In order to function instantly, the payer must lock a certain amount of Bitcoin into the Lightning Network as credit. This creates a Smart Contract between the pair of users and any transactions can occur between them.

In a previous article, we touched on the Blockchain Trilemma: Decentralization, Security and Scalability. There must be a compromise in one area, in order to satisfy and maximize in the other two areas. The Bitcoin Network lacks the speed and Scalability. This is where the Lightning Network comes in. The Lightning Network aims to maintain the integrity of Security and Decentralization on the Bitcoin Network, while providing instant transactions off-chain.

The Lightning Network is capable of processing 1,000,000 Transactions Per Second (TPS). By comparison, the Bitcoin Network can process only about 7 TPS, while the Visa Credit Card Network can process tens of thousands TPS.

You can read more about the Blockchain Trilemma here:

The Blockchain Trilemma

Benefits of the Lightning Network:

- Allows the Bitcoin Network to be more efficient and scalable

- Lightning Network reduces Network congestion by completing transactions off-chain

- Users are able to send and receive Bitcoin quickly and cheaply 

- Bitcoin remains and maintains an open, permissionless, noncustodial, high speed protocol

- Faster Instant micropayments

- Lower and cheaper fees

- Makes Bitcoin more accessible and more convenient 

- Increase in adoption and use through day to day Bitcoin payments

We have compared these 5 Canadian exchanges in order to help you determine which platform may be the best for your situation and criteria.

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Why are Cross Chain Bridges necessary? 

• Blockchains operate individually

• Allows Blockchains to be interoperable

• Helps to move assets between different Blockchain networks

• Transfer things such as Tokens, NFT’s and Funds 

• Can have the choice to use different Blockchains based on things such as: Low gas fees, Decentralization, Security, etc.

• Better user experience for Crypto participants

What risks are there with Cross Chain Bridges? 

• Failure to work properly

• Hacking, exploits and theft

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Lightning Network

The Lightning Network is a Layer 2 solution on the Bitcoin Blockchain created by Lightning Labs. It is a peer to peer payment channel whose function is to allow instant off-chain transactions, without congesting the Bitcoin Network. In order to function instantly, the payer must lock a certain amount of Bitcoin into the Lightning Network as credit. This …

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3 years ago

Here are a few key leaders who believe in the long term outlook of Crypto:

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In a previous article, we briefly touched on some types of Analysis: Fundamental, Technical, Sentiment and On Chain.

The article can be found here:

https://www.l82crypto.com/p/types-of-investment-analysis

Today we identify a few resources in which you can refer to for educational purposes to help educate yourself during your Crypto journey.

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The EVM allows for developers to create Smart Contracts and Decentralized Applications (Dapps) in a programming language called Solidity. What makes the EVM remarkable is that it can be used by other Blockchains. So instead of developing an entirely new way of implementing Smart Contracts, competitors can copy and paste the work done by the Ethereum developers. This allows for the EVM to be used and compatible with different Cryptocurrency projects. Thus, increasing collaboration between Layer 1 blockchains in the crypto space, and making the environment more interoperable.

Here are a list of Blockchains that use the EVM:

https://chainlist.org

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Cross Chain Bridges

A Cross Chain Bridge connects independent Blockchains and enables the transfer of assets and information between them. As the long list of Layer 1 and Layer 2 Blockchains continue to grow, Cross Chain Bridges provide movement and progress towards a multichain future…

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4 years ago

Albeit indirectly, there are a few ways you can do so. However, you must understand that these are not the same as owning Coins directly. They are derivative investments, therefore, they only mimic the asset and will not reflect true ownership or the same price movements.

Here are options to gain exposure to Ethereum by purchasing ETFs that are Publicly Traded:

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In a previous article, we briefly touched on some types of Analysis: Fundamental, Technical, Sentiment and On Chain.

The article can be found here:

https://www.l82crypto.com/p/types-of-investment-analysis

Today we identify a few resources in which you can refer to for educational purposes to help educate yourself during your Crypto journey.

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They are documents specific to a crypto project and are published by its creators. The Whitepaper should outline the project's purpose, details of the project and how it will solve the problem.

It is a key step to be considered legitimate and professional as it helps investors understand the project. Not only does the Whitepaper serve as an educational document, additionally it is a marketing tool, establishing brand and project legitimacy.

Key Contents of a Whitepaper:

• Project Outline

• Solution

• Overview of the Team

• Information about Token Release and Marketplace

• Project Roadmap

You can find most crypto Whitepapers here:

Whitepaper.io

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EVM

The Ethereum Network operates using automated Smart Contracts that are coded in the Ethereum Virtual Machine (EVM). The EVM is a global processor which allows for the deployment and execution of code on the network, operating by performing specific functions when certain conditions are met. Smart Contracts have their advantages including the speed of e…

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4 years ago

Albeit indirectly, there are a few ways you can do so. However, you must understand that these are not the same as owning Coins directly. They are derivative investments, therefore, they only mimic the asset and will not reflect true ownership or the same price movements.

Here are options to gain exposure to Bitcoin by purchasing ETFs that are Publicly Traded:

Read more

Those who run nodes on the Bitcoin blockchain and make it secure, must agree to any updates. In order for BIP’s to reach consensus, they need a majority vote of over 90%. If BIP’s get approved, the updates will be added to the network.

You can view BIP’s here:

https://github.com/bitcoin/bitcoin

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Crypto Whitepapers

What are Whitepapers? They are documents specific to a crypto project and are published by its creators. The Whitepaper should outline the project's purpose, details of the project and how it will solve the problem. It is a key step to be considered legitimate and professional as it helps investors understand the project. Not only does the Whitepaper serv…

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4 years ago

A way of earning rewards for holding a certain Cryptocurrency that uses a Proof of Stake (PoS) Consensus Mechanism.

For PoS networks, validators need to lock up and “stake” a certain amount of the currency and for a minimum amount of time as collateral, before they can be awarded the opportunity to validate transactions.

Staking adds security to the Blockchain as validators have “skin in the game” and therefore it is unattractive to act dishonestly when you can lose your staked currency. For helping the Blockchain operate safely, you receive rewards for doing so.

As different Blockchains have different minimum staking requirements, it is possible to join staking pools in order to meet the larger value staking amounts of certain chains.

 Advantages of Staking your Tokens:

• Generate passive rewards (a yield) 

• Yields are often higher than typical interest rates offered by banks

• Contribute to the security and efficiency of the Blockchain

Risks of Staking your Tokens:

• Often require a certain lock up period where you cannot transfer or sell your tokens

• Price drops can sometimes outweigh reward yields during highly volatile times

• May be longer waiting periods even after unstaking 

• Counterparty risk of staking pool operators such as hacks, going out of business, etc

You can learn more about different staking rewards and Blockchains with Staking here:

https://www.stakingrewards.com/

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What is a BIP?

Bitcoin Improvement Proposal (BIP) is a way to pitch an idea on how to change the Bitcoin blockchain. Since Bitcoin does not have a centralized leadership group, it is a way for the community to express ideas, draft and propose technical changes, and to vote for or oppose proposals. The BIP process allows for the network to operate without a leader…

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4 years ago

Why?

Because it is not the price that matters, but the Market Cap of a coin.

Market Cap = Circulating Supply of Tokens x Current Price

A Market Cap is a useful way to compare the size of crypto projects. Don’t be fooled by the coins that only cost $0.0000002 (for example). For them to get to $1, they may require more money than what is in existence in the entire world.

Additionally, for projects that do not have the entire circulating supply of coins in existence today, you may factor in the future supply using the Fully Diluted Market Capitalisation formula:

Fully Diluted Market Cap= Max Supply of Tokens x Current Price

Here are some places where you can go to check coin prices and Market caps:

https://coinmarketcap.com

https://www.livecoinwatch.com

https://www.coingecko.com

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Crypto Staking

What is Staking? A way of earning rewards for holding a certain Cryptocurrency that uses a Proof of Stake (PoS) Consensus Mechanism. For PoS networks, validators need to lock up and “stake” a certain amount of the currency and for a minimum amount of time as collateral, before they can be awarded the opportunity to validate transactions…

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4 years ago

1) ATH: All Time High

The highest price point a crypto has been in its history.

2) KYC: Know Your Customer

Identity verification and checks that exchanges and platforms must perform to comply with regulations.

3) TVL: Total Value Locked

Amount of assets being staked in a specific protocol

4) OTC: Over the Counter

Transactions made outside of an exchange through private broker-dealer transactions. Typically used by Institutions, High Net Worth Individuals and Whales for large transactions.

5) ASIC: Application Specific Integrated Circuit

The hardware used for mining Bitcoin or other cryptocurrencies.

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Don’t be Fooled by Prices

A coin that is $1 and wants to go $2 would require the same doubling of Market Capitalisation if the coin is $1,000 and wants to go to $2,000 Why? Because it is not the price that matters, but the Market Cap of a coin. Market Cap = Circulating Supply of Tokens x Current Price…

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4 years ago

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PoW: Miners compete against each other using specialized computers and hardware to be the first to solve a complex puzzle. The winning miner has the opportunity to validate the transaction.

PoS: Validators need to lock up and “stake” a certain amount of the currency and for a minimum amount of time as collateral, before they can be awarded the opportunity to validate transactions.

The Merge will occur when the current Ethereum PoW Mainnet that is running parallel to the Ethereum PoS Beacon Chain merges, and then updates. 

After the Merge, the impact will be:

• The end of PoW for Ethereum and the update to PoS

• Network Validators will stake ETH

• The PoS system will be less energy intensive as PoW consumes more energy and PoS will be more “green” and “ecofriendly”

• Offer greater security and stability with the staking of ETH

• Seen as newer and more advanced system

The ETH Merge is a very complex process and is the reason why it has taken so long to occur.

You can learn more about Consensus Mechanisms here:

https://www.l82crypto.com/p/proof-of-what?s=w

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What’s that mean? Crypto Terminology Part II

If you have been doing more investigation into the crypto industry, you may have come across some terminology or abbreviations you will want to get familiar with. We have put together a list of some common jargon you will want to know. 1) ATH: All Time High…

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4 years ago

There are two methods which can be used for traditional financial analysis, but also used for cryptocurrency investment analysis:

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Today, to compete, miners need to use special hardware, reliable and cheap power and have abundant energy. The difficulty to mine Bitcoin increases as competition increases, and as a result, using more electricity as the network continues to grow.

Bitcoin’s energy consumption can only be estimated and cannot be directly measured for a few reasons such as:

• Miners can operate pseudonymously

• Miners use different hardware equipment with varying energy efficiencies

• There are differences in how effectively mining facilities use power

Therefore, you can only use theoretical models to approximate Bitcoins electricity consumption. 

The University of Cambridge electrical consumption models can be found here:

https://ccaf.io/cbeci/index

There is an Environment, Social & Governance (ESG) movement which has created a narrative that Bitcoin is bad due to its energy consumption. The general ESG mandate is to lower carbon footprints and eliminate and reduce the use of energy from sources such as coal, gas and petroleum.

However, Bitcoins use of energy can be viewed as a benefit to society, more than the properties of this superior money. As clean energy gradually gets cheaper and the price of Bitcoin increases, Bitcoin miners can help subsidize green projects and shift to renewable energy sources such as geothermal, solar and wind power. As renewables become more popular and the price becomes cheaper than “dirty” energy, Bitcoin can begin to fully incorporate sustainability into its everyday operations, thus pushing clean energy forward, while reducing the carbon footprint of the network.

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ETH 2.0 Merge

ETH 2.0 Merge is the transition from the current Proof of Work (PoW) to Proof of Stake (PoS) consensus mechanism used by Ethereum. The consensus mechanism refers to the process used to validate every blockchain transaction. PoW: Miners compete against each other using specialized computers and hardware to be the first to solve a complex puzzle. The winni…

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4 years ago

The difficulty of the network is a parameter used to keep the average time between blocks steady. The Bitcoin blockchain is supposed to add blocks and release new coins at a steady predictable rate. For Bitcoin, blocks are mined nearly every 10 minutes. If miners are solving blocks more often than every 10 minutes, the difficulty increases. If miners are solving blocks less often than every 10 minutes, the difficulty decreases. 

The more miners there are online, the more hashrate is produced. Hashrate is the total combined computational power that is being used to mine and process transactions on a Poof of Work (PoW) Blockchain. The hashrate difficulty adjusts accounting for situations and periods when more guesses are being produced. The more guesses there are, the more likely the right guess will solve the algorithmic code. The difficulty adjustment allows miners to verify the blocks at a consistent rate and are awarded for performing this action.

The greater hashrate also means greater security for the network. The more hash power the network uses, the more distributed the work is for each transaction that takes place on-chain. A higher hashrate ensures safety against attacks on the network which requires at least 51% of the Bitcoin hashrate.

A person or group that controls a majority of the hashrate could, in theory, block or reorganize transactions and even reverse their own payments. This would create double spend issues, which would undermine the integrity of the blockchain.

A fall in hashrate, means a reduction in the cost to perform a 51% attack, making the network more vulnerable to attack. So, more hashpower results in higher security and a more valuable network. Over Bitcoin’s history, the hashrate continues to increase.

You can view the difficulty of the network here and see how it stacks up over time:

https://www.blockchain.com/charts/difficulty

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Energy Consumption of Bitcoin

Energy is essential to Bitcoins operation as the Bitcoin network uses energy to distribute the money within its economy and to secure its history of transactions. In the early days of Bitcoins existence, users were able to compete for newly issued Bitcoins just by running a laptop or a gaming computer using a small amount of electricity…

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4 years ago

There are different types of stablecoins:

​- Fiat Backed: maintain a reserve of a certain fiat currency. Most fiat backed stablecoins are backed by the USD and some by other world currencies. 

Ex. USDC. For every $1 in USDC, there is $1 held in a bank somewhere. 

- Commodity Backed: collateralized by physical assets such precious metals like gold and silver or even oil.

Ex. PAXG. For every 1 PAXG token, there is 1 fine troy ounce (t oz) of a 400 oz London Good Delivery Gold Bar stored in the Paxos Trust Company’s vault.

- Crypto Backed: collateralized by another Cryptocurrency through Smart Contracts. Due to the high volatility of crypto, the reserves of the crypto need to exceed the amount of stablecoins issued.

Ex. DAI. For every $1 in DAI, there is $2 worth of ETH.

- Algorithmic: an algorithmic code controlling the change of supply and demand of (typically two) tokens, a stablecoin and a crypto token. Most of them are based on arbitrage opportunities when the coin is "off" the $1 peg. They are undercollateralized and don’t have independent assets in reserves to back the full value.

Ex. UST. Change in value of UST and LUNA to maintain a 1:1 peg.

Why would you need to use stablecoins?

- Lower the volatility in a portfolio

- Help to preserve your portfolio from losing too much value short term

- Able to sit with money ready to buy the dips instead of having to wait to transfer fiat to a central exchange (which has varying processing times), and then buy crypto with the stablecoin.

- You can earn yield on stablecoins

- You can take profit into stablecoins

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Bitcoin Mining Difficulty

What does the Bitcoin network mining difficulty mean? The difficulty of the network is a parameter used to keep the average time between blocks steady. The Bitcoin blockchain is supposed to add blocks and release new coins at a steady predictable rate. For Bitcoin, blocks are mined nearly every 10 minutes. If miners are solving blocks more often than eve…

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4 years ago