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Bitcoin and Other Cryptocurrencies: Do Your Due Diligence

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just in bitcoin

Since bitcoin began in 2009, it has gradually accelerated towards global adoption. Despite countless attempts to attack or ban it, even by nation states, bitcoin currently has close to 200 million users, a market capitalization of greater than $1 trillion US dollars, and a 99.98% uptime during its 12 years of operation. Not surprisingly, new investors are entering the market every day. While many of these new market participants are becoming aware of bitcoin’s broad range of use-cases, this learning process can be diluted by the ever-growing allure of alternative cryptocurrencies, especially those with promises of being a better technology or more likely to return quick profits. Consequently, it is important to have a framework by which to perform due diligence when considering if one of the several thousand alternative cryptocurrencies is worth your time and money when compared to bitcoin.

What makes bitcoin an attractive investment?
Most new investors are drawn to bitcoin due to the properties which make it a superior form of money (i.e., being extraordinarily salable across time, space, and scales; as detailed in Saifedean Ammous’ The Bitcoin Standard). This is particularly relevant in the current economic and financial climate, given the value of fiat currencies (i.e., government issued tenders, like the dollar) are declining due to central banks and governments endlessly inflating the money supply in an attempt to ameliorate the disastrous ramifications caused by decades of unsustainable fiscal and monetary policies. Beyond this, the benefits of bitcoin are vast. While it is outside the scope of this article to exhaustively explain all features and use-cases of bitcoin, the following points tend to be what attracts many users to bitcoin:

1. Bitcoin was invented by a pseudonymous figure named Satoshi Nakamoto. Satoshi Nakamoto:

a) disappeared two years after the creation of bitcoin and entrusted its development to the broader decentralized community;

b) did not get awarded any free bitcoin, but instead mined/earned it like other network participants;

c) did not benefit financially from inventing bitcoin (i.e., even though Satoshi mined bitcoin, they did not use nor sell those bitcoin for profit); and

d) did not retain any power or control over bitcoin.

Many liken this to an “immaculate conception”, in which a revolutionary and disruptive technology was developed and bootstrapped from nothing by an inventor who received no power, social credit, or financial gain. That is an incredibly rare occurrence!

2. Bitcoin has no central controlling/governing individual or group. No central entity can control:

a) who can or cannot use bitcoin (or what they can use it for);

b) bitcoin’s maximum supply (which is capped at 21 million);

c) the issuance rate (i.e., the new supply) of bitcoin (which halves every four years until the final bitcoin is mined in 2140);

d) development of the bitcoin protocol/code;

e) security of the bitcoin network; or even

f) marketing and communications about bitcoin.

3. Bitcoin is a transparent peer-to-peer decentralized network that has strict rules and is open to all participants. In other words: anyone can join the bitcoin network by running their own node (i.e., a device which connects to other bitcoin node devices to comprise the network), which makes it possible for individuals to enforce and audit the rules of the bitcoin network themselves, rather than relying on a third-party. Relatedly, there is no need to trust centralized intermediaries to manage the network, store bitcoin, nor verify bitcoin transactions (i.e., there is no need for the involvement of governments, banks, payment processors like Visa or Mastercard, nor remittance intermediaries like Western Union). In sum, bitcoin removes the reliance on ever-changing laws and third-party trust required in the existing fiat monetary and financial systems and replaces these with strict mathematical rules and certainty through verifiability.

4. Bitcoin utilises a proof-of-work protocol to issue/create new coins and to secure the network. For context: a bitcoin “miner” is a network participant who consumes energy to run specialised hardware to compete to solve computationally intensive mathematical problems in order to mine the next bitcoin “block”. The first miner who successfully mines the next block is rewarded with newly-minted bitcoin. (Note: A bitcoin block is a set of bitcoin transaction data that will be added to the “blockchain”. The blockchain is the public ledger of all bitcoin transactions).

This proof-of-work method means:

a) new bitcoin is difficult and expensive to create (i.e., it requires specialised hardware, energy consumption, and time);

b) new bitcoin is only awarded to miners who productively work for the network (i.e., miners compete with each other on the shared task of confirming/verifying bitcoin transactions); and

c) it is extremely difficult and expensive for a malicious miner to attack the bitcoin network (e.g., to perform a “double spend” transaction) due to the energy and hardware cost it would involve, as well as the ongoing intense competition between productive miners.

Are there better alternative cryptocurrencies compared to bitcoin?
With the aforementioned points in mind, it follows that any due diligence regarding other cryptocurrencies should consider the following:

1. Is there a central individual or team which can control the cryptocurrency? If so, what kind of changes can this controlling party make? For example, can they:

– amend the maximum supply or issuance rate of the cryptocurrency?

– control how the project will be developed or marketed?

– make changes to the cryptocurrency blockchain, such as censoring, freezing, or reversing transactions?

Additionally, does having such a controlling entity raise any other risks? For instance, could they:

– be influenced by self-interest?

– be coerced by bribes, blackmail, or government regulations?

– make mistakes by accident or negligence?

– change management (e.g., due to moving to a new project, or even due to unexpected illness or death)?

2. What are the rules which govern the cryptocurrency’s supply? That is:

– what is the maximum supply cap?

– what is the issuance rate of the new tokens?

– can the maximum supply and issuance rate be changed? If so, how easily?

– can users audit/verify the maximum supply and issuance rate? If so, how easily?

– was there a “pre-mine” distribution which gave the cryptocurrency developers (or anyone else) a significant portion of the supply for free (i.e., without having to buy it or work for it like other users of the network)? If so, can these amounts and the owners be audited/verified?

– are there any entities with a very large or controlling share of the supply? If so, does this give them any kind of control over the network?

– is the issuance and security model based on a proof-of-work protocol like bitcoin, which makes new coins expensive to create and network attacks inordinately difficult? If not, is it instead based on a relatively easier, centralizing, and corruptible alternative like proof-of-stake (e.g., whereby owning more coins enables greater control over the network)?

3. How decentralized are the cryptocurrency network nodes and miners? For instance:

– are the majority of the nodes or miners run by a central party or on a centralized cloud hosting service? If so, has this been considered as a single point of failure for the network?

– how easy is it for a home user to run a node or miner (i.e., considering cost of hardware and software, setup time, technical ability, and data use and data storage requirements)?

– how geographically and politically decentralized are the nodes or miners?

– can security metrics (such as the processing power or “hash rate”) of the network be monitored (e.g., see bitcoin’s hash rate)?

4. Are there any “too good to be true” or ponzi-like offers being made? Such as promises of:

– high interest returns/yields by freezing/locking your cryptocurrency with a third-party?

– “airdrops” of more cryptocurrency tokens?

– burning/discarding token supply in an attempt to increase the price?

– features which never seem to be delivered or seem inordinately grand in scale?

While these are not inherently fraudulent claims, they do demonstrate that gimmicks are being used to draw in new network users, rather than providing a cryptocurrency with features that will attract participants on their own fundamental merits. Additionally, users must trust these claims along with the people who are making the promises.

5. Can the features of the cryptocurrency be accomplished by or integrated onto bitcoin? The following list includes frequently purported use-cases of other cryptocurrencies (without mentioning specific names), as well as how this functionality can be achieved with bitcoin:

a) Fast and cheap transactions: bitcoin’s Lightning Network already allows for near instant and free payments (Note: the Lightning Network is considered a second layer on top of the bitcoin base layer; the base layer is designed to be unbreakable, secure, and to provide immutable final settlement, whereas layer 2 enables scaling for higher volume, cheaper fees, and faster speed).

b) Smart contracts which enable complex functions rather than just simple transactions: bitcoin currently has smart contract capability on layer 2 (e.g., Lightning Network) and the option to expand this further with layer 3 solutions (e.g., RGB). Numerous applications are already being developed on bitcoin’s additional layers, such as content sharing and private messaging apps (e.g., Sphinx Chat), as well as virtual private networks (e.g., ImperviousAI). Furthermore, there is a bitcoin improvement proposal (BIP300) that may introduce “drive-chains”, which would allow any cryptocurrency protocol to be integrated onto the bitcoin network.

c) Private transactions: bitcoin base layer currently has advanced transaction types available that can obfuscate bitcoin payment history, such as by using coinjoins to mix and spend your funds (e.g., see Samourai Wallet and OXT Research’s recent deep dive into bitcoin on-chain privacy).

d) Stablecoins (e.g., a cryptocurrency token pegged to a fiat currency value, such as the US dollar): bitcoin’s Liquid Network provides for this functionality already, allowing traders and investors to shift in and out of a stablecoin using only their bitcoin.

In addition to these capabilities, there are numerous environmental and humanitarian benefits which result from the process of bitcoin mining, as well as from the permissionless and open nature of the bitcoin network. For example, bitcoin mining is being used to bootstrap renewable energy infrastructure and to drive the development of the renewables industry (e.g., see Alex Gladstein’s recent essay). Bitcoin mining is also utilised to rescue stranded, surplus, and wasted energy (e.g., see Great American Mining and Upstream Data Inc). Finally, the bitcoin network is currently helping to “bank the unbanked” in developing countries (e.g., El Salvador), at the same time removing the expensive, inefficient, and often corrupt intermediaries from the global remittances market (which puts money back into the hands of citizens who need it the most; see here for more detail).

As final food for thought, when considering other cryptocurrencies, it is important to query whether the project provides over 10 times more value than bitcoin, as this is believed to be the magnitude required to disrupt an existing network that has reached critical mass (as per Jeff Booths’ Price of Tomorrow). In other words, when bitcoin has powerful network effects working in its favour (e.g., see Lyn Alden’s comprehensive report), and it can perform or integrate the same features as all other cryptocurrency projects, then it needs to be asked why would one of the many thousand other less-adopted, still-unproven, and less-secure cryptocurrencies take its place?

Am I too late to buy bitcoin?
If you conclude that bitcoin is the better option, but find yourself hesitant due to its “old age” of 12 years or seemingly high price (~$55,000 USD as of writing this article), then it is worthwhile considering the following metrics of bitcoin’s adoption:

1. Less than 200 million people (or 2% of the global population) own bitcoin.

2. Bitcoin’s market capitalization is approximately $1 trillion USD (compared to the over $900 trillion USD of available global capital).

3. There is roughly 2.8 million bitcoin left to be minted, and the final coin will be mined in 2140.

In summary, and to put it bluntly: bitcoin is only just getting started in regards to its adoption by individuals, companies, and countries; it will continue to be used and mined long after most of us are dead. Rest assured, you have arrived just in time.

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Source: https://medium.com/@justin_bitcoin/bitcoin-and-other-cryptocurrencies-do-your-due-diligence-5b22759ac5f3?source=rss——cryptocurrency-5

Blockchain

MATIC Price Analysis: Weekly and 4 Hr Chart Analyses Reveals Buy Signal for Polygon

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Polygon recently set a new record for highest bounty paid in DeFi. The team at Polygon paid a two million US dollar worth of bounty to Gerhard Wagner, a white hat hacker who discovered a crucial vulnerability that had put around 850 million US dollars’ worth of capital at risk.

So what type of vulnerability could this be? Well, it’s a double-spend bug, a type of bug that could have tuned catastrophic for the Polygon ecosystem.

Bullish/Bearish Scenario

  • The bear-trap candlestick formation on the weekly time frame, alongside the buildup of bullish divergence on the 4HR time frame, shows that the bulls are back in control.
  • A breakdown of the 1.152 support implies a bearish takeover.

Important Weekly Polygon (MATIC) Announcements

  • Immunefi, a bug bounty, and security platform acknowledged that the bounty is the highest that has been paid in decentralized finance [DeFi].
  • Another exciting announcement in the Polygon ecosystem is the PECO-Polygon Ecosystem Index, which makes it possible for participants to bet on the performance of Polygon [MATIC] projects. The PECO Index is a single token that captures the best native projects on @xPolygon.

Without any further delay, Let’s analyze the MATICUSDT price chart.

Polygon (MATIC) Price Analysis:  MATICUSDT Weekly Chart 

Following the path of most top altcoins in the cryptocurrency market, the MATICUSDT triggers a bear-trap candlestick formation while trading within a rising and expanding wedge.

Although the crypto pair still trades below its all-time high, higher RSI readings above level-25 tell us that we are still in an uptrend and we may soon see a surge in demand for the MATIC token.

Polygon (MATIC) Price Analysis:  MATICUSDT Daily Chart 

A recent regular bearish divergence on the daily chart above shows that we may soon see a slowing and possible correction of current gains.

Failure of RSI values to breach below level-25 would suggest a continuation of the current uptrend.

Polygon (MATIC) Price Analysis:  MATICUSDT 4 Hr Chart 

As the RSI prints higher values above level-25 on the daily time frame, the 4HR time frame confirms entry into the uptrend with an exit of the oversold area [level-25] with the recent entry of oversold at press time.

Regular and hidden bullish divergence setups are instrumental for the previous trend reversal and current trend continuation we see on the above intraday chart.

An impending hidden bullish divergence at press time may be sufficient for the bulls to find a price floor above the 1.491 support and restore the MATIC price into new highs.

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Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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Source: https://coingape.com/polygon-matic-price-analysis-intraday-hidden-bullish-divergence-signals-trend-continuation-for-maticusdt/

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Blockchain

Harmony’s ONE Token Targets $1 After Breaking All-Time High

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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

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Source: https://cryptobriefing.com/harmonys-one-token-targets-1-after-breaking-all-time-high/?utm_source=main_feed&utm_medium=rss

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Blockchain

NEAR Announces $800M in Development Grants

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The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

See full terms and conditions.

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Source: https://cryptobriefing.com/near-announces-800m-in-development-grants/?utm_source=main_feed&utm_medium=rss

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