Steemit Crypto Academy Contest Season 1 Week 1 - Favorite Blockchain Network by @gentles

Good day to my fellow steemians, I have been off steemit a while now because I lost my devices but I am glad to be back now. I returned to see this new initiative that has been commenced by steemit crypto academy and I am very happy to be a part of it today. It is my hope that I am able to engage and establish close relationships with members of this community as I partake in this engagement contest.

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1. Tell us about your favourite Blockchain network, its history, and why it's your favourite.

2. Does the network have some earliest shortcomings and how has the network's team taken care of the problem?

3. What changes do you think would make the network better?

4. Write about a project that is built on your favourite Blockchain.

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Question 1

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My favourite blockchain network is the Bitcoin network. It is a peer-to-peer transaction network that uses the cryptographic protocol to work. The native coin of the network is Bitcoin. Users use this coin to transact (it can be sent and received) on the network without any intermediary. This coin only exists on the internet and cannot be used physically. Of course, these transactions are recorded in a public database which we all know as a blockchain. Every blockchain network operates using a consensus mechanism, Bitcoin uses the proof of work mechanism. It is recognized as the first cryptocurrency.

History of Bitcoin

In the financial system, we knew before the introduction of cryptocurrencies, transactions were tampered with by third parties such as banks which increase the cost of the transaction. Satoshi Nakamoto had the idea of a decentralised financial system that could operate without those third parties. They then published that idea to the public through a whitepaper which they called Peer-to-peer Electronic cash system in October 2008. In the whitepaper, they explained the technicalities and motivation of the cryptocurrency in which they described how double-spending, anonymity, and other problems that cryptocurrencies faced in their earlier release attempt will be solved. It also described how transactions would work on the blockchain.

Most attempts to release a digital currency failed due to the double-spending issue. Bitcoin tackled the double-spending issue using the proof of work algorithm that was hashed on a peer-to-peer network system.
Bitcoin relied on cryptographic proof to ensure the integrity of the network in the stead of intermediaries like the banks.

Bitcoin was launched in 2009 and released to the public in 2010 as an open-source program. The Genesis block (first block on the network) was mined by Satoshi Nakamoto which yielded 50BTC. Later, a transaction was made on the blockchain by Laszlo Hanyecs

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He bought 2 pizzas with 10,000BTC which were worth $30 at that time. With this, a lot of transactions followed up.

Why Bitcoin is my favourite

Firstly, Bitcoin is my favourite because of its leadership in the cryptocurrency world. It opened the gateway to other cryptocurrencies and showed how great the decentralised financial system will be. After the launch of bitcoin, other cryptocurrencies like Tron, Litecoin, Ethereum, etc. were also launched with similar but somehow different specifications and said to be better alternatives to the Bitcoin network in terms of speed, transaction costs, etc.

Secondly, the reason why I like Bitcoin is that it has existed for a long time compared to other currencies which means that before you invest, you can get more information and experience which will make it easier to invest and get rewards.

Also, bitcoin is the most recognized and accomplished cryptocurrency. The coin has a lot of real-life applications, where we see a lot of businesses accepting Bitcoin as a mode of payment. This gives it stability and is also a reason for it to be trusted. With this, we can be sure that the cryptocurrency will exist for a long time.

Finally, most cryptocurrencies are seen to follow the price pattern of Bitcoin, which means as the price of Bitcoin falls, their prices also fall and vice versa. This is because, in the cryptocurrency world, Bitcoin has more than half the market cap of the entire market which tends cause the market to move in the price direction of Bitcoin.

Additional Information about Bitcoin

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The native coin of the Bitcoin network, Bitcoin is ranked 1st on coinmarket cap with a marketcap of $720,376,445,503 which is the greatest so far as cryptocurrencies are concerned. The current price of the coin is $37,859.08 and a 24hr trading volume of $26,503,369,124.

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Question 2

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Just like how nothing in this world is perfect, the Bitcoin network has its imperfections also. One of the network’s imperfections was its slow transaction speed due to its small block size. Bitcoin processes about 4.6 transactions per second which when compared to other payment networks existing at that time was very small. Some of these other payment systems were processing transactions at about 1500 transactions in a second.

The Network had been receiving a lot of transaction data but with a very small block size of 1MB which is without the capacity to process all the incoming data which leads to a stockpile of data left in the blockchain to process. This causes a delay of processing of transactions in the network. The people behind the network tried to find a solution to this situation.

The first solution to address this problem was the application of hard forking of the Bitcoin blockchain. With this, Bitcoin Cash was created in 2017. This is an altcoin which is a duplicate of Bitcoin. An exact duplicate of the coin caused the network to be divided in two. Bitcoin cash was made with a bigger block size from the initial 1megabyte to 8megabyte. This aided in the weight reduction of the Bitcoin network and made it faster. Bitcoin cash was also divided further in 2018 November into two to increase its speed and named Bitcoin Cash and Bitcoin SV.

Also in 2018, another solution was applied. There was an introduction of another network into the Bitcoin network which was known as the Lightning network. The working process of the lightning network was that it allowed transactions to be made between users off-chain which were very fast and very affordable. After these transactions were completed off-chain, they were then recorded on-chain, and payments are paid out consequently. With this more space is created for data processing on-chain. This helped in reducing the stockpile of data on-chain by processing some of these data off-chain increasing the transaction speed of the Bitcoin network.

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Question 3

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One of the greatest problems with the Bitcoin network is the electricity consumption associated with the proof-of-work consensus mechanism of the network. This consensus mechanism is not considered to be eco-friendly as it consumes a lot of electrical power in order to run. This increases the cost of mining on the network and affects the environment greatly.

According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin currently consumes around 110 Terawatt Hours per year — 0.55% of global electricity production, or roughly equivalent to the annual energy draw of small countries like Malaysia or Sweden. This certainly sounds like a lot of energy source

From what was reported above, we can see that the network consumes a lot of energy even more than some countries and that is terrifying.

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Also, here we can see the amount of energy consumed in mining bitcoin every year and it increases with time.

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The above image gives a simplified report on the amount of energy that a single bitcoin mining consumes. These are huge values affecting the efficiency of the network and something has to be done about it.

In my recommendation, I would suggest that the network consider other consensus mechanisms with less energy consumption rate like the proof of capacity, proof of stake, etc. Some of these consensus algorithms are as effective as the proof of work but are considered more eco-friendly and secure.

If the Bitcoin network can find a way to change its consensus mechanism to a less energy consumption one, it will help reduce the cost of mining, help the environment to conserve energy, and make the network better

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Question 4

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The Lightning Network (LN) is an off-chain and also layer 2 transaction speed or scalability solution blockchain network built using the framework of the Bitcoin network that enables users to transact with Bitcoin at a fast and cheap rate by taking transactions off of the Bitcoin network. Layer 2 is a secondary protocol built using a blockchain system that exists already. Transactions on this network are completed on different network of payment mediums fixed to the Bitcoin network. We should note that the lightning network did not introduce a new coin.

Brief History of the Network

Joseph Poon and Tadge Dryja first had the idea of the network and published it in a whitepaper back in 2015. In 2016 around may, they released the first testnet of the network and in early 2017 its alpha stage was brought out. The network experienced its first transaction when Alex Bosworth paid his phone bill with it later in 2017. Lazlo Hanyezc, also used the network to purchase two pizzas.

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The main aim of the lightning network is to increase the scalability and cost of transactions of the blockchain network. It aims to reach a transaction speed of about 1 million TPS.

It is mostly used for smaller transactions because of how they are not worth the use of the blockchain itself because of their base layer fees even though it can be used for all types of transactions it can be used for all types of transactions.

At around August in 2021, there has been a transaction of over 2,000 BTC on the network. On-chain Bitcoin transfers which make use of smart contracts are responsible for the security of the LN network

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This post is about my favourite blockchain network, Bitcoin. The pioneer in the cryptocurrency world is Bitcoin and there is no doubt about that. It opened the way for other cryptocurrencies to come into being. Its market cap and price are unmatched in the crypto world.

This network was launched in 2009 and released to the public in 2010. One of the main reasons why I prefer this blockchain is because of how it paved the way for the cryptocurrency world as we know it today.

Despite its greatness, it had a transaction speed problem that needed to be solved and indeed was made better by the application of hard forking to the network which yielded the creation of Bitcoin Cash and the layer 2 network, the Lightning network.

The network also has a power usage in mining problem which rendered the network less eco-friendly and I personally think that the change in the consensus mechanism of the network will help mitigate this problem.