Over the years, blockchain, the technology behind bitcoin, has been the subject of interest for many tech enthusiasts. As such, the technology has been applied across several spheres. And this has birthed many different “blockchains” which perform special tasks. But how are these blockchains different, and why do we need so many?
Firstly, blockchains can be grouped into these three major categories:
- Public blockchain
- Private blockchain
- Consortium blockchain
The backbone of all blockchains – Public blockchain technology is the original blockchain and the technology behind most cryptocurrencies. As the name implies, a public blockchain is a blockchain that is operated, regulated and sustained by the public. It is not controlled by any single individual. Instead, anyone on the chain can read, write or audit the blockchain. Hence, these types of blockchain are transparent and accessible.
No centralised access point – Public blockchain do not have a centralised point of access. As such, decentralised consensus mechanisms which are known as POW (Proof of Work) and POS (Proof of Stake) are used for decision making.
Typical examples of public blockchains are Bitcoin and Litecoin.
Privately-owned and regulated by individuals – Just as its name implies, the private blockchain is operated as the private property of an individual or organisation. Instead of a decentralised point, a central in-charge regulates its operations. Important tasks such as reading, writing and auditing are controlled by the person/organisation in-charge. Access to any of these tasks can only be given to a third party by the person/organisation in-charge.
Access to mining right depend on mood of individuals – Mining rights are also controlled by this centralised point, and decision to or not to give out said rights are at the whim of the person/organisation in-charge. However, since the point of centralisation is trust, the private blockchain is cryptographically secure from the company’s point of view and financially practical.
Example of private blockchain in-use: Quorum (the JPM coin is built on this platform), Hyperledger Fabric
Somewhat similar to private blockchain – The word consortium refers to an association, typically several companies or groups. A consortium blockchain uses a similar system as the private blockchain. The only difference is that here, instead of one person in-charge, you have multiple. A selected group of companies or individual representatives work together as the “in-charge” to make decisions for the entire network.
To illustrate, imagine an association of all the banks in Nigeria, on a blockchain that is set up in such a way that if a given number of banks agree on a transaction/decision/block, it would be added to the blockchain. This way, things move faster and you have more than one point of failure. While a consortium is not open to just anybody and is “centralized” to some extent, it has multiple points of failure which protects the whole ecosystem.
An example of a consortium blockchain is Corda.
Now that we have all the definitions out of the way, how did blockchain become a thing that comes in types?
Enthusiasts caused it – This emanates from the argument by some enthusiasts that if there is a centralized control point, then it is not blockchain. While the point is valid considering the initial concept of the blockchain, there are other sides to consider such as how a private blockchain is appropriate to traditional business and governance models and might be the only way to get these organisations onboard. However, that would be the subject of a stand alone article.
Why do we need them all?
All blockchains perform different necessary functions – Public blockchains can receive or send data from anyone on the network from anywhere in the world. It can be audited by anyone, and each node (think of it as a computer/device that stores transactions that have occurred on the blockchain) has the same power as any other in the chain. Every transaction has to be validated by every node through a process called, chain consensus. These complexities could make it impossible for use in smaller, more targeted networks like banks. For these, the private and consortium blockchains are necessary.
Private and consortium blockchains reduce lengthy vetting processes and the number of trusted parties, thereby making the network faster and more efficient for businesses and organizations.
Where transparency and openness are required, public blockchains are preferred, and where there’s a need for full or partial control, private or consortium blockchains can be implemented. And this, friends, is why the different types of blockchains exist.
This article is in partnership with Quidax. Quidax is a European based digital assets exchange with a focus on Africa. We provide a seamless platform for users to send, receive, buy and sell cryptocurrencies using their local currencies.
Tether expected to surpass Ethereum, based on strength of the U.S dollar
The organic growth of Tether’s market capitalization is one of the major reasons for the gain Bitcoin (BTC) is presently having in the mid-term.
Tether, the third most valuable cryptocurrency with a market capitalization of about $9.1 billion, is expected to pass Ethereum ($27 billion)) as the number two cryptocurrency, on the strength of the dollar.
Bloomberg News reported recently that there is a high probability that it expects Tether (USDT) to outsize Ethereum (ETH) in market capitalization.
The report outlines the organic growth of Tether’s market capitalization as one of the major reasons for the gain Bitcoin (BTC) is presently having in the mid-term.
“Interest in digital links to the dollar represents the need to handle and store value in the world’s reserve currency without an intermediary.”
What you need to know: Tether is designed as a blockchain-based cryptocurrency whose digital coins in circulation are backed by the same value of traditional fiat currencies, like the U.S dollar, Japanese Yen, or the Euro. It trades under the ticker symbol USDT.
Recall that Nairametrics earlier reported how Tether had overtaken XRP (XRP) as the number three most valuable cryptocurrency by market capitalization. Bloomberg reports added that the momentum with the help of the U.S dollar is expected to make Tether gain and move to the second spot:
“Absent an unlikely reversal in predominant crypto trends, it should be a matter of time until Tether passes Ethereum to take the No. 2 spot in total assets behind Bitcoin. Receiving help from widespread adoption with a workable case as a proxy for the world’s reserve currency, there seems little to stop the increasing adoption of the dollar-linked stable coin.”
Also, Bloomberg’s report expects Tether to rise based on Ethereum’s limited upside.
“We see little upside in the ETH price absent a rising tide from Bitcoin. The pre-eminent crypto is breaking away from the pack in terms of adoption and is supported by almost-ideal macroeconomic conditions for stores-of-value amid quantitative easing.
“Tether is in a similar position. Strengthening Dollar Supports Stable Coins. The advancing dollar will fuel demand for the Tether stable coin, in our view. In terms of gold and Bitcoin, the dollar is depreciating, but it is going in the other direction vs. most other currencies.
“The greenback appears best positioned as global currency values retreat, with all facing unlimited supply.
“Tether and stable coins are gaining traction as vehicles for dollar exposure without intermediaries and for transferring value among the numerous highly speculative and volatile crypto assets.”
U.S regulator invites Banking and Crypto industry leaders for partnership
The OCC in America announced that it was working with banks and crypto firms on improving the technological cooperation in the financial system.
The Office of the Comptroller of the Currency (OCC) in America, on June 4, announced that it was working with banks and crypto firms on improving the technological cooperation in the financial system.
The Advanced Notice of Proposed Rulemaking asks banks and industry leaders to respond to several questions notably:
“What activities related to cryptocurrencies or crypto assets are financial services companies or bank customers engaged in and what are the barriers or obstacles to further adoption of crypto-related activities in the banking industry?”
READ ALSO: 3 emerging cryptocurrencies to keep tabs on
Why this is happening: Regulators around the world have been increasingly looking at the fundamentals and benefits of adopting cryptos. Many have interpreted Brooks’ (a former lawyer at Coinbase) hiring as the Comptroller of the Currency as evidence of greater interest in perfecting crypto capabilities into the American government’s arsenal.
Speaking to Cointelegraph, Acting Comptroller of the Currency, Brian Brooks, said that yesterday’s announcement would help to bridge the gap between finance and crypto. He said:
“Ways the cryptocurrency regime needs banking services, ways that they need to manage across the bank rails, etc. So we have affirmatively come out and said, give us information about what crypto needs from banking and banking needs from crypto because we want to really do something in that space.”
He also added that figuring out the role of banks as custodians and where stable coins fit in were critical goals going into his term:
“The OCC, quickly under my watch, will get a position together as to what do we think about national banks as appropriate custodians for cryptocurrency. We do not have a view on that and I do not want to presume that but it is certainly an interest of mine from my past life that we need to come to ground on that.
“And then there’s the question of what do we think about stable coins? Are stable coins equivalent to currency or are the cash equivalents? Can they be held by banks in an awesome format or if they are held outside of a bank? Is that covered by banking regulations?”
Bitcoin loses $1500 in 3 mins, pigs get slaughtered in BTC market
Bitcoin rose above $10,000 for the first time in six weeks in a move that seems to show a bullish momentum has the $10,000 resistance mark been broken.
Some hours ago, Bitcoin rose above $10,000 for the first time in six weeks in a move that seems to show a bullish momentum as the $10,000 resistance mark been broken.
However, during the rally, over $100 million worth of Bitcoin short positions were liquidated as Bitcoin plunged by nearly $1,500 in less than 3 minutes, before rebounding to around $9,458. Bitcoin is trading at $9,540 4 am local time.
Bitcoin’s plunge was bad news for the bulls. By falling back below the $10,000 psychological support, it has shown a likely downward trend as investors start to close their positions.
According to data retrieved from crypto derivatives platform, Skew.com, an approximate $96 million worth of long positions were wiped with this lower move. This is lower than the $125 million liquidation event that took place when BTC took out $10,000 yesterday, suggesting that the market was leaning to such a trend.
Things you need to understand about Bitcoin’s volatility
The price of Bitcoin is so volatile because of its high use for financial gain by investors and crypto traders. As such, individuals and hedge funds sell and buy Bitcoins like they would do for any other financial asset (Stocks, bonds) with regulatory limitations.
One of the key biases touted by Bitcoin bears is that Bitcoin remains below the key resistance of $10,500 and has refused to break that mark since early 2020.
$10,500 is the level at which the bitcoin price was rejected during two crucial rallies over the past 12 months.
The fact that BTC has made successive takes at the level without breaking past it suggests that the crypto market is still situated in a downtrend.
Robert Sluymer of Fundstrat Global Advisors, for instance, recently commented on the importance of the level. He said:
“Next directional move on tap for BTC’s as bull-bear convictions are about to be tested. Bears can point to the downtrend at 10-10.5K. Bulls have the long-term uptrend (200-week SMA) at their back and the past week’s resilience as BTC’s quickly rebounded from its 200-DMA.”