Proof of Work (PoW) Explained

What is Proof of Work?

Proof of Work, also known as PoW, is the consensus mechanism to secure the network by using an algorithm. That, while also creating new blocks and issuing coins as compensation. In simple terms, miners try to solve really complex mathematical equations through a process that is energy-intensive. The goal is to create blocks and to receive Bitcoin rewards in return. The technology of the blockchain in charge of powering Bitcoin, just as many other cryptos, is simply a decentralized database. It is driven by nodes that are distributed all over the globe; there are no authorities to supervise, call the shots, or establish the rules. 

Then, how is it possible for everyone to agree on the substance of the ledger? Well, that’s when the proof of work consensus algorithm plays its part. It secures the ledger and the network from attacks of “double-spend,” simultaneously, it adds blocks of transactions to the chain while it generates rewards. This kind of mechanism needs the miners to compete in solving complicated math equations using their equipment. It’s a highly complex process, it’s meant to be that way, but the results, the rewards are potentially precious.

The Environmental Impact

Proof of work is needed in order to keep Bitcoin’s operation going. The consumption of energy required has suffered great scrutiny, and that’s the reason why other cryptos have chosen the proof of stake mechanism instead. We can compare the carbon footprint of Bitcoin to the one of whole Morocco. Tesla, the carmaker, pointed out the problem when it decided that it wouldn’t take Bitcoin payments anymore. They made this public in May 2021, claiming that the impact of mining was too significant, and they didn’t want to take part in it. Constantly, BTC supporters claim that the estimates of the use of energy mentioned frequently are misleading. 

PoW or PoS?

Another mechanism that has taken a stronghold in the industry of blockchain is proof of stake. It all started from the concerns of finding a new way around the elevated consumption of energy than proof of work generates. The proof of stake system is based on validators to hold a big amount of crypto in the network and for them to validate transactions while earning rewards. Some other coins also use the PoS model, such as Algorand, Binance Coin, Cosmos, and Cardano. Soon, Ethereum will be transitioning to the same when the Ethereum 2.0 upgrade gets wholly implemented. This improvement will significantly reduce the amount of energy consumption; experts estimate that it will be reduced up to 99.95%.

Since PoS doesn’t need sophisticated high-powered equipment for mining, reducing said consumption is possible. Although, some claim that this model will only help rich people get richer because validators have to take an enormous amount of coins to participate. At the same time, this encourages users to hold on to their coins instead of spending them.

A Quick Guide to Stablecoins

What Exactly Are They?

Stablecoins, as we know them, are the cryptocurrencies backed up by the currencies issued by the government, also known as fiat currencies. Stablecoins are different from other cryptos because, unlike them, the price of stablecoins is constantly steady. They’re usually used as a value store or account’s units due to their stability. Since creating cryptocurrencies, they’ve been known as volatile assets when we talk about their price. It’s common for the prices to crash or jump, which prevents them from being valuable as everyday services or goods since it implies a high risk for merchants and vendors. 

In theory, a stablecoin has a stable price because it has a fiat currency such as the USD backing it up. In simple terms, their prices are regular because of the fiat currency itself. The most common currencies backing up stablecoins are the US dollar, British pound, Russian ruble,  Israeli shekel, etc. Some can be decentralized, others centralized, and they all can have diverse strategies to reach price stability. 

Examples of Stablecoins

A few examples of stablecoins are Tether (USDT), one of the first and probably the most famous ones. It claims to be backed up by USD called collateral. Other examples can be Gemini Dollar, oneFIL, and CACHE.

The Most Popular

In the crypto space, the most common stablecoins are pegged to the US dollar, such as Tether, True USD, USD Coin, and Binance USD. Although, there are other cryptos backed by different fiat currencies that are also popular. Such is the case of GBP-pegged crypto Binance GBP Stable Coin, EUR- pegged Stasis Euro and backed by gold CACHE.

How Can You Use Them?

Like the majority of the assets in the crypto space, stablecoins are used mainly as a value store or a way of exchange. Because of their low volatility nature, they provide a “safe haven” when the markets are shaky.

Why Are They So Popular?

As the best example of how popular they have become, we have Tether, the second most traded crypto after Bitcoin. Tether has a volume of trading of more than $70 billion every 24 hours. Once you know the principle they’re based on; it is easy to understand why someone would choose them. Their stability and backup provide investors with trust and confidence, knowing that their money is safer than in other assets. 

Disadvantages?

The proof that these coins are backed up by the reserves they claim to have, is hard to get. For example, Tether has never provided conclusive evidence that the currency is backed, which increased the rumor of it being issued out of thin air.

Solana’s High Volatility

A couple of days ago, the token of Solana’s protocol, also known as Sol, went through sharp fluctuations in price. Solana’s high volatility was due to a flood in the network that took place this week. The token fell more than 15%; later on, it regained a lot of the losses. The asset fell as low as $142.86 a few days ago, at which point, the crypto had already lost about 16% after getting the intraday high amount of $171.48. All of this is according to data from Messari. 

At the beginning of September, it reached a new high of $214.36. By the time of the last crash, it had already fallen a bit more than 33%. The token started recovering soon after, and at the moment of this writing, it was trading at $159.11. 

The Difficulties That Caused Solana’s High Volatility 

The network experienced technical difficulties, and it went down soon after; this was announced on September 14. That’s when most of that day’s action in price took place. Around 8 am that morning, the network had produced the last block, then a bit after 11 am, the CEO posted a tweet addressing the difficulties. The message stated that bots were flooding the network through a DEX that was happening on Raydium. The last being an automated provider of liquidity and market maker built on Solana. Then finally, at 3 pm, the Solana Twitter account gave an update. The post declared that the network experienced increased transactions, which saturated the processing channel and caused the web to start forking.

The Analysts Opinion

Even though it’s true that the price of SOL went down during this incident, it had been experiencing a downward trend before. More than one analyst concludes that today’s price action is a combination of standard profit-taking and technical difficulties’ impact. They say that after SOL’s price got to its overbought level, it was customary for it to go down because of profit-taking. 

Despite the unfortunate situation, analysts generally provided an optimistic view on the future prospects of Solana’s project. Of course, what happened will still impact the token price, but they’re also confident about its comeback. They don’t believe it will affect the cryptocurrency long-term and set Ethereum’s early years as an example. Although, they also made it very clear that the project needs to get the network running fast. They believe that because of Solana’s high volatility, they may have a perception issue in the near future if they don’t fix this soon.

Conclusion 

In this case, it has become evident that it is not the bug itself that caused Solana’s high volatility in the first place. Instead, people are more surprised that the reaction of the crypto community has come together to find a solution for it. Now the question is not if the Solana network will be able to fix it, but when. And when they do, it’s going to be soon enough for it not to suffer a lot of loss on the matter.

DeFi Net Value Approaches 200 Billion USD

How Did it Start?

The net value of DeFi went above $170 billion as other projects outside of Ethereum are becoming increasingly more vital. Despite the recent  $600 million hacks that cost Poly Network considerable money and an even more significant amount of users. The total value of decentralized finance got to an incredible USD 179.9 billion last week and is fast approaching the $200 billion mark. This is due to the significant momentum of growth that other DeFi projects, besides Ethereum, have been gaining during these last months. Currently, it’s Uniswap, the one dominating the second place with 3%.

According to the statistics, only during the last hours, the Total Value Locked (TVL) increased by 1%. It’s expected that it will keep growing at the same rate in the following days. After the already mentioned Uniswap, the decentralized finance app, Aave, is in charge of $16.04 billion, and Curve of $13.92 billion. This, considering that most of the TVL are actually locked into the reinforced app of Ethereum.

What About the Smaller Networks for DeFi? 

But nowadays, it’s not all about Ethereum. On the other hand, we have several other smaller networks contributing to the TVL. That is the case of Binance Smart Chain (BSC) that has a bit over $19.05 billion of the TVL. Terra follows BSC with 7.4 billion USD, then Polygon with 5.3 billion USD, Solana with a TVL of 2.36 billion. Not far below is Klaytn with a little over 1.29 billion USD total.

Other Platforms 

Now, we talk about the platforms for the exchange of DeFi; then we can conclude that Curve counts as the highest TVL. Currently, Curve has a TVL of 13.92 billion USD, and after it comes Pancakeswap 5.94 billion, driven by the BSC. And Uniswap, with a TVL of 5.3 billion USD. To set a better picture of the growth of decentralized finance, only for the chain of Ethereum, among 16 other different platforms of dex, statistics reflect that so far there was a total of 19 billion USD global worth of exchanges, only during the last week. Of course, Uniswap had the most considerable dex volume of them all, across all 16 platforms of dex, with 69.2%.

The Future

As you can see, Uniswap is the main dex of Ethereum. The statistics mentioned above prove that the decentralized exchange got about $12,952,621,793 in total trading transactions around the globe. A significant percentage of it comes straight from dex apps, but the rest is channeled through other aggregators of dex. Such is the case of 0x API, 1inch, Paraswap and Matcha. 

Another worth mentioning relevant statistic in the sector is the total of DeFi users or unique addresses in defi apps based on Ethereum. The last already went above the 3.3 million users. Today’s biggest loan apps include platforms like Compound, Aave, Anchor, Cream Finance and Venus respectively.

A Beginner’s Guide to Technical Indicators

What Are Technical Indicators?

Technical Indicators are tools employed by traders to understand the supply and demand of marketable securities. When put all together, these indicators create the base for technical analysis. They are commonly used to set buy and sell signals. These indicators help us understand the stock market’s behavior now or how it will work in the future. This can be very useful considering that our primary goal is to profit from our investments in the markets.

How Can We Classify Indicators?

There are two groups: economic indicators and technical indicators. The first are statistics measuring the growth or decline of the complete economy or a specific area within that economy. They are used for fundamental analysis since they enable us to quantify the economic and industrial conditions at the moment. These indicators are commonly used to supplying info about the future potential of public companies. The second, technical indicators, are used for predicting specific changes in price or trend patterns of an asset.

Lagged Indicators

These are a group of indicators that exhibit a factor of the economy that can be measured after an essential change in the economy has happened. These kinds of indicators can be classified within the technical indicators since they follow the price movements of an asset. That name is given because they show the results from previous actions in a determined time frame. These indicators are very convenient to track signals in the market as they confirm a trend’s strength before making any decision. This is because lagged indicators wait for basic movements within the market before they provide a signal.

On the other hand, although they can be helpful for the trend’s confirmation, there are also a couple of disadvantages. First, they cannot predict a movement in the market; they can only confirm it. Second, the signal to enter a particular position will always be delayed, which doesn’t allow traders to take advantage of the trend’s momentum.

Some Indicators With Lag

Averages – this indicator is used to recognize a specific trend of an asset in the market.

MACD – is used to interpret the trend and shows the relationship between two moving averages of the prices of a security in the market.

Double EMA – has a reduced lag, seeking to provide information more quickly to the trader.

Crossover – crosses data so that the trader can observe price characteristics and predict its movements.

Cardano ADA Becomes the Third Most Popular Crypto

The token of Cardano, ADA, has exceeded other coins on top positions and just became the third-largest cryptocurrency worldwide. Now, developers of different networks aim to capitalize on the rise of DeFi that is taking the world by storm. At the moment, the currency is being traded on various exchange platforms. ADA challenged a big crash in price by a warning to jump into a historic high, going even above its previous record. 

On Friday, August 20, the token’s rate went over $2.56, registering an increase of 154.54%. The culmination of a movement that had already begun on July 20. All of that despite expert’s opinions who warned about a fall in price. Now that the price of ADA skyrocketed by 50% only during last week, the trust in the advancements in new technologies has also grown. 

The Alonzo Upgrade

The previous also boosts confidence that Cardano will enable payment systems on its platform earlier than expected. This improvement is known as the “Alonzo” upgrade, and its release has been officially scheduled for September 12. The investors of ADA keep driving the value of Cardano even higher in anticipation of said upgrade. The upgrade will present smart-contract functionality to the blockchain, which will allow Cardano to settle as a significant player in the DeFi universe. 

Due to the low price, Cardano ADA has become one of the most sought-after currencies by traders. Now, with Cardano’s ability to work with smart contracts, the currency has been gaining consistently. On the other hand, its main competitor, Ethereum, dominates the $100,000 decentralized finance space.

Smart Contracts

These are also known as blockchain contracts and distinguish themselves for the methodology in which they ensure conformity between the parties involved in a transaction. These contracts are comparable to the standard traditional contracts. They function between two parties or more that don’t require the involvement of a third party to ensure the enforceability of the agreement.

Without traditional middlemen like banks, people who use DeFi can transfer financial functions straight onto digital ledgers. That allows them to lend cash or borrow it and collect interest in an account of savings.

The Future of Cardano ADA

The rises in crypto like Bitcoin, Ether, ADA, and others contributed to the market surpassing $2 trillion in total value last weekend. The first time it happened since the crash was in mid-May. And now, on September 12, all eyes will be on the Cardano ADA “Alonzo” upgrade. We’ll have to wait and see how this affects the whole crypto market. If it goes well, ADA could be considered a severe competitor for Ethereum, probably starting a new age in crypto history.

Crypto Mining With Your Smartphone

If you know about the concept of crypto mining, you must understand what cryptocurrencies are and how they work. A new and innovative way to do it is through your smartphone. The most common questions about this subject are “does it even work?” and “how is this possible?” And the answer to the first one is “yes, it works”, we’ll explain next how this is possible.

How Does Crypto Mining Work?

It is possible to mine with a device that has android as an operating system. Although, using your mobile device might not be the best option. This method is far from the way the traditional mining hardware or software works. Also should be taken into account that using your smartphone for crypto mining might not deliver a good enough profit worth all the effort and time you have to put in it. The last is because of the early stage that mining with your phone is currently at. 

Let’s clarify that smartphones don’t have enough power to withstand the task. In fact, miners use more powerful tools, which make smartphones practically useless. 

What About The Environment?

Regular miners use powerful PCs that are more likely to use GPU power or computer processors, which consume significantly more energy. Based on the above-mentioned, mining crypto can be considered an industrial activity. People nowadays invest in ASIC crypto mining devices to obtain a more significant margin of profit. Pool mining aims to get more power to increase miners’ chances of solving algorithmic problems and getting rewards.

This is how crypto mining on mobile works as well but on a smaller scale. You should be able to join the pool with your device. Although, the percentage of the shared rewards will be significantly smaller, following the power of your computer.

It’s important to mention that it will take a few months before your android generates a small fraction of one bitcoin. You can easily understand that it’s not an easy process, and the popularity of bitcoin keeps increasing exponentially.

Conclusion 

To start crypto mining is relatively easy. The only thing you need is to get a smartphone and an app that will help with the process of mining. You should be able to make use of your phone meanwhile the app is working in the background. On the other hand, the wrong side of it is that all these applications can affect the performance of your phone overall. It could cost you the money you intend to make from this operation in the long run. 

The Influence of Elon Musk Over Bitcoin

At the end of July, Bitcoin jumped over the $30,000 mark after Elon Musk mentioned that Tesla is “most likely” to accept it again as payment. Back in May, the carmaker stated that Tesla would not take the crypto for purchases. That is due to his concerns about the impact that mining Bitcoin could have on the environment. This came out only after two months that the company started receiving the crypto as payment. During the B-Word crypto lecture, Elon Musk stated that the company would likely accept Bitcoin again.

Early this year, a group of investors and environmentalists vigorously attacked Tesla for starting to take Bitcoin as a payment method. They criticized that Tesla was seen as an environmentally responsible company, and taking energy-intensive crypto was a contradiction. 

Elon Musk Direct Influence

The founder of Tesla has also been in the spotlight to use his privileged position and popularity to back up different crypto. While in a conference earlier this year, he commented that besides Tesla and SpaceX, his rocket company, he owned a variety of cryptos, such as Bitcoin, Ethereum, and Dogecoin. His statement, of course, caused an increase in said cryptocurrencies. He also mentioned that he had already participated in the artificial rise in cryptocurrencies before he planned to sell them but would like to see Bitcoin succeeding.

After those comments, there was an increase in Bitcoin of 6% at $31,952, Ethereum 10.6% higher at $1,979. All this according to the website Coindesk.

Long-term Investments

The CEO of Tesla and SpaceX has stated on several occasions that he has no plans of selling his crypto anytime soon. If you decide to invest in Bitcoin, experts on the subject suggest sticking with a strategy long-term instead of trading short-term. Some recommend planning to hold for about ten years at least.

When we consider that costs for crypto can be high, we can conclude that buying and holding can be of benefit in that regard. A good approach is to view Bitcoin as something you should hold on to for a more extended period. Even though it might be tempting to trade while following social media, experts recommend fighting this urge. 

Understanding the Risk

Before launching yourself into an investment in Bitcoin or any other coin, you should learn about it and understand all the possible risks. It’s important for new investors to understand that the asset is very volatile. One has to be comfortable with fluctuations and also the possibility of losing money. There are no guarantees. The cryptocurrency universe is hardly regulated, so you should ensure that whatever you choose to invest is something you can afford to lose.

Is Decentralized Finance (DeFi) The Money of The Future?

New business models have emerged from the concept of decentralized finance since the advent of Bitcoin and cryptocurrencies. The idea of the decentralization of the monetary economy has been prowling the world in an increasingly expansive way. Especially within the environment of Bitcoin and Ethereum, the most popular cryptocurrencies at the moment. But why will it be the future of the economy?

It’s well known that decentralized finance is rising as a tool for businesses in markets that are still developing. The industry of banking is starting to suffer the consequences of the inflexibility of their current processes. Since last summer DeFi has had a revival. Crypto such as Ether and Bitcoin are becoming more and more accepted as payment methods. USDC has progressed towards becoming an asset that will maintain the value without depreciating. Also, the technology of blockchain is on its way to have the financial infrastructure to offer a system similar to the infrastructure of tradicional finance.

New Opportunities That Decentralized Finance Offer

New business opportunities have opened up within the world of cryptocurrencies. Such as open lending protocols, issuance and investment platforms, prediction markets, open exchanges and markets, as well as more stable currencies. On the other hand, the issuance platforms are oriented towards the creation of new tokens. Currently this market has focused more on the issuance of security tokens, so issuance platforms seek to provide issuers with the conditions so that they can launch tokenized securities within the blockchain.

Decentralized finance comprises all financial services offered by automated applications hosted on blockchains that include services such as loans, the trading of currencies that earn interest that no bank offers, and implement investment strategies.

About the Advantages

The advantages of decentralized finance are that the source is open and anyone can participate, without a central body that places restrictions or can manipulate it. Their flexibility and possibilities are innumerable. It is still early to tell the real potential of it when implementing it in day to day life. Although the growth within the cryptocurrency sector has been gigantic, cryptocurrencies have not yet reached mass adoption. There is an opportunity for growth. It’s also important to understand that the risks are many and varied. One should always keep in mind not to invest or dedicate money that you are not willing to lose.

Blockchain Technology Helps Businesses Grow

Blockchain technology has become one of the most used technologies today since it became famous for making bitcoin possible. But, besides bitcoin, it can be helpful for any company. Such is the case of websites for sports betting and, in general, all kinds of websites. When talking about betting, it allows payments in crypto. That enables a system of trust for the user to feel comfortable using the websites. Also, it provides security and total anonymity for the users.

Besides this sector, the truth is that the Internet is being revolutionized by blockchain technology. That can yield a lot of benefits for all kinds of companies. If you have a business and you wish to implement blockchain to be one of its engines, here are some advantages to consider.

More Secure Financial Transactions 

The main advantages of blockchain technology are safety, trustworthiness, and irreversibility since it enables the transactions from user to user. The goal is eliminate the need for intermediaries to facilitate financial relationships that are reliable and permit to decrease costs.

Data Can’t Be Faked With Blockchain Technology

Among these significant advantages that blockchain can bring to your business is that, when financial transaction data has been uploaded, it will be impossible to falsify and, in turn, cannot be erased.

No Loss Of Information

Thanks to the blockchain technology, the information or the service will not be lost and will continue functioning in case the Network falls.

Cost Saving

For your business, implementing blockchain technology will cost less. This is because it is a cost-effective technology. That is possible by eliminating intermediaries as it offers the possibility of streamlining communications and processes.

Speed

Another advantage is that it doesn’t have a central authority or intermediaries, as mentioned before. It makes all the information always within reach to all Internet participants at the moment. What this causes is that the process of transmitting data becomes more straightforward. It yields data to be sent at a higher speed and also managed faster. 

Recently, blockchain technology has been a significant technological disruption for all types of sectors. Above all, thanks to the evolution of software and devices, it is possible to link transactions through a global distribution system.

Of course, there are still some challenges regarding security, legality, adaptability, privacy management, and intellectual property. But companies will be preparing to fight against these challenges and make blockchain the technology of the future.