4 Influential Cryptocurrency Projects
2018 has a number of exciting innovations that might be going live this year. Some of these could potentially change the entire way we interact with cryptocurrency today. They could also impact our financial lives in a far more direct way than we have ever seen before. Today, we will be going over a few of these exciting projects.
One of the biggest concerns facing the cryptocurrency world is the rapid growth of transaction fees, and the constantly increasing transaction times. Things have gotten so bad in the last few months that the list of unconfirmed transactions on the bitcoin network has at multiple times exceeded 200,000 transactions. At press time today things have cooled down, and the current amount of unconfirmed transactions stands at around 36,000.
Transaction fees have also increased alongside the competition for space in each block. According to the popular Exodus wallet, which allows for the storage of many different blockchain assets, the outgoing fee to send 0.1 bitcoin recently was USD 72. A few weeks ago, that amount was more than USD 200.
While lower fee transactions can be processed, they risk getting stuck and taking hours, days, or even weeks to fully process. During the peak of the fees, a bare minimum fee of USD 30 was required to even stand a remote chance of your transaction going through.
The solution to all of this could be Lightning Network. In a nutshell, Lightning Network is a second layer solution that will eventually allow for near instant, and near free transactions. If everything goes as planned, then transactions could be completed for less than one cent and confirmed nearly instantly.
Aside from the time and cost savings, this kind of change to bitcoin could fundamentally change how people interact with the cryptocurrency. It could be the essential key for allowing bitcoin to finally achieve widespread adoption.
Many cite the example of buying a cup of coffee with bitcoin. They say that now, this is simply impossible because the fees would almost certainly be more than the actual item itself. As well, it would take far too long to confirm.
While there is already a lot written about Lightning Network, it's difficult to state in clear enough terms how important the Lightning Network could be not only for bitcoin, but all of cryptocurrency as a whole.
With its Initial Coin Offering (ICO) completed last year, OmiseGO quickly became a billion-dollar asset due to not only what the project promised, but who the team is that represents it.
OmiseGO is an Ethereum platform based ERC-20 token that promises to become the ultimate peer-to-peer exchange platform for almost any kind of asset or value. This could include fiat currency, cryptocurrency, rewards points, mobile phone minutes, and almost any other digitally traded form of value.
The system will make use of a proof-of-stake consensus model that will encourage people to purchase, own, and operate OmiseGO network nodes. This will allow for a highly distributed and decentralized business model which is very different from the current centralized mining paradigm for bitcoin.
OmiseGO is being developed by the Omise company which is a southeast Asia based credit card and payment processor. They have recently made major deals with large corporations such as McDonald's Thailand among others.
Their current network processes billions of dollars in value each year. While the group has not explicitly said so, it is reasonable to assume that eventually, the OmiseGO company will one day start putting its traditional credit card processes on the blockchain for lower fees and higher security. Asset prices of OmiseGO have increased significantly from its launch price of around six dollars to a high of USD 25.
If OmiseGO is fully successful in their plans, it could have a broad impact not only on cryptocurrency, but on the financial world as we know it, and ownership of an OmiseGO node could prove to be a solid source of income in the future.
In addition to its business model, OmiseGo will make use of Plasma technology, which can be thought of as a Lightning Network for Ethereum. Plasma is being developed by the same team behind Lightning Network.
Ethereum Casper (proof of stake)
Since the launch of Ethereum, it has been based on a proof of work consensus model. This means that miners need to purchase expensive mining hardware and run them 24 hours a day in an attempt to win blocks.
Proof of work mining has been accused of being wasteful not only in energy, but also in computer parts investment. While many experts, such as Andreas Antonopoulos would argue this point, it is true that proof of work mining is costly.
According to the Ethereum foundation, this year will mark the beginning of Ethereum switching from purely proof of work to become purely proof of stake. This could have far-reaching consequences to not only the value of a unit of ether, but also for the economics of miners who have already purchased GPU mining hardware.
Soon to be former Ethereum miners will likely switch to a different cryptocurrency that allows for GPU mining. For example, they may switch to Ethereum Classic, Zcash, Bitcoin Gold, or any other GPU mineable cryptocurrency.
This sudden shift of mining hash power away from Ethereum could significantly change the dynamics of how various block chains are valued. For example, if thousands of miners switch to Ethereum Classic, prices for ETC units could shift either up or down.
Economics aside, the switch of such a major blockchain to proof-of-stake could encourage others to follow suit. For example, although extremely unlikely, perhaps one day bitcoin or a major bitcoin fork could switch to proof-of-stake for its consensus model if Ethereum is highly successful in doing so.
Cash loans for crypto collateral
Up until this year, the only way to realize profits from a cryptocurrency investment was to either find a way to spend it directly or to sell it for cash. The problem with this is that if one is required to spend or sell their assets, then they could potentially miss out on a major upswing in value.
The previously mentioned bitcoin expert Andreas Antonopoulos said on Twitter that he would have had a larger stash of bitcoin had he not been forced to sell it years ago in order to pay rent.
This year, a number of companies and projects are launching or have already launched that will allow for users to deposit cryptocurrency into an account, and then receive a low interest cash loan with the cryptocurrency used as collateral.
What this means is that if the borrower fails to repay, their cryptocurrency assets will be liquidated. In this way, lenders are able to offer much lower interest rates because loans are backed by collateral instead of just credit scores.
Each individual loan service has its own unique business model, so it’s difficult to say which one is inherently better than the others. Instead, those seeking loans should consider the offerings of each platform before deciding which one to use.
A few examples of this type of business include Salt Lending, Ethlend, and Celsius Network. More businesses of this type are likely to come as this business model proves to be successful.
More to look forward to
2018 is gearing up to be one of the biggest years in cryptocurrency news. These four upcoming projects and ideas are just a few of the many in development. Soon people will be able to see a doctor, find love, rent an apartment, and report a crime all using blockchain technology, and this is all just the beginning.