Bitcoin's Trajectory - Crypto Academy S4W5 - Homework Post for @imagen

aneukpineung78 (67)in SteemitCryptoAcademy • 3 years ago (edited)

This is my homework post for Steemit Crypto Academy Season 4 Week 5 for Professor @imagen’s lesson Bitcoin's Trajectory.

Note : I performed this task on Windows 10 PC, Google Chrome.

Task 1 – The Halving

1.1. How many times has Bitcoin been "halved"?

Bitcoin is scheduled to be halved every 210,000 blocks. At the moment of writing, a Bitcoin Explorer showed that the latest block was block #704106. That means that so far, Bitcoin has experienced 3 times of halving. A source on the internet noted the three previous halvings of Bitcoin as follow:

The first halving occurred on November 28, 2012. The miner's reward which was 50 BTC dropped to 25 BTC.
The second halving which happened on July 9, 2016, cut the block reward to 12.5 BTC.
The third halving, happened on May 11, 2020, dropped the block rewards to 6.25 BTC. (The next halving will likely drop the miner’s reward to 3.125 BTC.)

^{The latest block at the time of writing was block #704,106}

1.2. When is the next Bitcoin halving expected?

The next halving is to happen at block #840,000. That means 135,894 blocks left, or according to CoinMarketCap Bitcoin Halving Countdown page, was 979 days 14 hours 11 minutes, at the time of writing, as shown in the picture below.

^{CoinMarketCap Bitcoin Halving Countdown page.}

According to Day Calculator website, that means June 14 2024. It will be Friday. Add 14 hours to it, that will be around 2 PM on Saturday June 15, 2024, West Indonesia time (UTC + 7) or about 7 AM on Saturday, June 15 2014 UTC.

^{Online Days Calculator.}

But, it is NOT AN EXACT COUNTING DOWN. It is made based on the blocktime at a certain point in time. So, when the blocktime slows down later, the countdown number will be greater than what is currently shown. Various sources on the internet say that the next halving will occur sometimes in Spring of 2024.

Meanwhile, https://halvingdates.com/ already has a list of the next halving dates for various types of cryptocurrencies, as shown in the picture below. It says that the next Bitcoin halving is to happen on Thursday, 9 May 2024.

^{The next crypto halving schedule shown on https://halvingdates.com/. Also NOT an exact countdown.}

1.3. What is the current amount that Bitcoin miners receive?

The current block reward is 6.25 BTC based on the third halving on 2020.

1.4. The Two Examples of The Cryptocurrencies That Have Experienced Halving

1.4.1. ZCash

^{ZCash logo as seen on https://z.cash/press/.}

To date, ZCash has experienced halving once. That happened on 18 November 2020 UTC. The halving occurred on the block height 1,046,400. The halving dropped miners’ reward in half from 6.25 ZEC to 3.125 ZEC. ^[Source]

ZCash (ZEC) was launched in October 2016. Initially, ZCash was named Zerocoin. This coin was created by a developer named Zooko Wilcox. The most important feature of ZCash is confidentiality, meaning that ZCash allows users to send and receive tokens anonymously. Yes! It is a privacy coin!

Wilcox took the original Bitcoin code and made some adjustments to suit his wishes.

As with Bitcoin, it is planned that there will be only 21 Million ZCash, and that number is expected to be reached by 2032.

1.4.2. Bitcoin Vault (BTCV)

^{BTCV logo as seen at https://bitcoinvault.global/.}

The Bitcoin Vault or BTVC halving protocol stipulates that the halving will take place every six months. In the first period, miners' reward amounted to 175 BTCV per 10 minutes. The last halving is expected to occur on November 30, 2023.

BTCV was launched on December 12, 2019, with an initial price of USD 1. BTCV was created by Eyal Avramovich, called "Bitcoin version 2" because: 1) it uses the same mathematical algorithm as BTC namely SHA256, 2) uses PoW to reach consensus, 3) will only create tokens as much as BTC will, which is 21 million BTCV.

Task 2 - Consensus Mechanisms

2.1. The Meaning

Consensus Mechanism (in blockchain termination) is a mechanism used by the blockchain network to reach a necessary agreement about an information or data and also the current state of the blockchain network. This agreement is required by all nodes that are responsible or assigned responsibility for it.

Agreements between nodes are needed to, for example, validate certain data as well as blocks. Due to its very important nature, the Consensus Mechanism is called the "backbone" of any blockchain technology. There are at least 8 (eight) types of Consensus Mechanism currently available and running on various blockchains, namely^[source]: 1) Proof of Work (PoW), 2) Proof of Stake (PoS), 3) Delegated Proof of Stake (DPoS), 4) Proof of Capacity (PoC), 5) Proof of Elapsed Time (PoET), 6) Proof of Identity (PoI), 7) Proof of Authority (PoA), and 8) Proof of Activity (PoAC).

2.2. Proof-of-Work and Proof-of-Stake

The difference between Proof of Work (PoW) and Proof of Stake (PoS) is literally indicated by the name. In PoW work is required, while in PoS staking is required.

2.2.1. Proof of Work (PoW)
What is meant by “work” in PoW is that in this type of Consensus Mechanism, miners work to solve difficult mathematical puzzles. The first miner to solve the riddle means that he has successfully verified a transaction on the network and for that he will be rewarded with crypto assets.

It takes sophisticated computer equipment to be able to work to solve every mathematical puzzle in the data verification process, so PoW is known as the "expensive" Consensus Mechanism. In addition, this Consensus Mechanism also requires a lot of electricity, and is known to be environmentally unfriendly.

For those who are unable to provide sophisticated and expensive computers, they can join a group called a "mining pool" where they will jointly combine efforts to solve mathematical puzzles, and if successful they will share the rewards between them.

PoW is used in the very first blockchain technology, the Bitcoin blockchain.

2.2.2. Proof of Stake (PoS)

In Proof of Stake, miners "lock" coins they have. This "locking" process is known as "staking". By staking a certain number of crypto assets, they will have a chance to be selected as transaction validators and/or block validators, and if they were they would receive block rewards, in addition to rewards earned from staked assets.

There are 3 factors that determine the selection of miners in order to receive rewards, namely: 1) The total number of staked assets, 2) Staking Term, and 3) Randomization System.

2.2.3. The Difference Between PoW and PoS

Among the most major differences between the two are:

Item	PoW	PoS
System	Miners compete to solve complex mathematical puzzles.	Miners stake their assets.
Device	PoW requires sophisticated and expensive equipment (computer) to mine.	PoS does not need expensive equipment to do mining.
Rewards	The reward depends on the miner's ability to compete in solving math puzzles.	Reward comes from successfully validated transaction fees, incurred by investors buying and selling each other on the block and from asset staking.
Energy Use	PoW uses more energy than PoS.	PoS is more energy efficient than PoW.

Task 3 – The Bitcoin Blockchain Explorer

For this task I used https://www.blockchain.com/explorer.

^{Bitcoin Explorer.}

To indicate the hash of the latest transaction, I simply looked at the Latest Transactions section of the explorer. The last one is the one at the topmost.

^{the Latest Transactions section.}

I clicked on the topmost linked hash and opened the transaction detail page. The hash was 6bbd51b87580f56614b138104fd9b4e823ab13d0f52cdcde1ed942bb3c2c30f5 and the detail can be viewed here.

^{The detail page of the latest transaction hash.}

The detail page of the latest transaction showed information as follow (among another):

The transaction was included in block 704214.
Transaction fee was 0.00002684 BTC.
0.04733700 BTC was sent through the transaction with a value of $2,586.32.
Transaction size was 224 bytes.
Fee per byte was 11.982 sat.

Task 4 – The Altcoin Season

4.1. The Meaning of Altcoin Season

Altcoin Season or Altseason is when at least 75% of the altcoins (cryptos that are not Bitcoin) in top 50 (that means at least 38 coins) perform better than Bitcoin, over the last 90 days.

4.2. Are we currently in Altcoin Season or Are We Not

According to data from https://www.blockchaincenter.net/altcoin-season-index/, in the last 90 days, based on the performance of the top 50 coins, Bitcoin is ranked at number 27. So only 26 of 50 top coins (52%) that work better than Bitcoin over the last 90days. So, based on this data, we are not currently in the Altcoin Season.

^{Only 52% of top 50 coins perform better that Bitcoin over the last 90 days.}

4.3. The Last Altcoin Season

Data from https://www.blockchaincenter.net/altcoin-season-index/ also shows that the last altcoin season happened between end of March 2021 untilthe end of June of that year. The peaks were in April and May when almost 100% of the top 50 altcoin performed better than Bitcoin. See the chart below from https://www.blockchaincenter.net/altcoin-season-index/.

4.4. The Altcoins Charts

The top 10 performance over the last 90 days, according to https://www.blockchaincenter.net/altcoin-season-index/, are:

No.	Coins	%
1.	Fantom (FTM)	956.4%
2.	Axie Infinity (AXS)	662.1%
3.	Bitcoin Cash ABC (BCHA)	616%
4.	Terra (LUNA)	483.3%
5.	Solana (SOL)	435%
6.	Avalanche (AVAX)	432.7%
7.	Near (NEAR)	311.4%
8.	Quant (QNT)	290.1%
9.	Shiba Inu (SHIB)	288.6%
10.	Elrond eGold (EGLD)	208%

For this task I chose Solana (SOL) and NEAR Protocol (NEAR).

4.4.1. Solana (SOL)

^{Solana logo. Source: https://solana.com/branding.}

Solana is currently known as a "super-fast blockchain" due to its ability to facilitate more than 50 thousand transactions per second. The blockchain uses PoS mechanism in combination to its technology called Proof of History (PoH). PoH has proven to effectively greatly reduces the blocktime.

Below is the all-time Solana price chart as seen on coiningecko.

^{The all-time Solana price chart as seen on coiningecko.}

4.4.2. Near (NEAR)

^{Solana logo. Source: https://near.org/brand/.}

Near (NEAR) is the native token of the Near Protocol blockchain, a decentralized applications (dApps) platform. Near Protocol is a public blockchain and has been a competitor to Ethereum blockchain, as well as to another smart contract-enabled blockchains like EOS and Polkadot. This blockchain adopts Proof of Stake as its consensus mechanism. The native token NEAR is used to pay for storage and transaction fees, beside as a stoked assets. ^[Source]

Below is the all-time NEAR price chart as seen on coiningecko.

^{The all-time Solana price chart as seen on coiningecko.}

Task 5 – Investment

5.1. Cryptocurrency Purchasing of At Least USD 15

^{Cardano logo as seen on https://www.thestreet.com/crypto/defi/cardano-pumps-40-percent-in-five-days-ahead-of-smart-contract-launch.}

^{ADA coin logo. Source: https://www.pngwing.com/en/free-png-kvdvl.}

For this task, I originally wanted to choose Solana, but because the market platform I use (UPbit) has not yet listed Solana, I was forced to choose another coin. My second candidate was Cardano (ADA). So, Cardano (ADA) it was.

At the time of writing, the price of Cardano (ADA), as shown on CoinGecko was USD 2.26. To complete the task, I had to purchase at least 6.638 ADA to match USD 15.

^{Cardano (ADA) price as seen on CoinGecko at time of writing.}

To buy the coin, I logged into my UPbit account and clicked the [Exchange] button.

^{Logging in to UPbit Exchange.}

The default exchange page (Bitcoin) was then opened.

^{The default exchange page.}

I searched for Cardano (ADA) in the search box on the right panel of the page and clicked the result. There was only one result related to the search keyword “ada”.

^{Search box is a useful shortcut.}

The Cardano (ADA) exchange page was then opened.

^{Relevant and comprehensive information is available to help users make decisions.}

I made sure the buy option on the market section (marked number (1) in below picture) is active. And filled in the amount of token to buy (marked number (2)). And lastly, I hit the [buy] button.

^{Three simple step to buy.}

A conformational pop-up box appeared. I clicked the [Buy Confirm] button to proceed.

^{Confirming the transaction.}

The buy order was successfully placed in to the market.

^{It was a success.}

Soon, I can see on my trade history that the purchase had been successful, 10 ADA had been sent to my wallet.

^{The trade history page.}

5.2. Why I Chose Cardano (ADA)

The main reason is performance:
- In the last 90 days, based on data from https://www.blockchaincenter.net/altcoin-season-index/, Cardano (ADA) is one of the cryptocurrencies that performs better than Bitcoin, ranking 22 (Bitcoin is ranked 27) with a percentage increase performance at 74.3%.
- In terms of market capitalization, both on coingecko and on CoinMarketCap, Cardano (ADA) is currently ranked 3.
Charles Hoskinson as the founder, is well-known as one of the best developers in the blockchain technology. He was one of the co-founder of Ethereum blockchain.
IOHK (Input Output Hong Kong or simply Input Output, as the company that founded the Cardano (ADA) project has a commitment (and has proven it) to utilizing their technology for a higher purpose, especially after they collaborated with the Ethiopian government in 2018 with the aim of transferring technology into various industries.
Another reason was that this coin has been listed on UPbit and has pair in my native fiat currency.

^{The top 10 cryptocurrencies based on market capitalization as seen on CoinGecko at time of writing.}

^{The top 10 cryptocurrencies based on market capitalization as seen on CoinMarketCap at time of writing.}

5.3. The Goal Or Purpose Behind This Project

Cardano was born as a third generation blockchain with the main goal of fixing the problems faced by the first generation (Bitcoin) and second generation (Ethereum) blockchains. These problems have become classic problems in the blockchain world, namely:

Scalability. Cardano (ADA) is proven to be faster than the previous two blockchain generations.
Maintain the decentralization aspect without sacrificing the security aspect.
Transaction fees. Cardano (ADA) requires lower transaction fees than the previous two blockchain generations.

5.4. The Founders / Developers

Cardano (ADA) is the work of a blockchain developer named Charles Hoskinson. Hoskinson started his entry into the cryptocurrency and blockchain world in 2011. That year he started mining Bitcoin and trading cryptocurrencies.

^{Charles Hoskinson portrait. Source: https://hir.harvard.edu/charles-hoskinson-1/.}

Hoskinson has also worked with Dan Larimer (founder of STEEM, EOS, BitShares) to launch Bitshares network. Their project at that time was called Invictus Innovation.

In 2013, he met Vitalik Buterin who then together with six other people they built the Ethereum blockchain network.

In June 2014, Hoskinson left Ethereum. Together with another former Ethereum employee, Jeremy Wood, he then ran a project called Input Output Hong Kong (IOHK). IOHK is a research company focused on blockchain development.

In 2015, IOHK started a blockchain project called Cardano. Cardano and its native token ADA were officially launched 2 years later, in 2017.

5.5. The ATH and Current Price

Based on information from CoinGecko, ATH (all-time high) was reached by Cardano (ADA) on September 2, 2021 at USD3.09. Initial price is USD 0.0268. The price at the time of writing was USD 2.26.

The more comprehensive data on ADA price and market stats can be seen in the table below.

Item	Value
Current Price	USD2.26
Market Capitalization	$72,769,112,033
Market Capitalization Dominance	3.02%
Market Capitalization Rank	3
ATH	USD3.09 (Sep 02, 2021)
ATL	USD0.01925275 (Mar 13, 2020)

Below is the price chart as seen on CoinGecko.

^{The ADA all-time price chart as seen on CoinGecko at time of writing.}

Task 6 - Conclusion

6.1. Halving

Inflation is not only a threat to the traditional money economy, it can also happen to cryptocurrencies. Halving (also known as halvening) is one of the methods used to prevent tokens from experiencing inflation.

Halving is usually followed by coin price increase. Whether it's related or not, is still a question mark. An example is what happened to Bitcoin. After the first halving on November 28, 2012, the price of Bitcoin rose sharply to USD1,217 from previously only USD12. At the time of the second halving, the price of Bitcoin was USD647, but after the halving on July 9, 2016, the Bitcoin price shot up to USD19,800. Ahead of the third halving on May 11, 2020, the Bitcoin price is USD8,787. On April 14 of the following year the price of Bitcoin soared to USD64,500 (an increase of 634% from the price before the halving).

The halving doesn't just happen to Bitcoin. Each cryptocurrency can have its own rules related to halving, for example, there are cryptocurrencies that do halving every time they produce a number of blocks, and there are also those that do halving after a certain number of days.

6.2. Consensus Mechanism

Achieving consensus is a very important issue in blockchain because it is directly related to the speed of the network validating transactions and producing blocks. It is not surprising that the various Consensus Mechanisms have been born to look for gaps in time saving for reaching consensus between nodes.

There have even been several Consensus Mechanisms which are hybrids of several Consensus Mechanisms. This hybrid consensus mechanism, for example Proof of Activity (PoAC). It is a hybrid of PoW and PoS. PoAC adopts the advantages of both Consensus Mechanism PoS and PoW to offer solutions to classic blockchain problems.

Various solutions to the classic blockchain problems offered through the implementation of a more sophisticated Consensus Mechanism keep coming. One of the latest is the emergence of the Solana blockchain which is called the fifth generation blockchain. Solana blockchain matches PoS with a technology called Proof of History, and effectively increases scalability to 50 thousand transactions per second.

In the future, we can certainly expect to see more sophisticated innovations and provide better solutions to classic blockchain problems, so that blockchain technology will be able to compete with the speed of other technologies.

6.3. The Bitcoin Blockchain Explorer

The blockchain explorer is the search engine where everyone can search for information related to blockchain. Every blockchain technology has its block explorers. Users can search using a hash code to see the detailed transaction attached to it. Or they can search for a particular block height to view its detail.

6.4. The Altcoin Season

There were times when Bitcoin was outperformed by at least 38 altcoins in a 90-day timeframe. When that happens, it's called the Altcoin Season. When altcoin season occurs, traders with small capital who hold low-priced altcoins can get big profits because these altcoins will experience a very large price increase.