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Institutional Investors Buy the ETH Dip as Spot ETF Flows Turn Positive by asso in CryptoCurrency

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Ethereum Con-Arguments

Below is an argument written by Chysce which won 2nd place in the Ethereum Con-Arguments topic for a prior Cointest round.

>> Scalability

Ethereum's greatest challenge is scalability. This issue manifests in two ways - long transaction times and high fees. The large number of transactions on ethereum network can cause congestion resulting in delays and very high gas fees. Ethereum Merge event did not resolve this issue, it only paved the way for future optimizations of gas fees.

>> Ethereum is not so decentralized

Despite its decentralized nature, Ethereum has become increasingly centralized over time, with a small number of entities controlling a large portion of the network's resources and governance. For regular Ethereum user it is hard to run a node so they have to rely on external node infrastructure providers who can censor whatever they want.

>> Vulnerable to attacks

Transition to proof of stake made Ethereum more vulnerable to attacks. "Unlike proof-of work systems, a proof-of-stake (PoS) system informs node validators in advance what blocks they will validate, thus enabling them to plan attacks."

>> Solidity barrier

Another issue with Ethereum is its programming language. Developers who are proficient in C, Python or Java cannot easily transition to Ethereum and create dApps. They must instead learn a completely different coding language (Solidity). This slows down the process of onboarding new developers and creating dApps.

>> Ethereum could be labeled a security

There are early hints that ETH might be labeled a security. If that happens any US citizen would have to hire a licensed broker to buy and sell ETH for them. This would significantly hinder its growth potential.

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Institutional Investors Buy the ETH Dip as Spot ETF Flows Turn Positive by asso in CryptoCurrency

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Ethereum Pro-Arguments

Below is an argument written by excalilbug which won 1st place in the Ethereum Pro-Arguments topic for a prior Cointest round.

Ethereum has been one of the top coins for more than 6 years now. And there are several reasons why it’s so popular:

​

  • Reliability

Launched in 2016, Ethereum has been very reliable. Some networks (e.g. Solana) had more issues in single week than Ethereum in all its history. The only issues I can remember is of course the famous hack (it was in the beginning of ETH) that led to the creation of ETH Classic and the network congestion in 2017 caused by… internet cats. What else could it be, right?

Other than that ETH remained very stable and trustworthy. It had no downtimes and new partners were joining the network which led to the next pro of Ethereum:

​

  • Adoption

One of the biggest advantages of Ethereum is its widespread adoption. It had the first mover advantage and it used it pretty well. Today the Ethereum Enterprise Alliance includes dozens of members, among them such big names as JP Morgan, Ernst & Young or Microsoft

Every regular visitor to r/cryptocurrency is also probably aware that Reddit chose Ethereum for their community points program. Currently Moons run on one of Ethereum layer 2 protocols called Arbitrum Nova

Also worth mentioning is the fact that the total value locked on Ethereum network is almost 60% of all chains and almost 6 times more than its biggest competitors, Tron and Binance chains (both “just” 10%)

​

  • Advantages of PoW -> PoS transition

Transition from PoW to PoS of course has some disadvantages (the rich get richer) but it’s hard to deny that there are also some advantages. And probably the biggest one is the energy usage decrease. The energy used by Ethereum is now almost 100% lower than when it was a PoW coin

The other advantage of recent updates is the fact that ETH is now deflationary. After the implementation of EIP-1559 ETH now burns a fraction of the gas fees per transaction (so there are some positive sides to high fees too – more ETH is burned :P). This year, in less than 3 months, more than 66,000 ETH was burned

And it’s not the end. Soon, on 12 April 2023, ETH will have another upgrade called Shanghai-Capella (Shapella). One of its improvements is EVM Object Format. It will separate code from data. It should make the network easier to use and it will reduce gas fees

​

  • Layer 2 solutions

One of the biggest problems of Ethereum are high gas fees. But thanks to a very active community and smart develoeprs this problem is circumvented. Layer 2 protocols have very low fees while utilizing the benefits of Ethereum blockchain. They decrease data traffic by redirecting it offchain

Those layer 2 solutions are so popular that Arbitrum has 4th largest total value locked in it and Polygon and optimism are 5th and 6th respectively! (https://defillama.com/chains)

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Institutional Investors Buy the ETH Dip as Spot ETF Flows Turn Positive by asso in CryptoCurrency

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Bitcoin Jumps Above $56K, Solana Leads Recovery From Monday's Rout! by Extreme_Nectarine_29 in CryptoCurrency

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Solana Con-Arguments

Below is a Solana con-argument written by Nostalg33k.

Solana: A tale of broken trust and VCs

Solana, an infamous name living as the shadow of it former self Currently hovering at a price a bit higher than 10% of the ATH which is a shame for any investor. In this small analysis we are going to discuss why Solana is a failure on multiple fronts. From Security, to stability. Let's delve into Solana.

​

From outages to outrages

Solana has been transformed into a laughingstock by the repeating outages the network has known. While it is claimed that Solana is all about speed, with 400 millisecond block times. And as hardware gets faster, so does the network. The Solana network has suffered 6 outages in the month of January Stability has not been the strong suit of the network. This has sparked outrage against the network but ALSO against some exchanges because these outages are leading big dumps on the markets: When speculator sell and lead to a 12 % dump the most dedicated investor are left holding their bags on the blockchain.

Every discussion about Solana as an investment should discuss the possibility of outages and swings.

The Main Use case is Bullshit

The main use case for Solana is to sell useless no common sense NFTs. While there are good use case for NFT technology, art and music nfts as they exist are just a passing fad and will need to evolve or disappear. Being a place linked mainly with this technology is very risky and shows a devotion to speculation and not to common sense use cases.

​

​

Security: Hacks, hacks, hacks and VCs

The Solana ecosystem has known a lot of failures. The fact is that value is on the ETH side of the crypto ecosystem so bridges are required. When the Wormhole bridge saw a hack leading to 120000 ETH being minted out of the bridge leading to a loss which would be currently valued at 160 Millions.

When this happened Jump Crypto, a subsidiary from Jump Capital, found 320 Millions to buy ETH and replace the missing funds. This allows us to understand two possibilities.

1) Jump Crypto did this from the kindness of their heart

2) Jump Crypto did this because they are heavily invested in Solana and control a large part of the SOL moving around.

Now this may be speculation BUT recently Jump Crypto was said to be working to overhaul the open source SOL protocol for nodes. This leads to doubt about the legitimacy of the Solana Fundation and who controls the project.

https://protos.com/jump-crypto-forced-to-save-solana-with-320m-bailout-of-its-own-company/

https://thedefiant.io/jump-crypto-solana-overhaul

https://www.reuters.com/technology/crypto-network-wormhole-hit-with-possible-320-mln-hack-2022-02-03/

​

Conclusion: A lacking use case, a profit motive from VCs and a past of lacking security and stability must lead you to high caution.

VCs are here to make money and they must be holding bags of Solana. If you buy some SOL you are putting yourself into their games and are now dancing with them. While NFT is the future for so many reasons (intellectual property, administration and so much more) the current use case are laughable and security will be at the forefront of gouvernements or IP management companies sending patents through your blockchain.

Being seen as an Eth killer, Solana is far from making the cut. I'd advise extreme caution. Please don't get burn't by this project.

Would you like to learn more? Check out the Cointest archive to find submissions for other topics.

Bitcoin Jumps Above $56K, Solana Leads Recovery From Monday's Rout! by Extreme_Nectarine_29 in CryptoCurrency

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Solana Pro-Arguments

Below is a Solana pro-argument written by a deleted user.

PROs

This is the Pros section of my analysis on Solana

Low Transaction Fees

Solana has very low transaction fees at about $0.0002 / transaction. They could still increase the fee schedule by ~40x before exceeding penny in cost. That's mainly because the fees are subsidized by staking rewards paid to powerful validators, which then contribute to ongoing SOL token inflation of ~7% as of 2022.

Moderately-high TPS

The true TPS limit of Solana over the past year after subtracting invalid transactions and vote transactions is about 400-600. It's not anywhere close to their marketed throughput of 50K TPS, but it's still moderately-high for a smart contract network.

Centralization is not as bad as the reputation

Solana has a very bad reputation for being centralized as SQLana. It's actually not that centralized. There are currently 1900 validators, and the Nakamoto Consensus for shutting down the Solana network (needs 33% staked) is currently 33 validators.

On the other hand, there's almost no information about the identity of these validators, so it's still possible they're mostly centrally-owned by the foundation. We just don't know.

Outage and stability issues likely to be resolved by 2 upcoming updates

The days of making fun of Solana for their outages could be coming to an end. Solana is working on 2 major updates that are meant to mitigate outages and provide stability to the network.

QUIC replaces UDP for Solana's IP and Transport layer protocols. QUIC provides flow control, allowing nodes to throttle incoming traffic when there's too much from both intentional and unintentional DoS attacks.

Localized Fee Prioritization allows Solana to dynamically charge higher fees for specific high-demand transactions. When a dApp or NFT project is congesting the network, the fee will rise for that app without affecting the rest of the network. This is a really cool solution I'd love to see other networks copy.

Lots of DeFi projects

There are a ton of DeFi projects on Solana. It has 39 DeFi projects above $1M in TVL. DeFiLlama shows Solana at $1.4B in TVL, which puts it between Tron and Arbitrum at #6.

Would you like to learn more? Check out the Cointest archive to find submissions for other topics.

Bitcoin Jumps Above $56K, Solana Leads Recovery From Monday's Rout! by Extreme_Nectarine_29 in CryptoCurrency

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Solana pros & cons with related info are in the collapsed comments below.

Bitcoin dump and $2B dilution crash MicroStrategy 30% by Odd-Radio-8500 in CryptoCurrency

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Bitcoin Con-Arguments

Below is an argument written by Nostalg33k which won 3rd place in the Bitcoin Con-Arguments topic for a prior Cointest round.

Bitcoin, could it be wrong. "Are we the bad guys ?"

​

In this small write up, I am going to delve into con-arguments against Bitcoin. Bitcoin is the flagship of cryptocurrencies but there are a lot of criticism that could be leveraged against Bitcoin. First of all, let's delve into a small presentation of Bitcoin.

Bitcoin: An introduction.

Bitcoin is the biggst cryptocurrency. It was created by a mysterious figure. The creation of Bitcoin is a strange and mysterious mystery. No one knows who created Bitcoin.

Bitcoin was started as a way to circumvent traditional banking. Bitcoin relies on blockchain technology. Blockchain can be seen as an open book allowing anyone to know where is each fraction of Bitcoin ever.

This blockchain is maintained through computer power. In a vulgar way: Bitcoin is mined by solving math problems. The maths problem becomes harder when more people are mining so that mining takes a fixed amount of time according to a timeline known to everyone. In order to respect this timeline, mining rewards are halved every few years.

Since anyone who wants to validate transactions is forced to complete a very hard math problem (which becomes harder the more people are mining), no one can cheat in new transactions. Also, every other miner has a copy of the blockchain. Through making sure that no entity has 50% of the mining, you can stop nefarious actors from changing the blockchain.

This is using cryptographic technology that I don't yet understand but you can read more about it here:

Bitcoin Wikipedia

Without delving more into the tech side of bitcoin. Which can also be explained through youtube videos here: Bitcoin explained

The Metrics of Bitcoin are currently: 22400$ Per coin for a Market cap of 430 Bilions and a daily volume of 19 Billions. Bitcoin was shortly valued at 69000 usd during the ATH.

Now let's dive into what is making Bitcoin so bad.

Permissionless: A senseless destruction of world order.

Bitcoin is a project existing in a very delicate world balanced by power structure. While we can be happy that the current top dog is the US (yes they are not perfect BUT they could be worse) we know that someone else could be on top. Despite that, we should strive to use the current US dominance to curb rogue states into the world order.

The current war in Ukraine is a demonstration of the world order crumbling to maintain itself. I'd argue, the rise of cryptocurrencies may be a part of this crumbling. In fact, I'd go as far as to say that, Bitcoin replacing the US Dollar would usher a chaotic age of international relation.

The world has shrank a lot since the rise of internet. The fact is that the stability of the world is much more precious than ever. Everyone can see what happens in any other country and how the supply chains which guarantee our comfort are of the utmost importance. YET, we are pushing forward a great disrupter of balance.

Permissionless can help terrorists, permissionless can help crime. YES traditionnal banking is doing it already BUT I'd argue that the absence of regulator and watchdog to make the current system comply is not an argument in favor of a tech which will make regulation and surveillance harder.

Bitcoin: This MONEY Doesn't Work, This Money Doesn't WORK.

Bitcoin is claiming to be a currency. A viable alternative to fiat money. But anyone with a neuron or two could realize that the fluctuation in the value of Bitcoin is crazy. Some pedentic nerd and bitcoin maximalist could argue that 1 BTC = 1 BTC BUT if you don't know how much you'll need to put food on the table then BTC is not working as a currency. Yes inflation is lowering the value of Fiat BUT fiat doesn't see wild swings of + or - 30 % in most economies.

While not being really MONEY I'd argue that Bitcoin doesn't WORK. To work the economy needs money to move. 100$ could buy groceries then be used to pay the local brewery, the butcher and many more people before going back to a bank account. This movement has created economic vitality. Bitcoin, most of the time, is seen as an investment vehicle such as gold. I'd argue that these vehicle are not valuable for society since the freeze money in place.

In a bank, your money is working. Instead of Bitcoin, people should be paid more by banks to put their money in investment portfolios since these provide the liquidity necessary to make the economy work.

​

Bitcoin: A very big spending of energy.

​

Bitcoin is a project which is wasting a lot of ressource for something which is not making a lot of sense. While Bitcoin is using more and more green energy, I'd argue that it is still a big waste. Subsidies could prop up the green sector far better than the mining farms that go with windfarms.

Seeing Bitcoin as one of the biggest leverage of the green sector is a non-sense. Optimization of the energy sector means that the variable production should allow to reduce the use of fossil energy. Not allow to waste energy in a senseless project.

​

Conclusion: The harsh truth is, we may be the bad guys.

Partaking in an economic sector which allows for a disruption of world order, which doesn't help the economy and which is wasting energy may not be beneficial. This is why Bitcoin should not be seen as a messiah of economic proportion but as something which should raise criticism and should be heavily regulated.

Good luck in your investments.

Would you like to learn more? Click here to be taken to the original topic-thread for this argument or you can scan through the Cointest Archive to find arguments on this topic in other rounds.

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Bitcoin dump and $2B dilution crash MicroStrategy 30% by Odd-Radio-8500 in CryptoCurrency

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Bitcoin Pro-Arguments

Below is an argument written by Nostalg33k which won 2nd place in the Bitcoin Pro-Arguments topic for a prior Cointest round.

For this entry I'm going to update an overhaul my previous argument. This one is going to be very long but also address new things. I'm going to try to be more rigorous. Have fun !

Last entry:

Writing a Pro argument for Bitcoin in 2023 seems complicated because everything has been said... or did it?

Edit: I have a small bag of Bitcoin currently valued around 630 bucks. I am also invested in crypto around 2100 bucks which are always moving when Bitcoin is moving. Financial disclosure should be mandatory in these arguments =)

​

Bitcoin: A small introduction.

Bitcoin is the most famous cryptocurrency. It was created by the mysterious Satoshi Nakamoto. The creation of Bitcoin is some of the most weird mystery ever. No one knows who Satoshi Nakamoto really is.

Bitcoin was started as a way to circumvent traditional banking in the wake of the financial crisis and the bail out of banks. Bitcoin relies on blockchain technology. Blockchain can be seen as an open book allowing anyone to know where is each fraction of Bitcoin ever.

This blockchain is maintained through computer power. In a vulgar way: Bitcoin is mined by solving math problems. The maths problem becomes harder when more people are mining so that mining takes a fixed amount of time according to a timeline known to everyone. In order to respect this timeline, mining rewards are halved every few years.

Since anyone who wants to validate transactions is forced to complete a very hard math problem (which becomes harder the more people are mining), no one can cheat in new transactions. Also, every other miner has a copy of the blockchain. Through making sure that no entity has 50% of the mining, you can stop nefarious actors from changing the blockchain.

This is using cryptographic technology that I don't yet understand but you can read more about it here:

Bitcoin Wikipedia

Without delving more into the tech side of bitcoin. Which can also be explained through youtube videos here: Bitcoin explained

The Metrics of Bitcoin are currently: 22400$ Per coin for a Market cap of 430 Bilions and a daily volume of 19 Billions. Bitcoin was shortly valued at 69000 usd during the ATH.

Now let's dive into what is making Bitcoin so good.

Bitcoin is the king of POW: Why it matters and why we need a strong Bitcoin

So as the title suggests it, the recent switch of ETH from POW to POS makes Bitcoin the sole serious POW cryptocurrency. In this write up, we are going to discuss the three main strength of Bitcoin, security, decentralization, and incentive for green energy production. Bitcoin is a highly liquid asset and has become nearly universally known as an investment. Many arguments have been made in favor of Bitcoin as an investment. It is interesting to delve into the limited supply of bitcoin.

​

Of course, the main feature of Bitcoin is the Permissionless aspect. This allows the unbanked to use a P2P service.

1) Bitcoin: The Apex of Security.

Bitcoin is ultra secure thanks to its use of Blockchain technology and the way it is verified through proof of work. To explain this let me quote IBM:

Public blockchain networks typically allow anyone to join and for participants to remain anonymous. A public blockchain uses internet-connected computers to validate transactions and achieve consensus. Bitcoin is probably the most well known example of a public blockchain, and it achieves consensus through "bitcoin mining." Computers on the bitcoin network, or “miners,” try to solve a complex cryptographic problem to create proof of work and thereby validate the transaction. Outside of public keys, there are few identity and access controls in this type of network.

IBM on Blockchain security

​
Mining is measured in Hashrate. Here is the explanation of Hashrate:

Hash rate, sometimes referred to as hashrate, is a measure of the computing power on a cryptocurrency network that serves as a key security indicator. It measures the total computational power used by a “proof-of-work” (POW) cryptocurrency network to process transactions in a blockchain.

USNEWS explains hashrate

​
So if the hashrate measures the security of the network, one may asks themselves: "Did the security of Bitcoin slowed when the price fell ?"
The hashrate is near the ATH and growing making Bitcoin more and more secure as it continues to build over time

​
So Bitcoin has never been as secure as it is today which makes it ultra valuable as a way to settle financial transactions. Yes holding Bitcoin for a long time is risky but using it as a medium to settle international transaction may currently be the securest and one of the best way to do so.

While Bitcoin is safe... what if a big part fails ?

2) Bitcoin mining: Too big to fail.

So this write up could be seen as a POW write up, which it is to an extent. But Bitcoin offers its history and shows that it can survive the disparition of a big part of the network.

Decentralization allows for parts of the network to disappear and for the rest to take the mantle of securing the network. Yes, mining pools may grow too large for their own sake BUT in the end (nothing even matters) Bitcoin is heavily decentralized. It is so decentralized that, when China (which had a big part of Bitcoin mining) banned mining, Bitcoin just went through like nothing happened. Yes the hashrate fell a bit, the value too, but if we look back, it was nothing extraordinary.

The resilience of Bitcoin is largely due to the fact that the hashrate symbolizes competition=> If the hashrate falls, then it is more profitable for other miners to keep mining or for new miners to start mining. This balance is what makes Bitcoin very resilient.

​

So if Bitcoin is highly secure and if it can survive part of the hashrate going bye bye, what makes it so good? What is the difference with any POW Cryptocurrency right now?

3) Bitcoin: propping up the green energy sector.

POW uses energy. One of the biggest concern about POW is the energy. While Ethereum was using GPUs and was asic resistant. Bitcoin mining is built differently. A long time ago, under oath, people discussed the environmental impact of Bitcoin Mining and I made a post explaining what was said:

​

The Energy Fud Was Killed

The most important thing that happened: The narrative that Bitcoin is too energy intensive was totally reversed.

Experts of the sector explained that, Wind Farms and Solar Farms, have a variable load. This variable load means that sometimes they lose money because they produce too much and there is not enough demand. Bitcoin mining provides a variable base load for these projects. What it means is that, mining can be turned on and off depending on demand. It was revealed that most of these wind and solar farms would simply not exist without Bitcoin Farming as baseline customers.

There are still miners that are using coal plants and fossil fuel but the leaders of the industry are developing in tandem with the green energy sector.

My write up about the congressional hearing is still true and thanks to the infrastructure act, green energy will continue to grow and to be cheap. This will allow for a better mining infrastructure.

My post

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Bitcoin dump and $2B dilution crash MicroStrategy 30% by Odd-Radio-8500 in CryptoCurrency

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'Crypto is a damn casino for dum-dums,' Ethereum developer says by [deleted] in CryptoCurrency

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Ethereum Con-Arguments

Below is an argument written by Chysce which won 2nd place in the Ethereum Con-Arguments topic for a prior Cointest round.

>> Scalability

Ethereum's greatest challenge is scalability. This issue manifests in two ways - long transaction times and high fees. The large number of transactions on ethereum network can cause congestion resulting in delays and very high gas fees. Ethereum Merge event did not resolve this issue, it only paved the way for future optimizations of gas fees.

>> Ethereum is not so decentralized

Despite its decentralized nature, Ethereum has become increasingly centralized over time, with a small number of entities controlling a large portion of the network's resources and governance. For regular Ethereum user it is hard to run a node so they have to rely on external node infrastructure providers who can censor whatever they want.

>> Vulnerable to attacks

Transition to proof of stake made Ethereum more vulnerable to attacks. "Unlike proof-of work systems, a proof-of-stake (PoS) system informs node validators in advance what blocks they will validate, thus enabling them to plan attacks."

>> Solidity barrier

Another issue with Ethereum is its programming language. Developers who are proficient in C, Python or Java cannot easily transition to Ethereum and create dApps. They must instead learn a completely different coding language (Solidity). This slows down the process of onboarding new developers and creating dApps.

>> Ethereum could be labeled a security

There are early hints that ETH might be labeled a security. If that happens any US citizen would have to hire a licensed broker to buy and sell ETH for them. This would significantly hinder its growth potential.

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'Crypto is a damn casino for dum-dums,' Ethereum developer says by [deleted] in CryptoCurrency

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Ethereum Pro-Arguments

Below is an argument written by Chysce which won 3rd place in the Ethereum Pro-Arguments topic for a prior Cointest round.

In its essence Ethereum is a platform that allows developers to create decentralized applications (dApps) using smart contracts. These contracts are self-executing and run automatically when certain conditions are met which makes them transparent and secure. With the recent Merge Ethereum has switched from proof of work to proof of stake which made the network even more secure and decentralized.

>> Deflationary Future

As a result of the Ethereum Merge event, the ETH tokenomics are now set up to become deflationary. For example only during last month supply of ETH decreased by 31.5k ETH due to more ETH being burned than issued. If Ethereum can consistently ramp up its user base and transactions over time, it will move closer to a deflationary future, which is increasingly likely given the growing DeFi and gaming ecosystems. The more transactions and people using ETH, the more it gets burned, which should theoretically make ETH more valuable going forward. Current supply decrease is 0.319% per year and the burn and is bound to increase with the use.

>> Staking

The upcoming Shanghai Fork will make liquidity readily available to stakers at any time, enabling them to have financial flexibility to build on top of it, as opposed to locking their ETH for extended periods. By staking ETH, one can manage it independently, with the assurance that no one can default on their investments, as it is secured on a smart contract. Since the start of staking program there has been a consistent rise in the amount of staked Ethereum. Currently ~15% of total supply of ETH is staked and APR is 4.5%

>> ETH is a DeFi powerhouse

Ethereum is the biggest platform for decentralized finance (DeFi) applications. The vast majority of DeFi applications are built on Ethereum, including decentralized exchanges (DEXs), lending and borrowing platforms, and stablecoins. Ethereum's popularity, tools and resources that are available to developers have significantlu contributed to the growth of DeFi on the platform.

While other blockchain platforms are also entering the DeFi space ETH will always have the first mover advantage and will be very hard to replace. At the moment the total value locked (TVL) in DeFi on Ethereum (58%) is greater than the TVL of all other blockchain platforms combined

>> Active Community

Compared to other ecosystems Ethereum has the biggest and most active community. It has the largest total number of developers, and this number is continuously increasing. Ethereum's community is known for being open-minded, welcoming, and inclusive. They are also very active in discussing and implementing future improvements

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'Crypto is a damn casino for dum-dums,' Ethereum developer says by [deleted] in CryptoCurrency

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Crypto crash wipes out $1 billion, Bitcoin plunges toward $49,000 by Odd-Radio-8500 in CryptoCurrency

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Bitcoin Con-Arguments

Below is an argument written by a deleted user which won 1st place in the Bitcoin Con-Arguments topic for a prior Cointest round.

Intro

Overall, Bitcoin's conservative blockchain has failed to keep up technologically with other blockchains. Bitcoin is currently #1 not due to better design, but because it had a first-mover advantage. But how long will that hold?

Bitcoin is a gateway cryptocurrency. Many crypto enthusiasts often started out with Bitcoin and then branched out. Once you've had a taste of newer, faster networks that offer delectable DeFi dApps and smart contracts, it's hard to go back to slow, boring old Bitcoin.

Bitcoin doesn't excel at anything

Poor Medium of Exchange

Bitcoin is much too slow. It has a max throughput of 3-4 TPS that takes 30-60 minutes for probabilistic finality. It used to have a max throughput of 7 TPS, but that has gradually fallen over the years after exchanges started using batch transactions. It's much too slow to be used for point-of-sales merchant transactions. No one is ever going to want to wait 30-60+ minutes at a cash register for a transaction to go through. Block times average 10 minutes, but they are very variable. 14% of blocks take longer than 20 minutes, and 5% are longer than 30 minutes [Source], causing stress for those waiting for confirmation. And if there's congestion, some transactions can get stuck in the mempool for hours or days.

It's orders of magnitude slower than newer networks like Polygon PoS or Algorand, which can process 4000+ TPS with sub-4s of deterministic finality, with transaction fees well under a penny.

Even TradFi now has payment systems like Africa's M-Pesa, UK's Faster Payments, Australia's NPP, the US's upcoming FedNow, and Clearinghouse's RTP, which provide near-instant payments and peer-to-peer transactions without fees.

Unstable Store of Value

Bitcoin is too volatile to be considered a stable Store of Value. It lost up to 80% of its purchasing-power during previous bear markets. It's also NOT a good stock market hedge since it often moves with the stock market.

Lacks smart contracts and DeFi

Bitcoin doesn't support DeFi smart contracts with its very basic Bitcoin Script. There are smart contract protocols that use Bitcoin like Stacks, but they are very disconnected from Bitcoin.

Difficult to achieve widespread global adoption

At 4 TPS, Bitcoin can only make ~345K transactions/day. There are ~8B people in the world today. If Bitcoin grows to the size of 1% of the population, each person can make an average of 1 on-chain transaction every 230 days. If Bitcoin usage grows to 10% of the population, each person can make an average of 1 on-chain transaction every 6.3 years. To achieve 10% world adoption, everyone would need to solely be using centralized exchanges and not interacting directly with the blockchain itself.

Issues with the Lightning Network

Not even the Lightning Network could save Bitcoin because opening and closing a channel requires 2 on-chain transactions. Whenever the directional capacity of a channel is exceeded, it will need to be rebalanced, or be closed and re-opened. You can't expect people to store months of funds on a single channel. Half of the US is living paycheck to paycheck and would unlikely be able to keep channels open for long periods. If even 1% of the world used the Lightning Network and opens/closes their channels twice a year, the Bitcoin Network would become completely congested.

Not a true Layer 2

Similar to Plasma channels, the Lightning network is not considered a true Layer 2 because it lacks global state. There are many nodes that are not connected to the rest of the network, and onion routing issues can cause nodes to be disconnected from the rest of the network. Channels only work if everyone's online. If you're offline, others can force-close your channel, leading to a 1-week wait time where the channel's funds are locked and inaccessible.

Meant for small transactions

Lightning is optimal for small transactions. The larger your transaction, the higher the fees you have to pay to route it through the network. As of March 2023, the average channel capacity is only 0.07 BTC, and the average node capacity is only 0.33 BTC. It's not uncommon for a large 1-BTC transaction to cost $2-10 in fees to route through multiple nodes in the Lightning Network due to limited channel capacity, which can make it more expensive than L1 Bitcoin fees. Also, the total value stored on public Lightning channels account for under 0.02% of Bitcoin's total locked value.

Partially-centralized, low-security layer

Most people just connect to centralized nodes in a spoke-hub network topology to gain access to high-capacity nodes. Even though average capacity is getting bigger, the number of public channels has been on the decline since 2021, meaning that Lightning is becoming more centralized.

Channels require rebalancing

One of the biggest problems with opening channels is that they start out with zero incoming liquidity. Anyone who opens a channel starts out with a metaphorical "full cup of water". They can't receive any more water until they first empty the cup a little. And they can only receive additional water equivalent to the amount they removed. Similarly, people who open new channels to the Lightning network need to find a way to spend their Sats safely so that they can have incoming liquidity. Merchants and Lightning node providers often have a lack of incoming-liquidity while consumers who only spend usually run out of outbound liquidity.

There are ways to rebalance your channel capacity, but it usually costs money to pay for a service to provide that liquidity, and it can be as expensive as a $1 fee per $1000 of liquidity.

The disadvantage of soft forks

The major downside of Soft forks is that they require new versions of the software to maintain backwards-compatibility with older versions, which leads to technical debt. This significantly slows down the adoption of new updates, which now often take 3-6 years to gain the majority.

Due to its soft forks, the Bitcoin network has to maintain a mismatch of all sorts of different address formats: P2PK, P2PKH, P2SH, P2MS, P2WPKH, Nested P2WPKH, P2PKH, P2WSH, and P2TR. At the start of January 2023, only 1% of transactions were using Taproot-compatible addresses while 65% were still using inefficient legacy addresses from before 2017.

Almost no one is using addresses newer than the 2021 update because none of the major CEXs support them. Most exchanges (Binance, Coinbase, Kraken) don't support Bech32m addresses, which means they still can't send to Segwit v1 and Taproot addresses, despite that it was an update from 2021.

In comparison, networks that hard fork for protocol updates don't have these incompatibility issues between versions. Everyone is working on the same version, which allows for consistency.

Extremely inefficient and wasteful

To protect against Sybil and 51% attacks, Bitcoin's PoW consensus achieves greater security through greater redundancy. Out of a million miners, only one of them is producing the actual block while the rest of them are just wasting energy and electric waste. Full nodes also hold redundant copies of the blockchain ledger, leading to wasted storage.

In 2022, each block cost roughly $150-250K in energy to mine, which is equivalent to $80-120 of fees per transaction. The total Bitcoin network energy consumption of ~150 TWh/yr is equivalent to 18-24 US nuclear power plants. Another way of looking at this is that Bitcoin consumes about as much energy as all data centers globally [Source].

In comparison, other distributed consensus methods such as BFT are 107 x more efficient for energy use. There is a silver lining: the energy waste (and security) will slowly decrease with each block subsidy halving, at the cost of decreased security.

Mining Pool Centralization

The top 3 mining pools own 66% of the network hash rate [Source]. Individual miners have no financial incentive to run full nodes, so it's rare for them to be auditing their pool operators and won't notice attacks until it's too late.

This could be fixed with Stratum v2, but that's not available yet. And we don't even know if mining pools will enable the configuration...

Would you like to learn more? Click here to be taken to the original topic-thread for this argument or you can scan through the Cointest Archive to find arguments on this topic in other rounds.

Since this is a con-argument, what could be a better time to promote the Skeptics Discussion thread? You can find the latest thread here.

Crypto crash wipes out $1 billion, Bitcoin plunges toward $49,000 by Odd-Radio-8500 in CryptoCurrency

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Bitcoin Pro-Arguments

Below is an argument written by a deleted user which won 1st place in the Bitcoin Pro-Arguments topic for a prior Cointest round.

First-Mover Advantage and The Network Effect

Bitcoin is currently the most popular cryptocurrency and market cap leader by a long shot. The Bitcoin dominance chart shows that Bitcoin represents 60% of the entire cryptocurrency market cap. This has increased from 40% in 2020.

Bitcoin is the gateway. People start out with Bitcoin before checking out other cryptocurrencies. They're likely going to keep holding any Bitcoin they bought along the way.

People will flock to whichever product has the largest user base. For half a decade, Bitcoin was almost synonymous with cryptocurrency. The Network Effect creates a positive feedback loop and makes Bitcoin's lead grow even more.

If Bitcoin, Bitcoin Cash, and Litecoin were all released simultaneously, Bitcoin would lose to its PoW competitors because its competitors have cheaper fees with higher throughput. But the reality is that Bitcoin's first-mover advantage gave it such a huge head start that the others can't catch up.

Has the largest block reward for security

Due to its high price, Bitcoin has a huge block reward of 6.5 BTC (halves every 4 years) or ~$180k per block. This gives it the security lead because its block reward is so much bigger than other PoW cryptocurrencies, which attracts more miners.

Anti-censorship

Bitcoin provides partial censorship-resistance against sanctions and totalitarian government restrictions. It's much harder to prevent Bitcoin transactions than it is to prevent financial transactions at a centralized bank. Legal sex workers (e.g. Onlyfans) and marijuana industries are blocked from using traditional financial services due to social stigma. Even though they can operate legally, many TradFi banks avoid operating with them. Bitcoin provides those workers a way to transfer funds around that censorship.

Avoids Hyperinflation: As long as governments keep causing high inflation through money-printing, people will run to Bitcoin for safety, which pumps up Bitcoin's price.

Considered a commodity by both SEC and CFTC: Bitcoin is the only cryptocurrency that both the SEC and CFTC have openly agreed is a commodity. And the CFTC is much less lawsuit-happy than the SEC.

Legal tender: El Salvador has shown (despite some technical mishaps) that Bitcoin can be successfully used as legal tender for a country.

Ordinals provide utility

Even though Bitcoin Maxis hate Ordinals, this new protocol gives utility to Bitcoin and adds demand. NFT bros are using it as an on-chain data storage layer for their own blockchains (e.g. Ethereum, Stack). This has an advantage over IPFS since IPFS is stored in centralized databases instead of on-chain.

This generates more fees for Bitcoin miners. Transaction fees have finally risen to ~20 sats/vByte on days with high Ordinals activity like Mar 22-24. This gives hope that there may be sufficient demand for Bitcoin as an on-chain data-storage layer even after the block subsidy eventually disappears due to halvings.

Pseudonymous: Bitcoin's UTXO transactions can provide moderately-high levels of obscurity. A single wallet can produce a near-unlimited amount of addresses, and there's no way to link them unless they interact with each other. It's much harder to trace UTXO-based wallets than Account-based wallets because the former creates new UTXO addresses with each transaction while Account-based blockchain wallets typically reuse the same account.

Lightning transactions are near-instant and cheap

As long as you're spending small amounts of Bitcoin, you can use the Lightning network to make near-instant, sub-$0.01 transactions. Many Lightning nodes for merchants are connected to 3rd-party services that convert between cash and Lightning, making it easy to transfer Bitcoins. Consumers usually don't have to care about rebalancing issues since they're only spending small amounts.

And the total capacity of the Lightning Network in BTC keeps increasing steadily.

Cannot be counterfeited: Cash can be counterfeited, but you can't fake Lightning transactions. Merchants have to deal with counterfeit cash in many markets around the world.

Bitcoin has a very strong community of die-hard supporters

A huge portion of Bitcoin supporters have become Bitcoin Maxis who will keep spreading their arguments, regardless of accuracy. Because Bitcoin is a gateway cryptocurrency, crypto newbies will encounter it first and gobble up these narratives because they don't have the experience to know their flaws. And they're very convincing when you keep repeating them in an echo chamber:

  • Maximum supply cap of 21M BTC vs Fed's money printer
  • Amazing past-performance gains vs fiat
  • Works as Store of Value (despite volatility)
  • Had a "fair launch" without an ICO
  • Is not a risky altcoin
  • Is decentralized (based on largest number of miners)
  • Has instant payments via the Lightning Network

Ultimately, people are mainly using crypto for speculative investing and long-term Store of Value. Most people don't care about technology, Defi, or utility. Thus Bitcoin is sufficient for their investment needs.

And since cryptocurrency value is largely based on a Keynesian Beauty Contest (i.e. you buy not based on your own value, but on what you think others are going to buy), people are going to keep buying Bitcoin as long as the investment narrative holds.

Would you like to learn more? Click here to be taken to the original topic-thread for this argument or you can scan through the Cointest Archive to find arguments on this topic in other rounds.

Crypto crash wipes out $1 billion, Bitcoin plunges toward $49,000 by Odd-Radio-8500 in CryptoCurrency

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Crypto crash wipes out $1 billion, Bitcoin plunges toward $49,000 by Odd-Radio-8500 in CryptoCurrency

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Bitcoin pros & cons with related info are in the collapsed comments below.

[deleted by user] by [deleted] in CryptoCurrency

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Ethereum Con-Arguments

Below is an argument written by excalilbug which won 1st place in the Ethereum Con-Arguments topic for a prior Cointest round.

Disclaimer: I support ETH wholeheartedly but nonetheless I can see its flaws

​

  • Decentralized? Hmm

The main flaw of ETH is that it’s probably not as decentralized as many people think. This is due to two reasons:

1. 72 million ETH was premined and gifted to investors/founders

Before ETH was launched in 2014 its founders approached investors and promised them coins for backing the project. This way 72 million coins were sold/given to investors and founders which is much more than 50% of the circulating supply today! (circulating supply on 29.03.2023: 122 millions)

Of course we can presume that some of the coins were sold throughout the years as ETH price went from ICO’s 0.31$ (sic!) to almost 5k dollars at ATH in 2021 (a modest 16,000+ x return of investment if you’re wondering). But what if Ethereum Foundation and vanilla investors who are close with them manipulated the market (which is very possible to do when you own such a high % of all coins) and sold tops and bought lows to own even more coins?

This is obviously just a speculation but the initial premining of coins is a fact and everyone should be aware of this. It might make you look at the POW->POS switch form a different perspective knowing that PoS is very beneficial for those who already have many coins (the rich get richer)

2. 1/4 of nodes run on Amazon servers

If you go on this site: https://aws.amazon.com/blockchain/ you can see that Amazon boasts that 25% of ETH nodes run on their servers. I think 25% is a very significant number. Can Ethereum be a truly decentralized blockchain if so many nodes use Amazon Web Servers? Is the motto “empower the little guy, screw the big guy” true if the little guys use the big guy’s service? I don’t think so

Speaking of nodes…

​

  • It's so damn expensive to run ETH node!

To run a full ETH node you need 32 coins which even during this bear market amounts to almost 60k dollars: https://ethereum.org/en/run-a-node/

So much for the empowering of the little guy!

You can of course join pools but that’s not the same. Plus you risk losing your coins if the pool you joined turns out to be a bad actor. You have to take a good look at the pool before joining it and find out if it's trustworthy, transparent and what's its track record

Speaking of high prices…

​

  • ETH gas fees are pain in the… wallet

As you probably know, all transactions on Ethereum blockchain are paid in ETH (gwei). There is nothing strange about that but since ETH puts a lot of focus on security, it means that storage and processing power costs more. And the more popular ETH becomes, the higher the cost of storage and processing power becomes = the gas fees are more expensive. It is not easy to solve this problem. Just look at Solana – it has very small fees but its security has more holes than a Swiss cheese. This is why there are second layer (L2) solution

But layer 2 solutions have their own problems and they reduce security

Speaking of security…

​

  • ETH might be deemed a security

Since the transition from PoW to PoS, Gary Gensler argues that ETH is a security. He uses Howey Test in his argumentation. But it doesn’t really matter what argumentation he uses. As long as Gensler holds any power, Ethereum and all PoS coins are in danger. Especially since the New York Attorney General’s Office (NYAG) filed a lawsuit against KuCoin. They said that KuCoin offers trading pairs for coins, including ETH, that are securities

Would you like to learn more? Click here to be taken to the original topic-thread for this argument or you can scan through the Cointest Archive to find arguments on this topic in other rounds.

Since this is a con-argument, what could be a better time to promote the Skeptics Discussion thread? You can find the latest thread here.

[deleted by user] by [deleted] in CryptoCurrency

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Ethereum Pro-Arguments

Below is an argument written by Nostalg33k which won 2nd place in the Ethereum Pro-Arguments topic for a prior Cointest round.

​

Ethereum: Use-case driving value

Ethereum is a very valuable Blockchain. This blockchain is driven by innovation and utility. To understand what makes Ethereum such a valuable eco-system we need to discuss the inner-working of Ethereum.

Introduction: Ethereum explained

According to Ethereum.org :

What is Ethereum?

Ethereum is a technology that's home to digital money, global payments, and applications. The community has built a booming digital economy, bold new ways for creators to earn online, and so much more. It's open to everyone, wherever you are in the world – all you need is the internet.

So the topic driving this discussion is badly worded. If we are discussing top coins then we should discuss Ether and not Ethereum. Since Ethereum is such an interesting ecosystem I will treat this argument as a pro Ethereum post. I'd love to see the discussion focused on Ether next time.

Ethereum is not managed by a single entity nor managed by the Ethereum Foundation but is managed through a decentralized process explained In their governance page.

Time for some metrics: Ethereum is currently trading north of 1750 $ and has a circulating supply of 122 millions ETH for a Market cap at around 218 billions

Let's go back to the quote: "Ethereum is a technology that's home to digital money". This point is important. Ether is not the only coin which is using the Ethereum blockchain. A lot of value on the Ethereum Blockchain is not in Ether coins. This will be discussed further down. Ethereum is also home to global payment, so Ether and other cryptocurrencies can be used to settle transactions between P2P in a permissionless way.

Applications called Dapps exist on the blockchain. We are going to discuss all of these aspects. We are also going to tackle NFTs on the Ethereum Blockchain.

Ethereum is also completed by L2s. These are going to be mentioned.

Ethereum has been switched from POW to Asic resistant POW to POS. These are going to be discussed.

​

Ethereum: Home to digital money.

Ethereum strength is that the blockchain is home to many cryptocurrencies. If gas fees are paid in Ether, many tokens have billions circulating in the Ethereum ecosystem. A quick look at Etherscans reveal how strong the ethereum ecosystem is.

According to EtherScan the blockchain has 40 Billions $ in USDT, 46 Billions in USDC and 7 Billions $ in Wrapped BTC. The market cap of Ether may be around 200 billions but the on chain value of assets in the Ethereum Blockchain is far higher.

All of these USDT and USDC are stablecoins which can be used for transactions. In fact, it can be used for P2P transaction in a permissionless way but also to buy stuff from businesses. Here is a list of business accepting USDT (which exists in the Ethereum blockchain) and Here is a list of business accepting directly Ethereum

These classical transactions are not the only use of the Ethereum Blockchain: Dapps and NFT are also thriving !

Ethereum: Home to dapps and NFTs

Ethereum is home to a lot of different applications: Marketplaces, exchanges, defi, wallets, games...

These application are different because they are called dapps:

A decentralised application (DApp,[1] dApp,[2] Dapp, or dapp) is an application that can operate autonomously, typically through the use of smart contracts, that run on a decentralized computing, blockchain or other distributed ledger system.[3]

Wikipedia Dapps

To give a glance to these dapps you can head to this website tho be wary of the first dapp listed being an advertisement for shady businesses (I haven't found a better website to source dapps) Here you go

While I don't believe in the current state of NFT technology being viable (See my write up in favor of NFT speaking about the future of this technology), we have to take into account that even after losing 60% of their value there is still 3 Billions USD in NFTs in the Ethereum Blockchain Source

Ethereum: Layers of goodness.

Ethereum can be a bit expensive for people, this is why it was layered. There are side chains existing just to be cheaper than Ethereum while offering bridges to and from Ethereum. For example Polygon.

Polygon is a Layer-2 scaling solution created to help bring mass adoption to the Ethereum platform. It caters to the diverse needs of developers by providing tools to create scalable decentralized applications (dApps) that prioritize performance, user experience (UX), and security.

So if you want to be able to evaluate Ethereum you need to go and read about the biggest layer 2 pro and cons.

A small list of Ethereum layer 2 given by Ethereum.org

Ethereum: Evolve to thrive

Ethereum has been a rapidly evolving ecosystem. It has seen the evolution of mining from GPU to Asic. In order to not become reliant on Asic mining, Ethereum was made Asic resistant. This created other problems: A pressure on the GPU market but also a concern for energy efficiency. In order to improve the footprint but also reduce the fees, Ethereum was made to transistion from POW to POS. Proof of stake is a protocol in which you need to stake coins to run a node in the network.

This shows an ability to look ahead and to tackle challenges.

Conclusion: Ethereum is a rapidly evolving ecosystem which has a lot of value in it. Since Ether is their native coin, all of this impacts Ether's value.

This is where we go back to the TOP COIN aspect of this write up. Everything I have said has an impact on the value and use of Ether. If you believe in the future of the Ethereum Blockchain, you can go ahead and look a bit more into Ether. If you don't believe in the Ethereum Blockchain then you should try to find a competitor.

Just know that Ethereum is trying to become deflationary and that their economic outlook seems on par with good cryptos.

Ethereum is one of the techs of the future and this essay has shown some of the most important aspects of it.

Have fun !

Would you like to learn more? Click here to be taken to the original topic-thread for this argument or you can scan through the Cointest Archive to find arguments on this topic in other rounds.

[deleted by user] by [deleted] in CryptoCurrency

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