A cryptocurrency, broadly defined, is are a form onft based on cardanof digital token or “coins” that exist on a distributed and decentralized ledger called a blockchain.
Bitcoin Transactionsbitcoin exchange disappearsFor most individuals participating in the Bitcoin network, the ins and outs of the blockchain, hash rates, and mining are not particularly relevant. Outside of the mining community, Bitcoin owners usually purchase their cryptocurrency supply through a Bitcoin exchange. These are online platforms that facilitate transactions of Bitcoin and, often, other digital currencies.
El Salvador made Bitcoin legal tender on June 9, 2021.1 It is the first country to do so. The cryptocurrency can be used for any transaction where the business can accept it. The U.S. dollar continues to be El Salvador’s primary currency.Bitcoin exchanges such as Coinbase bring together market participants from around the world to buy and sell cryptocurrencies. These exchanges have been both increasingly popular (as Bitcoin's popularity itself has grown in recent years) and fraught with regulatory, legal, and security challenges. With governments around the world viewing cryptocurrencies in various ways—as currency, as an asset class, or any number of other classifications—the regulations governing the buying and selling of bitcoins are complex and constantly shifting.Perhaps even more important for Bitcoin exchange participants than the threat of changing regulatory oversight, however, is that of theft and other criminal activity. Though the Bitcoin network itself has largely been secure throughout its history, individual exchanges are not necessarily the same. Many thefts have targeted high-profile cryptocurrency exchanges, often resulting in the loss of millions of dollars worth of tokens. The most famous exchange theft is likely from Mt. Gox, which dominated the Bitcoin transaction space up through 2014. Early in that year, the platform announced the probable theft of roughly 850,000 BTC worth close to $450 million at the time. Mt. Gox filed for bankruptcy and shuttered its doors; to this day, the majority of that stolen bounty (which would now be worth a total of about $8 billion) has not been recovered.Keys and WalletsFor these reasons, it's understandable that Bitcoin traders and owners will want to take any possible security measures to protect their holdings. To do so, they utilize keys and wallets.
Bitcoin ownership essentially boils down to two numbers, a public key and a private key. A rough analogy is a username (public key) and a password (private key). A hash of the public key called an address is the one displayed on the blockchain. Using the hash provides an extra layer of security.To receive bitcoins, it's enough for the sender to know your address. The public key is derived from the private key, which you need to send bitcoins to another address. The system makes it easy to receive money but requires verification of identity to send it.One possible drag on the Solana ecosystem is that it uses an alternative coding language to Ethereum and it is not EVM compatible. Unlike on the Binance Smart Chain, where projects can essentially copy-paste what has already been built on Ethereum and use the same Solidity tooling, Solana developers need to start from scratch. Solana is written in Rust, which has far fewer Dapp building developers on it than Ethereum.
One of the biggest issues with using Solana is the lack of multifunctional block explorers or analytics platforms such as Etherscan. Analytics or data for fundamental analysis for the Solana blockchain is very limited - something the Solana development team says it is working towards fixing.One positive consequence of Solana’s lack of EVM compatibility is there are far fewer cash grabs and scams on it than there are on direct Ethereum clone platforms like the Binance Smart Chain.One of the reasons Solana stands out from other platform blockchains is its unique architecture and technology base. Solana is a Proof-of-Stake blockchain that uses the same hashing function as Bitcoin, SHA-256. It uses a unique, trustless way to determine the time of a transaction called Proof-of-History (PoH).The SHA-256 algorithm takes inputs from users and encrypts them to produce a unique output that is difficult to predict. Solana takes the output of a transaction and uses it as the input for the next hash. The order of the transactions is now inbuilt into the incoming hashed output. This is different from how the Bitcoin blockchain operates.
The Solana PoH hashing process creates a long, unbroken chain of hashed transactions. This is designed to create a clear and verifiable order of transactions so that when a validator adds to a block, they don’t need to use a conventional timestamp.Blocks on the Bitcoin blockchain are large and unorganized. Each BTC miner adds the time and date to the block they mine based on their local time. Other nodes in the network then have to verify that the timestamp provided by the miner is valid because it may be false or differ from the time reported by other miners. This is time-consuming.
By ordering transactions into a chain of hashes, however, Solana validators are able to process and transmit less information per block. Having that hashed version of the latest state of transactions constantly recorded greatly reduces the time to confirm each block on the Solana chain. Transactions on Solana are verifiably ordered without all nodes needing to agree simultaneously. This is a key reason why it is so quick.Proof-of-History combines with other features of Solana to optimize and speed up throughput. For example, TowerBFT is Solana’s version of a Byzantine fault-tolerant Proof-of-Stake consensus model that uses the cryptographic clock enabled by PoH to speed up blockchain consensus by reducing messaging overhead and transaction latency. Selecting the next Proof-of-Stake node to validate a block of transactions becomes faster because nodes need less time to verify the order of transactions.In a blog post from July 2019, Anatoly Yakovenko describes eight key innovations that make Solana “the First Web-Scale Blockchain”. Aside from Proof-of-History and Tower BFT (more on those later), the six other key innovations are:Turbine — a block propagation protocol
Gulf Stream — a mempool-less transaction forwarding protocolSealevel — parallel smart contracts run-timePipelining — a transaction processing unit for validation optimizationCloudbreak — a horizontally-scaled accounts database
Archivers — distributed ledger storageWhen combined, these features allow Solana to offer transactions and fees at a speed and cost much lower than other smart contract platforms.
SOL staking for yield farmingAs mentioned, Solana is a proof-of-stake blockchain with a focus on delegations. This means that anyone who holds SOL tokens can choose to delegate some of their SOL to one or more validators, who process transactions and run the network. SOL users need to stake or lock up their tokens with a validator.
In mid-June Staking Rewards.com listed Solana as the fourth-largest blockchain by value of assets staked - with US$13,475,960,413 staked. The Cardano, Polkadot, and Ethereum blockchains were all ahead of it at the time. Today, Solana is the largest staked network with US$67,075,392,728 staked on it. This is an almost 400% rise in value staked.The current estimated interest rate for SOL holders who delegate their tokens to a validator is 6.4%. Adjusted for the inflation rate of network supply, however, this interest rate drops to 0.95%. According to Staking Rewards, validators running a Solana Node will earn an interest rate of 7.05% but once adjusted for network supply inflation this drops to 1.95%.Users can delegate their tokens to a staking pool that will, for a fee, participate in the network’s Proof-of-Stake consensus on behalf of the delegator. Or run a node themselves and directly participate in consensus. Staking rewards.com describes the complexity of Delegating SOL to a staking pool as ‘easy’. Wallets like SOLflare.com allow for allocation to a pool within minutes and rewards are automatically compounded. It describes the complexity of running your own Solana validator node as ‘professional’. There are very high hardware requirements, validators also need to put up to 1.1 SOL per day to pay for vote transactions.The percentage of available SOL being staked is 76.6%. There has been a sharp increase in new stakers to the network in the last 30 days. Indicating a shift in sentiment of SOL holders with deeper commitment to lock in held assets to the network. Staking to the Solana network requires locking up assets for at least 5 days.Brave New Coin lead analyst Josh Olszewicz analyzed the Solana network and the price of the SOL token on September 8th. Josh backs the blockchain’s staking mechanism and burgeoning smart contract as value lockers and funnels to drive new entrants into Solana and SOL. On the technical side, Josh describes current volumes on Solana as “insane.” He says that while bullish continuation is possible it is more based on hope than it was a month ago. It would require more spikes in volume and euphoria from bulls to support further price all time highs.Solana is a new blockchain platform network that has found product market fit in 2021. Solana has attracted headlines after news that Solana Labs, the development team that manages the Solana chain technology, had raised US$314 million of new funding. The money will be used to develop technology in the Decentralized Finance (DeFi) space. The funding round was led by prominent Silicon Valley VC firm Andreessen Horowitz, and crypto-specific hedge fund Polychain Capital.
Discussing the project after the raise, Alameda Research CEO and long term Solana backer Sam Bankman-Fried said the project has “the most ambitious tech road map of any blockchain, and they’ve been making impressive progress on it. It’s a blockchain that has the potential to support a DeFi ecosystem with world-scale activity.”Despite being attached to the 6th largest asset in crypto, Solana is a new project that has only shown glimpses of what it is really capable of. Its Dapp ecosystem is nascent and most of what has been built is closely based on an Ethereum blueprint.
These somewhat unoriginal Dapps, however, are fast, cheap, and easy to use. They offer some of the best UX in crypto. Solana also has one of the best experiences for stakers in the space. This is indicated by the increasing commitment of SOL holders to stake in the network.The network remains relatively decentralized, it has big-name VC backers and influencers endorsing it as the future and it continues to attract developers to build on it. It ticks all the boxes and the only question now is if this ongoing momentum can be maintained.
A curated weekly summary of forward-focused crypto news that matters. This week, Ethereum hovers around US$4000 after its first deflationary day, Bitcoin's appeal as a macro asset grows, and Solana continues its epic surge, climbing up the top 10 digital asset chart.
It was a bullish week of trading in the digital asset markets with a surging Ethereum leading to strong gains throughout the week. Ethereum (ETH) ended the week up an impressive 22% and is poised to challenge the key US$4000 price level. Bitcoin (BTC) ended the week up ~6% having broken the key US$50,000 price level. Alpha performers amongst large cap assets included Solana (SOL), and Filecoin (FIL), which rose ~46% and ~60% respectively.Ethereum had its first ever deflationary day on September 3rd. This means that more Ethereum was burnt from transaction fees than was earned by miners. On September 3rd over 13,814 ETH worth ~US$55 million was burnt, a new record, compared to the 12932 ETH that was minted.The burning or removal of ETH out of circulation is a new feature of the network. It was introduced on August 5th, as part of EIP1559, which was implemented during the non-backward compatible London hard fork. ETH has been on a sustained rally ever since, rising by ~58%. EIP1559 also introduced a base transaction fee burn mechanism. The base fee required for all Ethereum network transactions is now burnt, a design choice to prevent miner collusion.The burn feature means that ETH now has a Bitcoin halving-esque supply constriction mechanism. The yearly inflation (money supply) growth rate is set to reduce significantly and gives ETH more appeal as a buy and hold asset.
The design of the burn mechanism means that as the transaction demand of Ethereum increases, more ETH is taken out of circulation. So if demand increases, the new supply decreases, and these two tailwinds should push the price of ETH higher. The biggest driver of demand to use Ethereum in the last week has been the booming Non-Fungible-Token (NFT) market. OpenSea, the biggest marketplace for Ethereum-based NFTs, is the largest user of gas on the network. Other NFT projects driving gas usage include Trash Pandas and the Lucky Buddha Club.Bitcoin had a strong Sunday on the back of global stagflation concerns. The market is bullish on macro hedge investments and with large outflows of US government debt now occurring, money is flowing into risk assets. Tech stocks and Bitcoin have both surged as a result.
Stagflation occurs when growth is slow but inflation is high. In this environment, even aggressive monetary policy can be ineffective in stimulating economic activity. Last month saw the U.S. create the fewest new jobs in seven months. Job creation in the United States is drying up due to a new rise in COVID19 infections. Sectors that have been especially hard hit include leisure and hospitality.This macro-environment appears ideal for Bitcoin, and the wider crypto-asset space, to achieve further gains as more investors search for yield and hedging opportunities.
Trading set-ups for the weekPro trader Josh Olszewicz explores trading options and signals for BTC and ETH - and lays out the trading setups he's watching for the upcoming week. Start your week off right with Josh's thoughts on trading strategies on a weekly basis.
Crypto news for the week aheadSeptember 7th - Basic Attention Token Community callA community call will be held this week for the ever-popular BAT token and Brave browser communities. The number of Brave users has just crossed the 36 million mark and the platform now has over 1.2 million users. The price of BAT is up ~18% in the last 7 days.September 12th - Alonzo hard fork
The third-largest asset in crypto is set to implement smart contracts to its mainnet as part of the upcoming Alonzo hard fork. After a four-year wait, developers will finally be able to build dapps and programs on the chain. There are, however, concerns around the efficacy of Cardano’s UTXO model. A testnet AMM designed for high throughput dapps struggled to handle transaction demand. Cardano (ADA) is up ~2% and is up ~107% in the last 30 days.Top 10 Crypto Summary
It was a bumper week for large-cap assets on the Brave New Coin market cap table with many assets enjoying double-digit gains. Solana rose another spot on the table, from 7th to 8th, and is up ~46% in the last seven days. Pyth went live on Solana a week ago. Pyth Network is a decentralized, cross-chain data oracle that is set to make dapp building easier by creating a funnel for real-time market data to DeFi applications.Bitcoin surged past the US$51,000 price level this week and looks primed to rise higher. Glassnode reports that long term holders continue to accumulate BTC. At present, the majority of on-chain volume represents coins that have moved in the last month. That means older coins are staying put with the hands of long-term investors. Glassnode suggests that this is a bullish indicator.
What's a CryptoPunk and why are CryptoPunks so valuable? We look at the trends driving the booming NFT market - and ask what happens next?Non-Fungible-Tokens are crypto’s hottest investment space so far in 2021, with millions in trades and rare works like Beeple’s EVERYDAYS: THE FIRST 5000 DAYS, selling at a Christie’s auction in March for $69,346,250 - setting the record for the most expensive NFT ever sold.