Bitcoin's Trajectory - Crypto Academy S4W5 - Homework Post for @imagen
How many times has Bitcoin been "halved"? When is the next expected? What is the current amount that Bitcoin miners receive? Mention at least 2 cryptocurrencies that are or have halved.
BITCOIN HALVING
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Bitcoin halving is a terminology used to describe the event that occurs in Bitcoin's blockchain every four years. It is the process by which the block reward allocated to Bitcoin miners for newly mined Bitcoins is halved. Once Bitcoin halving has successfully been done, miners starts to receive half the amount of Bitcoin they used to receive as block reward for their effort.
Bitcoin halving is programmed to occur after every 210,000blocks of Bitcoin have been mined. The 210,000blocks of Bitcoins are mined in a period of four years owing to the halving of the coins that takes place quarterly.
Let's get this clearly, every block of Bitcoin mined involves a miner solving a difficult cryptographic or mathematical puzzle. Doing this is not easy for miners as they put in so much effort to solve the cryptographic equation. Therefore, Bitcoin blockchain rewards it's miners with a certain amount of the Bitcoin that is mined in each block. This is what is called block reward.
The first block reward for Bitcoin miners was 50BTC, this was halved to 25BTC, in 2012. In 2016, another halving was done and the block reward was reduced to 12.5BTC. In 2020, the block reward was further halved to 6.25BTC.
From the information provided above, In a space of 13 years Bitcoin halving have been done three times. This occurred 2012, 2016 and 2020. We are in 2021.
Bitcoin halving is an event done in every four years therefore the next halving of Bitcoin is expected to happen in 2024.
Upon the last Bitcoin halving, Bitcoin miners currently receive 6.25BTC as block reward
Another popular cryptocurrency that undergo halving is the Litecoin. The halving of Litecoin also occur every four years when 840, 000 blocks of the coin had been mined.
Litecoin halving occurred in 2015 where the Litecoin block reward was halved from 50LTC to 25LTC. In 2019, the coin halved for the second time taking the block reward to 12.5LTC.
Aside Litecoin, Ravecoin (RVN) also undergo halving though the first halving is scheduled to take place by Jan 2022. When it is done, the block reward for miners would be cut from 5,000RVN to 2,500RVN.
What are consensus mechanisms? How do Proof-of-Work and Proof-of-Staking differ?
Consensus Mechanism
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A consensus mechanism is a fault-tolerant mechanism used in blockchains to obtain an agreement across dispersed nodes on a single network state. These are protocols that ensure that all nodes are in sync with one another and that all transactions are valid and added to the blockchain.
Consensus mechanism firms the backbone of all digital assets as they are the basic technology that backs every blockchain. They function to make sure that transactions are valid and authentic.
There are different kinds of consensus mechanisms they are;
- Proof of Work (PoW)
- Proof of Stake (PoS)
- Delegated proof-of-stake (DPoS)
- Practical Byzantine fault tolerance (PBFT)
- Proof-of-capacity (PoC)
- proof-of-activity (PoA)
- Proof-of-burn (PoB),
- Proof-of-elapsed time (PoET)
- Proof-of-ownership (PoO).
Amongst the list, PoW was developed by Satoshi Nakamoto for Bitcoin transactions. PoS was developed by Sunny King and Scott Nadal as a result of the flaws of PoW. All others were developed to be used for the transactions in a particular blockchain. Other blockchains built on them.
How Proof of Work and Proof of Stake Differs
Proof of Work and Proof of Stake differ in several ways.
The Proof of work mechanism was developed by Satoshi Nakamoto while the Proof of Stake was developed by Scott Nadal and Sunny King.
The Proof of Work uses at least 10 minutes to verify a transaction where as the Proof of Stake verifies transaction in seconds.
With the Proof of Work, only 5 transactions can be verified at once while the Proof is Stake verify up to 15 transactions at a time.
PoW has a strong security base making transactions secure on their blockchain while transactions are less secure with PoS because of the weak security of the consensus mechanism.
PoW uses a random technique in choosing the next miner giving everyone an opportunity to mine while the PoS uses a predetermined process of staking their asset to be the next miner making it difficult for all of them to be involved.
High electric power is needed to solve a cryptographic equation in PoW as it fully rely on electricity for its operation while less electric Power is needed in PoS as it doesn't full rely on electricity and does not involve solving cryptographic equation.
Bitcoin and Litecoin are the major cryptocurrencies that work with PoW while Ethereum and Peercoin are known with PoS.
Enter the Bitcoin explorer and indicate the hash corresponding to the last transaction. Show Screenshot.
In order to do this, I logged in to the Bitcoin explorer and the transaction Hash for the last transaction I met was '' d933d94a928a4ff306344bf5496d6bd3816184e25e560eca2bbf60d34481dcb5.
The transaction was found in 703671.
The screenshots below shows the necessary details.
What is meant by Altcoin Season? Are we currently in Altcoin Season? When was the last Altcoin Season? Mention and show 2 charts of Altcoins followed by their growth in the most recent Season. Give reasons for your answer.
Altcoins are cryptocurrencies that were developed after Bitcoin was developed in 2008. Some popular Altcoins are Ripple, Etherum, Polkadot, Binance coin, Cardano , etc.
Altcoin season is the season Bitcoin lose some of its dominance is the cryptocurrency market. Bitcoin as the father of cryptocurrency has dominated the market of cryptocurrency for a long time. This dominance has reduced steadily as other coins are produced year after year. Bitcoin make about 43.19% of the total market cap of cryptocurrency. This was recently reduced from a higher percentage as the market capitalization of other coins increased.
To see the dominance of Bitcoin over the other coins you can visit this site
From what is happening in the cryptocurrency world today, I will say that we are in altcoin season. This is because the market capitalization of Bitcoin is reducing while those of other coins are increasing. Bitcoin is currently too high to buy in order to make good money but other less priced coins can make one realize a huge amount of profit while trading. Big time investors also find it better to invest in other crypto projects other than bitcoin because of the huge amount they can realize in a small move.
Altcoin season have not happened too many times but the most memorable one apart from the one we are in was in 2017.
Examples of Altcoins are:
- Binance Coin (BNB)
- Cardano (ADA)
When the fall in the crypto market happened May this year, BNB fell from above $690 to around $213.7. Carano also fell from $2.480 to $1.063.
The present altcoin season has made the two coins have a tremendous increase in price from where they fell and today they are doing well. BNB is trading at $438. 50 and ADA is trading at $2.214 as I write this.
There price increases have resulted from the current boom in crypto market, especially the increase in the price of Bitcoin that influence the growth of other coins and also the increase in the volume of these cryptocurrencies.
Make a purchase from your verified account of the exchange of your choice of at least 15 USD in a currency that is not in the top 25 of Coinmarket (SBD, tron or steem are not allowed). Why did you choose this coin? What is the goal or purpose behind this project? Who are its founders / developers? Indicate the currency's ATH and its current price. Reason for your answers. Show Screenshots.
To attempt this question, I made a purchase of $20 worth of NKN in my verified Binance.
See the details of my purchase:
The full details of the purchase is in the screenshot below
I chose to buy the NKN coin because it has a future. It is usually have high liquidity as a result of its high volume. It is also highly volatile (on the positive). It is a cryptocurrency blockchain built upon a very great project so it would go far in the cryptocurrency market.
I had actually been trading on this coin before now but I stopped trading on it about two months back.
NKN (NEW KIND OF NETWORK)
New Kind of Network (NKN), founded by Bruce Liis a public blockchain with the goal of using economic incentives to encourage Internet users to share network connections and make use of idle bandwidth. NKN aspires to create a network that facilitates the development of decentralized applications by enhancing peer-to-peer transmission of data and communication.
NKN was issued on the 5th of May, 2018 with a price of $0.14. The coin is ranked 190 in the coinmarketcap with market cap of $232.534M, a circulating and maximum supply of 700M.
As at the time of writing this the coin was trading at 0.3327. It has a all time high (ATH) of $1.44
Conclusions
The main essence of halving of cryptocurrencies is to reduce their supply to ensure scarcity as this is the only way some quantity of the coins get into the market. Halving is also done to make coins valuable in the market.
Halving started with Bitcoin but some other coins like Litecoin, Ravecoin, Etherum, and Binance coin have all started undergoing halving to make their market valuable among investors.
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