Blockchain Projects to be Assessed by China
The Chinese government is set to assess blockchain projects and introduce a new rating system in the process. China’s Ministry for Information and Technology will rate 28 projects based on the technological capabilities and their utility to the public. We will be covering all the 28 projects in detail to give our readers knowledge on them and the ability to decide for themselves if the Chinese government’s ratings live up to expectations.
Bitcoin is the first and the original blockchain project started by an anonymous developer known as Satoshi Nakamoto. The world’s best developers are working on and contributing to this project. It is the most decentralized blockchain of all since there is no central authority to control it. It works by using the proof-of-work algorithm and has a massive hashpower that adds security to the entire network. Developers are currently working on the lightning network which is a second layer scaling solution designed to facilitate microtransactions.
Many see Bitcoin’s major drawback to be the high fees and slow network speed due to the huge transaction volume. This has already been rectified after Segwit was enabled using a soft fork. The network fees have come down to 1 Sat/byte on average, and the Segwit adoption is also growing at a rapid pace. Segwit adoption was at 35% at the time of writing. The Lightning network is another scaling solution being employed on Bitcoin. It takes microtransactions off the main chain to a secondary layer. People are awaiting the Lightening network for making microtransactions at negligible fees.
Just like apples and oranges, Bitcoin and Ethereum are different blockchain projects. Bitcoin was created to be used as a world reserve currency while Ethereum was created to be used as a “world computer.” Programs are built on the Ethereum blockchain and transactions are made only when the conditions in the program are met. These programs on the Ethereum blockchain are called Smart Contracts and the transactions are carried out using the currency Ether.
Smart Contracts are programs that automatically run on the blockchain once incorporated onto the Ethereum blockchain. Ethereum also uses proof-of-work algorithm and Ether is created through mining. Ethereum founder Vitalik Buterin has mentioned that they will be moving to the proof-of-stake algorithm this year. There are thousands of decentralized apps created on Ethereum blockchain. Each one of them is programmed to carry out certain tasks in a decentralized manner. Ethereum also faces performance issues like Bitcoin and the team is working on improving the performance of the network.
There are a lot of other competitors to Etherum like EOS, Cardano, Kamodo, Waves and many others trying to build a platform for enabling smart contracts. For now, Ethereum is still the most popular and widely used.
Ripple Labs is the organization that has developed the token called XRP. Ripple is built on distributed ledger technology which requires various parties to validate the transaction. In short, Ripple is a payment network (RippleNet) and a cryptocurrency (Ripple XRP). The technology can be used as a cryptocurrency as well as a cross-border payment system for financial institutions like banks and private remittance agencies like Western Union money transfer. If successful, Ripple XRP could disrupt the $500 Billion global remittance industry.
Ripple’s major competitor is the traditional Swift payment used by the banks for cross-border payments. Ripple promises to replace Swift and become the global leader in cross-border transactions. Swift is a messaging system that is used by financial institutions for transmitting information related to the transactions globally. Banks are still using Swift and are reluctant to move to XRP. This is due to regulatory issues with various governments. Ripple Lab’s other products are being used globally by financial institution. xCurrent is one of the products. We will just have to take a wait and see approach to figure out if the banks would be using XRP for global remittance. Keep in mind that this is a half a trillion dollar industry.
Litecoin was created by Charlie Lee in 2011. It is famously called:
“The Silver to Bitcoin’s Gold”
In reality, Litecoin is like a little brother to Bitcoin, and they both complement each other. Litecoin also acts as a testnet for Bitcoin since some major releases have been implemented on Litecoin prior to being implemented on Bitcoin. Litecoin has faster and cheaper transactions compared to Bitcoin. The 2.5 minutes block time is faster than Bitcoins’s 10 minutes. In theory, for every single Bitcoin block, 4 Litecoin blocks get confirmed during the same period. Litecoin also implemented Segwit prior to Bitcoin. There are also plans to have the Lightning network on Litecoin.
Bitcoin Cash is a fork of Bitcoin that was created by a part of the community led by Roger Ver, early Bitcoin adopter and a strong advocate and Chinese crypto miner Jihan Wu. They wanted to split from the original blockchain since they believed in a block size increase as a scaling solution. They dismissed Segwit as a viable scaling solution and argued that it was not the “Orginal Vision of Satoshi” since it was not stated in the whitepaper.
Bitcoin Cash was forked from the Bitcoin blockchain after Segwit was enabled by a soft fork in August 2017. Since then, Bitcoin Cash (BCH) has experienced gradual growth and adoption across the globe. It has also come under severe accusations from the Bitcoin community for brand confusion. The complaints are that newcomers are being made to believe Bitcoin Cash was the real Bitcoin.
With time, we will know if bigger blocks with Bitcoin Cash are a better scaling solution than Segwit and Lightening network.
The above are the major five projects from the 28 blockchain projects to be assessed by the Chinese government. The remaining projects are explained in detail in the articles linked below.
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