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Crypto: The Walking Dead of the financial world?
It’s been a tough few years for cryptocurrencies. Bitcoin, once the poster child of the industry, has seen its value plummet since its peak in late 2021. But is crypto really dead, or is it just going through a rough patch? Let’s take a closer look.
The Crypto Bear Market
To be sure, there are plenty of reasons to be bearish on crypto right now. The prolonged bear market has taken a toll on both retail and institutional investors alike, leading to widespread capitulation.
Moreover, regulatory uncertainty still hangs over the industry like a dark cloud, making it difficult for projects to get off the ground.
Even Facebook’s much-anticipated Libra stablecoin has been hit with delays and mounting skepticism from lawmakers.
That being said, there are also reasons to be bullish on crypto. For one, institutions are beginning to warm up to the idea of investing in digital assets. Fidelity Investments, Bakkt, and JPMorgan Chase have all entered the space in some capacity over the past year.
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In addition, central banks around the world are exploring the possibility of issuing their own digital currencies. Even Facebook appears to be pressing ahead with its plans for Libra despite the challenges it faces.
So where does that leave us? It’s hard to say for sure. Cryptocurrencies are still in their infancy, and it will likely be some time before we see wide adoption by either retail or institutional investors.
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All About Ethereum’s New Proof-of-Stake & What It Means for the Crypto Market
Ethereum’s long-awaited transition from proof-of-work (PoW) to proof-of-stake (PoS) is finally upon us. This massive upgrade will not only make Ethereum more energy efficient but also pave the way for a host of new features and improvements. Let’s take a high-level look at what PoS is, how it differs from PoW, and what impact it might have on the cryptocurrency market.
What Is Proof-of-Stake (PoS)?
Proof-of-stake is a method of consensus that allows individuals to validate transactions and earn rewards based on their stake in the network. In other words, the more ETH you have staked, the more likely you are to be selected as a validator.
Not only does this make Ethereum more energy efficient (estimates suggest that PoS could reduce energy consumption by 99%), but it also opens up new opportunities for scaling and governance. For example, with PoS, it would be possible to create “child chains” that run on top of Ethereum and are tailored to specific use cases (think Lightning Network for Bitcoin).
How Does PoS Differ from Proof-of-Work (PoW)?
With proof-of-work, miners compete against each other to validate transactions and add blocks to the blockchain. The first miner to solve a complex mathematical problem gets to add the block and receives a reward in ETH.
While this system has worked well so far, it has a number of drawbacks.
- First, because miners compete against each other, there is no guarantee that the most qualified individual will be selected to validate the next block.
- Second, proof-of-work is very energy intensive — Ethereum currently uses more electricity than some small countries!
- Finally, because mining requires specialized hardware, it creates a barrier to entry that favors those with deep pockets.
With proof-of-stake, however, things work differently. Rather than competing against each other, validators are chosen randomly based on their stake in the network.
This means that anyone with a computer can become a validator—no expensive hardware required! Furthermore, because validators have skin in the game (i.e., they stand to lose their investment if they act dishonestly), there is no need for an incentive structure like block rewards.
Other Benefits Of Ethereum’s Shift To Proof Of Stake
Proof of stake also offers some additional benefits over proof of work when it comes to security and scalability.
For instance, because validators are chosen based on their stake, an attacker would need to control 51% or more of all ETH in order to mount a successful attack on the network (this is known as the “sybil attack”).
This is contrast to proof of work, where an attacker would need51% or more of all computational power in order to mount a successful attack.
In terms of scalability, random selection also enables “sharding,” which partitioned the blockchain into smaller pieces that can be processed in parallel. This would allow Ethereum to process many more transactions per second than it can today.
Ethereum’s long awaited transition from proof of work to proof of stake is finally upon us!
This massive upgrade will not only make Ethereum more energy efficient but also pave the way for a host of new features and improvements such as sharding and child chains.
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How Solana is Becoming a Major Player in the Crypto Market
If you haven’t heard of Solana yet, you soon will. This up-and-coming cryptocurrency is making waves in the digital currency world, and for good reason. Here’s a look at Solana’s recent growth and what it could mean for the future of the crypto market.
In the past year alone, Solana has seen explosive growth, with its market capitalization increasing from $250 million to $12 billion.
That’s an increase of 4,700%! And it’s not just Solana’s market cap that’s grown; the price of SOL, Solana’s native token, has increased up to about $250 before correcting all the back to $25.
That was a huge run! And even with this years bear market the ecosystem continues to grow faster and faster. Clearly, there is a lot of interest in this digital currency.
Solana Proves Crypto Is Not Dead
So, what is driving all this growth? For one thing, Solana has some major backers. Its largest investor is Multicoin Capital, a well-known cryptocurrency hedge fund.
Other investors include FTX Exchange, Redpoint Ventures, and G2 Ventures. With such big names behind it, it’s no wonder that Solana is getting so much attention.
Another factor driving Solana’s growth is its technology. Solana is built on Proof-of-History (PoH), a new consensus algorithm that allows the platform to process transactions incredibly quickly.
In fact, Solana can handle 50,000 transactions per second! That’s far faster than any other blockchain platform currently in existence.
This scalability gives Solana a major advantage over other digital currencies and makes it more attractive to businesses who are looking to use blockchain technology.
There’s no doubt about it: Solana is on the rise. With strong backing from some of the biggest names in the industry and cutting-edge technology that gives it a major advantage over other digital currencies, Solana is poised to take over the crypto market.
Keep an eye on this one; it’s sure to be big!
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So Is Crypto Dead?
Cryptocurrencies have had a tough few years, but it’s still too early to count them out. While there are plenty of reasons to be bearish on crypto right now, there are also reasons to be bullish.
Only time will tell how this story will end. But as Warren Buffet once said “when there is blood in the streets”. So what are you waiting for?
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Just remember markets move in cycles, and just like any financial market those that have the foresight and patience to ride the lulls will ultimately be rewarded in the long run.