Solana is showing signs of potentially surpassing Ethereum in terms of consumer decentralized applications (DApps), as noted by Solana Foundation’s former head of growth. Despite current market challenges, Solana’s unique features could lead to increased developer activity and user adoption.
Matty Taylor, co-founder of Colosseum and previously part of the Solana Foundation, shared that he believes the Solana blockchain is going to become more popular than Ethereum, especially for regular users.
He said that Solana has been doing better than Ethereum in attracting user-friendly apps that fit with the modern web, thanks to its ability to handle transactions quickly and efficiently.
Currently, according to DappRadar, Ethereum has about 4,520 decentralized applications (Dapps), which is considerably more than the ones on Solana (240).
But even so, Solana has kept its nickname over the years, as it is often mentioned as a potential “Ethereum-killer.” This is because Solana can process transactions faster and more efficiently than Ethereum.
The collapse of FTX and the subsequent market downturn were major challenges for Solana, but according to Matty Taylor, these events actually brought more developers to the platform, even as the value of Solana’s SOL token dropped.
Taylor pointed out that every major blockchain network, including Bitcoin with its Mt Gox incident and the 2020 market downturn, has faced tough times. He believes that Solana has emerged from these challenges stronger and with a growing number of developers.
Despite these advancements, Ethereum still leads significantly in the crypto space.
As of March 2024, according to DefiLlama data, the total value locked (TVL) on Ethereum is $50.5 billion, more than 11 times Solana’s TVL of $4.34 billion.
Additionally, Solana faced technical issues when its blockchain stopped producing blocks for over five hours on February 6, forcing a network restart by its validators. This was not the first time; Solana has experienced several notable disruptions since January 2022.
Matty Taylor explained that while network problems are usually bad for any system, blockchains trying to expand their capabilities will naturally face some challenges. He mentioned that it’s better for these issues to occur now rather than later, especially before large, critical funds like pensions begin to rely on blockchain technology. He admitted that while it’s not ideal, these challenges are part of the innovation process.
Ethereum vs Solana dApps
There is no doubt that Solana is becoming a serious competitor to the already established Ethereum blockchain.
According to DappRadar, the top 10 Dapps are divided between Ethereum and Solana. Three of these are native to Solana, six are Ethereum-based, and one (Magic Eden NFT marketplace) supports both blockchains.
However, it’s worth pointing out that the UAW (Unique Active Wallets) interacting with these apps seems to be increasing on the Solana-based Dapps.
Raydium, the Solana-based DEX, has taken the lead with over 1.15 million unique addresses in the last 30 days. This is almost double that of the most popular DEX in the crypto space, Uniswap. However, the top from DappRadar counts Uniswap V3, V2 and the NFT aggregator as separate Dapps, but there’s no way of knowing if those aren’t the same addresses on both Uniswap V3 and V2.
According to CoinMarketCap, Solana (SOL) registered a price surge of over 78% during the last month, reaching a trading price of about $185 at the end of March 2024.
This sharp increase, together with its latest tech developments, played a pivotal role in last month’s TVL increase for its top protocols. Here’s a screenshot from DefiLlama of the top protocols on Solana, sorted by their TVL (total value locked).
Stablecoin dominance
Stablecoins are another way to measure how relevant a blockchain really is. Investors and day traders will often use stables, such as USDT and USDC to safeguard their trading profits from the market’s volatility.
While Ethereum still maintains its sovereignty, being responsible for over 52% of all stablecoin transactions, Solana ranks as the 4th blockchain for stablecoin trading, with a 1.86% dominance of the total market share.
Source: DefiLlama, Total Stablecoins Market Cap Dominance
Here is a breakdown for each of the top blockchains for trading stables.
Solana is gradually growing in volume and market capitalization, experiencing more than a 4% increase over the last week. It appears that Solana is steadily outpacing Ethereum. If this trend continues, it will not be a matter of if but rather a question of when.
The Ethereum Dencun upgrade, combining Deneb and Cancun updates, introduces significant changes to enhance scalability and reduce fees. This upgrade, crucial for Ethereum’s future growth, facilitates cheaper transaction storage off-chain.
What is Ethereum Cancun-Deneb (Dencun) upgrade?
Dencun combines two updates called Deneb and Cancun into one big change for Ethereum, touching both the part of Ethereum that reaches agreements (consensus layer) and the part that handles transactions (execution layer).
The Dencun upgrade also brings a feature called Proto-Danksharding through EIP-4844, aiming to lower the costs for layer 2 (L2) storage solutions. It introduces a new kind of temporary data storage called “blobs,” which helps in making storage cheaper for rollup providers.
Proto-danksharding is an early step towards full danksharding. It allows layer-2 solutions on Ethereum to keep large transaction data off the main network, similar to using a temporary storage space. This helps reduce costs for users of layer-2 solutions by keeping the main Ethereum network less cluttered and reserved for crucial transactions.
These blobs stay available on the network for about 18 days, or 4096 epochs, after which they are removed. However, even after removal, the validity of the data can still be checked with certain proofs.
This is a major system update in blockchain, and it started at a specific time in Ethereum’s history, rolling out completely in 15 minutes. This update aims to cut down fees for certain transactions and enable Ethereum to handle more activity.
Deneb focuses on improving the agreement part of Ethereum, making sure everyone on the network agrees on what’s happening.
Cancun upgrades how transactions are done, making them smoother and more efficient.
This addition is expected to significantly lower rollup costs, control the size of the blockchain, and accommodate more users while keeping the network secure and decentralized.
This big change comes after another important update last year, which let people take their Ethereum out if they had put it into the network before.
What will happen after the Ethereum Dencun upgrade?
Lower fees from rollups
This feature started on March 13, 2024, at 1:55 PM UTC, from epoch 269568.
Major rollup providers like Arbitrum and Optimism have announced they will start using the new blob feature right after the upgrade.
However, the exact time when each rollup will start showing lower fees might differ because each provider needs to update their systems to use the new blob space.
Off-chain transactions to keep the network costs low
The Dencun upgrade makes Ethereum better by allowing it to handle more users and transactions without raising costs too much. It also keeps the network spread out and not controlled by just a few.
Ethereum is focusing on improving “layer 2 rollups.” These are systems that help handle more users safely.
Rollups work by doing transactions separately and then sending a summary or proof back to the main network. This process costs money, which was high before because every network user had to keep the information forever.
The Dencun upgrade introduces Proto-Danksharding, making it cheaper to store these summaries. Now, they only need to be kept for about 18 days, reducing costs. Since rollups need about 7 days to handle withdrawals, the new 18-day limit is more than enough, keeping everything secure without needing more computer storage.
Impact all Ethereum consensus and validator clients
The Proto-Danksharding update (EIP-4844) requires changes to both the systems that carry out transactions and the ones that help agree on the network’s state.
All the main programs used by Ethereum have been updated to reflect this change.
People running these programs need to make sure they’re using the latest version to stay connected with Ethereum after the update.
Remember, this info can get outdated, so always look for the latest updates. Also, the software used by validators, who help keep Ethereum secure, has been updated for this new change.
Layer 2 (L2) transactions can be stored in 2 ways
Transactions on Ethereum’s Layer 2 can now be stored in two ways:
in new, cheaper temporary blob space or
in the older, more costly permanent smart contract calldata.
Blob space saves money by offering short-term storage, enough for all needed security checks. The permanent calldata, though more secure for long-term, costs more.
The choice between using blob space or calldata is usually up to the rollup providers, who decide based on how much blob space is available.
If lots of people want to use blob space, they might have to use calldata to make sure transactions go through quickly.
Even though users might technically pick which storage they prefer, rollup providers typically make this decision to keep things simpler and costs lower. For more details on how this works, you should look at the information given by the rollup providers.
Enhanced security with EIP-4788 and EIP-6780
The Dencun upgrade wasn’t mainly about security, but it did bring in some improvements to make Ethereum safer.
Part of the update, EIP-4788, helps the parts of Ethereum that check transactions and the parts that carry out transactions talk to each other better. This could make it harder for attackers to find and exploit weak spots.
Another change, EIP-6780, is about altering the way smart contracts can end themselves through the “SELFDESTRUCT” function. By tweaking how this works, it’s harder for bad actors to misuse this function, which could lead to better overall security for Ethereum smart contracts.
Lower costs on Layer-2 solutions
The Dencun update has introduced a new method for Ethereum’s Layer-2 scaling solutions that lowers the cost of transactions.
These Layer-2 networks group many transactions together to save money before sending them to the main Ethereum network.
The key feature of Dencun, called proto-danksharding and introduced in EIP-4844, reduces Layer-2 costs by allowing these networks to store certain transaction information outside the main blockchain.
Will the 4844 update lower the cost of gas on Layer 1 (L1)?
Not really.
The update brings in a new way to charge for something called blob space, used mainly by rollup providers. Moving rollup data to blobs might lower fees on L1 a bit, but the main goal is to cut costs on Layer 2 (L2). Any decrease in L1 fees would be a small, indirect result.
The lessening of L1 gas costs depends on how much the rollup providers use the new blob data. But since L1 is used for lots of other things too, its costs might stay competitive.
If rollups start using blob space, they will use less L1 gas, which could help reduce L1 gas prices for a while.
However, blob space has its limits; if it gets too full, rollups will need to use the old, more expensive storage, which could make gas prices go up again for both L1 and L2.
How do you get old blob data?
Regular Ethereum nodes keep the latest network information, but they can throw away old blob data after about 18 days. Before getting rid of it, Ethereum makes sure everyone who might need it has a chance to:
Grab and save the data if they want.
Finish any dispute periods for rollups.
Complete the transactions for rollups.
People might want old blob data for different reasons, and there are a few ways to get it:
The Graph uses a network of node operators paid in cryptocurrency to keep this data.
BitTorrent lets volunteers store and share the data.
Ethereum’s portal network is working to let people access all Ethereum data through a network similar to BitTorrent.
Individuals can also keep their own copies of any data they find important.
Rollup services might keep the data to make their services better.
Block explorers use special nodes to collect and keep all this information, making it easy to look up past data on the web.
When getting old data back, you just need one reliable source to check it against the current network state.
How does this upgrade fit into the larger plan for Ethereum?
Proto-Danksharding is a preparatory step towards fully adopting Danksharding.
Danksharding aims to spread out the storage of transaction data among different network participants, so no single one has to store everything.
This method will allow more data to be included in each block, helping Ethereum grow to support more users and transactions.
Such growth is key for Ethereum to serve billions of people affordably and run more complex applications while keeping the network spread out and not controlled by just a few.
Without these updates, the equipment needed to run the network would become too costly, possibly leaving only a few large players in charge, which would conflict with Ethereum’s goal of being decentralized.
How will the upcoming Bitcoin halving impact miners and the cryptocurrency market? It’s all about energy efficiency strategies, global mining shifts, market reactions, and the potential long-term effects on Bitcoin’s value and mining landscape.
Bitcoin 20224 halving and its impact
The Bitcoin community is on the brink of a major event – the upcoming Bitcoin 2024 halving.
This anticipated event, occurring every four years, is expected to have significant implications for the market and miners, particularly those based in the United States.
The biggest #bitcoin mining countries are: 1) The United States 🇺🇸(40%) 2) China 🇨🇳(15%) 3) Russia 🇷🇺(12%)
This map will look very different in 1-2 years as miners in Africa and Latin America expand operations.#Bitcoin mining ⛏️ rigs will ruthlessly hunt down the cheapest… pic.twitter.com/KD50g9mWHe
As we approach this pivotal moment, set for April, the mining landscape is bracing for change, with the reward for mining Bitcoin transactions set to decrease from 6.25 BTC to 3.125 BTC.
This reduction in mining rewards will challenge operations globally, but the impact will vary significantly based on regional factors and operational efficiencies.
In the United States, where recent data from Hashlabs Mining indicates that 40% of Bitcoin mining takes place, the focus has turned towards energy-efficient mining operations. These operations are believed to be less susceptible to the adverse effects of the halving due to their lower operational costs.
The halving is not just a technical adjustment; it serves as a crucial test for the sustainability and profitability of mining activities.
This situation sets the stage for a broader discussion on the future of Bitcoin mining in the U.S. and globally as miners scramble to adapt to the impending reduction in rewards.
What is the Bitcoin halving?
The Bitcoin halving is a major event. It happens every four years.
In April 2024, the reward for mining Bitcoin will be cut in half. This means Bitcoin miners will get less Bitcoin for their work.
Why does this matter?
It affects how much money miners make.
When rewards drop, some miners might stop mining because it’s too expensive. This is especially true for those who use a lot of energy.
But it’s not all bad. The halving can make Bitcoin more rare. This can increase its value. People are watching to see how this changes Bitcoin’s price.
In the U.S., many miners are preparing. They are using less energy to stay profitable. This is important because the U.S. has a lot of Bitcoin miners.
The halving tests miners. It shows who can adapt and who can’t. This event is big for Bitcoin’s future. It could change how people see and use Bitcoin.
U.S. miners’ strategies for becoming more energy efficient
As the U.S. miners are getting ready for the halving, they focus on using less energy. This can help them stay profitable even when mining rewards are cut.
Energy costs matter a lot. Cheap energy means lower costs and greater profits. This is key for making money after the Bitcoin halving.
Some miners plan ahead. They look for ways to cut energy costs. They have mining sites all over the world. They share their energy costs to stay open about their spending.
The price of Bitcoin is also important. If it stays the same, some U.S. miners might reduce their mining. This is because they will earn less Bitcoin for the same work.
But, if Bitcoin’s price goes up, miners could still do well. Higher prices mean more money for the same amount of Bitcoin.
Navigating post-halving challenges
As the halving approaches, the future of Bitcoin mining hangs in the balance. Miners around the world are bracing for change, with energy efficiency becoming the mantra for survival. Those who have prepared by reducing costs and enhancing efficiency stand the best chance of weathering the storm.
The halving could lead to a shakeout, where only the most efficient miners remain. This is not necessarily bad; it could lead to a more sustainable and robust mining ecosystem. Efficiency gains could offset the reduction in rewards, maintaining the health of the Bitcoin network.
The global hash rate, despite potential short-term dips, is expected to continue its upward trajectory. This reflects confidence in Bitcoin’s long-term value and the mining industry’s resilience. New technologies and mining strategies will likely emerge, driving further innovation in the sector.
The price of Bitcoin remains a wildcard. A significant increase could rejuvenate the mining landscape, compensating for the halved rewards. Conversely, if prices remain stagnant or fall, the industry could face further consolidation.
Anticipating the Bitcoin market post-halving
The Bitcoin halving event sparks widespread speculation about future price movements.
Historically, halvings have been followed by significant price increases, fueling optimism among investors. As the supply of new Bitcoins decreases, if demand remains the same or increases, the price could rise.
Currently, Bitcoin’s price is experiencing a notable upsurge, partly driven by the anticipation of the halving.
Investors are keenly observing market trends, with many expecting the price to reach new heights post-halving. This optimism is bolstered by recent rallies and the introduction of Bitcoin ETFs (exchange-traded funds), which have attracted new investors.
However, the market is complex and not immune to downturns. High leverage and speculative trading could lead to volatility and corrections. Analysts advise caution, suggesting that while the outlook is promising, the market may still experience swings.
The post-halving period is a time of uncertainty and opportunity. Market dynamics post-halving will be influenced by a mix of investor sentiment, market liquidity, and broader economic factors.
As always, investors should conduct thorough research and consider multiple perspectives before making decisions. The halving could be a catalyst for growth, but the path is unlikely to be smooth.
In conclusion, the upcoming Bitcoin halving presents both challenges and opportunities. Miners must adapt to survive, while investors watch closely as this event could herald a new era for Bitcoin’s value and its underlying technology.
The next few months will be critical in shaping the future of Bitcoin mining and the cryptocurrency market at large.
Dive into the thrilling world of crypto scalping and learn the top strategies and trading tips for mastering the art of quick profits.
Are you a beginner ready to tackle the fast-paced world of crypto trading? Or an experienced trader aiming to polish your scalping skills? This guide has all you need to successfully navigate the volatile cryptocurrency markets.
What is scalping?
Scalping is a trading strategy used in the financial markets, especially popular among day traders. Imagine you’re at a marketplace, but instead of buying fruits to eat over the week, you’re buying and selling stocks, currencies, or even cryptocurrencies, all within a very short time—sometimes in minutes or even seconds!
The goal here is to make small profits quickly by taking advantage of tiny price changes throughout the day. Now, to do this effectively, traders use special tools.
Scalping tools
These scalping tools are like the gadgets and apps that help you snag the best deals online but are designed for trading.
They include:
Charting software
This is like a high-tech map that helps traders see where the prices of stocks or currencies have been and predict where they might go next. It’s filled with graphs and indicators that give clues on the right moment to buy or sell.
Trading platforms
These are the apps or websites where the actual buying and selling happen. They need to be fast because, in scalping, even a few seconds of delays can make a difference between profit and loss.
Market news feeds
Just like checking the weather before heading out, traders use news feeds to stay updated on financial news that might affect the prices of what they’re trading.
Order execution tools
These tools help execute trades (buy or sell orders) quickly. Imagine telling a robot to buy or sell the moment conditions are just right; that’s what these tools do, making sure traders can jump on opportunities instantly.
In simple terms, the most basic definition of scalping is all about making quick, small profits in a fast-moving market. This trading technique also involves using a set of specialized tools to help make smart, speedy decisions.
Scalping strategies
Scalping trading strategies are favoured by many traders for their potential to secure quick profits with minimal exposure to market risk. While the concept might remind some of scalping tickets, where individuals buy tickets to sell at a higher price, scalping in financial markets is legal and widely practiced.
These strategies are particularly prevalent in forex scalping, where traders capitalize on minor currency fluctuations. The essence of scalping meaning lies in the rapid buying and selling of securities, aiming for small gains in short periods.
A successful scalping trader employs a variety of tactics to navigate the markets efficiently. When it comes to scalping stocks or scalping options, the approach involves meticulous analysis and swift execution to benefit from the brief periods when prices align favourably.
The strategy demands an in-depth understanding of market movements and the ability to act quickly to exploit small price changes.
The best scalping indicator can vary depending on personal preference and the specific market.
However, the following tools are commonly regarded as the most effective for identifying potential entry and exit points:
Relative Strength Index (RSI),
Moving Average Convergence Divergence (MACD)
Bollinger Bands
These indicators help traders discern short-term price movements, guiding them to make swift, informed decisions.
Trading and especially scalping requires a keen sense of market trends and the ability to remain focused under pressure, as the success of scalping strategies hinges on executing a large volume of trades to accumulate significant profits over time.
Scalping crypto
Scalping in the context of cryptocurrency trading is a fast-paced strategy that involves making multiple trades over the course of a day to profit from small price movements. This approach is similar to scalping in traditional financial markets but is applied to the highly volatile crypto markets.
What is scalping crypto?
Scalping crypto involves buying and selling cryptocurrencies within a very short time frame, often minutes or even seconds, aiming to capture small, quick profits from slight price changes.
Given the cryptocurrency market’s volatility, it presents numerous opportunities for scalpers to profit from these small fluctuations.
How to perform crypto scalping
Choose the right platform. Select a trading platform that offers low transaction fees and fast execution times, as the cost and speed of trades can significantly impact the profitability of scalping strategies.
Utilise technical analysis. Scalpers rely heavily on technical analysis and indicators to make informed decisions. Tools like the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and Bollinger Bands can help identify potential entry and exit points.
Set up a trading plan. Before starting, establish strict entry, exit, and risk management rules. Decide on the profit targets and stop-loss orders to minimize potential losses.
Monitor the market. Scalping requires constant monitoring of the market as conditions can change rapidly. Be prepared to make quick decisions based on real-time data.
Who is crypto scalping for?
Scalping crypto is best suited for traders who can dedicate the time and attention required to monitor the markets closely and make quick decisions.
It requires a good understanding of the cryptocurrency market, patience, discipline, and the ability to remain calm under pressure.
It’s not recommended for those who prefer a more laid-back approach to investing or cannot commit to the intense focus and time-scaling demands.
Is crypto scalping profitable?
Scalping can be a profitable endeavour in the crypto markets due to their inherent volatility and the frequent opportunities for making small, quick profits.
However, it’s also risky, and the high volume of trades can lead to significant transaction fees, which can eat into profits.
The profitability of scalping crypto also depends on the trader’s skill, strategy, and ability to react quickly to market movements.
If you’re interested in earning crypto, you should also check out some of the easiest ways to earn free crypto (still available today).
What is the best crypto for scalping?
The best cryptocurrencies for scalping are those that combine high liquidity, volatility, and strong market activity.
These characteristics ensure that there are enough price movements throughout the day to make small, quick profits, and enough trading volume to enter and exit positions easily without significantly affecting the price.
Bitcoin (BTC) and Ethereum (ETH) are often cited as some of the best options for scalping. That’s due to their high liquidity, volatility, and active trading communities. However, other cryptocurrencies like Ripple (XRP), Binance Coin (BNB), and Litecoin (LTC) can also be suitable for scalping. However, traders should always check if they meet the criteria of high liquidity and volatility.
Most crypto trading platforms have a page dedicated to the top trading digital assets on the platform. Look on that page to choose the crypto with the highest liquidity and market activity.
Factors to consider when choosing the best crypto for scalping
Here are a few factors to consider when choosing the best crypto for scalping:
High liquidity. Liquidity refers to how easily an asset can be bought or sold in the market without affecting its price. High liquidity is crucial for scalpers, as it allows for quick trades at predictable prices. Cryptocurrencies with high trading volumes, like BTCand ETH, are often preferred for scalping because they can be traded easily at any time of the day.
Volatility. Volatility is a measure of how much the price of an asset varies over a short period. While high volatility increases risk, it also creates more opportunities for scalpers to profit from price fluctuations. Cryptocurrencies that show consistent volatility can be good candidates for scalping.
Market activity. Cryptos that have strong and active trading communities and are frequently included in news or market updates can provide scalpers with more opportunities to capitalize on price movements driven by news or events.
Technical analysis support. Cryptocurrencies that respond well to technical analysis and show clear trends or patterns can be easier to scalp. This is because scalpers rely heavily on technical indicators and charts to make quick trading decisions.
Should you engage in scalping crypto?
Scalping in the crypto markets is a dynamic and intensive trading strategy that targets minor price movements for profit. While it can be profitable, it requires a significant time commitment, a thorough understanding of the market, and a disciplined approach to risk management.
It’s most suitable for experienced traders who thrive in fast-paced environments and are comfortable with high-risk, high-reward trading activities.
Whether one is engaged in scalping forex, scalping stocks, or scalping options, the key to success lies in a deep understanding of the market, a well-crafted strategy, and the use of reliable indicators.
Scalping trading demands discipline, quick reflexes, and the ability to make decisions based on real-time information, making it an exciting, though challenging, trading style.
FAQ:
Is scalping illegal?
Scalping, in the context of trading (stocks, forex, or crypto), is a legal and legitimate strategy used by many traders. However, ticket scalping (buying and reselling event tickets for a profit) can be illegal or restricted in some jurisdictions.
What are the best scalping forex indicators?
The best scalping forex indicators include the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and Bollinger Bands. They help identify entry and exit points by highlighting market trends and volatility.
What is scalping in crypto?
Scalping in crypto involves making numerous small trades on minor price fluctuations. These trades happen within a day to accumulate profit from short-term market movements. Scaping is leveraging the high volatility of the cryptocurrency market.
Is scalping profitable?
Scalping can be profitable for traders who are disciplined, quick to make decisions, and able to closely monitor the markets. However, scalping carries a high risk and requires a significant time commitment to manage effectively.
In a puzzling move, an unidentified individual has spent approximately $64,000 to record nearly 9 megabytes of encrypted data on the Bitcoin blockchain. Spanning over 332 transactions, with fees varying from $14 to $2,500 in Bitcoin’s smallest unit, satoshis, the purpose behind this enigmatic activity remains shrouded in mystery.
Recently, someone spent around $64,000 (about 1.5 BTC) to add almost 9 megabytes of complex computer data to the Bitcoin network.
The mystery of the 2024 Bitcoin data inscription
A report from Ord.io, a digital data tracker, revealed that over 1 Bitcoin was used to make 332 separate entries on January 6th.
BREAKING: Someone just spent >1 BTC to inscribe 8.93 MB of raw binary data into Bitcoin.
As you can imagine, there is a lot of curiosity about who actually added this data.
The Bitcoin address linked to these mysterious additions is listed as “Unnamed” on Ord.io. The data itself is a mix of English, Greek, and mathematical symbols.
Interestingly, among the 332 entries, two feature a digital image of a pepperoni pizza.
According to Ord.io, this signifies that the entries include some of the 10,000 Bitcoins once used by early Bitcoin enthusiast Laszlo Hanyecz to buy two Papa John’s pepperoni pizzas on May 22, 2010.
This puzzling event of inscribing data occurred just a day after a massive 26.9 Bitcoins, valued at $1.17 million, were transferred to the very first Bitcoin wallet, known as the Genesis wallet, on January 5.
What is Bitcoin blockchain inscription?
Imagine the Bitcoin blockchain as a digital ledger or a record book.
Normally, this ledger keeps track of Bitcoin transactions – who sends and who receives Bitcoins.
An inscription on the Bitcoin blockchain is like writing a note in the margins of this ledger. Instead of recording a transaction, you’re adding extra information.
How is it different from typical transactions?
A standard Bitcoin transaction is like saying, “I give 5 Bitcoins to Alice.”
An inscription adds more: “I give 5 Bitcoins to Alice. P.S. Here’s a recipe for apple pie.” This ‘recipe’ is the extra data you’re inscribing.
This extra data doesn’t affect the transaction’s main purpose (sending Bitcoins), but it permanently records additional information.
Why inscribe data on the blockchain?
Permanence. Once something is written on the Bitcoin blockchain, it can’t be changed or deleted. It’s like carving into stone.
Visibility. Everyone who can see the ledger can see your inscription. It’s a public display.
Proof of existence. Inscribing data can prove that a certain piece of information existed at a certain time. For instance, if you inscribe a unique digital artwork, you’re showing that it existed at the time of the inscription.
Security. The blockchain’s secure nature makes it a trustworthy place to store important data.
The process of a Bitcoin blockchain inscription
You create a Bitcoin transaction.
Along with the transaction details (like sender, receiver, and amount), you include your extra piece of information – your ‘note.’
You send this transaction to the blockchain.
Miners on the Bitcoin network confirm the transaction and add it to a block.
Once added to a block, your inscription is permanent and visible to anyone who looks at the blockchain.
26.917 BTC transaction to Genesis Wallet
On January 5, at 1:52 am Eastern Time, an anonymous Bitcoin user made a notable transaction, sending 26.917 Bitcoins, valued at $1.17 million, to Bitcoin’s first-ever wallet, the genesis wallet (1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa).
This wallet is historically significant, as it was set up by Satoshi Nakamoto, the elusive creator of Bitcoin.
The transaction was unique for several reasons.
Firstly, the amount was transferred from a wallet that had been emptied specifically for this purpose. The transaction fee was $100, which is considerably higher than the average fee.
Secondly, the funds were moved in a complex manner, involving three wallets initially and then dispersing to 12 others.
Notably, a large portion of these funds was traced back to a wallet associated with Binance, a major cryptocurrency exchange, as identified by Arkham Intelligence, a blockchain analytics platform.
Coinbase director Conor Grogan commented on the transaction, speculating on two possibilities: either this was an action taken by Nakamoto himself, moving Bitcoins from Binance, or it was someone else making a dramatic gesture by effectively ‘burning’ over $1 million. Grogan also raised the possibility of this being part of an unusual Bitcoin exchange-traded fund marketing campaign.
It’s important to note that there has been no movement of funds from wallets associated with Nakamoto, including the genesis wallet, since Nakamoto’s disappearance in December 2010.
However, it’s speculated that Nakamoto could still possess the private keys to these wallets and control the funds within.
The genesis wallet initially contained 50 Bitcoins mined by Nakamoto.
By the end of 2023, on the occasion of Bitcoin’s 14th birthday, the global Bitcoin community had added to this wallet’s balance, bringing it up to 72 Bitcoins through various celebratory contributions.
Bitcoin ETFs are the intersection where cryptocurrencies meet the structured universe of traditional investing.
Bitcoin ETFs, or ‘exchange-traded funds’ that focus on Bitcoin, offer a unique way to participate in the exciting growth potential of cryptocurrencies without diving headfirst into the often complex crypto markets.
These ‘crypto ETFs’ blend the familiarity of conventional stock trading with the adventurous spirit of digital currencies, providing a gateway for both seasoned investors and curious newcomers.
As we explore this innovative investment vehicle, you’ll discover how it simplifies the process of adding digital assets to your portfolio, all while maintaining the ease and accessibility of traditional stock market trading. Let’s dive in and unravel the essentials of Bitcoin ETFs.
What are exchange-traded funds (ETFs)?
Imagine you want to invest in the stock market, but instead of picking individual stocks (like shares of Apple or Google), you decide to buy a little bit of lots of different stocks all at once. That’s essentially what an Exchange-Traded Fund (ETF) is.
An ETF is like a basket that contains a mix of various stocks, bonds, or other assets. When you buy a share of an ETF, you’re buying a small piece of all the things inside that basket. This mix can include all sorts of investments – from tech companies to government bonds. The beauty of ETFs is that with just one purchase, you can invest in a whole range of assets, which can reduce the risk compared to buying just one company’s stock.
What makes ETFs special is that they are traded on the stock exchange, just like regular stocks. This means you can buy and sell shares of an ETF throughout the day at different prices, just like you would with stocks of individual companies.
So, in a nutshell, ETFs offer a simple way to diversify your investments, spreading out your risk while still allowing you the flexibility to buy and sell as you would with traditional stocks.
Why is everyone talking about a spot Bitcoin ETFs?
The sudden importance of spot Bitcoin ETFs in the crypto world stems from their potential regulatory approval, a significant step forward in legitimizing Bitcoin as a mainstream investment.
Unlike previous ETFs tied to Bitcoin futures, spot Bitcoin ETFs would be directly linked to the current price of Bitcoin, offering a more direct and potentially more accurate reflection of Bitcoin’s market value. This direct connection attracts investors looking for a more straightforward way to invest in Bitcoin through traditional financial structures.
The anticipation of these ETFs has been heightened by the involvement of major asset management firms like BlackRock, Fidelity, and VanEck, signalling strong institutional interest.
The approval of spot Bitcoin ETFs by the SEC would not only increase Bitcoin’s accessibility to a broader range of investors but also potentially provide more stability and liquidity in the crypto market.
This move is seen as a critical milestone for the cryptocurrency industry, as it represents a significant endorsement from regulatory authorities and could lead to increased adoption and integration of Bitcoin into the traditional financial system.
The benefits of Bitcoin ETFs
Bitcoin ETFs are an exciting option for those interested in the buzz of the cryptocurrency world but looking for something a bit more familiar and potentially less risky. Let’s break down why someone might lean towards a Bitcoin ETF instead of buying Bitcoin directly.
Familiarity and Ease of Trading
Investing in a Bitcoin ETF feels much like investing in any other stock. You don’t need to learn the ins and outs of cryptocurrency exchanges or how to securely store digital coins. It’s as straightforward as trading regular stocks, making it a comfortable option for many traditional investors.
Diversification
Bitcoin ETFs often track not just the price of Bitcoin but can include other cryptocurrencies or related assets. This means you’re not putting all your eggs in one basket (Bitcoin) but spreading your risk across a range of assets. It’s like choosing a mixed fruit basket over just apples. This diversification can be a safer bet, especially in the volatile world of cryptocurrencies.
Regulatory oversight
ETFs are subject to regulatory oversight, which means there’s an added layer of security and transparency. When you buy Bitcoin directly, you’re stepping into a largely unregulated space, which can be riskier. With a Bitcoin ETF, you have the peace of mind that comes with regulated financial products.
Lower entry point
Investing in Bitcoin directly can be expensive, as you often have to buy whole units of the cryptocurrency. But with a Bitcoin ETF, you can invest with much smaller amounts, making it more accessible for the average investor.
No digital wallets are needed
Holding Bitcoin directly means dealing with digital wallets and the security concerns that come with them.
With a Bitcoin ETF, you don’t have to worry about digital wallet security or remembering complex passwords. Your investment is as safe as any other stock in your portfolio.
Top Bitcoin ETFs to invest in
When it comes to dipping your toes into the world of Bitcoin through ETFs, there are several key players you might want to consider. Here’s a list of some of the top Bitcoin ETFs, each offering a unique crypto-investing approach.
ProShares Bitcoin ETF
ProShares is a big name in the ETF world, and their Bitcoin ETF is a popular choice. It’s known for its reliability and is a go-to option for many investors looking to get involved in Bitcoin through a more traditional investment vehicle.
Grayscale Bitcoin Trust
While not a traditional ETF, Grayscale’s Bitcoin Trust is another major player. It offers exposure to Bitcoin’s price movements without the need to directly buy and store the cryptocurrency.
Valkyrie Bitcoin Strategy ETF
This ETF is relatively new but has quickly gained attention. It focuses on Bitcoin futures contracts, offering a different angle on Bitcoin investment.
VanEck Bitcoin Trust
VanEck is known for its innovative investment products, and its Bitcoin Trust is no exception. It aims to reflect the performance of Bitcoin, offering investors direct exposure to the cryptocurrency’s price changes.
Bitwise 10 Crypto Index Fund
For those who want broader exposure, the Bitwise 10 Crypto Index Fund covers the top 10 cryptocurrencies by market cap, not just Bitcoin. It’s a good option if you’re looking to diversify within the crypto space.
Each of these options has its unique features and approaches to Bitcoin investment. Whether you’re looking for something straightforward like the ProShares Bitcoin ETF or something more diverse like the Bitwise 10 Crypto Index Fund, there’s likely an ETF that fits your investment style and risk tolerance.
Remember, investing in Bitcoin, whether directly or through ETFs, carries risk. It’s always wise to do your own research and consider seeking advice from a financial advisor to find the best fit for your investment goals.
How to trade Bitcoin ETFs
Trading Bitcoin ETFs is like playing a video game where you need to know a few key moves. Let’s make sense of terms like ‘bitcoin tracking’ and ‘bitcoin exchange-traded note,’ and also explain how different platforms work for trading these crypto ETFs.
Bitcoin Tracking
Imagine Bitcoin’s price is like a rollercoaster at an amusement park. ‘Bitcoin tracking’ is like having a model of that rollercoaster in your backyard. The ETF follows the ups and downs of Bitcoin’s price, just like your model coaster follows the same path as the real one.
Think of ETNs as a promise note from your school friend. They promise to pay you back your lunch money with a little extra. In the financial world, an ETN is a promise by a company to pay you based on Bitcoin’s price performance.
But remember, if your friend moves away, you might not get your money back. Similarly, if the company behind the ETN has problems, your investment could be at risk.
Trading platforms for Bitcoin ETFs
Now, let’s talk about where you can trade these ETFs. You’ve got two main options: brokerage platforms and crypto exchange platforms.
Brokerage platforms: These are like your regular supermarkets where you can buy all sorts of things (stocks, bonds, ETFs). Trading Bitcoin ETFs here is like buying cereal from a supermarket. You use the same cart (platform) you use for other shopping. These platforms are user-friendly and regulated, offering a familiar environment for regular stock traders.
Crypto Exchange. These are specialized stores, like a shop that only sells video games. They mainly deal with cryptocurrencies. While you can’t directly buy Bitcoin ETFs here, these platforms are where the action happens for Bitcoin and other cryptocurrencies. They offer more crypto-specific features and can be a bit more complex to use.
The main difference between these platforms is what you can buy on them. Brokerage platforms offer a variety of investment products, including Bitcoin ETFs, while crypto exchanges focus on cryptocurrencies.
Also, brokerages are often seen as more beginner-friendly and regulated, while crypto exchanges offer more in-depth features for crypto trading.
Crypto vs crypto ETFs: comparing investment options
Let’s talk about the difference between buying cryptocurrencies directly and investing in crypto ETFs, and how these stack up against other investment options like mutual funds.
1. Direct crypto investment
Imagine buying cryptocurrencies like Bitcoin or Ethereum directly is like owning a specific type of exotic fruit. You have full control over it; you can eat it, save it, or sell it. However, you need to know where to buy it, how to store it safely and be ready for its price to jump up and down wildly.
2. Crypto ETFs
Now, investing in a crypto ETF is like buying a fruit basket that includes a bit of this exotic fruit along with other types. You don’t own the fruit directly, but you own a share of the basket. It’s simpler and safer in some ways because you’re not responsible for taking care of the individual fruits, and you also get a variety, which can balance out the risk.
3. Crypto ETFs vs traditional mutual funds
Traditional mutual funds are like a pre-packed lunch – you know what you’re getting, and it’s usually a well-balanced meal.
Mutual funds pool money from many investors to invest in stocks, bonds, or other assets and are managed by professionals. They’re not as volatile as cryptocurrencies but may offer lower returns.
4. Platforms for trading
The difference in platforms is like shopping at different types of stores.
Crypto exchanges are like speciality stores where you buy and manage individual types of fruit (cryptocurrencies). Some of the most popular centralized exchanges (CEXs) are Binance, KuCoin, WhiteBit, Kraken and Coinbase.
In contrast, brokerage platforms where you trade ETFs are like big supermarkets where you can buy fruit baskets (ETFs), along with other groceries (stocks, bonds).
As you see, there is more than one way to invest in crypto. Investing directly in cryptocurrencies is for those who want full control and are comfortable with high risk and volatility.
Crypto ETFs, on the other hand, offer a simpler, more diversified way to get into the crypto market, much like traditional mutual funds, but with a focus on digital assets.
And where you shop (trade) depends on whether you want to manage individual assets or prefer a more diverse, managed portfolio.
