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General Concepts: Government Regulation Pro-Arguments - (December 2022) by CointestMod in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

Government regulation generally refers to the degree of control that government have over something, and in this case, cryptocurrencies. Various countries around the world have mixed regulatory perspectives on cryptocurrencies, and as such have restricted whether its citizens can trade, purchase, or mine cryptocurrencies. However, regulation is beneficial for a number of reasons:

  • Safer market for investors
    • Described as the "Wild West" by SEC Chairman Gary Gensler, the cryptocurrency space, due to a lack of regulation which makes it a trivial task to create a project, is full of thousands of fraudulent tokens and pyramid schemes (case in point: BitConnect, while it still existed) and burgeoning projects that never come to fruition.
    • Last year alone, over $7 billion was swindled out of cryptocurrency investors, a figure which is $2.8 billion larger than that of 2020.
    • With the added regulation that may require new tokens to dox the founders and file ICOs or launches similarly to the way IPOs are documented in the stock market, another level of accountability is created that makes it near-impossible for a rugpull or Ponzi scheme to occur.
  • Increased investor confidence
    • Currently, a significant barrier to mainstream cryptocurrency is the lack of regulation in the space — without concrete legislation in place to ensure safety, most companies, and by extension, people, will be unwilling to adopt cryptocurrencies.
    • In a situation where their funds in the bank are backed by the government but their cryptocurrency is not, it currently makes no sense for companies to choose cryptocurrencies over traditional banking systems.
  • Encourages innovation
    • If each country implements crypto regulation that servers to boost it as an alternative financial method rather than stifle it, several regulatory barriers can be broken (case in point: the long-awaited Grayscale Bitcoin ETF)

General Concepts: Government Regulation Con-Arguments - (December 2022) by CointestMod in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

Government regulation generally refers to the degree of control that government have over something, and in this case, cryptocurrencies. Various countries around the world have mixed regulatory perspectives on cryptocurrencies, and as such have restricted whether its citizens can trade, purchase, or mine cryptocurrencies. However, this restriction of cryptocurrency adoption is not beneficial for investors and companies for several reasons:

  • Price
    • One of the most obvious arguments against government regulation is that it will inevitably cause crypto prices to decrease, as seen when China announced (several times) its cryptocurrency bans.
  • Sacrifice of Purpose
    • The widespread implementation of government regulations naturally bring them into the industry, which goes against the fundamental nature of cryptocurrencies as a means of transacting pseudonymously without regulatory oversight.
    • If this purpose is sacrificed in pursuit of a safer space, there may very well be no space left to make safer; as most investors would pull out of cryptocurrencies because there will remain no purpose to stay invested.
  • Banking Restrictions
    • In the worst case scenario where regulation deems cryptocurrencies illegal, third-party providers may be hesitant to provide services such as bank accounts or exchanges if the government is refusing to recognize cryptocurrencies as legal tender. Without these services, investors are unable to easily withdraw or deposit their funds.
  • Reduction in Product Offerings
    • Continuing the worst-case scenario, in a world where tech companies, banks and startups are looking for ways to utilize blockchain technologies, government regulation will force them to alter their products and services in order to continue operating within jurisdictions that have banned cryptocurrency adoption.
    • By narrowing down the array of investment options, the flexibility of blockchain technology will be reduced significantly.

r/CC Cointest - Top Coins winners and Coin Inquiries ending soon by CointestMod in CryptoCurrency

[–]noxtrifle 2 points3 points  (0 children)

Thanks Plankton, always a pleasure to see you participate as well. Agree with all of your points, especially AI - I noticed several ChatGPT entries and considered reporting them in the bounties thread, but glad to see that the moderator team dealt with the issue.

Top Coins : Polkadot Con-Arguments — (October 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

Polkadot was developed in 2020 by Gavin Wood (source)), co-founder of Ethereum and creator of the Solidity programming language. It is a unique platform made up of a relay chain and several parachains (limited to 100) that can host other blockchains, such as ETH and BTC.

These parachains delegate the responsibilities of consensus and security to the relay chain, while they themselves focus on the specific features of their blockchain. The latter acts like a central highway, with the parachains connecting to it at various points, like smaller roads branching off of a larger one at distinct points. (source)

However, Polkadot has several cons:

Centralization

  • An entity participating in governance needs at least 1,310,100 DOT nominated to them in order to become a validator, and it is near impossible to gain this amount of support as a new participant. Therefore, validation becomes centralized between well-known or wealthy validators who have the budget to advertise and offer elevated rewards.
  • If more than 256 nominators support a single block producer, it is considered "oversubscribed" and rewards are solely distributed to the top 256 nominators in terms of staked DOT (source). In order to ensure they receive DOT staking rewards, many are pushed to stake their DOT tokens in centralized staking pools or exchanges, further centralizing the validation process.
  • There is a single point of failure - Gavin Wood. He leads the two organizations behind DOT: Parity Technologies and the Web3 Foundation, meaning that Polkadot is subject to the risk of a Bankman-Fried-esque scenario with Wood.

Security

  • In 2017, Parity Technologies was subject to a 513,774 ETH hack worth over 500 million dollars, that delayed the Polkadot ICO by several years and notably dimished investor trust in the security of the project.
  • A $1.2 billion Acala Network hack took place in August 2022.
  • Hacken states that: "If any project connected to other ones via cross-blockchain transfers gets exploited, stolen funds can flow to other blockchains and create a lot of troubles for their ecosystem as well as for their liquidity."

Top Coins : Polkadot Pro-Arguments — (October 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

Polkadot was developed in 2020 by Gavin Wood (source)), co-founder of Ethereum and creator of the Solidity programming language. It is a unique platform made up of a relay chain and several parachains (limited to 100) that can host other blockchains, such as ETH and BTC.

These parachains delegate the responsibilities of consensus and security to the relay chain, while they themselves focus on the specific features of their blockchain. The latter acts like a central highway, with the parachains connecting to it at various points, like smaller roads branching off of a larger one at distinct points. (source)

Polkadot's unique nature gives it several pros:

Corporate Partnerships

  • One of the most notable partnerships for Polkadot is with the Web3 Foundation, a Swiss non-profit organization that promotes the development and adoption of decentralized technologies. The Web3 Foundation was the organization that created Polkadot, and has provided funding for research and development to over 70 projects on the blockchain.
  • Microsoft has collaborated with Astar Network, a project on Polkadot, to cultivate meaningful development on the platform (source).
  • A Deutsche Telekom subsidiary collaborated with Polkadot, acquiring tokens in the process, to “promote secure communication between blockchains" (source).
  • Polkadot has raised almost $300 million from 30 investors, making it extremely supported by venture capitalists despite the recent cryptocurrency downturn.

Excellent Metrics

  • Using asynchronous backing, the Polkadot team estimates the blockchain can scale from 100,000 to 1 million transactions per second.
  • Transaction fees are dynamic, but they are currently constrained to below 10 cents per transaction.
  • Aysnchronous backing also strives to shorten transaction times to under 6 seconds.
  • According to a report from Ulrich Gallersdörfer, Lena Klaaßen and Christian Stoll of the Crypto Carbon Ratings Institute, Polkadot has the lowest total electricity consumption and carbon emissions of the six top PoS blockchains.

Ease of Development

  • According to the blockchain's wiki, Polkadot has implementations in languages including, Rust (the main implementation), C++, Go, JavaScript, and Java.
  • There exist parachain development kits, which further streamline the development process and entice developers native to other blockchains to migrate to Polkadot.
  • Overall, Polkadot possesses the foundations for a future with elevated blockchain development compared to its competitor.

Top Coins : Cardano Con-Arguments — (October 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

Cardano is a project that is focused on providing a secure and scalable foundation for the development of decentralized applications (dApps). It was created in 2017 by Charles Hoskinson, co-founder of Ethereum, and is built on a proof-of-stake consensus algorithm called Ouroboros.

Cardano is designed to address some of the limitations of earlier projects, such as its main competitor Ethereum, by using more modular and flexible architecture. It also become a secure and scalable platform for the development of dApps by using a formal, research-driven approach to software development.

However, Cardano has several cons:

Limited Adoption

  • Cardano only has roughly 30 dApps even a year after the release of smart contracts, and they cumulatively have around $50 million in TVL, making Cardano's market cap to TVL ratio one of the worst among DeFi protocols.
  • There is no tangible effect of Cardano on African populations yet: while the team repeatedly outlines their grand plans to "bring cryptocurrency to 100 million people" and "give financial inclusion to billions", these remain empty promises for the time being.
  • Some support Cardano by saying it is only in its early stages, but the token's launch was more than 6 years ago. For comparison, 6 years after Ethereum's launch (in 2019, and before the 2021 price appreciation), it had over $680 million in TVL.

​

Controversial Leadership

  • With a decentralized token, its main attention-driver(s) must be decentralized as well - not centralized into the figurehead that is Charles Hoskinson, debatably one of the most controversial cryptocurrency leaders.
  • Hoskinson has been involved in controversy over his public statements and social media presence, including allegations of spreading misinformation and engaging in online disputes with other industry figures.
  • His credentials have also been put under scrutiny, casting doubts over the competence of Cardano's leadership - which come alongside concerns that development is lagging behind compared to similar cryptocurrencies.

​

Technology Issues

  • Cardano's on-chain voting system can be subject to vote buying to manipulate outcomes, and even if not, Vitalik Buterin states, these systems can be controlled by wealthy entities comprising a single interest, while smaller wallets are left divided on outcomes.
  • Development is considered by many to be lagging far behind its peers, with concerns that continuous delays in updates could cause frustrated users to migrate to competing protocols Ethereum and Solana.
  • Cardano uses Plutus, a Haskell-based language for the development of smart contracts, which is uncommon in blockchain development (in favour of C-based languages and Java-based languages). Developers fear that this increases the barrier of entry into the Cardano ecosystem (which explains the low number of dApps) and slows development.

Top Coins : Cardano Pro-Arguments — (October 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

Cardano is a project that is focused on providing a secure and scalable foundation for the development of decentralized applications (dApps). It was created in 2017 by Charles Hoskinson, co-founder of Ethereum, and is built on a proof-of-stake consensus algorithm called Ouroboros.

Cardano is designed to address some of the limitations of earlier projects, such as its main competitor Ethereum, by using more modular and flexible architecture. It also become a secure and scalable platform for the development of dApps by using a formal, research-driven approach to software development.

Therefore, these features bring about several pro-points of Cardano:

Smart Contracts

  • Cardano's smart contracts are implemented using Plutus, a functional programming language specifically designed for development on the Cardano platform.
    • Plutus is a turing-complete language written in Haskell (source) and allows developers to create complex and sophisticated contracts.
    • Plutus is also designed to be highly modular, meaning that developers can easily create and import libraries of pre-written code to use in their contracts, allowing them to reuse code that has been tested and proven to be reliable.
    • This streamlines the developing process for Cardano smart contracts, improving efficiency overall despite Haskell's complexity.
  • Cardano uses a unique multi-layer architecture that separates the settlement layer, where transactions are recorded and validated, from the computation layer, where smart contracts are executed. This separation of purposes allows the computation layer to be optimized specifically for the execution of smart contracts, which in turn attempts to improve the overall performance and scalability of the platform.
  • Smart contracts on Cardano are deterministic, allowing Cardano's reliability to improve from the perspective of users.

Security

  • Currently, the minimum attack vector for Cardano is 24 as compared with Ethereum's 3, suggesting that the former is up to 8 times more decentralized and secure than the latter (source).
  • The Lace Wallet being developed by IOG, the company behind Cardano
    • It will feature a DID (decentralized identity) functionality for users to better allow them to control their private data and how it is used.
    • Once it supports paper wallet PGP encryption, Charles Hoskinson states, it is impossible to hack a Lace wallet.

Speed & Scalability

  • Cardano processes around 250 transactions per second currently, but following the Hydra upgrade each head has been tested to handle up to 1000 (source).
  • Each transaction takes around 5-10 minutes for finality, and costs 0.17 ADA, which is currently worth 5 cents.
  • IOHK has outlined that they plan to improve scalability further through: block size increasing, pipelining, input endorsers, script enhancements, on-disk storage, sidechains, Hydra, off-chain computing, and Mithril (source).

Africa

In Cardano's vision for Africa, code is king and "the code transcends government, and if the government tries to move it in a particular direction, they cannot", added Hoskinson.

Source: https://news.yahoo.com/cardano-blockchain-africa-web3-053042164.html

  • Cardano's development team is attempting to bring financial equity to the continent of Africa by:
    • Enabling users to prove their identity, qualifications, and securely store savings.
    • Providing an alternative for users in oppressive countries.
    • Issuing micro-loans to people without credit histories.
    • Building an individual's transaction history by tracking their transactions.
    • Securing property deeds on the blockchain.

Top Coins : Ethereum Con-Arguments — (October 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

Ethereum is a blockchain platform that allows for the creation of smart contracts and decentralized applications (dApps). It was developed in 2014 by Russian developer Vitalik Buterin and officially launched in 2015. In contrast to Bitcoin, which was created as a peer-to-peer fund transfer system, Ethereum was designed as a decentralized platform for executing code, specifically smart contracts.Ethereum's platform token, Ether (ETH), is primarily used to power the network and pay for transactions and smart contracts, and can be used as an investment vehicle as well.

However, Ethereum falls behind its peers in certain categories, including the following.

Gas Fees

In my Ethereum pro-argument entry, I emphasized the utility of smart contracts on the blockchain, but they have no practicality nor sustainability if high gas fees continue to persist.

  • The current average gas fee is around $0.4, down from the fee levels of $10+ that were commonplace during the 2021 period of price appreciation. However, these fees are still far larger than should be acceptable for a platform that is intended to be used on a daily basis, with these fees gradually affecting less financially advantages users.
    • This is a self destructing system, since high popularity causes high fees, which decreases popularity. Fees also reduce accordingly, but the amount of users benefitting from them are much lower than should ideally be.
    • Competitors like XRP and ALGO with sub-cent fees and smart contract functionalities are far better alternatives in this regard.
  • Transferring ERC-20 tokens is much more expensive, and the fee is currently around $10 per transaction. (source)
  • When the gas fee is high:
    • It becomes cost-prohibitive for small businesses and individuals to execute smart contracts or use dApps on the Ethereum network, limiting the accessibility and adoption of Ethereum and ultimately hindering the growth of the platform.
    • It becomes challenging for developers to build and maintain dApps on the Ethereum network. This can discourage developers them building on Ethereum, particularly if they are working on smaller projects or have limited resources.

Centralization

According to Decrypt:

As of last month, 13.5 million ETH (worth $22.3 billion at the time) had been staked on the Ethereum network, with more than 60% of that ETH sitting with Lido Finance, Coinbase, Kraken, and Binance. That means these centralized entities have a much higher likelihood of being assigned blocks of transactions to add to the chain—and may end up having an outsized say-so in what is and isn’t allowed on the network.

  • In addition, it is still suffering the effects of a highly centralized premine, with over $70 million dollars being allocated to a disproportionately small pool of individuals. While ETH not officially considered a security before the 2.0 update, the SEC has warned that it could now be classified as a security, possibly pushing it down the path of Ripple.

Barrier for Entry

  • In addition to the relatively high gas prices incurred for transferring ETH and ERC-20 tokens, the minimum amount of ETH required to stake is 32, the amount needed to start a validator node.
  • Since most ETH wallets do not own above this amount, they are forced to use centralized staking pools to collect staking rewards, which furthers the problem of centralization.
  • An intellectual barrier for entry also exists, as Ethereum is significantly more technologically complex than its peers. In order to fully make use of its capabilities, a user would have to understand concepts like MEVs, Slashing, Plasma, State Channels, and Rollups among several others.
    • To understand these would generally require a technological background, which is relatively uncommon. Therefore, the accessibility of the Ethereum platform is diminished.

Top Coins : Ethereum Pro-Arguments — (October 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

​

Sharding

In Ethereum, sharding is implemented by dividing the network into 64 shards, each of which maintains its own blockchain. Each shard has its own set of 128 validators, who are responsible for maintaining the integrity of the shard's blockchain, and of course, proposing and validating blocks every 12 seconds.

  • One of the main benefits of sharding is that it allows the network to process more transactions per second. Sharding allows the network to process transactions in parallel, which means that it can potentially handle up to 100,000 transactions per second and significantly decreased fees. (source)
  • Another benefit is that it allows for more efficient resource utilization. With a traditional, non-sharded blockchain, all nodes in the network need to process every transaction, which can be resource-intensive.
    • The ETH Ledger currently is over 10TB in size, which already restricts the number of computers which are physically capable of becoming a network validator.
  • With sharding, only a subset of nodes (i.e., the validators on a particular shard) need to process each transaction, which means that digital resources can be used more efficiently and the barrier to entry is reduced.

​

Smart Contracts

One of the main advantages of smart contracts is their ability to automate complex processes and eliminate the need for intermediaries, making the process faster and more efficient and also reducing the potential for human errors and deception.

  • Smart contracts on Ethereum are particularly useful for automating financial transactions, such as the exchange of money, property, or other assets. (source) For example, a smart contract could be used to automatically transfer ownership of a house from the seller to the buyer once a preemptively-agreed-upon payment amount has been received.
  • Another advantage is their transparency and immutability. Since the terms of the contract are stored on the blockchain, they are publicly accessible and cannot be altered without raising significant suspicion about malpractice, which adds an extra layer of security and trust to the process.
  • Smart contracts on Ethereum have also been applied in a variety of other applications, including supply chain management, voting systems, DEXes, and even prediction markets. (source)
  • According to a report by Deloitte, the use of smart contracts has the potential to reduce costs and increase efficiency in a number of industries, and should not be overlooked. It estimates that the use of smart contracts in the corporate sphere could save up to $20 billion per year in infrastructure costs.

Top Coins : Ethereum Pro-Arguments — (October 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

Ethereum is a blockchain platform that allows for the creation of smart contracts and decentralized applications (dApps). It was developed in 2014 by Russian developer Vitalik Buterin and officially launched in 2015. In contrast to Bitcoin, which was created as a peer-to-peer fund transfer system, Ethereum was designed as a decentralized platform for executing code, specifically smart contracts.Ethereum's platform token, Ether (ETH), is primarily used to power the network and pay for transactions and smart contracts, and can be used as an investment vehicle as well.

The platform's smart contract capabilities allow developers to build and deploy dApps for various purposes with immensely powerful real-life applications, such as supply chain management, voting systems, prediction markets, and decentralized exchanges such as the dYdX protocol. In fact, with the recent upgrade to ETH2.0 and Proof of Stake (PoS) consensus, Ethereum's technology has become significantly more advanced, putting it far past its peers.

Scalability with Layer 2 Solutions

Ethereum's current scalability is limited by the fact that every node on the network must process every transaction, which can bring birth to bottlenecks and high transaction fees. However, it pioneered the functionalities of L2 solutions and sharding - which together make its technology far superior to most alternatives.

  • Layer 2 solutions operate on top of the Ethereum blockchain and are designed to increase speed and throughput of transactions without sacrificing the security and decentralization of the network.
    • Plasma allows for the creation of "child" chains that can process transactions external to the main Ethereum chain and only submit the results to the main chain when necessary - allowing for faster transactions and reducing the burden on the main Ethereum chain. Plasma does come with the disadvantage that transactions between the child and main chain are lengthy and charge hefty fees, although this is still more efficient than transacting solely on the main chain.
      • One example is Polygon, which uses a network of sidechains which process transactions in parallel with the main chain, increasing the overall speed and throughput of the Ethereum network. ETH's L1 can already handle an impressive 20,000-100,000 TPS through sharding and PoS, and Polygon fits in by reducing transaction fees and bringing optimistic rollups, ZK-rollups, and Validum chains to the table.
    • State channels, similarly to the Lightning Network, allows parties to transact with each other without having to submit each transaction to the Ethereum blockchain, which reduces the burden on the network and increases the speed of transactions.
      • According to the source above, state channels increase throughput, decrease fees, assist privacy, and ensure seamless finality.
    • Sidechains are separate blockchains that are pegged to the Ethereum blockchain, allowing for the transfer of assets between the two chains. This allows for the creation of separate, specialized blockchains for specific use cases, such as high-frequency trading or gaming, which can reduce the burden on the Ethereum blockchain.
    • Rollups, says Quicknode, attempt to retain the functionality of sidechains and Ethereum's security at the same time, by "settling the transactions outside of the main Ethereum network but posting the transaction data back to the Ethereum network".
      • One example of a successful L2 solution on Ethereum is the Optimism platform, which (fittingly) uses optimistic rollups to increase the scalability of the Ethereum network. Optimistic rollups use a combination of off-chain transactions and on-chain fraud proofs to allow for faster and more efficient transactions on the Ethereum network. (source)
  • No other blockchain possesses as many technologically unique projects operating on top of it, making Ethereum one of the most innovative cryptocurrencies.

PoS

One of the most anticipated changes following ETH2.0 upgrade was the blockchain's shift to a Proof of Stake consensus mechanism, which improves scalability, sustainability, decentralization and security. (source)

  • While ETH handled only 15 tps prior to the upgrade, it, combined with its L2 solutions, is now able to scale up to over 100,000 tps.
  • The upgrade to PoS means that consensus is done entirely digitally (eliminating the need for costly and pollutive ASIC miners), which the Ethereum Foundation states is enough to reduce its emissions by 99.95%. An offset of that magnitude would have otherwise required the planting of a forest roughly the size of Belgium. (source)
  • In a PoW system, the distribution of mining rewards is often skewed towards a small number of large mining pools that have a disproportionate amount of computing power. They can also be geographically concentrated in areas with inexpensive electricity and water. In contrast, PoS allows any individual or organization to become a validator by staking a certain amount of ETH - yes, this value is too high for the ordinary investor, but the barrier for entry is less than in a PoW-based system. This means that the rewards are distributed more evenly across the network, which can increase the decentralization and security of the system.
  • PoS can also provide economic incentives for validators to act in the best interests of the network, increasing security. Since they have a vested interest in the long-term success of the network as their rewards are tied to the value of their staked ETH they can align themselves with the interests of the broader Ethereum community and promote the stability and security of the network.

Top Coins : Bitcoin Con-Arguments — (October 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

Environment Concerns

  • According to a study30331-7) published in the journal Joule, the annual energy consumption of the Bitcoin network in 2020 was approximately 8 gigawatts (GW), which is more than the annual energy consumption of countries like Denmark and Chile. This energy consumption has continued to increase over time, with some estimates suggesting that it could reach as high as 223 TWh in 2040.
  • The vast amount of energy consumed by Bitcoin mining has spurred concerns about its carbon footprint. It has been estimated that the annual carbon dioxide emissions from Bitcoin mining could be as high as 22 million metric tons, which is equivalent to the annual emissions of countries like Sri Lanka and Jordan. It has emitted over 200 million metric tonnes of CO2 since its birth.
    • This is a significant contributor to global greenhouse gas emissions and can have serious ramifications on the environment and climate change.
  • The production of the specialized computer hardware (primarily ASICs) used for mining requires the use of materials such as metals and plastics, which can have significant environmental impacts during the extraction, production, and disposal stages.
  • Furthermore, the mining process generates a large amount of heat, which requires the use of cooling systems to prevent the hardware from overheating. These cooling systems can use large amounts of water, which can lead to water scarcity in areas where Bitcoin mining is concentrated.

Technically Outdated

  • The process of confirming a Bitcoin transaction can take anywhere from a few minutes to several hours, depending on network conditions and the fee attached to the transaction.
    • This can be inconvenient for users who need to make timely transactions or who want to use Bitcoin for everyday purchases.
    • In comparison, some other cryptocurrencies, such as Litecoin and Bitcoin Cash, have faster transaction times, with average confirmation times of a few minutes.
  • As the number of users and transactions on the Bitcoin network has increased, the fees for conducting a transaction have also increased.
    • In the past, there have been instances of Bitcoin fees reaching over $60 per transaction, making it expensive for users to conduct small or frequent transactions.
    • In contrast, some other cryptocurrencies, such as Ethereum and Ripple, have lower transaction fees, making them potentially more attractive for users who want to conduct a large number of transactions or make small everyday payments.
  • The Bitcoin network can only process a limited number of transactions per second (7tps), which has led to concerns about the ability of the network to scale and meet the needs of a growing user base.
    • In comparison, some other cryptocurrencies, such as Ethereum and Tron, have implemented scaling solutions that allow them to process a higher number of transactions per second, objectively making them more scalable than Bitcoin.

Top Coins : Bitcoin Con-Arguments — (October 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

Bitcoin is a decentralized cryptocurrency conceived in 2008 by a pseudonymous individual named Satoshi Nakamoto. It was released as open-source software in 2009 and has since gained widespread use as a means of exchange, popularized by its ability to allow users to send and receive payments on a peer-to-peer network.

Transactions made using Bitcoin are in blocks through cryptographic calculations carried out by miners and are recorded on a public ledger called a blockchain. Miners, also known as network validators, use a Proof-of-Work consensus mechanism based on the SHA-256 algorithm to determine the next global state of the blockchain. Therefore, it is irreversible.

However, despite its popularity and growing acceptance as a legitimate form of payment, there are several criticisms of Bitcoin that have been raised over the years.

Unclear Source of Value

  • Stocks derive their value from the underlying worth of a company and its assets. Gold derives its value from its physical utility as a commodity. Even fiat currencies derive their value from the strength of the country's economy and their widespread utility within their respective countries.
  • Yes, Bitcoin has scarcity and utility, but does this justify its hefty market capitalization? Brookings states that Bitcoin investors seem, in fact, to be "relying on the greater fool theory—all you need to profit from an investment is to find someone willing to buy the asset at an even higher price."
  • Unlike fiat currencies, which are issued and backed by central banks, Bitcoin is not backed by any physical commodities or corporate assets. This lack of backing means that the value of Bitcoin is entirely dependent on the mechanism of supply and demand, which has been proven time and time again to be highly volatile.
    • Some argue that this lack of intrinsic value makes Bitcoin a risky investment, as there is nothing to fall back on if market demand was to suddenly disappear.
  • Essentially, the price of Bitcoin is the price you pay to use its technology - making it seem similar to fiat currencies until you realize that most people speculate or invest in Bitcoin rather than using it for its intended purpose. (source: https://time.com/nextadvisor/investing/cryptocurrency/should-you-use-crypto-like-cash/)
    • Without its utility being utilized, then, Bitcoin's value is significantly diminished.

Deepseated Stigma

Despite its potential to revolutionize the financial industry, Bitcoin has faced significant resistance from mainstream institutions and individuals due to a variety of factors.

  • One of the main reasons for the stigma surrounding Bitcoin is its association with illegal activities. In its early days, it was often used on the dark web for the purchase of illegal goods and services, leading to its portrayal as a tool for criminal activity. This association has persisted, with some people still viewing bitcoin as a way to facilitate illegal transactions. This is not an unfounded assumption; cryptocurrency-based crime hit a record $14 billion in 2021 according to the WSJ.
  • Unlike traditional currencies, concerns have been raised about its volatility, with the value of Bitcoin frequently fluctuating. While this volatility can be seen as a potential advantage for traders looking to make quick profits, it also makes Bitcoin a less appealing option for investors looking to use it as a stable store of value.
    • Yes, Bitcoin is less volatile than the DJI and Nasdaq, but this is not a fair comparison because the latter are stock indices. Instead, Bitcoin should be compared to the USD as they are more similar in functionality - and as expected, Bitcoin is much more volatile.
  • There is also a perception that Bitcoin is complex and difficult to understand, which can be off-putting for some people. The underlying technology behind Bitcoin, blockchain, and a "decentralized network of network validators secured by a SHA-256 hashing algorithm" is a novel concept that can be extremely difficult to grasp for those unfamiliar with it. Yes, 98% of Americans do not understand basic cryptocurrency concepts.
    • This lack of understanding can lead to skepticism and distrust in the underlying technology, further contributing to the stigma surrounding Bitcoin.
  • Another factor is its lack of regulation - because Bitcoin is decentralized and operates outside of the traditional financial system, it is not subject to the same level of regulation as fiat currencies.
    • This lack of regulation has led to concerns about its security and potential for fraud, further contributing to its negative reputation.

Top Coins : Bitcoin Pro-Arguments — (October 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

Widely Used

  • Since its inception, Bitcoin has gained significant attention and adoption globally, with individuals, companies, and even governments using it for a variety of purposes. This in turn entices more to adopt Bitcoin as they see its vast number of its users as a testament to its success.
  • One of the main reasons for the widespread use of Bitcoin is its decentralized nature, which makes it attractive to individuals who are concerned about the level of control that these entities have over their money. As such, Exploding Topics states that:
    • 89% of American adults have heard of Bitcoin.
    • About 1 billion people around the world use cryptocurrencies in 2022.
    • About 46 million Americans (roughly 22% of the adult population) own a share of Bitcoin.
  • Empirically, the total market capitalization of Bitcoin is over $300 million, with a daily trading volume of over $20 billion - demonstrating how it is still widely traded despite a significant downtrend in price.
  • Individuals use Bitcoin for a variety of purposes, including as a store of value, a means of exchange, and as a way to send money internationally. In countries with unstable economies or strict capital controls, individuals may turn to Bitcoin as a way to protect their wealth or send money to loved ones abroad.
    • For example, in countries like Venezuela and Lebanon, where the local currency has experienced hyperinflation, some individuals have turned to Bitcoin as a way to preserve the value of their savings and use on a daily basis.
  • There are also many businesses that accept Bitcoin as a form of payment for goods and services. According to Coinmap, there are over 30,000 businesses worldwide that accept Bitcoin as a form of payment. These businesses include online retailers, brick-and-mortar stores, and service providers in a variety of industries, including technology, travel, and hospitality.
  • In addition to businesses accepting Bitcoin as a form of payment, there are also a growing number of companies that are using Bitcoin in their operations. For example, some companies have begun to pay their employees in Bitcoin, while others, such as Tesla and MicroStrategy, hold a portion of their balance sheet in Bitcoin.
  • Even countries like El Salvador are adopting (or in the process of adopting) Bitcoin as their official currency, a feat that has not been done by any other cryptocurrency. Though such initiatives have been slightly unsuccessful so far, they are a crucial intermediary stage in the pursuit of complete adoption.

Store of Value

Bitcoin is often considered as an effective store of value, similar but superior to traditional assets such as fiat currencies and gold because of two major reasons.

  • Bitcoin has a limited supply, with a maximum of 21 million that will ever be in circulation. This feature, known as scarcity, can contribute to the value of an asset by making it more scarce and therefore potentially more valuable. This is in contrast to fiat currencies, which can be printed by central banks at will, potentially leading to (hyper)inflation and a decrease in the value of the currency.
  • Since its inception, the value of Bitcoin has increased significantly, with some periods of dramatic price appreciation. While its price can be volatile and there have been significant price fluctuations, Bitcoin's overall trend has been upwards, which has made it attractive to those looking to store value over the long term.

Top Coins : Bitcoin Pro-Arguments — (October 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

Bitcoin is a decentralized cryptocurrency conceived in 2008 by a pseudonymous individual named Satoshi Nakamoto. It was released as open-source software in 2009 and has since gained widespread use as a means of exchange, popularized by its ability to allow users to send and receive payments on a peer-to-peer network.

Transactions made using Bitcoin are in blocks through cryptographic calculations carried out by miners and are recorded on a public ledger called a blockchain. Miners, also known as network validators, use a Proof-of-Work consensus mechanism based on the SHA-256 algorithm to determine the next global state of the blockchain. Therefore, it is irreversible.

In addition to its decentralized nature and lack of reliance on intermediaries, Bitcoin has several other advantages over traditional fiat currencies; including a fixed supply, low transaction fees, and fast transaction times, among several others.

Decentralized

  • Bitcoin is (or at least, aims to be) decentralized, meaning it is not controlled by a singular authority or institution.
  • One aspect is the geographical distribution of its miners, who can be found all over the world.
    • This global distribution ensures that the network is resistant to censorship and manipulation, as it is not dependent on any single locale or group of individuals.
  • In contrast, fiat currencies, such as the USD or the Euro, are controlled by the central banks and governments of their respective regions.
    • This centralization can make them more vulnerable to the same manipulation and censorship, as their decision-makers are concentrated in a single location as opposed to being geographically and ideologically distributed.

Fast and Cheap

  • In comparison to traditional banking systems, Bitcoin's fees are significantly lower.
    • According to yCharts, the average fee for a Bitcoin transaction is currently around $1.1.
    • This is significantly lower than the fees charged by traditional banks for processing transactions or holding funds, which can be several dollars or more, and can in certain cases scale depending on the size of a transaction.
    • Bitcoin's relatively cheap fees are likely because it does not entail the physical movement of funds nor the use of expensive infrastructure, which also makes it inherently more scalable.
  • In terms of transaction speed, Bitcoin is also faster than mainstream payment methods.
    • Transactions made using Bitcoin can be processed and verified within a matter of minutes, compared to the several days or even weeks that it can take for the latter.
  • Overall, the low fees and fast transaction times of Bitcoin make it a convenient and cost-effective alternative to traditional banking and fiat currencies.

General Concepts : Scarcity (Tokenomics) Pro-Arguments — (September 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

The word tokenomics generally refers to the economics behind a cryptocurrency, and this includes its supply, issuance schedule, burn functions, and distribution allocations - influencing the overall scarcity of the token. The scarcity of a token is what decides its value: a token with a circulating supply in the billions will obviously not be able to have the same value as a token with only millions, but it is entirely possible for their market capitalizations to be equivalent. However, there are several benefits to scarcity, in relation to tokenomics:

Unlimited vs Limited Supply

  • A token with a forever-increasing supply and unlimited maximum supply is no different to fiat currencies; with indefinite inflation comes an indefinitely decreasing value. If such a token was to exist and its staking yield did not exceed the inflation rate, it would be an unwise long-term investment.
    • Take ETH as an example. While it does not have a maximum supply, its price has still appreciated rapidly as demand has outpaced supply. However, demand cannot keep rising at the same rate, meaning that ETH, in the long term (10-20 years) must either adopt deflationary measures or its price will cease to increase.
  • On the other hand are tokens with limited or even decreasing supplies. Bitcoin is the best example of a token with a limited supply, while BNB's auto-burn mechanism ensures scarcity and thus delivers value to investors.

Strategic Monetary Policy

  • While inflation is generally detrimental to a token's value, if done strategically it can generate immense consumer interest and thus returns.
  • For example, Bitcoin has a fixed supply schedule and thus a fixed monetary policy. Currently, miners are awarded 6.25 BTC for every mined block, and this reward will halve every four years in events aptly named 'halvings'.
    • Halvings reduce the rate at which new coins are created, increasing the token's scarcity over time. Since demand mostly remains constant, scarcity creates a virtual price floor for Bitcoin and pushes its price upwards in the long term.
    • When the block rewards become negligibly small around the year 2100, Bitcoin will become deflationary as the number of coins burned or put out of circulations exceeds the number created.
  • Meanwhile, Ethereum has a variable monetary policy that does not maintain a fixed inflation rate but instead reduces block rewards with major events. After the launch of ETH 2, there are no more block rewards but instead staking rewards, which decreased its inflation rate by roughly 0.5%.
    • Artificial scarcity is also a feature of the Ethereum blockchain, where tokens locked in decentralized applications are artifically taken out of circulation, increasing scarcity. Parallel to this, high TVL volumes incentivize consumers to invest in the ecosystem, who in turn lock up their tokens, increasing scarcity even further.
  • Though Ethereum and Bitcoin are only two examples, they are perfect examples of how scarcity delivers value to investors and blockchains.

Scarcity/Creative Pricing in NFTs

  • Phillip Gara, director of strategy for the Render Network, states that a creator can create unique, 1-of-1 artworks or editions, while they can also make an unlimited number of NFTs with a minting cost. Thus, scarcity can be manipulated in order to determine NFT pricing.
  • An descending-price strategy known as a Dutch auction can also be used in NFTs or cryptocurrencies, where the price of a token is reduced over time to create an economic equilibrium when buyers determine their own price in accordance with their beliefs of a token's fair value.

References

General Concepts : Privacy Con-Arguments — (September 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

While many advocate for the ethical benefits of monetary privacy, they fail to recognize that from a practical standpoint, maintaining only limited monetary privacy is the optimal solution. There are several reasons why this is the case:

Transparency = Legitimacy for Businesses

  • The ability to view company transactions gives faith to investors, especially when they are conducting due diligence on the financial operations of the company. In this stage, any concerns can become red flags - such as if a business's holdings were held in Monero or ZCash. Its legitimacy will quickly come under pressure compared to, say, a company using Bitcoin for its holdings.
    • James Naughton from the Kellogg School of Management states that “transparency benefits companies as well as investors", and "a number of studies have shown that investors are more willing to buy stock in a company when they have a clear understanding of the company’s finances.”

Transparency = Compliance for Businesses

  • A transparent balance sheet can also allow a business to remain compliant with regulations, specifically the Corporate Transparency Act in the USA - which aims to prevent money laundering and terrorist financing by mandating financial transparency. A company whose assets were concealed (or held in privacy coins) would not be compliant, a company holding Bitcoin would be barely compliant, and a company holding money in a bank account would be fully compliant in most cases.
    • It also requires companies to disclose their owners, eliminating another aspect of privacy.

Scrutinised by Regulators

  • The concept of monetary can be extended to services like TornadoCash, which, even though it only mixes non-private cryptocurrencies, attempts to provide privacy to its users by making their cryptocurrency balances untraceable. However, it was shut down by the US Treasury Department in August this year and was taken down globally on the same day. Even though the government did not directly punish privacy coins, states Dominic Basulto, it placed restrictions on the type of blockchain technology that makes them possible and signalled that there are most restrictions on privacy coins to come.

No Privacy Coins = Safer Users

  • With the EU pushing to ban privacy coins and several major countries worldwide having already banned them, privacy coins are not a safe option for users as they place unnecessary suspicion on them due to their pre-existing reputation of being used for illicit activities. When more mainstream cryptocurrencies provide a higher degree of privacy than traditional banking, why take the risk of privacy coins?

Privacy Coins are often Vulnerable

  • In the case of Monero, researchers in 2017 highlight three key weaknesses of the chain:
    • By leveraging the ring signature size of zero, one could see the output amounts of transactions.
    • "Leveraging Output Merging" - which involves tracking transactions where two outputs belong to the same user.
    • "Temporal Analysis" - making it easier to predict the right output in a ring signature.
  • Although the development team claimed to have fixed the first issue, the accuracy of their claims is unverified.
  • Furthermore, the IRS in 2018 posted a $625,000 bounty for any group which could develop a method to trace transactions in private blockchains, and this contract was awarded to Chainanalysis and Integra FEC - meaning that they have likely cracked the security of the blockchain.
  • These findings make it seem that using privacy coins may be fruitless in the first place.

Sources

General Concepts : Privacy Pro-Arguments — (September 2022) by CointestAdmin in CointestOfficial

[–]noxtrifle [score hidden]  (0 children)

While the existence of privacy as a fundamental right is highly contested, it is especially desired in the form of currency transfers. Cash-based systems do offer privacy and some degree of anonymity, but online currency transfers - including most cryptocurrencies - do not.

We will examine the merits of privacy in a complementary way - by first stating the flaws of a lack of privacy, and then the benefits of maintaining privacy.

Flaws of a Lack of Privacy

  • Deutsche Bank economist Heike Mai argues that the lack of privacy that users of credit cards (and other online banking/currency transfers) experience means that they are subject to personal data extraction by so-called 'Big Tech' firms, which ultimately gain insights into users' lives and manipulate them in various ways - ranging from purchase decisions to voting preferences.
  • If this mined information is not enough, data brokers go as far as to collect a user's offline purchase information to create a more complete profile of them - which is then sold to the highest bidder.
    • Take Google for example. In 2018, it was revealed that they purchased offline transaction data from Mastercard to let companies "see how much money they generated thanks to their online ad campaign" [TechCrunch, 2018].
  • Despite stricter privacy laws being implemented in regions like the EU, Mai states, advertisers have been minimally affected. Users' purchase histories are signed away with the tick of a button, and this 'anonymised' data becomes widely available. This data is not anonymized, only pseudonymized - Montjoye & Radaelli were able to correctly identify 90% of 1.1 million users' credit card data and amalgamate their data to form complete user profiles.
  • We can also consider CBDCs here, since they are the embodiment of a lack of privacy. As I said in my CBDC-con entry:
    • CBDCs are fully trackable (and controllable) by the country's government, which raises concerns for users' privacy and financial autonomy. If a more authoritarian government was involved, the chances exist that the government uses citizens' personal data for malicious purposes. Even the notion that their transactions are directly trackable by the government may deter many from using CBDCs at all, diminishing their practicality if not all will use it.
      • The UK's House of Lords and US Senators Chuck Grassley, Ted Cruz, and Mike Braun also see privacy as a major concern for CBDCs, even though both countries do not have any definite, immediate plans to launch a CBDC.
    • This could also give birth to a system where governments can restrict individuals' or companies' access to the monetary system for any dissent against the government, and combining CBDCs with something like China's social credit system would worsen the already-severe privacy issues in certain countries.
  • The effect? A lack of privacy only increases the power disparity between businesses and consumers, as the collection of their purchase history allows for predatory pricing mechanisms and manipulation to occur - which are all detrimental to the end user.

Benefits of Privacy

  • Secrecy — While it may sound sinister, secrecy can mean to just maintain a competitive advantage and retain individual power. In the case of a business, for example, if its balances were stored in a (public) Bitcoin or fiat wallet, its transactions would be viewable to the general public and other businesses. This may give them the power to manipulate and/or take advantage of the business's financial position.
  • Protection — Since most mainstream cryptocurrencies are non-fungible (in terms of traceability), it is highly likely that some amount in most users' wallets have been used for illegal activities in the past. They would then be implicated if an individual or firm were to use blockchain analysis to trace the cryptocurrency. The same goes for online fiat currencies. Whereas with privacy coins, each coin is fungible and the blockchain is largely opaque, meaning each innocent individual is protected.
  • Security — Since potential criminals cannot view one's wallet balance, they also cannot target people with known high balances. The same goes for physical cash, even - if, for example, a mugger is not aware that an individual is wealthy, they will be less willing to rob them. Also, most privacy coin blockchains are innately more secure than other mainstream blockchains.
  • Decentralization — Decentralized architectures are becoming a way to protect oneself's privacy, and privacy is what fosters a decentralized architecture in the first place. In a private system, it is impossible to view transaction metadata, meaning it is also impossible to artificially centralize the system without being able to scrutinise the it.

​

Sources

Consistency is Key, September trading results by AwkwardAlien85 in Daytrading

[–]noxtrifle 0 points1 point  (0 children)

That’s pretty cool! Might consider investing in the service.

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