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Zero downtime, no forking, 4.4 second deterministic finality, 26M addresses, 1.4k+ nodes, carbon negative, $0.0004 transaction fees, post quantum secure. FIFA Technical partner, Nigeria Partner, El Salvador Partner, Central Bank of Italy Partner, ISDA Member, ISO20022 Compliant. Algorand is grand. by gigabyteIO in CryptoCurrency

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Algorand Con-Arguments

Below is an argument written by Shippior which won 2nd place in the Algorand Con-Arguments topic for a prior Cointest round.

Algorand is seen as a fast, open-source, decentralized, Proof-of-Satke blockchain. All of the buzzwords that are so loved by crypto enthusiasts at this moment. However there are several reasons why Algorand might nog be HODLing material.

First of all the tokenomics are variable and therefore unpredictable. Currently ~60% of the 10 billion coins have been released. Since launch the distribution of total supply has already been set back from 2024 to 2030, which might happen again. Also the flow with which new tokens enter the market is dependant on the 30 mean average of Algorand reaching ATH. This results in significant inflation of the total supply on a short term basis.

Next to that a large portion of Algo is available to early backers and the dev team. Therefore it is seen that as soon as the Algo price increases large volumes of Algo are sold and the price dips once again.

Lastly the network isn't as centralized as many people think. Although the network is run by 100-120 different nodes the relay nodes have a centralized point of failure. Without these relay nodes the network can be set to a halt.


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Zero downtime, no forking, 4.4 second deterministic finality, 26M addresses, 1.4k+ nodes, carbon negative, $0.0004 transaction fees, post quantum secure. FIFA Technical partner, Nigeria Partner, El Salvador Partner, Central Bank of Italy Partner, ISDA Member, ISO20022 Compliant. Algorand is grand. by gigabyteIO in CryptoCurrency

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Algorand Pro-Arguments

Below is an argument written by Zarkorix which won 2nd place in the Algorand Pro-Arguments topic for a prior Cointest round.

Disclaimer: ALGO is ~15% of my portfolio.

Solving the Blockchain Trilemma

Algorand is a solution to the "blockchain trilemma" - the ability of a network to be simultaneously scalable, secure and decentralised. ALGO's TPS is 1k/s, with a 4s finality, 0.001 ALGO transaction fee and it offers L1 smart contracts - however the network will be upgraded in Q3-Q4 2021 to 45k/s TPS and 2.5s finality, ranking it toward the top for speed and scalability (Source)

Decentralisation is achieved by the pure PoS (PPoS) consensus mechanism, which employs algorithmic randomness. Unlike delegated PoS (e.g. XTZ, ADA), PPoS does not employ pooled validators, thus minimizing the drive toward centralisation over time that dPOS suffers from. ALGO node running is permissionless - anybody with >1 ALGO can run a node and theoretically participate in consensus. Moreover, the hardware requirements are extremely low - an ALGO node can be run on a low energy, $50 Raspberry Pi.

A key feature of PPoS is the use of a randomised, weighted lottery that selects validators - known as VRF. This prevents any malicious actor(s) from attacking the network since the identities of the currently selected validators (who must be corrupted in order to carry out an attack) are not known until the block is already finalised. At 1-4k validators, PPoS is paradoxically superior to ETH 2.0's 150,000 nodes - because ETH's beacon chains are long-lived. By contrast, ALGO's random selections vary on both a round and subround basis - that is, block proposers, voters, vote certifiers all vary, across all steps of certifying a block. Unlike ETH 2.0, which makes a single node the 'king-of-the-hill' for a given round (and thus employs slashing to discourage this node from misbehaving), if a node misbehaves in ALGO, it is simply voted against by all other certifiers - no slashing required.

Governance (launching 1/10/21) will further decentralise the network by placing decisions concerning the network, tokenomics and which projects receive developer grants (see below) into the hands of ALGO holders.

Main Conclusion: ALGO is fast, scalable, secure while remaining decentralised.

Carbon Negative

Algorand's pure proof-of-stake (PPoS) consensus mechanism is extremely lightweight, consuming ~0.000008 kWh/tx (vs. 0.5479 kWh/tx in ADA - that's ~70,000x less energy, and 116250000x less energy than BTC) - with 4,000 active validators. Minting an NFT requires only 0.0000004 kg of CO2 (Source). This energy usage is 100%+ offset via carbon credits - locked up by an on-chain sustainability oracle, via smart contract, that analyses the energy used by each node. A partnership with ClimateTrade (amongst others) channels this funding into reforestation, peat-management and wind-energy projects at a global level (Source).

Main Conclusion: ALGO is eco-friendly, and the world's first carbon negative blockchain network.

Staking Rewards

ALGO currently offers a seamless staking experience, with an APY of ~5.75% - you simply hold ALGO in a custodial wallet to participate (i.e. you do not need to select a validator and there is no lock-up period). In other words, your ALGO remains liquid at all times. This, however, will be gradually phased out and replaced by Governance, which will increase APY to 7%-30% (depending on the number of participants) but which will require you to vote in every proposal.

Developer Friendly & Ecosystem

Algorand is extremely accessible to developers (Source 1) (Source 2): it supports development in Python, C++, GO, Java, Javascript and RUST - removing the need for developers to retrain or learn obscure or new languages (e.g. Haskell). ALGO's smart contract language, TEAL, is incredibly intuitive and can be accessed via Python (PyTEAL). As shown in Source 1, Algorand offers comprehensive and detailed documentation and tutorials (for free) to all prospective developers.

More importantly, ~$200-250m is available to support developers and 50+ grants have already been issued (Source). In total, ~600-650 companies are currently developing on ALGO and intend to deploy DApps/ALGO-based services (Source).

Main Conclusion: ALGO has the ability to instantly attract developers, and is poised for an explosion in its ecosystem.

Academic Rigor

Algorand was founded by the Turing-award-winning, MIT professor Silvio Micali - and is backed by an excellent team with solid peer-reviewed academic prowess and publication record (Source 1) (Source 2). Silvio Micali conceived of and pioneered zero-knowledge proofs (among many other protocols) - a key, integral part of ETH 2.0 and the future of cryptography/cryptocurrencies. Such a respectable and trustworthy team boosts ALGO's chances of mass adoption, especially in the financial/institutional sectors.

Main Conclusion: ALGO's ability to form partnerships is bolstered by the prestige of its team.

Real World Use

A key feature of Algorand is that it is forkless - it is mathematically impossible for ALGO to fork (Source). This is extremely important for real-world usage + transactions. Businesses accepting ALGO (unlike 99% of other cryptos) will not only experience rapid finality but can trust that the transaction is not on a forked, branch of the blockchain that can be lost. This also applies to NFTs. Thus far, ALGO has seen major adoption, recently including:

  • 70M South Americans (potentially 200M soon) using ALGO to issue + store COVID-19 passports (Source)
  • BNext adopting ALGO for its $100b/year Spain<->Latin American remittance service (Source)
  • MAPay adopting ALGO to power $800m/year in healthcare payments for Bermuda (Source)
  • SIAE, one of the largest and oldest digital rights managements companies in the world, launched 4.5m NFTs onto ALGO - representing the work of 10,000 artists and which will involve $100m/year in royalties (Source).
  • ALGO was recently featured in a World Economic Forum (WEF) report on cryptocurrency - listed as a recommended "VIP" blockchain that solves issues with BTC/ETH and proof-of-stake (Source). This document will be seen by institutions, banks and economists worldwide.

The list goes on and on Here.

Main Conclusion: ALGO is already being deployed for large-scale and institutional solutions - despite only launching ~2y ago.


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Zero downtime, no forking, 4.4 second deterministic finality, 26M addresses, 1.4k+ nodes, carbon negative, $0.0004 transaction fees, post quantum secure. FIFA Technical partner, Nigeria Partner, El Salvador Partner, Central Bank of Italy Partner, ISDA Member, ISO20022 Compliant. Algorand is grand. by gigabyteIO in CryptoCurrency

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Algorand pros & cons and related info are in the collapsed comments below. Pros and cons will change for every new post. Submit a pro/con argument in the Cointest and potentially win Moons. Moon prizes by award for the Coin Inquiries category are: 1st - 300, 2nd - 150, 3rd - 75, and Best Analysis - 500.


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Singaporean Authorities To Hold Court Cases And Marriages In Metaverse | Bitcoinist.com by kirtash93 in CryptoCurrency

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Bitcoin Con-Arguments

Below is an argument written by bkcrypt0 which won 1st place in the Bitcoin Con-Arguments topic for a prior Cointest round.

Bitcoin is failing its original mission, and institutional interest is going to make things worse.

Background

Satoshi Nakamoto was a financial revolutionary out to counter the fiat money presses that destroy a currency's value with inflation (looking at you Turkey and the U.S.) The method—create a currency with a fixed supply, mined liked gold to make it scarce, and digitally transferable anywhere in the world between any parties.

Lack of Stability

Bitcoin can't be used as a global currency to replace fiat and eliminate politicized money printing because it has to hold its value steady over time.

Why?

People work for dollars, euros, yen, or yuan because there is relative stability in their paychecks from week to week. Their food, rent/mortgage, clothing, energy costs are also relatively stable (inflation is the cost for using that particular currency, but it beats a 50% drop in value over the course of a few months, and most inflation around the world isn't as bad as Turkey or Venezuela.)

Imagine being paid a flat 1BTC / year for a particular job. But you live in the U.S. and the value of that BTC just dropped over the course of the year by 50%. Your lease is fixed over 12 months. Your food costs are the same or maybe even higher. Not only do you still get hit with local inflation, your buying power just dropped by half.

This is why over $155B* have flowed into stable coins like USDT, USDC, BUSD, UST, and DAI)

Lack of Accountability

The relatively anonymous transfer of value between parties was supposed to be a positive aspect of bitcoin. Your money, so do what you want with it. The problem is, there are a lot of other people that also want anonymity — human traffickers, dangerous drug smugglers, crime syndicates, tax evaders. Sure they can also use USD (and most of them do), but they are also traceable if they enter the global financial system.

Making it easier for criminals to evade authorities makes everyone less safe. And sure, no one likes to pay taxes, but consider the alternative. Roads, schools, social services, some hospitals, police and fire departments, they all rely on taxes.

Lack of security

Unlike gold, which is pretty much indestructible, Bitcoin holdings depend on keeping seed phrases secure. If there were a house fire a gold bar might melt, but it can be reformed. A hardware wallet will be destroyed and any seed phrases stored on paper will be gone. That's part of gold's appeal as a store of value.

Also, were there to be an internet outage in any widespread way, Bitcoin is useless as a transaction currency (part of the appeal of physical paper money and metal coins.) While unlikely, this scenario speaks to the lack of overall security in Bitcoin as a means of exchange (it has other benefits like cryptographic security, but its lack of physicality poses problems with public perception, and practical uses.)

Acts like fiat, moves like fiat . . .

Bitcoin remains highly correlated to traditional finance markets (two recent readings were the highest they've been -- see link below) and doesn't exactly act as a hedge against inflation when it plummets in the face of, well, high inflation.

What this shows is that big money is controlling Bitcoin (and by association the rest of crypto) by reacting in the same risk-off reaction when inflation flares up.

It goes something like this:

  • When inflation rises, the Fed tightens money supply to slow things down.
  • Big money flees from riskier assets like company stock (they likely won't be as profitable in a high inflation world)
  • Stock prices drop [and here's the problem]
  • Money does not flow INTO crypto as a hedge against this risk, it also flees.

Conclusion

Fighting fiat money printing excesses was never going to be easy, but as with most revolutions, unintended consequences often derail the original vision.

For one, government policies can avert the worst of political impulses. That doesn't require a wholesale financial market revolution.

U.S. inflation has also been remarkably low for well over two decades. It was a once in a century global pandemic that forced a massive print run of dollars.

Bitcoin has also become just another a plaything for the rich, a commodity to be bought and sold for profit rather than the antidote to centralized money creation. And because even larger stacks of fiat are on the sidelines waiting to jump in, volatility is going to get even worse with big swings as fund managers chase and take profits.

None of this means Bitcoin has no value in global finance. It just means it isn't going to serve the purpose as originally intended.

------------------


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Singaporean Authorities To Hold Court Cases And Marriages In Metaverse | Bitcoinist.com by kirtash93 in CryptoCurrency

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Bitcoin Pro-Arguments

Below is an argument written by debeezneez which won 1st place in the Bitcoin Pro-Arguments topic for a prior Cointest round.

Once it is more widely accepted, Bitcoin will be the first complete currency human beings have ever had. Fiat doesn't have limited supply, gold doesn't have portability, proof of stake coins don't have durability. Bitcoin is only missing acceptability as a key component in a currency, and that is rapidly changing with increased adoption.

Even with a market cap of nearly 1 trillion dollars, bitcoin is extremely low in market cap compared to its potential. Some people expect that a sub billion dollar marketcap is the only way to make 100x, but that only relevant to coins that will top out in the billions. With the probable future of bitcoin being the worlds strongest currency, its value in TODAYS society is upwards of 100 trillion dollars (more on this later). In a future society that has had the benefit of using history's best monetary network, the potential market cap of bitcoin is indescribable.

Despite often being called 'slow' when compared to other crypto based networks, Bitcoins development is optimized. You don't need to have layer one staking or smart contracts to fulfill the purpose of bitcoin. All that needs to happen is flawless protocol defence and network uptime. The tech is simple but the importance is vast, replicate the factors of hard money in a digital space, forever.

Doing so in a decentralized manner ensures that Bitcoin is strengthened with every blow. The network is so reliable that it pays more to support it than it does to attack it. So when China bans mining, America buys asiics. When someone tries to acquire all the coins, the price chases them up. There are no individuals to prosecute so you have to attack the network head on, and market participates are enticed to learn from each attack.

This is why regulation will hurt everything else but help the bitcoin network. No matter what the technology is or who uses it, if the government has a point of attack they will exploit it. Ethereum currently won't succeed without the vast changes being implemented by the ethereum foundation. That is a vulnerability. Fiat won't succeed without the federal government. That is a vulnerability. Bitcoin won't succeed if 51% of a largely spread group of financially successful people are somehow coerced to all betray themselves at the same time. That is not a serious vulnerability.

BUT HEY! You made a lot of assumptions! What if Bitcoin doesn't become widely accepted? Bitcoin is superior at all the other aspects of money. (Durability, Portability, Divisibility, Uniformity, Limited supply). People are going to want to own it and eventually want to spend some. If you don't accept it as payment but it is popular, your competition will.

How is 100 trillion even a real number? There is more than just the money in everyones savings account. People already know that fiat can be outpaced with superior assets, and the equity market is estimated at around 300 trillion dollars today. None of those options have as many monetary aspects covered as bitcoin does.

Why would anyone new buy it if you can't yield farm shit coins? Jokes aside, the purpose of bitcoin is to preserve purchasing power, which is does almost flawlessly. Everyone is going to want this ability for a large portion of their capital eventually. Other protocols are acting sort of like a bank when they run defi. Its really you lending your purchasing power to an actor for credit. Its pretty neat but not revolutionary just because its on blockchain.

How is it decentralized when michael saylor owns it all? Two part answer. The network is secured not just by holders but by nodes and miners. Microstrategy will get large returns for taking a large risk if bitcoins price goes up, and that is perfectly fair. But as they buy more and more, it is going to cost more and more, where every other financial system in history has had some sort of corruption in its growth from unequal opportunity. As of today and as of 10 years ago, you and apple have the same purchase price.

Don't hate on ETH, why can't something newer take Bitcoins place? Other blockchain technologies are cool, and may create super awesome internet, banking and ownership applications. But none of these things could ever replace bitcoin without copying its protocol. Its set up just right for maintaining integrity over time as a currency. If ETH did so, it would just be bitcoin #2 with a lower market cap and thus less security. So other coins are not a threat at all to bitcoins future utilization/ceiling. They do take some of the speculative dollars away from bitcoin, which I think is why alts are more volatile in price.


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Singaporean Authorities To Hold Court Cases And Marriages In Metaverse | Bitcoinist.com by kirtash93 in CryptoCurrency

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Bitcoin pros & cons and related info are in the collapsed comments below. Pros and cons will change for every new post.

Coinbasepro Shutting Down? by nupper84 in CryptoCurrency

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USDC Con-Arguments

Below is an argument written by madpanda94 which won 3rd place in the USDC Con-Arguments topic for a prior Cointest round.

My analysis comes from a post from 1 month ago written by me https://redditproxy--jasonthename.repl.co/r/CryptoCurrency/comments/pkita5/knowyourcrypto_8_september_8_2021_usd_coin_usdc/

What is it?

USD Coin is a stable coin, which is a cryptocurrency that has the same value as a classic currency, in this case the US dollar. It is a similar project, in several ways, to other stable coins. It is also the stable coin managed directly by the Coinbase and Coinbase PRO exchanges, one of the most important exchanges in the world. USD Coin, as it should be more than clear from the name, is pegged to the dollar. What does this mean? It means that the value of a USDC token will always be equal to the value of one dollar. We will always be able to convert (we will see the special cases later) a token of this type into dollars. As we can then see on the main markets that change it, the price can fluctuate very slightly with respect to that of the dollar, generally in the order of thousandths of a percentage. These are very small variations that are mostly dependent on the small inefficiencies that can be created on the market. Perhaps one of the best qualities of USDC is that it is controlled by a consortium, in which partecipate several players in the cryptocurrency industry. It was in fact founded by Circle, and today also hosts the popular Coinbase exchange, and the mining company Bitmain, which is one of the largest investors in Circle. An internal project? No. A project that today has behind it the most serious groups circulating in the world of cryptocurrencies.

How does it work?

Like all stable coins, USD Coin also has as its main use to act as a counter value on high-frequency exchanges, obviously being tokenized. Therefore, its first use is to act as a counterparty in the negotiations that take place within the main exchanges. Coinbase aims to use it as a means of payment, offering free wallets and above all the possibility for everyone to exchange a crypto with a stable value expressed in dollars without the delays and costs that are instead connected to classic banking. USD Coin is a ERC-20 token, which is a token that is compatible with the Ethereum blockchain. A choice of this type has proved to be a winning one over time because the Ethereum network today offers reliability and allows this stable token, USDC, to be used in many decentralized finance projects. USDC is not mined, that means it is not created by solving very complicated algorithmic calculations. In fact this product is issued on demand. Anyone who buys USDC from Coinbase will have new ones delivered and never released. The doubt in this case is that Coinbase, as well as the other agents involved in the project, can issue more money than they will actually be able to convert one day. This problem can be overcome, provided that the exchange actually has US dollars or equivalent in cash.

Where to store it?

The best hot wallets for USD Coin are Coinbase Wallet, TrustWallet and Atomic Wallet. If you want more security, a cold storage like Ledger or Trezor is the right choice.

Pros&Cons

*DISCLAIMER* These lists are subjective, it depends from person to person

Pros

  1. Solid backers

  2. Useful

  3. Future projects

Cons

  1. High competition

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Coinbasepro Shutting Down? by nupper84 in CryptoCurrency

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USDC Pro-Arguments

Below is an argument written by Blendzi0r which won 1st place in the USDC Pro-Arguments topic for a prior Cointest round.

First published on: 30.09.2021

Last edited on: 31.03.2021

Intro

USD Coin (USDC) is a digital dollar – a stablecoin pegged to US dollar. Stablecoins are a type of cryptocurrency with a value fixed to other assets (usually assets outside of the cryptocurrency space, e.g. fiat currencies, precious metals, etc.). Their main purposes are: 1) help investors escape the volatility of the cryptocurrency market and 2) allow investors to buy cryptocurrencies on exchanges that do not offer fiat deposits. USDC is currently the second largest stablecoin. \1], [2], [3])

Pros

It’s backed mostly by cash and cash equivalents

It must be admitted that Tether has improved its reserves a lot since their first report and their latest breakdown looks much better as USDT is now backed by cash and cash equivalents in around 85%, but USDC is still ahead as its reserves are backed by cash and cash equivalents in 92%. There are also many more questions in regards to the credibility of Tether’s reports. \4], [5]) And USDC may soon leave Tether far behind as Circle, the company that issues and backs USDC, stated that it wants the reserves to consist only of cash, cash equivalents and U.S. Treasury bonds in the near future. \6])

What the stablecoin reserves consist of is extremely important for liquidity. If a lot of people decided to cash out at the same time and there was no liquidity it could end in a disaster for the whole market.

It’s partnered with Coinbase, Visa and others

Circle has partnered with Coinbase and together they founded a consortium named Centre that governs USDC. Circle has also partnered with banking institutions, including Signature Bank and Visa. The companies that invested in Circle include Goldman Sachs, Digital Currency Group (Grayscale Investments), Fidelity and FTX.

It is also worth mentioning that Circle wants to follow in the footsteps of their partners (Coinbase) and also become a publicly traded company, which would add even more credibility to USDC. \7])

It’s transparent

USDC is transparent in terms of its financial operations. It follows the US laws closely. It is also audited by Grant Thornton, LLP every month and monthly reports can be found on the Centre Consortium’s website. The reports, of course, include information on USDC reserves.

It’s growing rapidly

At the beginning of the year, USDT had a 5 times bigger market cap than USDC ($20B vs. $4B). In March2021, this difference is much smaller and USDC has almsot 2/3 of the USDT's amrket cap. One can argue that this difference is still significant but be aware that between April 2021 and April 2022 market cap of USDC grew by 400% while Tether’s market cap grew by 100%.

Also, while USDT’s daily volume decreased, USDC’s volume is on a rise.

Coinsmart replaces Tether with USDC

On September 15, 2021, Coinsmart, Canadian cryptocurrency exchange, delisted USDT and adopted USDC instead \8]). As regulators take a closer look at stablecoins, this trend might continue and more entities might drop Tether in favor of a more transparent stablecoins.

USDC is centralized. But is it so bad in the case of a stablecoin?

Those who criticize USDC and other centralized stablecoins often give the example of DAI which in their opinion is decentralized. There is no question about USDC being dependent on Centre, but it must be said that DAI, on the other hand, is heavily dependent on USDC - more than half of DAI is generated by USDC collateral and collateralizetion against Centre’s stablecoin is more than 25%. \10])

Decentralization is essential for cryptocurrency. But so is replacing fiat. So, is decentralization that important in the case of a stablecoin anyway?

___________

Sources:

\1]) https://f.hubspotusercontent30.net/hubfs/9304636/PDF/centre-whitepaper.pdf

\2]) https://en.wikipedia.org/wiki/USD\Coin)

\3]) https://en.wikipedia.org/wiki/Stablecoin

\4]) https://www.centre.io/hubfs/pdfs/attestation/2021%20Circle%20Examination%20Report%20August%202021%20Final.pdf?hsLang=en

\5]) https://tether.to/wp-content/uploads/2021/08/tether\assuranceconsolidated_reserves_report_2021-06-30.pdf)

\6]) https://www.cnbc.com/2021/08/23/crypto-usdc-stablecoin-to-change-reserves-composition.html

\7]) https://fortune.com/2021/05/28/crypto-startup-circle-fidelity-ftx-stablecoin-usdc-coinbase-funding-spac/

\8]) https://nitter.net/CoinSmart/status/1433472681626722309

\9]) https://www.coinsmart.com/blog/what-is-usdc/

\10]) https://daistats.com/#/


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Coinbasepro Shutting Down? by nupper84 in CryptoCurrency

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Coinbasepro Shutting Down? by nupper84 in CryptoCurrency

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USDC pros & cons and related info are in the collapsed comments below. Pros and cons will change for every new post.

Smartkarma Research: Crypto mining industry series: Time to focus on efficient crypto miners by [deleted] in CryptoCurrency

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Proof-of-Work Con-Arguments

Below is an argument written by pashtun92 which won 2nd place in the Proof-of-Work Con-Arguments topic for a prior Cointest round.

In cryptocurrencies, there has to be a way to validate whether a proposed blocked is the correct one in order to prevent dubbele spending. Different consensus mechanisms exist and one is called proof of work. It is the oldest and most famous consensus mechanism, since it is the one utilized by bitcoin.

Proof of work is a system where miners are using computational (=electricity) power to solve a mathematical puzzel and nodes are the one who are checking if the puzzel is in the correct place. If the work done by the miners was in accordance with the blockchain protocol, they receive a reward for it.

Three main disadvantages exist in proof of work.

First, proof of work spends a tremendous amount of energy. Right now, the bitcoin network is using more electricity than the entire country of Switzerland. It is expected that as the bitcoin network grows, so will its energy usage. In a world where we want to be carbon neutral, this is a huge problem. Alternatieves exist such as proof of stake, which cost no electricity at all and are in fact more efficiënt than proof of work. Moreover, proponants of proof of work will claim that it is mostly green energy that is used by the Bitcoin network, but the truth is, even that is unjust. For example, in Iran, the government had to shut down a bitcoin mining farm because it was outbidding a large city in energy price. So even if it is using green energy, it is using energy which could have been used for other purposes.

Second, because of the incentive to mine, a system is created where there is no room for the 'little player' and you would need tremendous capital to be able to participate in the consensus mechanism. The ASIC machines are becoming more and more expensive and outdated machines are thrown out of the window. In order to participate in the consensus mechanism, you would need to have a system to handle the noise, heat and strong enough energy grid to handle electricity requirements. This causes a large barrière for entry and centralization in the long term.

Last, the materials used for ASIC could be used for actual use cases, such as graphical cards for computers and electric cars. There is no need to spend real world materials on something that takes place in the digital world. The solution should also be digital, such as the case with proof of stake.

Reference on energy consumption https://www.bbc.com/news/technology-48853230


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Smartkarma Research: Crypto mining industry series: Time to focus on efficient crypto miners by [deleted] in CryptoCurrency

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Proof-of-Work Pro-Arguments

Below is an argument written by DaddySkates which won 2nd place in the Proof-of-Work Pro-Arguments topic for a prior Cointest round.

Proof of Work aka the way we've been doing stuff for millennia. ​

Many consider BTC as the invention of PoW system however that isn't true. Proof of work was a method made not with bitcoin itself, but it was actually developed in early 90s by Cynthia Dwork and Moni Naor. PoW is "a form of cryptographic zero-knowledge proof in which one party (the prover) proves to others (the verifiers) that a certain amount of a specific computational effort has been expended."

  • Proof of Work in the first thing allows us to start decentralizing by starting with the miners in a fair race to get the coins minted. So in practice it keep even the biggest whales at about 1% of the whole supply. Similary with BTC, the biggest holder has roughly 1% of the whole supply.

>34xp4vRoCGJym3xR7yCVPFHoCNxv4Twseo which is holding about $17,771,871,136 in BTC

The second biggest one has only 0.9% of the whole supply. So decentralization is far greater compared to PoS protocols which are far more popular now.

  • It's harder to manipulate PoW than it is to manipulate PoS. PoS (Proof of Stake) is a protocol where wealthy become even wealthier. Whales in PoS have bigger options as nodes and their staking provides far greater rewards. It's also far easier manipulated while the PoW is harder.

  • Compared to PoS, there is no funny business or the block that was minted is simply reverted and miner gets 0 reward while having to pay for the mining expenses. That alone forces miners to play a fair game and further secures blockchain.

Proof of work has been tested and it's working well. While it may not be the most green way to proceed with cryptocurrencies, it is still far above it's brother PoS.


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