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  • The Layer-0 Blockchain Guide

    The Layer-0 Blockchain Guide

    Some topics and terms in the digital money industry can be quite complicated for beginners. Ordinary people who often use cryptocurrency do not even suspect what labor-intensive and well-coordinated processes take place when buying/selling cryptocurrency, transferring a token from one blockchain to another. There are several layers of protocols for such purposes. 

    You may have heard about Layer-0 on forums about cryptocurrency or from your friends who are advanced users. However, it is very difficult to understand in detail on your own what L0 is and what it is for in general. In this article you can learn key concepts about Layer-0, information about how it works in real life, and see examples.

    What is Layer-0 and How Does It Work?

    By its nature and purpose, blockchain technology offers advantages such as decentralization, transparency, and, of course, immutability. However, more widely used blockchains such as Bitcoin and Ethereum still have fundamental problems with scalability due to low rates of transactions and high fees. This is where solutions such as Layer-0 blockchains come into the picture to bring changes into the equation.

    • The Layer 0 is the basic level of the blockchain architecture which provides the foundational services that are essential to the Layer-1 blockchain networks.

    Actually, the L0 is the infrastructure layer that provides an integrated connection of various blockchains. It facilitates the seamless interoperability of one chain with another or from one chain to multiple chains. Layer-0 is not a blockchain but a relay between different chains that connects them.

    Layer-0 solutions employ synchronous messaging and distributed reasoning to synchronously connect blockchains. When a transaction requires crossing to another chain, L0 protocols encapsulate the data and transaction logic. This enables the messaging in two networks to occur at different times and the two networks to be compatible. Layer-0 platforms leverage innovations like:

    • Ones that involve relaying and passing of messages with a view of shifting data at a very fast pace between chains.
    • It distributed the logic to ensure the integrity of the transactions carried out by every participant.
    • State channels that can provide finality of transfers within a second.

    Some of the Layer-0 solutions incorporate decentralized arbiters, known as block masters, to help in arriving at agreements on chains. The interoperability protocols also incorporate new snapshot and fraud-proof functions for security. By removing interoperability hurdles, Layer-0 unlocks several benefits. First of all, the exchange of value tokens at a very high speed and at a low cost across various crypto assets. You should remember about flexibility in leveraging specific features of other blockchains. Another point is to increase scalability through decentralizing transactions between chains.

    Key Features of Layer-0

    As mentioned above, understanding the topic of Layer-0 is quite challenging unless you have a vast amount of experience and advanced knowledge. To better understand what it is and how L0 works, look at this protocol layer through the lens of the three main factors of blockchain – compatibility, scalability and security. 

    Compatibility

    The Layer-0 blockchains should have better compatibility with existing L1 and L2 blockchains. Layer 0 networks are interconnected and enable transactions with other significant blockchain systems such as Ethereum through open standard interfaces. Information exchange, assets, and other state information can be passed across Layer-0 and other networks via cross-chain bridges.

    To enhance the usability of the system, tools developed, languages used, and interfaces that are computer readable are aligned to standards of the developed world. Mantle protocol helps in the integration of Layer-0 chains to generate an internet of blockchains to support interoperability.

    Scalability

    Just remember the big players in the digital money market such as Bitcoin, Ethereum and others. What they have in common is the fact that they were among the first to emerge and faced a big challenge, which is scalability. You probably know that scalability means the number of transactions that can be processed per second. Therefore, scalability even has its own defining measure called TPS (transactions per second). Layer-0 blockchains use a number of improvements to attain substantially better scalability compared to other blockchains. Some major scalability aspects include:

    • Sharding decentralizes the blockchain network into different shards which will process transactions concurrently all at once. This means that the network can accommodate high transactions throughputs as the network grows.
    • Partitioning divides the network based on the use of the system and involves creating smaller subnets that are independent. This helps in avoiding expansion of the entire network with a single node that may be expensive to manage.

    Modularity and upgradability allow for certain parts of a modular architecture to be substituted with more advanced counterparts without affecting the rest of the blockchain system. All these previously mentioned facts tell us that L0 provides an excellent foundation for scalable cryptocurrencies. 

    Security

    The security issue is especially relevant in the digital money industry. This is not surprising, as any blockchain project strives to provide the best conditions for customers, including transaction security. They want to achieve 100% security to guarantee a great user experience. Layer-0 blockchains are solely designed to offer security superior to other alternatives. Some key security features of Layer-0 include:

    • The validator nodes that are involved in the process work in a safe environment termed as secure enclaves to enhance safety against any attacks. This helps prevent unauthorized users from accessing the information and ensures the data’s reliability through the use of a blockchain.
    • Sophisticated solutions like zero-knowledge concepts and trusted setups such as TEE are applied to make transactions anonymous and data secure.
    • Subnets and partitions help in splitting the blockchain into smaller regions, which means that security updates can be administered at segment level without necessarily having to affect the whole network. This type of a model enhances security as the risks are segmented into different categories.

    A consensus mechanism such as the proof-of-stake tries to design the system in a way that attacking it is very costly and not worth it. This is because the high cost puts off any malicious actors who might want to wage cyber or hack attacks.

    Main Differences between Layer-0 and L1-L2 Networks

    Blockchain technology has expanded through various layers to enhance the standards of scalability, interoperability as well as sustainability. The first of these layers is Layer-0, which is the lowermost layer of all and serves as the foundation on which the other layers are developed. This pertains to aspects such as physical components, rules, and how blockchains operate in the context of a given project.

    Layer-1 principally means the original blockchains in which the actual transactions and data are recorded on a distributed ledger. Bitcoin and Ethereum among many others are examples of solutions that belong to Layer-1. They offer decentralization, security, and the feature of immutability, as more nodes in the network verify the transactions. However, Layer-1 is constrained by expensive transaction fees and slow throughput, making it difficult to scale.

    Layer-2 solutions – these are secondary networks that sit on top of Layer-1 chains to facilitate faster and cheaper transactions. They transact on-chain before packaging and sending smaller information packets to the base Layer-1 to enhance network efficiency. Examples of Layer-2 solutions familiar to everyone are State channels, Sidechains, and Rollups.

    In essence, Layer-0 offers the basic architecture. The interconnectivity between all three elements of this framework enables blockchains to evolve and become better for customers. This will have a positive impact on ordinary users who buy and sell digital money using a crypto exchange.

    Popular Layer-0 Blockchain Examples You May Know

    The best way to understand what Layer-0 solutions are is to look at real-world examples of blockchains operating at this level. Moreover, there are some popular names among all the L0 solutions.

    1. Avalanche

    Avalanche is a polygenic network composed of several blockchains interacting through a central relay. This has made an emphasis of a fast system and low transaction fees. Avalanche includes subnets, which are chains a project can create to rely on the main Avalanche network’s security. These complex consensus protocols can also operate in the smaller subnets to add more functionality.

    Avalanche has the capacity to process more than 4,500 transactions every second with finality that can take less than a second, making it ideal for uses that require quick and immutable payments, such as in the financial sector. Avalanche has already pulled together hundreds of decentralized applications into its environment. Currently, it is considered one of the largest cryptocurrencies by market capitalization of its native token called AVAX.

    2. Polkadot

    Another ambitious and highly-financed Layer-0 undertaking is Polkadot. Polkadot was pioneered by Ethereum co-founder Gavin Wood and is a highly interoperable form of blockchain that can allow various blockchains to interact and transact with each other. This interoperability is achieved through the communication bridge known as the relay chain, which is a part of Polkadot and through which the parachains that connect to it communicate.

    Sub-teams can set up their own parachains for anything related to DeFi, gaming, and more, and link them to Polkadot’s ecosystem. Similarly, Polkadot has sound security measures and has developed a unique governance system to enable the network’s development through community-driven decisions. Currently enjoying robust community backing and having $8,4+ billion worth of DOT tokens staked, Polkadot can be regarded as one of the most significant L0 solutions.

    3. Cosmos

    While Polkadot and Avalanche have a fairly centralized structure, Cosmos is less unified in that sense. Its centerpiece hub is the Interblockchain Communication protocol (IBC), which enables messaging between IBC-compatible sovereign blockchains, based on the Tendermint consensus. 

    This approach is an innovative one and as such enables each of the application-specific blockchains to remain independent while at the same time reaping the rewards of an integration. Cosmos also has a friendly user interface SDK that allows developers to create dApps for the blockchain. Cosmos now hosts well over 250 projects with different applications across DeFi, NFTs, and numerous other sectors that continue to advance the interoperability front. Its ATOM token powers the Cosmos network, an economic system that has handled more than 50 million transactions to date.

    4. Venom

    Venom is a relatively new Layer-0 blockchain with a planned emphasis on speed, safety, decentralization, and opportunities for DeFi. It has a pillar structure that includes the ability to work with several blockchains at once. Reducing the transaction throughput, which Venom says is possible to achieve 0.2 second block times with low gas fees. Interoperability, scalability, and liquidity are issues that Venom states it seeks to address in DeFi use cases.

    Final Thoughts

    As you may have realized by now, scalability and compatibility are some of blockchain’s biggest enemies. The basic Layer-0 protocol helps «jump ahead» with respect to these factors. You must realize that Layer-0 is an unfinished process, and it is always evolving. What can it bring to society in the future? The base layer will help finalize scalability and compatibility issues. It will broaden the horizons for business owners to open new applications that are built on the digital economy. Layer-0 is the new approach to scale, secure, and be compatible with blockchain and general computing while offering the best of these options.

  • Layer 1 vs. Layer 2: The Difference Between Blockchain Scaling Solutions

    Layer 1 vs. Layer 2: The Difference Between Blockchain Scaling Solutions

    Some skeptics often say that cryptocurrency is a complicated topic that beginners will not be able to understand without the help of specialized experts. This is actually not true at all, and basic knowledge of cryptocurrency can be gained even by a new user. However, when you start delving further into this industry, you will be faced with more and more complex and unknown terms.

    You must have come across early terms such as «Layer 1 and Layer 2”. Many people who are involved in cryptocurrency still don’t know what they actually mean and what impact they have on scalability. This article will help you learn more useful information about the difference between Layer 1 and Layer 2, and how they affect overall bandwidth.

    Blockchain Trilemma

    Before delving into the key differences between Layer 1 and Layer 2, it is important to take a look at the trilemma of the blockchain. This is the exact thing why Layer 1 and Layer 2 exist. This is the term used to describe the problem that blockchain developers and engineers face. This is all due to the fact that a distributed network is characterized by 3 main factors that are immutable:

    • Decentralization. This is the main point that characterizes blockchain. It means that no one can get 100% control over a particular system.
    • Security. Another important component of the system ensuring that the network will remain secure for users.
    • Scalability. The third item called scalability defines how many transactions can be processed in a given period of time.

    All of these components in combination provide the network with guaranteed success. However, the trilemma of blockchain implies that one of the important components is always missing. Developers have to sacrifice one thing to get another.

    What is Layer 1 in Cryptocurrencies?

    Layer 1 is one of the structures in the blockchain technology that refers to the fundamental protocol that is employed in the system. In fact, it incorporates the basic blockchain functionality, which consists of four layers of architecture.

    • Data level. All transactions and all related information are allocated in this separate level.
    • Network level. The entire blockchain is a multitude of distributed network devices, computers and facilities that are interconnected. All of this is emphasized in the network level.
    • Consensus level. There are different consensus levels that include different mechanisms. For example, the most popular mechanisms are Proof of Work (PoW) and Proof of Stake (PoS).
    • Activation Level. This is a level that is separate and includes the functionality to distribute the reward to validators.

    The scalability problem has been solved here by increasing the blocks. This means that the system can handle more transactions. It is on this that decentralized applications, smart contracts, and tokenization platforms are developed. This layer of the blockchain performs activities such as processing of transactions, storing data, and consensus algorithms that help participants in the network to trust it.

    Examples of Layer 1 Usage

    The best way to understand any topic in detail is to see concrete examples and understand how it works in a real case. Below you will see some well-known examples for Layer 1.

    Bitcoin
    The first and the biggest distributed ledger that has been created to support the flow of digital money. They implemented the use of smart-contracts such as blockchain ledgers, distributed consensus, and proof-of-work mining to facilitate the use of electronic cash without the intervention of a third party like a bank.

    EOS
    Introduced more complex scripting language to its Layer 1 that would allow decentralized applications (DApps) and smart contracts. Unlike traditional systems that may be altered by bugs, malicious actors, or other external interference, coded agreement protocols and dApps on the Ethereum platform operate strictly as programmed, with no possibility of halting, corruption, or manipulation by third parties.

    Solana
    This aimed at maximizing transaction speed as well as the network’s capability by utilizing Proof of History consensus mechanism in addition to PoS voting system and Distributed System architecture. Solana boasts of being capable of processing over 50 thousand of transactions.

    What is Layer 2 in Cryptocurrencies?

    Layer 2 solutions are meant to provide users with higher throughput, cheaper fees, and scalability without compromising the security of underpinning layers such as Ethereum. Layer 2 systems process transactions of Ethereum’s chain first before being incorporated into the main chain.  They group transactions together, then stake them on to the main Ethereum network in block-chains. It also means that the main chain does not need to perform all the computations, thus, passing the ample load to the Layer 2 systems.

    There are Layer 2 solutions that utilize new consensus algorithms for low-cost and fast transactions and security from the main chain through roll-ups of the Merkle root into the chain. Some others are entirely dependent on the consensus mechanism adopted by the main chain, which may be a proof-of-work or proof-of-stake system. These innovations are crucial for the efficiency and effectiveness of a cryptocurrency exchange.

    Examples of Layer 2 Usage

    The topic of comparing Layer 1 and Layer 2 may seem difficult to many people and that is quite normal. It is recommended that newcomers learn the basic terms and also look at real examples of these systems. Here are what famous examples of Layer 2 exist in 2024:

    Polygon
    Polygon makes an easy entry to Ethereum’s Layer 2. It has a system of side chains that are linked to the Ethereum parent chain but makes it possible for the transactions to be processed at a faster rate with a lot of efficiency at a lower cost. The scaling options people have for their projects depend with the type of scaling solution required.

    Bitcoin Lightning Network
    The Lightning Network is an extension of the Layer 2 payment protocol for use on the Bitcoin blockchain. It allows for near-instant and almost unlimited payment transactions through payment channels that settle most transactions between users of the blockchain. One of them is high transaction throughput and privacy with almost no fee.

    Scroll
    Scroll’s architecture, which is based on an off-chain network for real-time, cost-free transactions and an on-chain consensus mechanism for Internet-scale integration. The off-chain network reports small payments instantly for free by leveraging participant reputation within trusted social networks as opposed to universal consensus.

    Detailed Comparison of Layer 1 and Layer 2

    Blockchain is a distributed and decentralized ledger that can revolutionize the way transactions are carried out by ensuring their transparency while promoting the virtues of decentralization, security, and the absence of intermediaries. Still, the first generation of Layer 1 blockchain such as Bitcoin and Ethereum, has some scalability problems when the number of users is large. This has led to the emergence of Layer 2 solutions, which are more complex than those in Layer 1. But before we get into that, let’s look at how Layer 1 and Layer 2 blockchains are different.

    Scalability

    Layer 1 blockchains are composed of one chain comprising a sequence of blocks with data about transactions. Each node must approve all transactions. In turn, this severely slows down the transaction rate and capacity. Compared to Bitcoin, which is capable of processing 7 transactions per second, Ethereum can only handle 25. Layer 2 solutions, on the other hand, are constructed on Layer 1 chains, that are just above the physical layer. This allows for a significantly increased throughput – for instance, Loopring notes that they are capable of processing 2000+ transactions per second.

    Security

    The first layer chains, such as Bitcoin and Ethereum, possess a high level of security as they both operate on global networks with consensus algorithms. Nevertheless, Layer 2 solutions never lose security, as they integrate the security of the L1 chains they are based on. Through pushing the withdrawal transactions to Layer 1, the L2 platforms get the advantage of using the security from the root chain. While not as fully decentralized as Layer 1, Layer 2 solutions boast robust security while enjoying the ability to scale significantly.

    Mechanism of Consensus

    Layer 1 blockchains are the leading ones, which work on either Proof of Work or Proof of Stake to authenticate the transactions. Both require energy-intensive computing. But Layer 2 platforms can sort, verify transactions away from Layer 1 and submit a proof of validity, known as zero-knowledge rollups. This means that there is no need for performing numerous calculations which are possible at much higher efficiency. For instance, Polygon PoS chain, integrates Ethereum security with a PoS consensus model that can support quicker transactions for significantly lower costs.

    Size of Commissions

    While comparing L1 and L2, there is a difference regarding the number of fees/commissions needed to make the actual transactions. Layer 1 is the base of the blockchains, such as Ethereum, which is a solid foundation that is used. Performing transactions on Layer 1 blockchains generally costs more due to the contest for the accessible bandwidth on the base infrastructure. For instance, gas prices – which are fees for executing operations on the Ethereum network – tend to rise during traffic.

    On the other hand, the Layer 2 platforms are established above the Layer 1 to help with the scalability issue. Layer 2 solutions such as Arbitrum allow for transactional batching “off-chain” before being permanently written on the main network; this significantly lowers the cost. In sum: Layer 2 significantly reduces commissions by easing the pressure of transaction volume on Layer 1.

    Throughput Capacity

    One related difference is that of the network bandwidth and capability that the two options employ. Layer 1 has predetermined number of bandwidth by core developers. Due to MTP rates limitations, high usage of Layer 1 causes traffic and costs for consumers.

    Layer 2 technologies are mainly focused on increasing the bandwidth. Optimistic Rollups scale transactions «off-chain» before summarizing and reporting the outcome back to Layer 1, enabling higher TPS. Consequently, Layer 2 desires superior bandwidth and, thereby, eludes the constraints and expenses associated with various Layer 1s functioning at or near capacity.

    Final Thoughts

    As mentioned before Layer 1 and Layer 2 are the two primary methods to increase the blockchain network size and consequently, the transaction throughput and fees. Of course, each option has its own advantages and disadvantages. 

    It is not hard to guess that Layer 1 is the foundation, and among its representatives are such giants as Bitcoin, Ethereum, Solana, and others. However, Layer 2 solutions help to find a compromise when it comes to blockchain thrillers. Based on this article, you already know about well-known projects like Bitcoin Lightning Network, Scroll, and Polygon. They have proven that scalability and a high number of transactions per second are affordable things for any project. However, this can be a drawback when it comes to decentralization since corporations and banks, for instance, may own several nodes or hubs.  Implementation of such scalable solutions is best suited to help drive relevant innovation and positively impact blockchain performance. This can be beneficial for both developers and ordinary users of the cryptocurrency exchange.

  • Top Cryptocurrency Myths

    Top Cryptocurrency Myths

    The year 2009 was especially memorable for mankind when the term cryptocurrency was used for the first time, and Bitcoin was born. Most people at that time did not pay much attention to this project, considering it something unserious and potentially free. Today, the regular use of cryptocurrency by people has proven that it is a useful technology. However, to this day there are still many skeptics who have a negative attitude towards digital money.

    Such people often say that cryptocurrency is not a reliable thing and users should not invest in it. Is this true or just a loud myth? This article collects the top ten untrue rumors and myths that are said about cryptocurrency.

    Myth 1. Cryptocurrencies have no real value

    The first discussion focuses on the fact that digital currencies have no real value, as their worth is determined by their ability to be used as a medium of exchange in a virtual economy. Another criticism is that cryptocurrencies have value but contain no physical form of back up which is true since cryptocurrencies are virtual.

    Nevertheless, most modern fiat currencies do not have the backing of gold, silver, or any other physical commodity and are valuable based on demand and scarcity. Like gold, cryptocurrencies have their intrinsic value in the same way that the dollar, Euro, British pound or any other legal tender has its value: it is because people have a belief in its value.

    Cryptocurrencies are also considered to have value in use. They facilitate quick, cheap, cross-border transfers of funds with no need for the services of a middleman. In terms of usage and adoption, the more users and businesses begin to adapt to the use of cryptocurrencies, the greater the benefit that the crypto network will generate.

    Myth 2. Storing cryptocurrency in a wallet is not protected by any means

    A lot of people agree that holding coins in a digital wallet is dangerous because wallets have been attacked before. However, such a perception of organizations is outmoded. Today, there are some well-known hardware wallets and they already have implemented the features that can be referred to as advanced. For example, two-factor authentication and cold storage, which means that the funds are stored in encrypted offline devices.

    Incorporating practices such as avoiding sharing your passwords and using good quality passwords, as well as purchasing from reputable manufacturers, showcases that digital wallets are safe ways to store cryptocurrencies. All the biggest wallet risks of today are exclusive of ineffective technology. They are the direct result of user negligence.

    Myth 3. Cryptocurrency usage is associated with crime and fraudulent activity

    Critics also point out that the use of cryptocurrencies is pseudonymous and suggests that it fuels crime. This is perhaps the most important myth that millions of people around the world have heard about. However, due to their openness, blockchains render Cryptocurrencies useless for criminal activities. Cash and precious metals still retain much lower level of identification.

    The largest exchanges conduct KYC policies and have internal fraud detection mechanisms through data analysis. But while the volumes of illicit transactions remain small compared to overall cryptocurrencies’ turnover. Paper money is still dominant in illicit transactions because it is almost completely non-reportable. Recent studies well demonstrate that cryptocurrency transactions that are associated with fraud and criminality are around 0.15%. This is quite a low figure.

    Myth 4. People should invest only in Bitcoin

    Any user on the internet who has heard of cryptocurrency knows about Bitcoin. This is not surprising, as Bitcoin was the first digital currency in the world. There is a notion out there that Bitcoin is the only sustainable investment in the cryptocurrency market. However, it is an undeniable truth that Bitcoin itself is the largest cryptocurrency by market capitalization, and its popularity is dominating the headlines and discussions. It is now up to 9000+ cryptocurrencies nowadays and many of them have unique features or are designed specifically for different use cases than Bitcoin.

    For instance, Ethereum serves as a decentralized app and smart contract platform, Ripple is designed to enable global money transfers between banks, and Monero is all about maximal privacy. Some of them have even achieved much higher percentage gains in price during the latest bull markets than Bitcoin. Diversification of investment across different cryptocurrencies will increase yields and also help in diversifying risks over the various cryptocurrencies rather than staking all funds in Bitcoin.

    There are many shining examples of digital currencies that have managed to grow by more than 15 thousand percent in a few years. They have helped many investors become dollar millionaires. Just remember about such projects as Solana, Shiba Inu and Dogecoin. They managed to grow by thousands of percent talking about the market value. Moreover, many digital currencies continue to grow today, and economic experts predict the huge potential for investment.

    Myth 5. Any digital currency is a bubble

    Critics have gone further to saying that the rapid growth and flapping that has characterized the prices of the digital currency over the last decade suggests that the market is in a bubble. Nonetheless, critics of cryptocurrency have said it was a bubble when Bitcoin was at a $100, $1,000, and $10,000 mark. However, it is crucial to understand that cryptocurrencies’ market instability is primarily attributed to the enormous first-year gains and relatively immature ecosystem.

    Cryptocurrencies have value as they represent digital money that exists outside of central banks and operate as a decentralized digital system while being underpinned by the use of blockchain. However, it is expected that prices will stabilize in the future, as the underlying structures are put in place and more people begin to embrace it. Also, with many big corporations having adopted the digital asset, having it on their books as an asset shows increased acceptance.

    Myth 6. Digital money will replace fiat money in a few years

    Some supporters of cryptocurrencies believe that cryptocurrencies will quickly bring revolutions to digital fiat currencies, including the US dollar and the financial system. Yet, paradigm shifts of such a scale in the entirety of financial systems are not outcomes of one day’s work.

    Although such conditions as hyperinflation can spur the development of cryptocurrencies in some countries and their transition from using some world currencies, such as the USD, moving from using centralized systems to decentralized ones on a global scale will still require many years. You should realize that paper money is a thing that has been around for more than one thousand years. They have come a long way to become an integral part of every person’s life. Moreover, today, a large number of skeptics remain, who do not believe in the success of cryptocurrency and consider it an unsafe way of payment. Yeah, experts say that cryptocurrency will be able to replace fiat money in the future. However, there are two factors to consider in this situation:

    • Time. No one can know when the use of cryptocurrency will become more common than paying with paper money. It could take 5 years, 10 years or maybe even 50 years.
    • Scale. Economic experts are confident that cryptocurrency will replace fiat money. However, they don’t know if they will completely displace paper money or partially do it.

    Looking deeper into this myth, it is possible to realize that the means of payment and exchange have been changing throughout the existence of mankind, and this is quite a normal thing. For example, until paper money appeared, people paid for services or goods with wheat, gold, water or other things that have value in society.

    Myth 7. Cryptocurrency is a temporary thing

    On forums about cryptocurrency today, you can often find opinions that the trend for cryptocurrency will soon end and asset values will drop significantly. Some people think that cryptocurrency is a kind of fashion that everyone will forget in a few years. 

    Right now, only a limited number of people are using electronic money and some estimates are around 150 million people. However, this market is a system that is constantly growing and is gradually entering everyone’s daily financial life. Now, thanks to Bitcoin and other cryptocurrencies, it is possible to:

    • Pay for goods in the online store.
    • Make donations to charitable organizations.
    • Pay for media subscriptions.
    • Use services of insurance companies.
    • Buy real estate.
    • And perform many other tasks.

    To confirm the dispelling of this myth, remember things like the internet, email and social media. When these projects were introduced, people also thought that it was not serious and had no future. However, today they are integral things in the life of any modern person on our planet.

    Myth 8. Mining cryptocurrency is bad for nature

    Another myth that is so recurrent is that crypt mining is hazardous to the environment. Critics say it discharges more power acquired from fossil energy sources than what it saves from compact fluorescent lamps. Although mining does demand substantial computational processing, most of the leaders of the crypto environment have addressed pertinent sustainability issues.

    First of all, it is important to note that nowadays, a large number of miners utilize power from renewable sources of energy such as solar, wind, and water. According to a study by the University of Cambridge in 2021, about 76% of miners reported to be using renewable energy sources to power their operations. Other form of validations such as proof-of-stake validation also cuts the energy consumption bills as compared to proof-of-work systems. That is why major networks like Ethereum shift to proof-of-stake.

    Cryptocurrency must scale sustainably, and this can only be done through the stewardship of competent leadership and the application of technology. The thrust that holds crypto as being inherently negative on the environment is invalid.

    Myth 9. It is difficult for beginners to understand how to buy cryptocurrency

    As statistics show, there are many people around the world who would like to invest in cryptocurrency but are afraid to start because they don’t know how to do it. Based on this, another myth has emerged which is called «cryptocurrency is difficult».

    It goes without saying that cryptocurrency is a relatively new phenomenon that requires a special approach and increased knowledge. However, if you just want to purchase a certain amount of coins, using them as savings, it is very easy to do even for a beginner. With the Swapzone crypto exchange, any user can quickly create an account, purchase the desired cryptocurrency with fiat money, and exchange digital assets with each other. Even a new user who doesn’t know much about cryptocurrency can easily handle the task of opening an online wallet and buying digital coins. Many of the exchanges have also launched features such as auto purchasing, which makes it very easy to practice the dollar cost averaging technique regularly.

    Myth 10. Cryptocurrencies are too expensive

    In today’s market, there are many cryptocurrencies whose value starts from 100 dollars and higher. For example, the most expensive cryptocurrency is Bitcoin, which is valued on exchanges today at around 61 thousand dollars. However, there are many other alternatives that can be easily purchased. Moreover, buying cheap digital currencies today is a great opportunity to invest money profitably. Cheap cryptocurrencies usually have great potential in the near future. 

    Final Thoughts

    As you might have realized by now, there are many myths surrounding cryptocurrencies today. However, the reality is just one. The future of the world is directly related to blockchain technology and cryptocurrencies. This process cannot be stopped. It is natural and meets the modern challenges and requirements of the time. Cryptocurrency has already irrevocably changed the financial system, and the blockchain community is shaping a new future. Bitcoin and other altcoins are the new gold. Those persons who understand these principles now will be far ahead of others tomorrow.

  • Cardano (ADA): What It Is, How It Differs From Bitcoin

    Cardano (ADA): What It Is, How It Differs From Bitcoin

    ADA is a digital currency associated with the Cardano blockchain and is slowly but steadily growing in popularity in the sphere of distributed systems. This platform, which is built for decentralized applications and smart contracts, provides distinctive solutions for security, scalability, and sustainability. Cardano is based on scientific research and has no high risks, so along with being one of the youngest, Cardano is considered one of the most reliable and unique cryptocurrencies. In this review, we will consider what Cardano is, how it functions, the benefits it offers and its shortcomings, and how it stands compared to Bitcoin.

    What is Cardano (ADA)?

    Cardano is a third-generation blockchain that can do more than just financial transactions, unlike the previous types of blockchains such as first and second generations. Cardano is not like most other cryptocurrencies because it rests on the strategy of scientific discovery and research. 

    Cardano’s primary token that circulates in its ecosystem is called ADA. It is employed for operations involving the transfer of value within the network and voting in the company’s decision-making process. Substantial with Cardano is the Proof of Stake (PoS) algorithm on which its success is built, which is significantly less energy-intensive compared to Proof of Work (PoW) for such cryptocurrencies as Bitcoin.

    Cardano works on a two-tier model that is in seamless harmony with each other. The first layer is called the Cardano Settlement Layer, or CSL, which deals with the ADA transactions, whereas, the second layer is known as the Cardano Computation Layer, or CCL, which is a layer that supports the smart contracts and the decentralized applications. This structure makes it easier to build a large network and makes the network more secure.

    History of Cardano (ADA)

    As a starting point, the structure of the project was initially characterized by original concepts in the field of development and the identification of priorities using scientific data. This led to the development of a platform that is known to boast of very high and secure reliability.

    Early Development Stages

    Cardano or ADA started its journey in 2015 with Input Output Hong Kong (IOHK), created by Charles Hoskinson, one of the Ethereum co-founders. As for the first stage, the development team was primarily concerned with the platform itself, building its foundation. The platform’s aspects went through numerous studies in cryptography, game theory, and computer sciences to make all the work completed as scientific as possible. Charles Hoskinson and his team, who worked on this project, closely cooperated with various scholarly institutions, such as the University of Edinburgh and the Tokyo Institute of Technology, which helped bring scientific advancements into the project.

    Official Launch

    Cardano was launched fully in September 2017. This stage was given the name of Byron in honor of the great poet-Boyar Lord Byron. This component of Byron, the primary Cardano network, was created to enable users to carry out transactions through ADA coins. The platform attracted attention in short order because of the scientific approach to future delivery and the talk of high security and scalability.

    Early Challenges and Updates

    Indeed, before the middle of the twentieth century, Cardano experienced many problems and opportunities. When it comes to the primary issues encountered, there were issues related to network stability, the need to enhance its throughput, and the necessity to also enhance the user experience. The development team was truly engaged in addressing these issues as the platform continued to be refined and optimized.

    One of the major updates that was implemented was the release of Shelley in 2020. This update was designed to decentralize the network further and offer participants the ability to validate transactions. As an integral part of Shelley, the Proof of Stake (PoS) algorithm was introduced, which enhanced the energy efficiency of the network and introduced the concept of staking, through which users can earn rewards for contributing to the functionality of the network.

    Introduction of Smart Contracts

    The next meaningful period in the Cardano development was the Goguen update, which was in honor of the American mathematician Joseph Goguen. This update was carried out in 2021, enabling the Cardano platform to implement support for smart contracts. New to this environment, developers could now build and deploy dApps on Cardano, which added even more capabilities to the platform.

    Further Development

    Since its inception, Cardano has been growing and advancing. The Basho update was released in 2022 as the attempt to increase the scalability and compatibility of the network. This update contained features for connecting various blockchain networks and enhancing their integration.

    Among them, the most eagerly awaited is Voltaire, which is to be released in the coming years. This update will focus on the implementation of the governance system enabling people to vote for changes in the platform’s future evolution and become a part of Cardano.

    Achievements and Successes

    Cardano has been very successful all through the years. It has grown to become one of the biggest and most famous cryptocurrency projects in the world, with many developers and users. The successes of Cardano include cooperation with the government and commercial companies, contribution to international projects in using blockchain technologies, and promoting science.

    Purpose of Cardano (ADA)

    Rating of Popularity and its Increase

    Cardano (ADA) is slowly but surely establishing itself as a popular cryptocurrency because of the approach to its construction and scientific perspective. Cardano is unique from other cryptocurrencies since it is backed by science and proper means, hence renders it reliable and sustainable. On the graph provided below, it demonstrates that the interest in the platform has grown gradually after the platform was created in the year 2017.

    Popularity (in millions of users):

    Cardano continues to garner more attention owing to its capability to tackle challenges that may be experienced by other blockchain systems. Consequently, the number of users and investors in this platform has grown with the intention of utilizing the various innovative solutions given by the platform.

    Profitability Analysis

    Nevertheless, when evaluating an investment in ADA, one should assess the increase in the price of the currency and the possibility of directly participating in the management of the platform. The main indicator of this will be the further development of the network. Unlike other cryptocurrencies, the Cardano has regular and accurately predictable passive income due to the use of the Proof of Stake (PoS). This algorithm compensates participants in the network for their service in maintaining and growing the network, making ADA investments ideal for the long term.

    Advantages of Cardano (ADA)

    1. Energy Efficiency: Another benefit of adopting Cardano is that it has adopted the Proof of Stake algorithm, which is way more efficient than proof of work algorithms used in Bitcoin and many other coins. This makes Cardano a more environment-friendly option.
    2. Scalability: Cardano employs a two-tier structure where the transaction processing and smart contracting tiers are two different tiers. This in a way enables the network to handle an increased number of transactions in a second and run intricate smart contracts at one time without straining the system.
    3. Security: The scientific approach and adherence to such rigorous schemes guarantee a high degree of security for the further Cardano network. The dedicated development team works together with other academic institutions and shares the findings in the scientific literature, thus ensuring that the security system is continually refined and upgraded.
    4. Flexibility: For writing smart contracts, Cardano is a more flexible platform because supports multiple programming languages. it also enables the development of several dApps associated with Cardano.
    5. Transparency: Trust and transparency are considered due to the open availability of all the project documentation and codes. The Cardano team always prepares reports about their activity and potential further activities, so people who invest and use the Cardano platform always know every change and addition.

    Disadvantages of Cardano (ADA)

    In general, all listed advantages put Cardano (ADA) among the most perspective cryptocurrencies currently available on the market, able to offer a stable and safe environment for DApp and smart-contracts deployment. At the same time, Cardano has certain prospects that should also be taken into consideration when investing.

    • Relative Newness: Despite Cardano being a relatively new digital currency, it has not been for a long time in the market and thus has not been through the test of time.
    • Competition: Among the other blockchain platforms that share similar characteristics and capabilities, some may pose a genuine threat to Cardano.
    • Technical Complexity: For developers and users who are not privy to the usage of blockchain technologies hint can be a little steep to master.

    Cardano (ADA) and Bitcoin

    Comparison

    Despite the similarities, Cardano and Bitcoin are two different digital assets with their strengths and benefits. Now let’s look at the main distinctions between these cryptocurrencies.

    • Consensus Algorithm: Bitcoin employs the Proof of Work (PoW) algorithm for identifying valid transactions as well as generating new blocks. This process is not as energy efficient as the previous process since it uses a lot of electricity and certain equipment.

    However, Cardano relies on the Proof of Stake (PoS) algorithm. In PoS, the validators are selected depending on the number of coins they own and are ready to “stake.” It greatly decreases power consumption and doesn’t need costly devices, making Cardano more eco-friendly and energy-saving.

    • Scalability: Bitcoin has some scalability issues owing to its layer one system, where all the operations and transactions occur on a single blockchain. This results in slow transactions and extremely high charges when the network is congested.

    The Cardano protocol has a two-tier model with the Cardano Settlement Layer (CSL) and Cardano Computation Layer (CCL). This structure also enables decentralizing transaction processing and smart contract execution that overall improves the network’s efficiency and its capability of rendering more complex operations.

    • Security: Bitcoin, which is the first cryptocurrency, has a relatively high degree of security, both due to decentralization and the use of computing resources for this purpose. However, its security also depends on the fact that it is backed up by a pool of many miners who support the network.

    The approach used and adopted in creating Cardano makes the network secure and reliable. Every platform component and algorithm is tested for security and assurance against threats of subsequent attacks and exploits.

    • Rich Input Output: Bitcoin, however, has a very limited number of uses and applications, and it primarily works in the financial context. While applications such as the Lightning Network extend Bitcoin’s use cases, the functions offered are not as versatile as smart contracts on Cardano.

    Cardano is also not rigid in working with smart contracts; it supports multiple programming languages. This makes it possible to combine Cardano with various different applications, often referred to as dApps.

    Bitcoin refers to the first cryptocurrency, and it is widely recognized and used by many users as well as investors. However, due to being the first, Bitcoin provided the framework and generated immeasurable interest in cryptocurrencies and the underlying blockchain. This, in turn, helped gain a high level of confidence from investors and requests from various exchanges, wallets, and services where Bitcoin is accepted.

    Final Thoughts

    ADA is a rather progressive cryptocurrency with more performance benefits than its competitors due to its scientific approach and architecture. However, there are certain disadvantages and risks related to this mode of communication, but it also offers a vast opportunity for further development. Opportunities related to modern blockchain solutions could attract long-term investment in Cardano for investors.

    Warnings

    Crypto investing was never void of the specific risks it entails. There are always risks associated with fluctuating market prices, future changes in the regulatory framework that governs cryptocurrencies, and the occurrence of technical flaws that may significantly affect the value of a particular cryptocurrency. Hence, anyone intending to invest should always conduct research on the market and seek the services of a financial consultant.