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

in hive-108451 •  4 months ago 

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Question 1 - How many times has Bitcoin been "halved"? When is the next one expected? What is the current amount that Bitcoin miners receive? Mention at least 2 cryptocurrencies that are or have been "halving"

Bitcoin Halving

Bitcoin Halving is a term that is associated with the bitcoin blockchain network. Bitcoin uses the proof of work consensus mechanism and on the bitcoin network, mining process introduces new bitcoins. Miners on the bitcoin blockchain network are responsible for securing the bitcoin network, verify transactions on the blockchain and adding new block to the chain. Miners on bitcoin network are rewarded with block rewards each time they verify transactions and add new block to the chain. Bitcoin halving is basically a mechanism that ensures that the block reward is reduced by 50% in about every 4 years which is also equivalent to every 210,000 blocks.

Question 1b - How many times has Bitcoin been "halved"?

On the bitcoin network, beginning at the genesis block, 50 BTC was the set bitcoin block reward initially. This was decreased to 25 BTC in 2012 which became the first halving that took place on the bitcoin network. 4 years later, there was another bitcoin halving that took place on the bitcoin network which saw the amount decrease by half which was 12.5 BTC in 2016 and this became the second halving that took place on the bitcoin network. 4 years later, there was another bitcoin halving that saw the amount decrease to 6.25 BTC in 2020 and this became the third bitcoin halving that took place on the bitcoin network.

Question 1c- When is the next bitcoin halving expected?

The next bitcoin halving is expected 4 years later from the last bitcoin halving. The next bitcoin halving will take place in 2024, the next 2 years and 7 months or 986 days, 7 hours, 24 minutes This will see the amount decrease to 3.125 BTC.

Question 1d - What is the current amount that Bitcoin miners receive?

On the bitcoin network, the last bitcoin halving that took place on the bitcoin network was in May 2020 which saw the amount decrease to 6.25 BTC. Since the next bitcoin halving will take place in the next 2 years and 7 months or 986 days, it means that the bitcoin miners currently receive 6.25 BTC.

Question 1e - Mention at least 2 cryptocurrencies that are or have been "halving"

Litecoin (LTC)

The Litecoin blockchain makes use of the proof of work consensus mechanism and is also one of the proof of work blockchain that also experiences halving, similar to bitcoin. Miners on litecoin network are rewarded with block rewards each time they verify transactions and add new block to the chain. The halving on the litecoin network is known as litecoin halving which ensures that the block reward is reduced by 50% in about every 4 years which is also equivalent to every 840,000 blocks.

On the litecoin network, the initial block reward was set at 50 LTC. This was decreased to 25 LTC in 2015 which became the first halving that took place on the litcoin network. 4 years later, there was another litecoin halving which saw the amount decrease 12.5 LTC in 2019 and this became the second litecoin halving. The next litecoin halving is expected 4 years later from the last litecoin halving, which will take place in 2023, the next 2 years and 6 days. This will see the amount decrease to 6.25 LTC.

Bitcoin Cash (BCH)

Bitcoin cash is one of the many forks of the bitcoin blockchain network. Bitcoin cash blockchain was created to be a faster version of bitcoin with higher number of transaction and to be used as a payment solution. Like litecoin blockchain, bitcoin cash also relies on the proof of work consensus mechanism inherited from the bitcoin blockchain. Miners on bitcoin cash network are rewarded with block rewards each time they verify transactions and add new block to the chain.

Bitcoin cash halving ensures that the block reward is reduced by 50% in about every 4 years which is also equivalent to every 210,000 blocks. On the bitcoin cash network, the halving takes place every 4 years and the initial block reward was set at 50 BCH. This was decreased to 25 BCH after 210,000 blocks, then 12.5 BCH, then 6.25 BCH which is the current block reward on the bitcoin cash network. The next halving will take place in 2 years and 184 days. This will see the amount decrease to 3.125 BCH.


Question 2 - What are consensus mechanisms? How do Proof-of-Work and Proof-of-Staking differ?

Consensus mechanisms

Consensus mechanism is a common term in the blockchain space and is associated with many blockchain networks. Consensus mechanism is basically a mechanism or algorithm that is used in blockchain networks for nodes to reach agreement in the network through decentralization. This allows the nodes to be able to secure the network, verify transactions on the network and add new block to the chain. At the moment, there are a number of different consensus mechanisms used by different blockchain networks such as; proof of work (PoW), proof of stake (PoS), delegated proof of stake (DPoS), proof of burn (PoB), proof of history (PoH), proof of capacity (PoC) etc.

Proof of work

The proof of work consensus mechanism is a consensus mechanism that was first used by the bitcoin blockchain. In proof of work consensus mechanism, the miners who are the nodes in the network utilizes a process known as mining to secure the network by utilizing high computational power to solve the complex mathematical problem in order to verify transactions on the network and add new block to the chain.

Miners on proof of work are rewarded from the block rewards for verifying transactions and adding new block to the chain. The proof of work consensus mechanism utilizes high energy consumption as miners make use of high computational mining rigs which consumes a lot of energy, in order to solve the complex mathematical problems. The high computational power is used in combination with cryptography in order for the nodes to reach consensus or agreement in the network. Example of blockchain networks that make use of the proof of work consensus mechanism are;

  • Bitcoin
  • Ethereum
  • Litecoin
  • Bitcoin cash

Proof of stake

The proof of stake is another type of consensus mechanism and is considered the second most popular after the proof of work. The proof of stake consensus mechanism was created as a more efficient alternative of the proof of work mechanism. In the proof of stake consensus mechanism, nodes secure the network, validate transactions on the network and add a new block to the chain based on the amount of stake they have on the network. Instead of miners, the nodes on the proof of stake are known as validators or block producers, and the validators are rewarded through the network fees.

The validators stake their assets in the network to become eligible to be randomly selected to become block producers on the network. The more stake each node has, the higher the chance of becoming selected. Once selected, the validators are responsible for securing the network, verify transactions and add a new block on the chain. The amount of coins staked and how how long the coins have been staked on the network are considered in order for the nodes to reach consensus or agreement in the network.Example of blockchain networks that make use of the proof of work consensus mechanism are;

  • Zilliqa
  • Cardano
  • Polkadot
  • Cosmos

Question 2b - How do Proof-of-Work and Proof-of-Staking differ?

Proof of work requires high computational power machines and high energy consumption for mining. While proof of stake is more energy efficient and does not require high computational power machines.
Miners who are the nodes on the proof of work network receive rewards for verifying transactions and adding new block to the chain from the block rewards. While validators who are the nodes in the proof of stake network receive rewards for verifying transactions and adding new block to the chain from the network fees.

In Proof of work, miners make use of physical hardware for the high computation to compete against other miners to solve the complex mathematical problems. While in proof of stake, validators stake their assets in the network. The higher the amount of stake, the higher the chances of being selected as a block producer in the network.


Question 3 - Enter the Bitcoin explorer and indicate the hash corresponding to the last transaction

Bitcoin Explorer

For this demonstration, I will be visiting the bitcoin explorer website at https://www.blockchain.com/explorer

On the latest transactions section, we can see the latest transaction on the list of transactions.

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Next is to click on the hash of the latest transaction to view the transaction details. From the transaction details, we can see the following transaction details;

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Screenshot of Blockchain Explorer

Transaction Hash: f8be21b902ada722305f47b3b6657234f8f56ba2c0e925c4f507503c7296e1d1
Status: Unconfirmed
Date and time: 2021-10-9 12:58
Total Input: 0.06120481 BTC
Total Output: 0.06118145
Fees: 0.00002336 BTC
Value when transacted: $3,359.17


Question 4 - 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

Altcoin season

In the crypto space, altcoin season is simply a period the where altcoins gain dominance in the market against bitcoin. We all know that as far as cryptocurrency is concerned, bitcoin is king and mostly draw all the attention to itself for its dominance in the entire cryptocurrency market. At the moment, bitcoin has a 42.9% dominance in the market. However, even though bitcoin most of the time have dominance over all other cryptocurrencies in the market, it doesn’t always happen all the time and there are period where the altcoins wins as bitcoin begins to lose its dominance against the altcoins in the crypto market.

During the altcoin season, the value of altcoins begin to rise and reach new highs and bitcoin does not. For instance, if about 75 percent of the altcoins in the top 50 cryptocurrencies based on market cap are performing better than bitcoin in about 3 months, then it is right to say that the market is in an altcoin season. In an altcoin season, investors start taking their investments off bitcoin after making profits and invest them into altcoins. This continues to drive the value of altcoins up. As more and more investors sell their bitcoins for altcoins, bitcoins losses its dominance against the altcoins.

Question 4b - Are we currently in Altcoin Season?

No we are not in an altcoin season currently. This is because bitcoin still has majority of the dominance in the market. This basically means that we are still in bitcoin season. Based on the chart from https://www.blockchaincenter.net/altcoin-season-index website, only about 53% of altcoins in top 50 have seen a substantial growth increase. Since about 75% of altcoins in the top 50 needs to perform better than bitcoin in atleast 3 months, that is only when we can be in an altcoin season. With an Altcoin year Index of 61, there is a strong possibility that altcoin season is coming soon.

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Screenshot of blockchaincenter.net

Question 4c - When was the last Altcoin Season?

Based on the data from the blockchaincenter.net website, the last altcoin season happened between 25-03-2021 and 21-06-2021. During that period, there was a massive increase in the altcoin index which saw the altcoin index reach a peak of 98 on 17-04-2021 and another on 18-05-2021.

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Question 4d - Mention and show 2 charts of Altcoins followed by their growth in the most recent Season

Fantom – FTM

At the moment, FTM is the most performing altcoin that has gained a lot of growth recently. According to the data from Blockchaincenter, FTM is ranked first as the most performing altcoin and has made over 877% return over the last 90 days. At the moment, FTM is ranked number 35 on the coinmarketcap platform. FTM has a current market cap of $5,590,526,877, fully diluted market cap of $6,974,551,107, 24hr volume of $1,548,027,089, circulating supply of 2.55 Billion FTM, max supply of 3,175,000,000 FTM and total supply of 2,545,006,273 FTM. FTM increased from its All Time Low of $0.001935 on Mar 13, 2020 all the way up to an All Time High of $2.45 on Oct 08, 2021.

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Screenshot of coinmarkercap

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Axie Infinity - AXS

AXS is one of the cryptocurrencies that gained a lot of growth recently. According to the data from Blockchaincenter, AXS is the third most performing altcoin and has made over 610% return over the last 90 days. At the moment, AXS is ranked number 26 on the coinmarketcap platform. AXS has a current market cap of $7,702,207,154, fully diluted market cap of $34,124,377,782, 24hr volume of $847,433,555, circulating supply of 60,907,500.00 AXS, max supply and total supply of 270,000,000 AXS. AXS rose from its All Time Low of $0.1234 on Nov 06, 2020 all the way up to an All Time High of $155.08 on Oct 04, 2021.

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Question 5 - 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?

Polygon - MATIC

Polygon MATIC is one of the top blockchain and cryptocurrency projects at the moment and offering solutions and use cases in the crypto space. At the moment, Polygon MATIC is ranked 21 on coinmarketcap. Polygon was created to be an easy to use and well-structured platform with the sole aim of providing scaling solutions to ethereum and provide the infrastructure for developments. On the Polygon platform, the main component is the Polygon SDK. This provides a modular and flexible framework for the development of applications. Polygon prides itself as a layer 2 scaling solution that provides solution to the scalability issues of many blockchain networks. On polygon, the key features are;

  • ETH Compatibility
  • Scalability
  • Security
  • Modularity
  • Sovereignty
  • Interoperability
  • Developer Experience
  • User Experience

Polygon – Popularity/ Social Reach

Polygon MATIC is a very popular coin and one of the top cryptocurrencies based on market capitalization. Ranking 21st on coinmarketcap, there is no doubt that there are a lot of eyeballs on polygon MATIC. Polygon also has a large social reach with a large community on social media. At the moment, Polygon has close to millions of followers combined, across their social media channels. Polygon has a large presence on twitter, with a twitter community that comprises of over 720k followers. Aside from social media presence, Polygon MATIC also has many use cases, with many applications and projects making use of Polygon. Also, the MATIC token is listed on top exchanges with high volume and liquidity.

Purpose

Polygon was created to offer solutions and use cases in the crypto space. The main purpose of Polygon is to be an easy to use and well-structured platform with the sole aim of providing scaling solutions to ethereum and provide the infrastructure for developments. Polygon prides itself as a layer 2 scaling solution that provides solution to the scalability issues of many blockchain networks, with key features that makes it one of the top platforms for solving scalability issues and the development of applications.

Polygon - Team

Polygon was co-founded by Jaynti Kanani, an experienced blockchain developer, Sandeep Nailwal, an experienced blockchain developer, and Anurag Arjun, a business consultant. The 3 co-founders founded the Polygon, sharing the same vision and goals to help bring scalability to ethereum and also help Ethereum blockchain network transform into a full-fledged multi-chain system. The polygon team comprises of developers, professionals and advisors who work together to help polygon reach its potentials.

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Source

Polygon MATIC Statistics

Market capitalization - $9,019,252,455
Fully Diluted Market Cap - $13,423,502,107
Circulating Supply - 6.72B MATIC
Total supply - 10,000,000,000 MATIC
Max supply - 10,000,000,000 MATIC
24hr Volume - $825,010,168
All Time High - $2.68
Current Price - $1.34

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Polygon MATIC Exchanges

At the moment, Polygon MATIC token is listed on, Binance, Coinbase, Kucoin, Huobi, Okex, Kraken, Poloniex, Bittrex, Uniswap, Gate, Probit and other exchanges.

Reasons why I chose Polygon MATIC

Provides solutions - for me, when deciding on a cryptocurrency to invest in, I always look of for what the project has to offer as that is a key driving factor when it comes to increasing in value. Polygon was created to provide scalability solutions to ethereum and also provide solutions to blockchain networks.

Below its all-time high - This is also one of the main reasons why I chose MATIC. As a top cryptocurrency project, being below its all-time high is great buying oppurtunity because it wouldn’t take long for MATIC to reach its all-time value when the altcoin season comes.

Solid team - before I make any investment decision, I like to look at the team behind the project. For me, polygon has a great team who are constantly developing and looking to bring improvements. That is why the project has achieved a lot growth.

Large community - I like to also look at community size before making any investment decision. For me, community is key as far as cryptocurrency is concerned. Polygon has a large community which is great because it means that there are more people using it and more people buying it which would potentially see the value go up over time.

Purchasing Polygon MATIC

For this, i will be making use of Okex exchange to buy MATIC tokens. Before i am able to do this, i will have to first make a USDT deposit into my Okex exchange account.

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On okex exchange account, click on assets

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From the drop-down menu, Select deposit.

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I will be depositing USDT so i will select the USDT tron option since it is faster and has low fees.

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Next is to click on continue to proceed. Copy the provided USDT address to proceed with the deposit

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Once the deposit is confirmed and has arrived in the account. At the top menu, click on markets.

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Select MATIC On the markets page, and click on Trade

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On the Buy side On the exchange platform, Select the markets. I like to use the market buy option so as to all the order to fill immediately based on the best market price.

Input the amount of USDT. For me, i am purchasing MATIC with 20 USDT which will give about 14.9 MATIC tokens.

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Click on Buy MATIC

On the confirmation page, confirm to proceed and execute the buy trade.

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Conclusion

When it comes to blockchain and cryptocurrency, consensus mechanisms is very important term to pay attention to. The proof of work and proof of stake blockchains are still two of the most popular consensus mechanisms used by many of the top blockchain networks. Bitcoin halving is basically a mechanism that ensures that the block reward is reduced by 50% in about every 4 years which is also equivalent to every 210,000 blocks. Also we looked at altcoin season and what it is all about. This is very important to understand as it can help make the best investment choices. When it comes to investing in any cryptocurrency, it is important to pay attention to key fundamentals such as the founders, the purpose of the project, statistics and other fundamental factors so as to make the best investment decision.

@imagen

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