The Top Cryptocurrency and Blockchain Projects in 2018

There’s been a change in the outlook for cryptocurrency during the past few months. People seldom talk about the markets or the price of Bitcoin. Volatility has been causing a lot of uncertainty, and mainstream adoption came to a virtual standstill.

Nonetheless, the cryptocurrency space showed remarkable resilience as blockchain projects continue to expand its borders with more lateral thinking and “out-of-the-box” blockchain solutions. We’ll explore some of their use-cases and find out whether these currencies and platforms are the next big thing.

 

Why People Invest in These Projects

Despite the recent lull in cryptocurrency trading and mining, blockchain projects and ICOs are very much in the business for 2018. Investors and tech companies remain optimistic about the future of the cryptocurrency space amidst tightening restrictions and negativity. In fact, according to Coindesk, the amount of money raised in ICOs in the first quarter alone exceeded the total amount last year.

Most ICOs and blockchain projects didn’t end up well for a lot of investors (more than 90% failed to deliver). However, there are a few examples like Binance and EOS which turned out as good investments. Binance became one of the leading cryptocurrency exchanges with a BNB market cap of over $1 billion – the second most valuable token on Coinmarketcap. EOS, on the other hand had a successful, albeit controversial mainnet launch, and is now a full-fledged decentralized application platform second only to Ethereum.

Smart investors consider the current state of affairs as a golden opportunity to hunt for new projects with the greatest potential, particularly in their early stages when they are mostly undervalued. Investing early on has the advantage of maximum gains with the least amount of exposure. For instance, a hundred dollars’ worth of investments at ten cents per token won’t break the bank if things go south. But if it turns out to be a real investment, gains will be exponential (e.g., BNB and EOS tokens are worth a hundred times more than their initial price in 2017)

 

 

Blockchain Projects to Watch for in 2018

Finding a good investment can be a real challenge since we’re dealing with dozens of new blockchain projects and ICOs every month. If you’re lucky enough, you might be able to land on some big winners from a list of projects. But before anything else, please bear in mind that this is not investment advice, and you are solely responsible for any gains or losses. That said, here are five of the most talked-about blockchain projects in 2018.

 

Zilliqa (ZIL). Launched in January, the project puts a lot of work in building a highly scalable decentralized platform using a method known as “sharding.” Unlike in Bitcoin, each node will be working in parallel within a group of nodes called “shard,” verifying a subset of all the transactions occurring at the same time (also called parallel processing). Sharding works perfectly in many centralized systems (Ultima Online, Google, etc.). However, it presents an immense technical challenge when applied on a decentralized environment. Ethereum has been working hard on it as part of its on-chain scaling solution in hopes of solving the security/scalability/decentralization trilemma. Zilliqa’s entry into the whole sharding scene threatens to steal the thunder from Ethereum by becoming the first to come up with a workable solution. Some estimates it to be around January 2019. Key features include:

  • faster transaction throughputs (speed improves as the network grows)
  • employs practical Byzantine Fault Tolerance as a consensus mechanism
  • reduced energy consumption (mining is spaced a hundred blocks apart)
  • maintains a decentralized network structure (a new shard is created for every 600 nodes)

Basic Attention Token (BAT). Cutting the middleman goes beyond peer-to-peer transactions to include decentralized, blockchain-based digital advertising in the form of an open-source, ad-free browser with its own currency. Brave Browser is one of today’s hottest Internet browsing software because it allows users to block ads and trackers completely free. In fact, as many as 3 million people have already been using Brave, becoming one of Google Play’s top ten in the Android browser category. The project is moving towards the creation a decentralized advertising platform using its own currency – Basic Attention Token – to incentivize both content creation and user attention. It works in some ways like Google Ads but in a more transparent and decentralized manner. The key advantages of BAT from an investor’s point of view include:

  • good potential for adoption (sold out BAT worth $35 million in 30 seconds)
  • strong support from the community (Brave browsing experience receive a lot of positive feedback from users)
  • a solid team of experienced developers (founded by no less than the co-founder of Mozilla, Firefox, and creator of JavaScript)

Kin (KIN). Canadian messaging app company Kik Interactive is making headway into cryptocurrency adoption with the launching of Kinecosystem. The company hopes to build a community of users and developers sharing resources, and making digital goods and services. However, unlike most blockchain startups with no real users, Kin’s integration into the Kik Messenger meant its value could potentially rise with over 300 million active users.  The company is now moving towards the next phase, inviting all developers and content creators in building the ecosystem for large KIN payouts. Gains will take time, but you might want to consider its advantages, namely:

  • KIN’s practical use-case as a digital currency on an existing application (Kik has been in use since 2010)
  • user base is mostly made up of digital-natives (teens, millennials, and active mobile users)
  • Kik’s emphasis on anonymity

DeepBrain Chain (DBC). Blockchain companies like DeepBrain Chain sees decentralization as the future of the AI industry. Development of AI applications use up a huge amount of computing power. DeepBrain Chain works by utilizing computational resources across millions of nodes on the neural network in building AI applications which are then published onto the blockchain. Nodes that successfully deploy mirror images will receive payouts in DBC. It plans on migrating out of NEO to its own mainnet in Q4, with its own consensus algorithm (proof of importance and delegated proof of stake). The goal is to become the deep learning machine for the AI industry. Successful adoption is achievable through:

  • growth in people’s interest in the AI industry
  • reduced computational cost of AI companies through resource-sharing
  • secure, decentralized method of storing AI information.

Wormhole. Bitcoin Cash might soon be able to run smart contracts through its proposed protocol layer known as Wormhole. Developers plan on forking the Omni Layer to create a platform for smart contracts on top of Bitcoin Cash. Much of it is still in the works as of this moment, but news is, they’re going to issue a token named “Wormhole Cash.” Investors and crypto-enthusiasts are keeping track of its progress since it is expected to have a very high demand upon release.

 

Conclusion

The cryptocurrency space has been constantly evolving even as the noise and the hype surrounding cryptocurrency have mostly faded. Cryptocurrency is here to stay, and we’ll be seeing more projects in the near future that will bridge the gap between the average user and blockchain technology.

Solving the Cryptocurrency Puzzle

Cryptocurrency gives people a glimpse of what our financial system could look like in the next five to ten years. From its infancy, we’ve already seen the potential of cryptocurrencies like Bitcoin and Ethereum to revolutionize traditional banking through a system of payment which doesn’t require intermediaries.

This method is proving itself as a fast, reliable, and cost-effective means of communicating value, touted by enthusiasts as the Internet of money, far better than our centuries-old banking system with its painfully slow and costly transactions. However, in recent years, we’re starting to see some of its growing pains as it goes through the slow process of mass adoption.

Developers are now looking into these problems with a renewed sense of urgency as cryptocurrencies gear towards mainstream integration. It is expected for the next couple of years to be the most turbulent in all of cryptocurrency history, and one which will decide the fate of our status quo.

 

In Search of the Missing Piece

Blockchain protocols lend to the blockchain’s immutability and varying degrees of decentralization. Like any software, they are far from being perfect. There are over a thousand cryptocurrencies in circulation today, and all of them will have to somehow deal with their own issues one way or the other.

Bitcoin has had a number of BIPs to solve this lingering problem of slow confirmations. By mid-2017, they managed to increase the block’s capacity by almost double without causing compatibility issues with old, existing wallets. With the adoption of Segwit, Bitcoin accomplished two things at once: fixed a software glitch (transaction malleability), and reduced confirmation times.

However, such measure won’t guarantee a long-term, let alone permanent solution, to Bitcoin’s transaction woes. At the time of writing, there are over **50,000 pending transactions in Bitcoin’s blockchain mempool, waiting to be confirmed, and they’re constantly piling up at a rate of 2-3 unconfirmed transactions per second. Developers have been working round the clock testing and finalizing Lightning Network for Bitcoin, the success of which will enable Bitcoin to break the sound barrier and bring this whole debate of scalability into a close.

(**That number went down to <2,000 unconfirmed transactions, probably due to increased Segwit adoption by wallet users and providers, or to some early adopters of the Lightning Network.)

Ethereum has had its own share of problems and fixes, most notably the Decentralized Autonomous Organization (DAO) attack of June 2016 and the hard fork that ensued to prevent further loss of funds. Smart contracts is one of Ethereum’s major selling point which enabled contracting parties to make an agreement that executes after satisfying certain conditions, or rolls back if it hasn’t.

Ethereum’s biggest hurdle is the ominous “difficulty bomb” built into the system which makes it nearly impossible to mine without incurring losses to miners after a certain point in time. Hence, the only solution is to migrate from a “proof of work” to a “proof of stake” method of confirming transactions. With the release of the Casper update for Ethereum, they hope to achieve exponential rate of confirmations and scalability in preparation for worldwide adoption.

 

The Proof of Work Concept

Proof of work had its roots in the early 90s to deter users from launching denial of service (DoS) attacks performed by spamming websites and establishments with superfluous requests. Interestingly, proof of work was also coined from the standpoint of giving value to a currency like the shell money used by inhabitants of the Solomon Islands.

Proof of work underpins major currencies such as Bitcoin, Etherium, Bitcoin Cash, and Litecoin in confirming transactions on a blockchain, which can only be achieved through mining. Proof of work helps create a system which is resistant to fraud and hacking since there are no viable means to circumvent the process except by brute-forcing through an inordinate number of trial-and-error.

In proof of work, only truth matters, in this case, the correct nonce and the corresponding hash which would allow transactions to be confirmed. In return, miners are rewarded for their efforts and new units of currencies are created and added into their accounts (hence the idea of mining).

Such method opens up the possibility of individuals with the most powerful mining hardware taking control, and in effect centralizing all the hash power to an elite few. Thus, a self-regulating mechanism was put in place to assure that only a specific number of confirmations can be done at a given time (difficulty increases/decreases with the network’s hashing capability).

Bitcoin also has several BIPs to increase network efficiency, such as the inclusion of mining fees. With this, they hope to alleviate congestion by putting a premium on higher transaction fees and eliminating the possibility of saboteurs spamming the network with high volumes of worthless micro-transactions.

As it turns out, some solutions can also have unforeseen consequences down the line, namely, difficulties with scaling. The first cryptocurrency, Bitcoin, was not really intended for everyday use but only as an alternative means of exchanging value outside the realm of government regulations. Scaling would not have been an issue back then. However, much has changed, and more countries and businesses are looking towards cryptocurrency as the way forward to their old and antiquated monetary system.

 

Proof of Stake and Its Potential Risks

Proof of stake adds another twist to the way transactions are confirmed. Similar to mining, participants validate and confirm transactions which are added on top of the blockchain. However, instead of using hash power, they would stake their currencies and lock them up for each round of staking. It also requires continuous uptime in order to be chosen by the algorithm, and, by being chosen, confirm transactions, and receive their rewards.

There are many nuances on how proof of stake are implemented in various cryptocurrencies based on how they try to mitigate the risks associated with staking, e.g. monopolozing, inflation rates, and network stability. Most prominent among cryptocurrencies which use proof of stake includes Peercoin, Blackcoin, Nextcoin, Bitcoin Plus, Cardano (premined) and soon to be Ethereum Casper update.

Staking is touted by several crypto-enthusiasts as the only road to scalability and worldwide adoption because it solves a lot of issues with associated with mining which uses proof of work such as power consumption and confirmation times. Although plausible with proof of stake being cost-effective and faster than proof of work, it could quickly turn into a can of worms if not implemented correctly.

Proof of stake tend to favour “stakers” (the equivalent of “miners” using proof of work) with huge quantities of currencies in reserve as they could handily beat small-time stakers with the increasing level of difficulty. Stakers can do the same thing as did every miner, creating a pool of stakers or the so-called master nodes to consolidate all their assets and have a fighting (or “winning”) chance of being randomly selected by the algorithm to confirm transactions.

Some proof of stake implementation prevents monopoly by capping the amount of currency that could be staked, “coin age,” and ticket waiting times. Putting a limit to staked currencies is intended to level the playing field for everybody and encourage more people to participate in staking. On the other hand, coin age and ticket waiting times regulate the frequency participants can stake, Peercoin, for instance, is set to a minimum of 30 days and a maximum of 90 days.

Inflation and network stability are some of the common issues with a proof of stake protocol. Developers are careful enough not to overdo one aspect over the other and seal off potential gaps and loopholes that can cause instability or discourage people from participating. Most proof of stake protocols and algorithms are still in the process of development and rigorous testing. The much anticipated Casper update for Ethereum could be released anytime this year, effectively moving to proof of stake through a hard fork.

 

Ripple and the Consensus Protocol

Consensus seems to be the antithesis of a decentralized method of confirming transactions which rely on proof of work or proof of stake. At its core, it is a trust-based method whereby transactions or any form of agreement between two parties are validated and confirmed by way of consensus. The result is almost instantaneous confirmations, averaging at a rate of 1500 transactions per second.

Ripple breaks the mould by being the first to implement the cryptocurrency version of the “hawala” system, allowing it to deliver lightning fast transactions outputs consistently at only fractions of a penny. However, there is an obvious downside with this kind of method. Despite having the trappings of decentralization as one of the cryptocurrencies listed in exchanges, it is, by all accounts, a centralized currency backed by tech giants and financial institutions.

Unlike mining and staking, there are no incentives as a “validator,” except that fact you earn more trust and contribute to the stability of the whole network. Validators are usually large entities like banks and commercial establishments which might benefit from it through cross-border transactions. However, since all the currencies that will ever exist are already pre-mined, the currency’s value and every asset tied to it are at the mercy of whoever holds the majority of it (hint: 55% is held in escrow by Ripple).

 

The Lightning Network and the New Bitcoin

The proposed Lightning Network solution for Bitcoin, Ethereum’s plan on moving to proof of stake, and Ripple’s meteoric rise towards the end of 2017 sends a strong signal to the cryptocurrency community and to the world that a major change in the current financial system is forthcoming.

Lightning Network, if successful, will usher the golden age of Bitcoin and cryptocurrencies in general. In so doing, we might also have a slightly different view about the new Bitcoin, particularly with its strong stance for decentralization. We might have to welcome the possibility of having off-chain payment channels and smart contracts to communicate with the blockchain instead of having every wallet users transmit countless numbers of micro-transactions to the blockchain every single time. The result would be a dramatic increase in transaction outputs, and the ability to scale with a fast-growing number of users.

Lightning Network could be the missing piece of the puzzle, the final solution to Bitcoin’s scalability issues, and the last hurdle towards worldwide adoption. But it is, by no means, the only way. If, for some reason, Lightning Network failed to materialize, it would not be the end of the road for Bitcoin. It would just be the beginning of a long journey towards perfection and worldwide adoption.

 

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