Best Tweets about blockchain & crypto

Weekly BC Insights

12 Topics, 60+ Tweets, Great Insights

 

Best Blockchain Tweets

In Blockchain Insights, we collect the most interesting Twitter updates from the overall blockchain ecosystem and present them in perfectly curated lists. At the end of each week, we share a summary of the most interesting discussions. Make sure to sign up for the newsletter once you’ve read the full article 😉

In order to kick this off, we have collected some of the best tweets since Bitcoin’s launch for a number of important blockchain topics. We believe 99% of people in blockchain can learn a lot from these insights and hopefully avoid making some unnecessary, costly mistakes!

If you come across a great Tweet in the future, please tag us @BCComparison or share it in our new Telegram group where we collect & discuss these insights from all ecosystems: @BCinsights.

 

Important milestones in blockchain history

Bitcoin was the result of decades of research in cryptography, game theory, and computer sciences. It was also a result of digital cash research & implementations in the 90s and the works of Nick Szabo (bit gold), Wei Dai (b-money), and Adam Back (Hashcash). We have dedicated an article specifically to the history of blockchain.

Hal Finney announced that Bitcoin is live.

The first Altcoin was Namecoin. Litecoin was another early Altcoin that was founded by Charlie Lee and became “Digital Silver” compared to Bitcoin – the “Digital Gold”.

At some point, people wanted to enable more than the simple transfer of values. Since Bitcoin is somewhat limited and core developers didn’t want to change the core protocol too much, new blockchain protocols were started. NXT introduced the first PoS blockchain and made it easy to build Dapps based on built-in features. Many blockchain protocols such as NEM, Waves or Ardor follow the NXT vision.

Vitalik Buterin introduced Ethereum – the “decentralized global computer” including a built-in Turing-complete programming language – to really enable use cases such as decentralized exchanges, smart properties, smart contracts, and DAOs. Since then, Ethereum has become the dominant smart contract protocol and many new blockchain protocols follow this path.

Even before NXT and Ethereum, J. R. Willett proposed Mastercoin and the first ICO. This concept of fundraising was utilized by many projects ever since and really picked up utilizing ERC-20 Tokens on Ethereum in 2017. The performance of the overwhelming number of ICO projects and the value of tokens is another story..

In 2018/2019, the blockchain industry has been going through a phase of consolidation. There were fewer ICOs and fewer partnership announcements but a lot of building. In 2020, there are more than 100 layer 1 blockchain protocols and thousands of Dapps – with few users! The level of adoption is being measured..

A more recent, very comprehensive report was released by Decentral Park Capital, IDEO Colab Ventures & a large number of industry contributors and can be accessed below.

 

Blockchain Security

On the one side, Bitcoin and truly decentralized blockchains are extremely secure compared to a centralized system with a single point of failure. On the other side, while core blockchain technologies are getting more and more secure, smart contracts, the combination of protocols, and project implementations come with risks.

You can not make conclusions from one project for another. Also: DYOR – Do Your Own Research!

You can take self-custody of your finances without being dependent on any third party (bank). You may have heard the saying: “Your keys – Your Bitcoin. Not your keys – Not your Bitcoin”. Note: If you take self-custody, you cannot call somebody to refund your stolen funds. Make sure to safely store your keys and backups.

New wallets improve the user experience significantly. However, in this young industry, there is already a lot of money in circulation and constantly at risk if you don’t take precautions. Be aware of scammers!

Security of blockchains should be the #1 aspect to look for.

 

Decentralization of Blockchain

Decentralization is an enabler of blockchain security. Depending on the use case and participants, more or less decentralization may be needed.

The significance of measuring decentralization is clear.

There are different types of decentralization and different reasons to aim for decentralization.

An analysis of decentralization must include ecosystem, development, tokens, and technology.

Sophisticated attempts at measuring decentralization are emerging.

The security of all available systems and their decentralization may ultimately be put to a test.

Bitcoin’s success until today can be attributed to Satoshi Nakamoto, developers & the community.

 

Scalability of Blockchains

Scaling blockchain mostly refers to throughput. Scaling blockchain also includes storage and the upgradeability and maintainability of solutions – which has been a challenge due to the “immutability” of state, smart contracts & projects.

Storage costs should not be the most important issue.

Blockchain throughput can be improved through a number of different strategies.

Layer 1 blockchains are becoming a settlement layer and other protocols shall take off some of the load.

Some issues must be solved on a core layer and other functionality & scaling must be enabled on other layers.

So far, the Lightning network and other layer 2 scaling solutions are not much used. At the same time, sharding is being implemented in various protocols and a lot of research is going into Zero-knowledge proofs.

 

The Web 3 Tech Stack

The tech stack of the future internet is getting more and more clear. It will consist of various components that are interoperable with each other. Some of these components build on each other which is then described as “layer 1, 2, 3”. A brief introduction is available here.

Web 3 Foundation introduced a general Web 3 stack.

Ethereum Enterprise Alliance is showcasing its tech stack including some tools & private chain adjustments.

Investors are building their portfolio around their new Web 3 stacks.

In the last 2 years, especially 2nd layer protocols have been emerging as well as better tooling.

 

Token economics

The design of tokens and token engineering must be among the top project priorities. Investors must be able to capture real value besides speculation. Also, projects must be compliant with existing securities regulations.

A  clear token framework that specifies the different types of tokens can help with that.

Many disciplines relate to crypto-economics. The engineering of (complex) systems is research-heavy.

Leading organizations such as the Token Engineering Group & Outlier Ventures have already shared great insights into creating a token and a token ecosystem.

The progress in this field has been made step by step over the past years (here: token bonding curves).

Ultimately, projects should be enabled to utilize best practices and models out of the box.

Good token design, distribution, and token value capture mechanisms may enable long-term sustainable token economies.

 

Consensus in Blockchain

Consensus algorithms are a central piece in blockchain to secure the blockchain and maintain its efficiency. Bitcoin’s Proof-of-Work is best-known and tested. Many projects have slightly adjusted and innovated consensus algorithms in the past years. More than 80 consensus algorithms are listed here.

We are seeing the launch of many new Proof-of-Stake & Delegated Proof-of-Stake systems which incentivize early holders with high staking rewards but there is no clear “winner” of PoS networks yet.

 

Governance

Governance is one of the biggest issues in blockchain. Best practices have to emerge in regards to leading a decentralized blockchain protocol, controlling community funds & tech developments. Governance processes continuously evolve and are hard to understand from the outside.

A great introduction to the history of governance in blockchain is described here.

Experiments with on-chain governance are interesting but not everything can be solved on-chain.

The launch style and token distribution are crucial.

The first takeovers and token mergers are happening in 2020.

Governance tokens are emerging.

Decentralized autonomous organizations (DAOs) are live.

 

Interoperability

Interoperability is among the hot topics in 2020. Cosmos and Polkadot are rapidly growing their ecosystems while other projects enable interoperability or launch their own concepts. By now, it’s clear that Bitcoin & blockchain won’t be solely used as a payment network but enable various use cases. Interoperability among networks allows protocols to specialize and helps with scaling.

Interoperability is critical for a liquid tokenized world and integration with other systems.

Ingredients for good interoperability are shared here.

An overview of different interoperability approaches is given here.

An in-depth study showcases all major interoperability approaches in 2020 and includes blockchains and connectors. An easy overview is shared below and the full paper is available here.

 

Blockchain & Privacy

Blockchain and privacy is a delicate matter. On most blockchains all records are visible and it’s possible to track and trace addresses and transactions. However, blockchain can also be part of the solution for private, anonymous payments and even self-sovereign identity.

So, how can we evaluate privacy?

Layer 1 blockchains such as Zcash, Monero, or Dash utilize different technologies such as ring-signatures, mixers, Tor, and zero-knowledge proofs to enable privacy features.

Zero-knowledge proofs can be used for a variety of use cases.

More privacy-preserving technologies are necessary. Nym is working on the infrastructure.

 

ICO, IEO, STO.. what’s next

Blockchain enabled new types of crowdfunding: Initial coin offerings. During the ICO hype in 2017, many projects collected money without a sound token offering & investors got scammed.

Since then, the monthly number of original ICOs decreased. IEOs and STOs were once seen as the next big thing. While they received some attention & some IEOs on large exchanges are successful in fundraising, overall volumes decreased a lot. Some crypto VCs also filled that early-stage gap by investing in tokens & equity.

Many projects also offer airdrops to promote their tokens and to distribute them widely.

Since unspecific airdrops do not help the cause, projects ask ICO participants and potential token holders to engage in specific actions, for example, they need to “like and retweet” or to lock up tokens.

New ICO types are being explored such as the IDO..

the reversible ICO..

and most recently the DYCO.

 

Crypto Valuation & Investing

A never-ending story is the valuation of Bitcoin and other cryptocurrencies. People always discuss whether Bitcoin is overvalued or undervalued – mostly without looking at fundamentals or metrics. Bitcoin & crypto in general has evolved into a new financial market that is immature, not fully regulated, and offers uncountable opportunities for short-term and for long-term investors. There are numerous trading strategies from pump & dump schemes to arbitrage, algo-trading, margin trading, and derivatives trading. We cannot list all trading strategies but we highlight important crypto valuation models and some investment theses.

First of all, it’s important to highlight that crypto asset valuation is still work in progress. Chris Burniske has done fantastic work in this field and shared an update on Cryptoasset Valuations.

A good overview of different crypto asset valuation models is presented here.

Best-known Bitcoin price models are the stock to flow model and the rainbow chart. A comparison.

Some investors share their crypto investment theses and there seems to be a general agreement on the potential of Web 3, open finance & stateless money among crypto investors. Andreessen Horowitz shared their thesis here.

Multicoin Capital shared their Crypto Mega Thesis here.

Henrik Andersson shared insights into the different opportunities and compared the maturity of verticals with potential value captures.

Ryan Sean Adams defined the crypto money portfolio. His thesis is that one or more cryptocurrencies will become the base money of a parallel non-sovereign financial system worth trillions of dollars.

While the outlook looks rather promising for the overall blockchain industry, the valuation of specific layer 1 blockchains, networks and tokens remains challenging. The valuation of DeFi tokens and protocols may be easier because existing models seem to fit better. Note: DeFi is less mature and technical risk must also be accounted for.

 

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In our newsletter we introduce great blockchain solutions and share a collection of the best blockchain insights from the past week.

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