Author: changehero
February 27, 2020

The recent Coronavirus outbreak in China has brought businesses to a standstill. It cost hundreds of lives and sent shockwaves to the entire world. On the other hand, the cryptocurrency market witnessed huge gains in early February and took a nose-dive in the last week. These series of events does bug everybody if the epidemic […]

The Convoluted Story of Crypto and Coronavirus

The recent Coronavirus outbreak in China has brought businesses to a standstill. It cost hundreds of lives and sent shockwaves to the entire world. On the other hand, the cryptocurrency market witnessed huge gains in early February and took a nose-dive in the last week. These series of events does bug everybody if the epidemic is impacting crypto. In this short post, ChangeHero will reveal what is happening to crypto amid this epidemic.

The Outbreak

According to the World Health Organization Coronavirus disease (COVID-19), was first reported in Wuhan, China on 31 December 2019. A Bloomberg report suggests that there are 82,302 confirmed cases and 2,802 deaths worldwide, but China has been the most affected. In measures to contain the spread, the Chinese government has locked down cities and restricted the free movement of people which made the factories and businesses to shut the doors. The steep in the factory output has taken a toll on the Chinese economy and also threatened the global economy. Industries such as manufacturing, oil and gas, tourism and supply chain suffered the most. In the same vein, crypto is also not immune to this virus.

Miners hammered

China has a history of crackdowns on cryptocurrencies and exchanges. On the contrary, they are spearheading the blockchain adoption race and working towards digital currency, quickly go through this article for more info about China and cryptocurrencies. Moreover, the top five mining companies — AntPool, BTC.com, BTC.top, F2 Pool, and ViaBTC are based in China. These firms control almost 60% of the hash power in the Bitcoin network. Mining farms are the first to be affected by the outbreak, and a few representatives of these firms expressed their concerns on Social Media. Many stated that the government has cut off the electricity, supplies and also drove away workers from mining facilities. It reflected in the difficulty of bitcoin mining, a measure which indicates the effort required to solve the math in finding the block. This measure is adjusted once every two weeks and in the last difficulty correction, the measure rose only by 0.52%, which is significantly lesser than the previous corrections of 4.67 and 7.08.

Mining may soon turn out to be a not so profitable activity, credits to the Bitcoin Halving. Bitcoin will undergo its third halving event somewhere around May, and the block reward will be slashed to 6.25 BTC. It leads to tougher and unfavourable economic conditions. To boost their chances of surviving, miners are gearing up with advanced machines. Yet again, China is one of the largest suppliers of the mining equipment. Coronavirus outbreak has also locked up the doors of the factories, and the companies have postponed the deliveries. Although there is a significant impact on the crypto mining industry in China, Bitcoin hash rate has seen a negligible change.

Community reflex

To restrain the spread of the virus, the Chinese government has halted the distribution of Yuan worth almost a Billion Dollars. Meanwhile, the S&P 500 Index and other traditional markets have also recorded their worst performances due to the epidemic. Crypto community was quick to react and hinted that digital currency can fix this. Big names in the crypto sphere like Binance and Tron have also pledged support to the coronavirus victims. Moreover, the epidemic has spread a sense of terror amongst the community and led to the cancellation and postponing of the conferences and public events.

Amidst the crisis, CoronaCoin, an ERC-20 token was launched with the ticker NCOV. Though the website states that the token is meant for charity, its approach has shocked the crypto community. The cryptocurrency has a total supply equal to the world’s population, and the tokens will be burnt every 48 hours, proportionate to the number of casualties. The concept of investors benefitting with the spread of the virus poses serious moral questions on this project.

Impact on the crypto

Bitcoin kickstarted the new decade with a massive bull run and crossed the ten thousand dollar mark in early February. Many have contributed this to the upcoming halving and some connected it to the coronavirus outbreak. Things didn’t fare well long for crypto, and the whole market crashed and lost a whopping 50 Billion Dollars in the last week of February. The epidemic has indeed affected the people and processes behind the crypto industry, but it is still unclear if there is a correlation between the coronavirus and the crypto market prices. Nevertheless, the notion of Bitcoin as a safe haven during the crisis still exists but hasn’t been proven yet, at least for now. We hope the crisis will end soon, and peace be restored. Until then, all our strength to the effected, families and businesses around.

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Author: changehero
February 25, 2020

Cryptocurrencies came into existence to eliminate the need for middlemen while transacting value from one to another. Satoshi Nakamoto was able to achieve this with the help of Blockchain technology. Though it gave the world Bitcoin, it was confined just to payments and hasn’t evolved to a greater extent. Ethereum exploited the blockchain technology and introduced the revolutionary smart […]

Cardano: Blockchain 3.0

Cryptocurrencies came into existence to eliminate the need for middlemen while transacting value from one to another. Satoshi Nakamoto was able to achieve this with the help of Blockchain technology. Though it gave the world Bitcoin, it was confined just to payments and hasn’t evolved to a greater extent. Ethereum exploited the blockchain technology and introduced the revolutionary smart contracts. Though this marked the beginning of the second generation of the blockchain, some challenges were left unsettled. Cardano took a distinctive approach in fixing the persisting issues by building on the already existing things that make sense and adding sustainable features with the help of new technology and innovation. In this post, ChangeHero will introduce give you a quick summary of the Cardano.

Genesis

Cardano is a decentralized blockchain aiming to build a platform for the development of DApps and verifiable smart contracts. Dubbed as the third generation of the blockchain, Cardano aims to fix the pestering problems like scalability, interoperability and sustainability. Charles Hoskinson, Ethereum’s co-founder launched Cardano in the year 2015. Additionally, three organizations support and contribute to the development of the ecosystem. Cardano Foundation, a non-profit organization based in Switzerland, oversees and supervises the development of the ecosystem. Input Output HK (IOHK) is an independent firm contracted to carry out the designing and building of the network. Finally, Emurgo is employed to boost adoption through its commercial ventures.

Cardano logo

It is the first blockchain which is based on scientific philosophy and developed by academics and engineers around the world. Unlike the traditional cryptocurrency projects, Cardano did not start with a whitepaper, instead, it began with a set of principles. Cardano is a multi-layered protocol — Cardano Settlement Layer (CSL) used to settle transactions of ADA and functions similar to other networks for recording the transactions. The second one is called Cardano Control Layer (CCL) and used for smart contracts. This strategy of using different layers enables storing of metadata separately and strengthens the security of the network. The platform uses Haskell coding language and the smart contracts to be coded in Plutus. In addition, Marlowe, a new language, designed specifically for the freshmen in development to build financial instruments like smart contracts. These are functional programming languages which strengthen the security and accommodates for quick changes in case of future updates.

Scaling with Ouroboros

Scalability is a baffling issue that all the cryptocurrencies face. Cardano network itself was built in a layered structure to cope with the scalability issues. As explained earlier, transactions and smart contracts take place on different layers and the information will not be shared from one to another. In addition, Cardano tackles this with a modified version of Proof-of-Stake consensus called Ouroboros, a Provably Secure Proof of Stake. Unlike Bitcoin, all the nodes in Cardano are not required to have a full copy of the blockchain. Instead, a slot leader brings all these nodes together in the process of reaching a consensus. Though full nodes like Daedalus wallets can reach consensus, only slot leaders are capable of creating and adding a block to the chain. In Ouroboros, time is divided into Epochs which further sectioned into slots. These slots are short periods of time which usually last for 20 seconds. Each slot will have its own slot leader who works similar to miners and responsible for confirming the transaction and adding blocks to the chain. They can create not more than one block per slot and the transaction fees along with the block rewards of the epoch will be pooled together and distributed to these leaders and further to the stakeholders.

Theoretically, even a user holding 1 ADA can become a slot leader but the probability is quite low. At the moment, there is no accurate figure of ADA to be staked to get a chance to add the block. We’ve also been hearing that it would be somewhere between a million and two million ADA to become a slot leader. But it’s clear that the higher the stake, the higher the chances of becoming a slot leader. These qualified candidates are considered electors for the next epochs. Elections will be held by a random number generation method and the owner of the coin becomes a slot leader for the next epoch. Cardano has also adopted the RINA (Recursive Inter-Network Architecture) to improve the scaling. On top of this, the team is inclined towards Partitioning in which users can have only a chunk of blockchain and aiming to achieve this through side chains.

Interoperability with Side Chains

Even in 2020, it is difficult for different blockchains to understand each other and even tougher to communicate with traditional financial services. Though cryptocurrency exchanges bridge the gap, they are vulnerable to attacks and can be influenced by regulatory policies. Cardano envisions to build the Internet of blockchain and enable users to perform cross-chain transactions with the help of side chains. Cardano supports the Kiayias, Miller and Zindros (KMZ) proofs of proofs of work to allow for the movement of funds from the CSL to CCL and other blockchains as well. Moreover, Cardano is also working on a mechanism to incorporate the Metadata into the transaction in an encrypted manner.

Sustainability

There are a ton of projects in the blockchain space. To stay alive in this red ocean, continuous innovation and a robust governance system are a must. Sustainability lies right in the core of the Cardano’s founding principles. The ecosystem has a grants fund called Treasury. Whenever a block is added to the chain, a part of the reward will be added to the Treasury. Someone who intends to develop the platform can submit a ballot for a grant which will be decided by the stakeholders through voting. As the network grows and the transactions increase, and the funds in the treasury keeps on filling up. This results in the availability of funds all the time for the development of the network.

In addition, the network will use Liquid Democracy for governance providing more room for the stakeholders. Furthermore, the team aims to build a constitution for the protocol to avoid any unintentional hard forks. Cardano follows a timeline in the form of eras to deploy vital upgrades to the platform. On February 20, the team has successfully completed the OBFT hard fork, a pre-planned one. It is a development over the already existing consensus mechanism, Ouroboros Classic. With this planned upgrade, Cardano has begun the transition to the Shelley era which focuses on the community and decentralization.

ADA

ADA logo

ADA is the native cryptocurrency of the Cardano network. The sole purpose of the Cardano is to enable a true peer-to-peer payment with the help of the ADA digital currency. Simply put, ADA can be used to transact value across individuals without any middlemen. It does allow the developers to create smart contracts and also provides voting rights to the holders for governance. As of writing, ADA was being traded at a price of $0.0581 and has a total market cap of 1.5 Billion Dollars according to CoinMarketCap. Furthermore, the team specifically designed the Daedalus wallet for holding and transacting ADA.

Blockchain 3.0

Despite the criticism for its consensus mechanism and delays in the network upgrades, Cardano is delivering on what it promised. With all being said, Cardano is a unique project which is delivering the best by fusing in the essentials from the existing chains and adding sustainable features through innovation in a scientific approach. For the Blockchain 3.0, the best bet would be to wait for the future upgrades and witness how things unfold.

Finally, a big shoutout to the Cardano community on Reddit for their comments and feedback on the article.

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Author: changehero
February 20, 2020

Tezos is one of the very few cryptocurrencies that made an earth-shattering entry into the crypto sphere with its hell of a hit ICO. It has always been doing rounds in the social media for its unique offerings. Over the past few days, Tezos has once again caused friction in the crypto community with its […]

Baking Bad with Tezos by ChangeHero

Tezos is one of the very few cryptocurrencies that made an earth-shattering entry into the crypto sphere with its hell of a hit ICO. It has always been doing rounds in the social media for its unique offerings. Over the past few days, Tezos has once again caused friction in the crypto community with its massive bull run and looks like it would join the Top-10 most valuable cryptocurrencies club in no time.

In this post, ChangeHero brings you everything you need to know about Tezos in one place.

Home Run on the First Pitch

Tezos is a decentralized blockchain platform with a major emphasis on smart contracts and dApps. The husband and wife duo Arthur Breitman, Kathleen Breitman joined hands almost before a decade with aims to develop a true digital commonwealth blockchain. In 2014, the official whitepaper of Tezos was launched stressing the flaws of Bitcoin and potential fixes. The research-driven blockchain network has gained traction among the investors and raised a whopping $232 Million in its first ICO in the year 2017.

Quirks

The team took an unconventional method of developing the network, the entire blockchain was coded from scratch and not based on Bitcoin or any other protocol. Though Tezos appears to echo Ethereum in terms of the core features like smart contracts and dApps, it has a few quirks under its belt that sets it apart. To name a few, Self-amendment, On-chain governance, Baking (yeah, it’s not a typo this time 😉) and Michelson are a few peculiarities that are driving Tezos ahead of others.

F-word? Not again!

We’ve seen many cases where some of the strongest communities in crypto parting ways due to the difference in the perspective of a network. Yeah, it’s the F-word in crypto, FORK. And we’ve seen quite a few controversial cases like Bitcoin Cash and Ethereum Classic. Tezos is tackling this issue by self-amending and on-chain governance. Upgrades to the network can be implemented without having to split the blockchain through the self-amending. On-chain governance functions as a means to drive the upgrades by voting on the proposed amendments. Developers can submit upgrade proposals and stake-holders vote on which proposal should be implemented or not. This mode of governance system vests the power of voting and decision making in the hands of users and ensures decentralization. The combination of self-amendment and on-chain governance keeps the network cohesive.

Mr.Michelson Verifies Your Contracts

Tezos uses a unique programming language called Michelson to write smart contracts on the platform. It was specifically designed to facilitate the formal verifications of smart contracts. It uses mathematical algorithms to check the correctness of the developers’ code and the logic behind every smart contract. Incorporating this technique into the protocol beefs up the security and minimizes the bugs.

Baking Bad

Breaking Bad meme
Source: ChangeHero

Tez is the native cryptocurrency of the Tezos blockchain and trades with the ticker XTZ. It can be used to conduct transactions and interact with the network. Tezos uses a Liquid Proof-of-Stake mechanism which is based on the PoS. The process of staking in Tezos network is called Baking and token-holders are supposedly called Bakers. One of the most intriguing aspects of Baking is the optional delegation. This allows every stake-holder to participate in the consensus without deligating their tokens to third parties or validators. Bakers get a chance to bake the block randomly and they get notarized by 32 other random bakers. Bakers will be compensated with transaction fees and rewards for contributing to the consensus.

Mastering Balance

Despite the internal disputes and lawsuits for the delays in the initial launch of the platform, Tezos has performed consistently well. With new integrations such as zk-SNARKS protocol to facilitate private transactions and Tendermint, the future looks promising to Tezos. As of writing, it is being traded at $2.18 with a total market cap of over $1.5 Billion. All in all, Tezos is one of a kind project that ensures decentralization without sacrificing on the scalability and features.

ChangeHero believes in the potential of Tezos and pledges its support. On ChangeHero, you can get $XTZ by swapping any crypto or you can simply buy with your credit or debit card.

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Author: changehero
February 19, 2020

Cryptocurrencies have been around for more than a decade and we are yet to see the real use case of them. We often see people trading crypto to cash in the profits and hodling in hopes for a rise in the value. Most of the hodlers lean towards selling off their assets when in need […]

Nexo: Collateralized by Crypto

Cryptocurrencies have been around for more than a decade and we are yet to see the real use case of them. We often see people trading crypto to cash in the profits and hodling in hopes for a rise in the value. Most of the hodlers lean towards selling off their assets when in need of extra cash. However, it does have drawbacks like expensive exchange fees and completely losing the ownership of cryptocurrencies whose price may rise in the future. Nexo resolves this by providing fiat loans to the user with cryptocurrency as collateral. In this short post, ChangeHero will give you a quick outline of Nexo.

A pioneer in Fintech

Nexo is powered by Credissmo — a FinTech Group which has been providing instant loans for over 10 years. The trio of Antoni Trenchev, Georgi Shulev and Kosta Kantchev launched Nexo in the year 2017. The team also makes a bold claim that Nexo is the World’s First Instant Crypto-backed Loan provider. The crypto-banking firm provides loans in 45+ fiat currencies and accepts a dozen of cryptocurrencies as a collateral. Moreover, there is also an option to deposit your assets and earn interest on them, more about all of these features will be detailed below. Before jumping into it, it would be ideal to have a look at the problems the current loaning system has and how Nexo is tackling it.

No more hustles and bustles!

We all must’ve had a headache with the amount of paperwork required to be done to acquire a loan from a traditional bank. Nexo aims to put an end to this and provide instant loans to the users in a breeze. Brick and mortar banks carry out credit checks for every individual during the processing of a loan. Whereas Nexo doesn’t perform any checks as the collateral is crypto and the value attached to those assets. Ownership is another important factor which plays a crucial role in cryptocurrencies. In Nexo, only clients have ownership of the assets and they can claim and withdraw from the contract anytime. In contrast to the high exchange fees and slow withdrawal procedures, Nexo offers instant delivery of the cash to the clients without any withdrawal fees or taxes. On top of all this, loan data and the contracts are highly transparent and immutable, thanks to the blockchain technology.

Sats to Bills

Nexo lending mechanism
Source: Nexo

The platform is widely popular for crypto-backed loans and they are indeed good at what they are doing. One can acquire a loan on the platform in a few clicks on this platform. An illustration in their Whitepaper describes the complete process better than anyone. It consists of four simple steps and begins with the user depositing of the crypto assets into the Nexo account. Next, the client receives an instant loan in the preferred fiat currency. The user can get hold of the cash either through a bank account or with the Nexo card. Users can repay the loan through bank transfer or also with crypto. Finally, when the whole amount is cleared, users can withdraw their crypto from the Nexo Account.

It does sound simple, but there is a lot of stuff going behind the curtains, especially integrating the business operations with the loan contracts on the blockchain poses a challenge. As we’ve discussed in the previous article, Oracles come to rescue in this case and Nexo Oracle bridges the off-chain activities with the blockchain. Whenever a user requests for the loan, Nexo Oracle automatically develops the loan contracts and distributes the cash. It also aggregates the value of the assets in real-time with the data from multiple exchanges and recalculates the loan limits. Furthermore, Nexo Oracle keeps track of the cash inflow and outflows, repayments and updates them to the ledger and also sends push notifications to the clients.

Nexo payments card
Source: Nexo

The project also offers Nexo Mastercard Card which can be used to spend the loan amount at merchants without withdrawing from the wallet. Impressively, there will zero fees on all the transactions which include surcharges, maintenance, foreign exchange and also offers cashback. Also, users can earn interest by depositing either fiat or stable coins into the platform. In terms of security, the firm claims to provide military-grade security for the platform and partners with BitGo for the custodian services along with a $100M insurance policy for the cryptocurrency it holds.

NEXO Tokens

NEXO is the native ERC-20 token of the platform. These tokens can be used as collateral and the users avail discounts when NEXO is used to repay the loan. Similar to the other cryptocurrencies, NEXO can be stored and traded on various exchanges. As of writing, NEXO is being traded at a price of $0.195 with a market cap of over 100 Million Dollars according to CoinMarketCap.

Banking on the Blockchain

Nexo made it possible for the HODLERS to get some extra cash without losing the ownership of their crypto assets. In a nutshell, it is a unique project which delivers the best of both worlds. The project not only made it easier and faster to get a loan but also brought banking to the blockchain. ChangeHero believes that Nexo has great potential and can change the course of banking in the near future.

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Author: changehero
February 17, 2020

Smart contracts have unlocked the black box of blockchain and provided the much-needed breakthrough in fintech. Through the code was cracked, it was confined only to the chain. These programs seriously needed a means of communication with the external world to function at its full potential. ChainLink is one of a kind project which filled […]

Plumbing the Blockchain with ChainLink by ChangeHero

Smart contracts have unlocked the black box of blockchain and provided the much-needed breakthrough in fintech. Through the code was cracked, it was confined only to the chain. These programs seriously needed a means of communication with the external world to function at its full potential. ChainLink is one of a kind project which filled this void and enabled various projects to communicate with the off-chain applications.

Recently, ChainLink has been doing rounds in the crypto community for its impressive performance in the market. ChangeHero will give you an overview of ChainLink and what sets them apart from the rest in this short post.

Oracles — Miracles

Simply put, smart contracts are pieces of code which incorporates the user agreements and processes the transactions automatically when the preset conditions are met. They are indeed a huge leap over the traditional contracts and financial systems, but they cannot pull in the data from off-chain environment or APIs. It’s because blockchains have a connectivity problem and cannot exchange information with the external world limiting its function.

Chainlink oracle connectivity
Source: ChainLink

This is where Chainlink comes in. Oracles function as a bridge between the blockchain and the real-world data. These enable a to and fro transmission of data extending the potential use cases of the blockchain technology. Chainlink is a decentralized oracle network that feeds data to the blockchains. The project was founded by Sergey Nazarov and Steve Ellis in 2014, interestingly way before Ethereum’s existence. According to their whitepaper, the project aims to provide a feasible solution to the connectivity issues of smart contracts. It is the first decentralized Oracle service that is on par with IBM’s middleware.

On-Chain Architecture

Chainlink uses a collection of independent nodes to collect the data from oracles. These nodes reply to the data requests or queries from the users through Requesting Contracts. On-Chain Architecture has three major types of contracts: Reputation contract, Order-matching contract and Aggregating contract. The first one checks the reputation of the oracle service provider through set performance metrics. Whereas the Order-matching contract collects the bids from the oracle providers based on the Service Level Agreement (SLA) parameters. It also selects the bid and confirms the oracle SLA through the Reputation contract. The major function of the Aggregating contract is to collect the responses from the Oracles provider and calculate the final collective result of the Chainlink query. In addition, it feeds in the metrics to the Reputation contracts. Finally, on-chain architecture also has three main steps, Oracle Selection, Data Reporting, and Result Aggregation.

Off-Chain Architecture

Initially, ChainLink began offering oracle services to the Ethereum network. Off-chain, the project has a network of oracle nodes that process the data requests on the Ethereum Network. This network of nodes is powered by the ChainLink Core which handles the blockchain interactions, scheduling and communications with the external sources. These nodes can feed data from any kind of industry in real-time. This indeed is revolutionary and can unleash the full potential of smart contracts.

Security system

ChainLink takes a decentralized approach to deliver the oracle services. In addition, it provides a variety of features that adds an extra layer of security to the users.

Validation system: All the on-chain oracles are monitored and are provided with performance metrics which are based on the availability and Correctness of the Oracles. These facilitate the users in their choice of oracles.

Reputation system: It resembles the review system present in everyday businesses. This records and publishes the user ratings for the oracles which are based on their performance.

Certification services: To add more legitimacy to the oracle providers, the team issues certifications to the ones which have a reputation of providing high-quality services.

LINK

LINK is the native token of the ChainLink platform. The ERC-20 token can be used to pay the node operators that pull-in the data from off-chain data feeds. The prices for retrieving data will be set individually by the node operators considering the demand for the off-chain resources and supply of similar resources. Akin to the other cryptocurrencies, LINK token can also be stored and traded on all the major exchanges. LINK started 2020 with a massive bull run growing over two folds and reached an all-time high of $4.83 on February 16, 2020. As of writing, LINK is being traded at a price of $4.19 with a market cap exceeding 1.4 Billion Dollars according to CoinMarketCap.

Connecting the Unconnected

ChainLink is one of a kind project which expanded the possibilities of smart contracts. Its strong ties with SWIFT has also contributed to its success. Though the project is currently compatible only with Ethereum, Bitcoin, and Hyperledger, it is expected to extend its support to all the smart contract platforms in the future. With the help of decentralized oracle services like ChainLink, smart contracts will be able to connect seamlessly with the external world and can transform the way smart contracts provide services.

On ChangeHero you can exchange LINK in a matter of minutes at the best rates on the market. Give it a try here.

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Author: changehero
February 11, 2020

As the name suggests, stablecoins aim to minimize volatility. They attempt to fuel the mass adoption but their centralized nature is often criticized.

Stable Coins: The Best of Both Worlds?

In the past, we have witnessed Bitcoin gaining hundreds of dollars in a matter of minutes and also nose-diving at a similar pace. Not only Bitcoin, but there are many other cryptocurrencies whose prices peak and fall. Volatility is one of the biggest hurdles for the masses to integrate crypto into their daily life and it is hampering the dream of mass adoption. A few are aiming to address this with the introduction of stablecoins and they have had success to a certain extent.

In this post, ChangeHero will introduce you to the concept of stablecoins, their peculiarities and impact on the mass adoption.

Stablecoins

On any given day, crypto markets would experience an up to 10–20% increase or decrease and there are multiple factors contributing to this change. It is very inconvenient for the public to use volatile cryptocurrencies for everyday transactions as the price fluctuates every second.

Stablecoins are considerably new and resemble fiat currency that people use for spending every day. These digital currencies aim to minimize volatility and offer a fixed value irrespective of the factors affecting the crypto markets. In this regard, they are more like actual currency than regular cryptocurrencies.

As a means to stabilize the value, stablecoins are backed by a reserve asset. Also, stablecoins function as a safe haven for crypto investors to store their assets and not worry about the price swings. The underlying assets can be fiat currencies, commodities like precious metals or even other cryptocurrencies. Most widely used among those are stablecoins pegged to the U.S. Dollar.

Fiat-collateralized

Tether logo

Tether was the first stablecoin available to the users in 2015 which revolutionized crypto trading. It was built on the Omnichain protocol and pegged to the U.S. Dollar at a 1:1 ratio: 1 USDT token will always be equal to $1, theoretically.

In terms of the use case, it bridges the gap between othercryptocurrencies and fiat currenices along with providing stability, transparency and security. Most often, we see traders selling off their assets for USDT on crypto exchanges before withdrawing to protect their profits.

With a market cap of over $66 billion dollars, it is the third most valuable cryptocurrency by market capitalization at the moment. It is completely dominant in the stablecoins’ market and operates on various chains such as Ethereum, Tron, EOSIO and Liquid. Tether is well established in the market and integrated into all the top exchanges. Despite the wide usage, its centralized nature and the lack of transparency regarding the dollar-denominated currency reserve are often criticized.

TrueUSD is another popular fiat-collateralized stablecoin. It is the first ERC-20 token fully backed by U.S. Dollar which raised an impressive $20 million in 2018. The token stands out from the rest in terms of transparency and discloses the details of escrow accounts daily. Other popular stablecoins follow the same design and include Binance USD, Paxos Standard and USD Coin.

Crypto-collateralized

DAI logo

MakerDAO is another name often heard in the stablecoin market. The project is well-known for its off-beat approach to stabilizing the currency.

Unlike Tether, DAI is crypto collateralized and backed by ETH. It is one of the first stablecoins to be completely decentralized. Each DAI token will be equal to $1 and the platform uses CDP (Collateralized Debt Position) smart contracts to lend DAI to the users.

In late 2019, MakerDAO introduced multi-collateral DAI adding support to BAT. Other tokens have been added to the collateral basket as well. The single collateral coin was renamed to SAI while the new multi-collateral asset took the name DAI. Though the project is applauded for its autonomous and decentralized nature, its stability fees structure has always been a controversy.

Algorithmic

Thise kind of stablecoins attempts to maintain stability in the value of the cryptocurrency through algorithms. Basecoin is one such stablecoin pegged to the USD which was announced back in 2017. The stability of the price was planned to be maintained through a consensus mechanism in which the supply of the tokens is adjusted according to the exchange rate between the coin and its peg.

The approach is similar to the Central Banks and was criticized by many in the crypto community. Though the project gained a good amount of initial funding, later it went into exile and is nowhere to be seen in 2020.

Two years later, another algorithmic stablecoin became infamous for its rapid rise and spectacular fall. Yes, we are talking about Terra algorithmic stablecoins, and UST in particular. It was a rather successful arbitrage stablecoin but its design turned out to be vulnerable to a death spiral. We have covered it extensively in a series of articles on Medium, and highly encourage you to read them if you want to learn more info.

Best of both worlds? Not yet!

Stability, Scalability, Privacy and Decentralization are the ideal characteristics of a cryptocurrency. Stablecoins solve only the stability problem, but fall short in the rest, especially in the decentralization.

If we get into the thick of it, crypto investors use all these stablecoins as a stop-loss tool. Traders simply exchange their crypto to stablecoins in order to avoid the loss of profits due to volatility. In a nutshell, stablecoins are far from delivering the best of both worlds, at least for now.

Mass adoption would be possible only when an average person is able to use a cryptocurrency like digital money, but stablecoin usage is not seen often in such scenarios. This is mostly due to the lack of awareness of the existence and the benefits of stablecoins in public.

We have been hearing news about JP Morgan and IBM releasing their own stable cryptocurrencies. Moreover, the topic of stablecoins cannot be concluded without mentioning Facebook Libra’s hard times. Though these projects contradict the true nature of decentralization, they would fuel the awareness of stablecoins and ultimately lead to mass adoption.

On ChangeHero you can exchange USDT, USD Coin and True USD with all the popular cryptocurrencies at the best rates. You can instantly swap your crypto assets to stablecoins without any registration or logins. Do give it a shot!

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Author: changehero
February 5, 2020

The core idea of the Bitcoin was to enable peer-to-peer transactions but went off track and was not able to keep up with the promises. There are a ton of barriers not-only for Bitcoin but also for all other cryptocurrencies hindering the mass adoption. Scalability and Block size are a few factors which have been […]

Quest for the Mass Adoption: Scaling the Chain and Building Bigger Blocks by ChangeHero

The core idea of the Bitcoin was to enable peer-to-peer transactions but went off track and was not able to keep up with the promises. There are a ton of barriers not-only for Bitcoin but also for all other cryptocurrencies hindering the mass adoption. Scalability and Block size are a few factors which have been debated over the years by the crypto enthusiasts and also resulted in the branching of many chains to provide a true peer-to-peer payment solution to the users.

In this short post, ChangeHero will have a look into the scalability and how it is withholding the blockchain’s potential.

A blockchain is akin to a ledger book but on the internet instead of the office desk and available to everybody. This digital ledger is made up of blocks that are connected to each other using the cryptographic hash. These blocks have the capability of holding batches of transactions and upon confirmation will be added permanently to the network. These blocks consist of transaction information such as date, time, amount of cryptocurrency in the transaction and the hash of the previous block and the current block. All this information occupies space on the block and every block has a preset block size limit.

In the early days, Bitcoin’s block size was limited to 36 MB. Later in 2010, it was downsized to 1MB to prevent attacks on the network and enforced a rule that blocks exceeding the limit will be rejected. Usually, adding a new block to the Bitcoin network takes around 10 minutes. This, in turn, resulted in the limiting of the number of transactions processed per second ultimately affecting the scalability of the network. At this rate, Bitcoin can process a maximum of 7 transactions per second.

Bitcoin grew in popularity over the years and the number of transactions has also increased over time. More transactions and a limited block size slowed down the entire network. It is one of the reasons why we see people waiting for hours and even days for their transactions to be confirmed. Moreover, transacting value over the Bitcoin chain became a virtual race in which users had to shell out more satoshis as fees to get their transactions confirmed quicker than the rest.

Delay in the transactions and fees pose a major barrier for fulfilling the mass adoption dream for all the cryptocurrencies. People in crypto have addressed this issue in multiple ways.

Bitcoin tried to tackle this with the help of SegWit at the beginning and later Bitcoin Core developers came up with an off-chain solution called Lightning Network to make transactions process faster.

Ethereum has a throughput of around 20TPS currently and is trying to lift it up by implementing the PoS consensus mechanism to eliminate the AISC advantage by considering only the amount of stake to make the entire block creation process faster. Ripple claims to handle over 1500 transactions per second through its patented consensus algorithm. EOS uses a delegated proof-of-stake and once claimed that the protocol was able to process over 2000 transactions per second. There are other projects like NEO and QTUM whose TPS claims appear to be promising, but we haven’t seen them yet put to use.

On the contrary to all this, BCH came into existence as a result of the Bitcoin hard fork due to the difference of opinion of fixing scalability. BCH approached this by lifting the block size limit to 8MB and was able to process transactions faster than Bitcoin. This didn’t end quite well within the community and BCH underwent a hard fork and gave birth to BSV in 2018. As the name implies, BSV aims to bring back the satoshi vision and enable a true peer-to-peer payment solution. BSV approached the scalability issue by lifting the block size limit to 2GB and claims to handle over 1000 transactions per second. Taking it to another level through the Genesis upgrade, the block size limit is completely removed and the team showed off some impressive numbers. BSV is also working on a Teranode which would be able to process 4 million transactions per second and we just have to wait and see how things will unfold.

For the cryptocurrency to be penetrated into the masses, projects must show that crypto can be put to use in everyday life. For the public to make this dramatic shift from the traditional means of payment to the crypto is only possible when people have gotten to see the real value behind using the cryptocurrencies — faster transactions and lower fees. Though lower fees will be a benefit for the users, it might turn out to be fatal for the miners and validators. Thus all the cryptocurrency projects must come up with a mechanism to balance the needs of both the end-users and the contributors.

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