Just over half a year ago the entire cryptocurrency market entered a bear market. For public blockchains, the time leading up to the bear market was spent growing ecosystems and findings ways to distribute wealth among developers and users. Since the bear market started, a trend towards dApp games has begun.
Many developers have found solace in developing games that can produce some of the highest activity we have seen on blockchains, and likewise, users have found comfort in playing fun dApp games, many of which come with crypto incentives – not a bad way to wait out the crypto winter.
However, looking at DappRadar, if you take the number of transactions or total price volume in the past 24 hours and divide it by the number of users, through simple calculation you will uncover the abnormally high numbers per user for many of these games. Suspicious you should be, as reports by blockchain security company PeckShield in December uncovered this activity comes from a small portion of accounts, pointing to the probability of fake volume.
Fake volume mostly occurs on public blockchains without a gas fee [or with a tiny gas fee], which with false marketing can help create the misunderstanding that this volume is good for the development of the blockchain and the token. This is fake news – fake volume is an overdraft of the ecosystem in which genuine developers and users do not reap the benefits of the blockchain. However, with a gas fee, we can make blockchains which reward both developers and users for the genuine activity they create.
Gas, synonymous with utility tokens, are used in blockchains for paying transaction fees or rewarding miners, just as we see in early blockchain projects such as Bitcoin and Ethereum. As blockchains have evolved, we have seen a more advanced use of gas, such as in Ontology, NEO, Cardano, and so on, where it is used for on-chain transactions, smart contract deployment, and more.
Meanwhile, with blockchains such as EOS and TRON, the same actions require collateralizing tokens to acquire network resources. Below are the advantages and disadvantages of blockchains which use gas. Let us take a more considered decision when choosing which public blockchains to support.
Advantages of gas
- Rewards miners/nodes
Whether it is Bitcoin, Ethereum, Ontology, NEO or other public blockchains, all require compensation for computing and storage.
- Simplified economic model
Blockchains without a gas model require case-by-case, complex fee structures for dApp developers to earn an income. With a gas model, this process is simplified and incentivizes developers to make good dApps which users actually use.
- Prevents malicious acts
If there is a gas fee to pay for transaction fees the likelihood of DDOS attacks is greatly reduced as they become expensive to execute.
- Prevents fake volume
Likewise, if there is a gas fee, the fake volume is costlier. This allows good dApps which create activity naturally be recognized.
- Supports growth
The gas model creates the need for users to purchase and hold tokens long-term [many tokens gradually unbind gas to holders, such as with Ontology].
Disadvantages of gas
- Gas price fee
If gas fee prices are not adjusted in accordance with the market, it will have negative consequences on the use of the blockchain.
Introducing a second token to a blockchain makes things a little more complex, which can make the blockchain less user-friendly if not implemented well.
Bitcoin Educator Andreas Antonopoulos Gives a Digital Deep Dive on Blockchain Transactions
One of the ways by which the crypto industry can make significant process is through the education of those who make use of crypto and those who simply observe the industry.
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He recently uploaded a video in which he touched the process of manual construction of transactions that have multiple inputs in response to a question posed by a user about whether the process will be done by a blockchain or not. Antonopoulos explained that the process is done by a wallet and not a blockchain.“You can conduct the process with a variety of wallets that allow you to construct transactions. With multiple inputs. Electrum wallets and other web-based wallets are good examples of platforms that give you the liberty to control transactions. Just to clarify, the process is done by the wallets and not by the blockchain,” Antonopoulos said.
He also pointed out that the construction wallet is based on an algorithm and if more than one payment is needed due to small amounts the wallet will construct the transactions with payments. This process, he explained, is called coin selection and helps in the movement of various transactions.
Also, he touched on the concept of change on the blockchain and pointed out that bitcoin transaction outputs have two states in which the exist which are spent or unspent and that there is no concept of a half-spent transaction.
While this was very helpful for users, some controversy was caused when Antonopoulospointed out that the scalability problem that bitcoin struggles with will always exist and that solving one issue will inevitably bring up more.
“..and you can’t, in the beginning, solves the problem for the end there is no end and also if you prematurely optimize if you try to solve scale problems for a scale that doesn’t yet exist you shift the problem somewhere else in the case of cryptocurrencies,” he said.
The Need for an Education
While Antonopoulos might have caused some controversy, it cannot be denied that his efforts to educate the public on blockchain and crypto are highly needed, especially seeing as many of the problems faced by users can put down to a lack of education about how blockchain works.
An example of this can be seen in security as a research piece that was published recently pointed out that over 700 crypto wallets were broken into by the researchers merely guessing the passphrases which were usually weak and repetitive phrases.
In such a case, education about how wallets, blockchain, and crypto work could go a long way to prevent such issues, ensuring Industries safer for all.
Blockchain Capital Ltd Co-Founder: Release Of New Crypto Assets By Businesses Isn’t “Unreasonable”
Co-Founder Of Blockchain Capital Says That The Release Of New Cryptocurrencies From Businesses Isn’t “Unreasonable”
There is a strong possibility that multinational firms could end up creating their own cryptocurrencies. Gavin Brown, the co-founder, and director at Blockchain Capital Limited commented that this idea isn’t “unreasonable” right now while speaking at the Credit Suisse Global Supertrends Conference, hosted in Singapore. According to reports from CNBC, the director said that it would be possible to create a CNBC coin as the “democratization of money” happens.
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To further explain this concept, Brown brought up prepaid cards for Starbucks. With “over a billion dollars of assets work on their balance sheet” of people that like their morning coffee enough to buy a prepaid card, it is clear that they trust the brand to be around and that they like spending their money with the company. Considering that there are some companies with better credit than others, like McDonalds over the whole government of Ireland, there is a chance that multinational companies could easily get involved to start using crypto as something between an asset and a loyalty credit.
Brown believes that the next “big one” that could happen is most likely to be Facebook coin, even though the company has yet to actually confirm that they’re following this path. However, reports indicate that the social media platform has been working on crypto asset to tie directly with fiat currency, which will be used through their messaging app. So far, both Bloomberg and the New York Times have run this report, and Facebook still has not expanded on the work.
When asked if it would cause too much confusion to have many companies simultaneously offering their own tokens, Brown commented that the mostly likely outcome would be “groups or alliances” developing. He even called the launch of the JPM Coin by JPMorgan Chase a “really intelligent play.” However, the rise of the coin’s popularity will ultimately dictate how strong the asset becomes.
China’s Foreign Exchange Regulator Piloting Blockchain in Trade Finance
The agency that regulates and manages China’s foreign exchange reserves has developed a blockchain system aimed to address inefficiencies in cross-border trade finance.
As reported by local financial news source CNStock, the State Administration of Foreign Exchange (SAFE) worked with the Hangzhou Blockchain Technology Research Institute to build the open blockchain platform, which uses multi-signature technology to keep transaction content private, revealing details only to the firms involved and regulators such as those relating to customs, taxation, industry and commerce.
Traditionally, China’s import and export financing uses a manual, paper-based operation for processing a hugely complex industry and that brings low efficiency, commonplace errors, high operational risk and, thus, elevated cost of financing. Putting the financial data on a distributed network enables information to be shared transparently and in real-time, according to the report.
The forex watchdog’s blockchain platform takes a focus on export receivables – the funds owed to a company by a foreign buyer after delivery – allowing firms to enter data on financing, audits, loans repayments and so on, and manages the entire process. It further automatically verifies customs documents and calculates a final balance for the customs declaration, a factor that prevents double or excessive financing, according to the report.
With initial development now complete, SAFE will now pilot the blockchain platform in three major trading provinces – Jiangsu, Zhejiang and Fujian – and two cities, Shanghai and Chongqing, CNStock indicates.
The pilot will run for six months and is expected to be taken nationwide going forward, with many banks said to be involved in the scheme.