Blockchain tech has been said to be world-changing for nearly a decade now, but will blockchain based coins be able to compete with the new tech.
Bitcoin vs Bitcoin Cash is a debate that may take a strong side on, but my view is that both are too slow to be able to compete. Projects like IOTA, Stellar, NANO (formerly Raiblocks) and Ripple (ugh, but I have to mention it) have TPS (Transactions Per Second) counts orders of magnitude higher than even the fastest blockchains. Many people say that because blockchains offer unrivaled security that coins like Bitcoin will become stores of value rather than every-day money. If you think about it though this argument unfolds very quickly. In a theoretical future where… let’s say… Stellar Lumens is the payment method of choice. Bitcoin, in this theoretical future, will have no purpose. Lumens would have a huge market cap compared to Bitcoin and since Bitcoin doesn’t have any payment uses would go by the wayside. It is possible that Bitcoin could still be used as a long-term store of value because of its security, but I think this is unlikely. If Bitcoin is to be used at all in the future it is going to need its blocksize increased by tremendous amounts to handle the transaction volumes. To reiterate my point, Bitcoin and other traditional blockchain coins will eventually lose their value because there will be vastly superior options.
Ethereum, I believe, is to a great extent immune to this. Ethereum is not simply a coin like BTC, but offers a smart contract platform which can only use ETH (or any token of the Ethereum blockchain). Etherum does have faster competitors like Stelar, but they mostly only offer the ability to make coin smart contracts. Etherum can support DAOs and many other very complex contracts. This gives Ether its value. Because ETH will be the main payment method on the Ethereum blockchain it doesn’t need to be used for day to day payments.
Now that we have gone over the need for highly scalable coins let’s review some of them and their features.
Ripple (XRP) – Such a Joke!
Ripple (XRP) is a very fast coin that boasts VISA and Paypal level speeds. XRP also has almost no fees. The problem with Ripple, however, is how it achieves consensus. Ripple doesn’t have any kind of Proof of Work or Proof of Stake it simply has a list of trusted “Validators.” This means that Ripple (the company) chooses who can validate the ledger and who can’t. Anyone can verify that the ledger hasn’t been tampered with, but the average Joe has no say in the consensus of the network. The only difference between XRP and VISA is the fact that the XRP ledger can be verified by outside sources. The decisions on valid/invalid transactions are completely centralized!! I can’t believe that XRP currently has the #3 spot on coin market caps! A good summary of Ripple’s solution to scaling is “Hey, let’s not worry about all this decentralized stuff. Let’s just make a list that mostly has servers that we control on it and call it a day!” Ripple is an improvement to VISA, but not by much.
NANO (XRB) Formerly Raiblocks
NANO uses a Block-lattice which essentially means that every wallet has its own blockchain. NANO, since there are no miners, doesn’t have any fees at all! It is also lightning fast. The NANO network is a very complicated network and I will do my best to simplify it here. Keep in mind that this is an oversimplification and if you want a more in-depth analysis check out the whitepaper – https://nano.org/en/whitepaper. The sender and receiver do all of the verifying of transactions. If there is a dispute between the sender and receiver nodes take a vote to resolve it. The node voting system works with a Proof-of-Stake method. Each node holds a certain amount of NANO and their voting power is weighted proportionally to the NANO which they hold. Transaction flooding is a big problem with NANO. Their solution is a tiny amount of Proof-of-Work when sending a transaction. Also, nodes have the ability to “prune” unnecessary blocks which helps mitigate the damage of a transaction spam attack. A full list of the possible attack vectors of NANO is concisely laid out here – https://github.com/nanocurrency/raiblocks/wiki/Attacks
IOTA
I’m not going to get into IOTA very much because I think it has a very long way to go. IOTA is very much like NANO in that there are no miners or validators. IOTA is vulnerable to a 34% attack, but the attack is mitigated by the use of a “coordinator.” The coordinator can be verified by anyone, but in my mind is still a major downside. I will do followup posts on IOTA in the future, but for now let’s just say that IOTA has allot of improvements to make.
Stellar
Stellar (the network) and Lumens (the value token on the network) in my opinion is like a repaired version of Ripple. They are both very similar most likely because they have the same founder who is Jed McCaleb. Jed was the founder of Mt. GOX also (he sold it Mark Karpeles who wrecked it completely). McCaleb left Ripple because he realized that the centralized way that Ripple operates is not a good idea. He created Stellar which is completely decentralized! Stellar works based on trust. Nodes set in their config files which nodes they trust and which they don’t. The full explanation is beyond the scope of this article, but you can read more about it here. Stellar also has a built-in decentralized exchange. It is composed of many anchors which you set trust to. The decentralized exchange aspect of Stellar has very little participation at this time. Stellar can also run code on it’s network kind of like Ethereum! Stellar is not Turing complete, but it is great for tokens! By the way did I mention how fast and cheap Stellar is! It does have transaction costs (to prevent spamming). The fees don’t go to miners, but they get paid out with the newly minted coins. New coins are handed out on a Proof-of-Stake basis. People often pool their money together (much like mining pools) so that they can get more Lumens. Stellar.org does, however, hold around 80 Billion Lumens which they are supposed to distribute to the public. When compared to a total supply of 103 Billion this is a big deal! Stellar.org has tried to distribute out the Lumens quickly, but they have had setbacks to do with cheating and such.
CONCLUSION
I believe that these new and super fast coins will be the future of cryptocurrency. They are VERY risky to invest in right now because, as I pointed out above, they are not all fully functional and still have many kinks which need to be worked out.
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