weeks El Salvador will start its nationwide rollout of bitcoin as legal tender in the country — the first phase of which will likely push more countries to adopt bitcoin as legal tender and a hedge against deflation.
Furthermore, more and more miners are opting to HODL their newly minted coins instead of selling them, indicating that they agree with the bullish sentiment that many investors and analysts are pushing out. More and more individuals and institutions agree that bitcoin may very well surpass $100,000 in the coming months, something I’ve blabbered on about incessantly as well.
The amount of companies investing in bitcoin is growing by the week. The amount of companies accepting bitcoin payments is growing by the week. I don’t believe it would be too far-fetched to say that soon the amount of countries accepting bitcoin will grow by the week. As inflation rises, fiat currencies like the dollar continue to lose their value, but bitcoin doesn’t.
Bitcoin adoption is growing by the week and if you’re not stacking while it’s a five-figure asset, you’re going to regret it when it’s a six, or even seven-figure asset. So, stack up, strap up and get ready for a wild ride in the months ahead…
This is a guest post by Dion Guillaume. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
Blockchain’s moon race is on as the ecosystem grapples with developing scalability solutions to meet demand without sacrificing security or decentralization – the classic blockchain trilemma.
The rapid growth in decentralized finance, NFTs, and gaming has seen adoption congest the Ethereum network, in particular, leading to bottlenecks and high transaction fees given its capacity for processing only a few transactions per second, rendering many dApps usable at times.
Ethereum’s transition to a proof-of-stake sharded network may alleviate some of that pressure on layer 1, with sharding splitting the Ethereum network into new chains or shards to spread the load, reducing congestion, and increasing transactions per second.
However, given full deployment is still years away and participation isn’t showing signs of slowing down any time soon, the pressing need for scalable solutions has accelerated the adoption of layer 2 technology that runs on top of Ethereum’s layer 1, rather than trying to improve performance at the base layer.
Layer 2 and related technology offer several different solutions for Ethereum scaling, each with its own benefits and trade-offs, including:
Plasma
Sidechains
State Channels and Payment Channels
Optimistic Rollups
ZK-Rollups
Validium
Aggregators
Plasma
Plasma chains are separate blockchains that anchor to Ethereum, sometimes called child chains, as they operate as smaller copies of the Ethereum mainnet. These child chains use a combination of smart contracts and cryptographic verification to offload transactions from the parent chain.
Each with its own mechanism for block validation, Plasma chains periodically report back to the Ethereum main chain, using its security to settle disputes when challenged via fraud proofs.
Plasma chains enable high throughput at a low cost per transaction. However, only basic transactions like token transfers and swaps are supported, there is a liveliness requirement, and chain withdrawals can be lengthy to allow for challenges.
Several projects provide implementations of Plasma for dApp integration, including OMG Network and LeapDAO.
Plasma. Image by Near.org
Sidechains
Layer 2 sidechains are independent Ethereum Virtual Machine (EVM) compatible blockchains running parallel to the Ethereum main chain. Validator nodes in the sidechain network are responsible for confirming and processing transactions, adding blocks, and maintaining the sidechain’s own consensus rules, such as proof-of-authority or delegated proof-of-stake, to provide more efficient transactions.
Compatibility is achieved via a two-way bridge to Ethereum, though its security is not directly inherited and is the responsibility of the sidechain.
Sidechains. Image by Near.org
Sidechains utilize established technology and support more complex transactions with EVM compatibility, though they are less decentralized and rely on their own consensus mechanisms rather than the security of layer 1 and so aren’t technically layer 2 in that sense.
Projects offering sidechain implementations include POA Network and xDai chain.
State Channels and Payment Channels
One of the first widely discussed layer 2 scaling solutions, state channels use multi-signature contracts to enable participants to transact quickly and frequently off-chain, settling back to layer 1 for finality as required.
State channels can manage more complex interactions like a game, whereas payment channels are simplified state channels that only deal with payments between two participants. State channels allow for extremely high transaction throughput at a very low cost, making them ideal for micropayments. However, the time and cost to set up and settle channels are not ideal for one-off payments, liveliness is required, and funds have to be locked up in open payment channels.
The main projects leveraging state channels on Ethereum are Celer, Perun, and Raiden.
Optimistic Rollups
Optimistic rollups sit in parallel to the Ethereum main chain on layer 2. They allow transactions to be executed cheaply and scalably in batches outside layer 1 while still using the security of the Ethereum base layer when submitting them as a single transaction.
As computation is the slow and expensive element of the Ethereum network, optimistic rollups offer up to 100 times scalability improvements as they don’t run any computation by default, a number that will increase further with the future introduction of Ethereum sharding.
Instead, optimistic rollups assume transactions are valid and only run computation if challenged via a fraud-proof. Optimistic rollups use a bonding system, and anyone proven responsible for a fraudulent transaction or challenge will forfeit their bond with some slashed and some used to incentivize the correct party.
Optimistic rollups can handle anything done on Ethereum layer 1 as they are EVM and Solidity compatible. As all transaction data is stored on the layer 1 chain, optimistic rollups remain secure and decentralized. At the same time, they are providing execution scalability. However, long wait times for on-chain transactions are possible due to the potential fraud challenges.
Optimistic rollups. Image by Near.org
As optimistic rollups support both simple payments and complex smart contracts, they are seen as more immediately suitable for DeFi applications, with Optimism, Arbitrum, and Cartesi among the multiple projects offering implementations.
In a sign of the future direction of the space, the leading DEX platform Uniswap recently also announced it would be taking the next step in adopting layer 2 tech by launching on Optimism to sharply reduce transaction costs for its users.
ZK-Rollups
Zero-knowledge rollups, or ZK-rollups, bundle transactions off-chain and generate a cryptographic proof, known as a SNARK. In contrast to optimistic rollups, ZK-rollups run computation off-chain and submit these validity proofs to the layer 1 chain.
ZK-rollup smart contracts maintain the state of all transactions on layer 2, which can only be updated with validity proof. As ZK-rollups only need the validity proof rather than all the transaction data, validating a block is quicker and cheaper as it includes less data and requires less gas.
Additionally, as the ZK-rollup contract has already verified the transactions, there are no delays in moving from layer 2 to layer 1.
As a result, ZK-proofs offer faster finality times while remaining secure and decentralized since the data needed to recover the state is stored on Ethereum layer 1. However, some ZK-rollups do not have EVM support, and validity proofs are intensive to compute, making them unsuitable for dApps with little on-chain activity.
Multiple implementations of ZK-rollups also exist, including zkSync and ZKSwap. zkSync offers a trustless protocol for scalable, low-cost payments on Ethereum using ZK-rollup technology, helping crypto wallets and defi platforms to unlock PayPal-like scale. ZKSwap provides a ZK-rollups-based layer 2 DEX with zero gas fees and high-transaction throughput, transforming the future of the AMM model.
Harmony’s interoperable layer 2 for Ethereum offers something more unique, combining the best of both the optimistic and ZK-rollup worlds. Harmony provides full EVM compatibility, unlike ZK-rollups, faster settlement with shorter withdrawal times compared to Optimistic rollups, and gas-efficient interoperability based on its sharded Proof-of-Stake blockchain that bridges to Ethereum via smart contracts.
By building on the benefits of both Optimistic rollups and ZK-rollups, generally seen to be the most promising of layer 2 scaling technologies, while addressing their shortcomings, Harmony can provide a more wholescale solution for projects to deploy. Harmony’s interoperability also extends beyond Ethereum with its Horizen bridge to Binance Smart Chain, opening up access to the broader defi ecosystem.
Validium
Validium uses validity proofs like ZK-rollups, but instead, data is not stored on Ethereum layer 1, allowing for scalability of up to 10,000 transactions per second per Validium chain, of which multiple can run in parallel.
Validium offers no withdrawal delays, improving capital efficiency, and is not vulnerable to certain economic attacks faced by high-value dApps using fraud-proof-based systems. However, Validium chains have limited smart contract support.
Projects providing implementations of Validium include Loopring and StarkWare. Immutable X, the first layer 2 scaling solution for NFTs on Ethereum, utilizes StarkWare’s Validium and ZK-rollup technology to enable transaction speeds of over 9,000 per second with zero gas fees while retaining Ethereum’s security for its ecosystem of marketplaces, apps, and games.
Aggregators
Polygon is something of an aggregator of these layer 2 solutions, offering multiple implementations of several layer 2 technologies. As a result, Polygon has become the fastest-growing layer 2 network, bringing blockchain infrastructure to the masses by opening up the accessibility, usability, and use cases of decentralized applications on Ethereum’s internet of blockchains.
Polygon’s suite of layer 2 scalability solutions has witnessed adoption from Defi blue chips, with platforms like Aave, SushiSwap, and 1inch already integrating with it.
CVI, the decentralized volatility index for the crypto space powered by the COTI network, has also followed that lead in integrating with Polygon. CVI users can open positions, provide liquidity and stake, while processing transactions out of the main ETH blockchain.
Summary
No one scaling solution alone is sufficient to fulfill the secure, decentralized, and scalable vision of Ethereum 2.0, avoiding the problem of high fees and bottlenecks.
Sharding will certainly help on-chain scaling on layer 1, but off-chain layer 2 solutions that can flexibly tailor to the unique requirements and acceptable trade-offs of the plethora of dApp projects being developed are key to the future of blockchain.
The ecosystem as a whole is greater than the sum of its parts, and different layer 2 solutions can exist and work together in harmony to respond to the increasing demands of mainstream adoption, continuing to help reduce congestion and prevent single points of failure as we transition to the world of Web 3.0.
SPECIAL OFFER (Sponsored)
Binance Futures 50 USDT FREE Voucher: Use this link to register & get 10% off fees and 50 USDT when trading 500 USDT (limited offer).
PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to get 50% free bonus on any deposit up to 1 BTC.
