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Blockchain Projects in China Are All Hype and No Chain?

Blockchain projects from the very beginning have been hyped before any real substance or proof of work. This was a trend in 2017 following countless exit scams and initial coin offerings (ICOs) that had great plans to change the world, but ultimately only changed people’s bank accounts for the worst.

The current Chinese report claims that over 30,000 companies use blockchain, however, this number is not even 3,000 according to research carried out by CCTV, a Chinese television broadcaster.

Blockchain is well known as a buzz word in business, with companies aiming to capitalize on investment and advancement, collecting new suiters to become involved in their businesses.

Wu Zhen, head of the Key Laboratory of Internet Financial Security Technology of the National Internet Emergency Center was interviewed about the statistics stating:

“There are more than 32,000 blockchains […] However, we found that there are actually not many companies that have blockchain technology or chain ownership […] About 10%, or even less than 10%.”

Since Chinese President Xi Jinping announced that there will be a huge focus on Blockchain efforts in China, it is unsurprising that acceleration for business to move to blockchain will come with hurdles, as China aims to become the number one innovator in the sector.

It is unclear from the 30,000 companies what the next steps will be, if they will implement Blockchain technology into their systems at later dates, or if it is only for show.

Image via Shutterstock

Ethereum's Vitalik Buterin Concerned About Security Risks That Come With High ETH Transaction Fees

By now, it is no secret that Ethereum co-founder Vitalik Buterin and his team are busy perfecting Ethereum 2.0 and preparing it for its official launch.

Ethereum 2.0

One of the key elements of the blockchain ecosystem is that it runs on a Proof-of-Stake (PoS) consensus algorithm, as opposed to the conventional Proof-of-Work (PoW). This enables Ethereum blockchain users to reach distributed consensus when mining a block, and for bullish crypto investors to determine the next block.

Digital asset owners can also lock up their accumulated digital coins and get paid for helping the blockchain.

Will An Upgrade Make Ethereum Faster, Bigger, Stronger?

However, Buterin came forward and while he proudly announced that the data capacity of the developing blockchain will be huge, the Ethereum creator admitted that the higher transaction fee on the blockchain-network may cause unintentionally trigger security risks. Buterin, who can boast that he has co-founded the second largest blockchain network in the world, behind Bitcoin, came forward in a tweet and mentioned a research paper provided by highly reputed Ivy League university, Princeton U. Buterin wrote:

“Transaction fee revenue is now nearing half as high as block reward revenue. This actually risks making Ethereum *less* secure because of https://cs.princeton.edu/~arvindn/publications/mining_CCS.pdf. Fee market reform (ie. EIP 1559) fixes this; another reason why that EIP is important.”

In other words, though it may not be a security issue at this point in time, the higher fees that Ethereum 2.0 will run may potentially cause a security problem long term and be threatening for the blockchain network. The analysis conducted by Princeton university addressed this issue and voiced that selfish mining may pose a real threat, especially in cases where transaction fees surpass the block rewards.

The research paper goes on to name several malicious mining behaviors, that are deviant and may negatively impact Ethereum blockchain.

Introducing EIP 1559

The fee market reform that Buterin referred to in his tweet is none other than the “Ethereum Improvement Proposal (EIP) 1559”, which was first introduced in April 2019. The whitepaper proposes upgrades that would make transaction fees on Ethereum more predictable. This would enable the blockchain network to be more flexible, by dynamically alternating the block size based on the number of transactions that are queued and waiting for validation.

Furthermore, to prevent congestion from happening in the ecosystem, the whitepaper proposed charging users during times of high demand. Buterin publicly voiced his approval and support of EIP 1559 fee market reform.

Slow and Steady Wins the Race: Ethereum Surpasses Bitcoin

The market capitalization of Ethereum currently stands at approximately $26 billion dollars. The astonishing thing about this is that the given value does not even include all of the crypto assets founded atop the Ethereum blockchain ecosystems, such as the stablecoins – Tether and USDC – and altcoins.

Also, data from digital-asset data firm Messari showed that Ethereum had now surpassed Bitcoin as the network that settles the most value per day. Ethereum blockchain daily settlement value is estimated to be about $2.5 billion, which makes it the first time since early 2019 that the blockchain has outranked its rival Bitcoin.

Ethereum Releases Validator Launchpad for ETH 2.0 Testnet

Ethereum software developers finally released the validator launchpad for ETH 2.0, which enabled users to participate in the testnet’s Proof-of-Stake.

Leveling up And Unlocking “Medalla”

The testnet, dubbed “Medalla,” is said to be released on August 4, if all goes well. Ethereum developers behind Medalla have also set up certain criteria that need to be fulfilled for the alternative blockchain to be unlocked.

The test run of the network will be in the hands of the community, and a minimum of 16,385 validators are required for the launch. Each of these users is required to deposit 32 Ether (ETH) coins to access the multi-client testnet. Also, “minimum genesis time” needs to be accomplished, which basically outlines when the earliest launch of ETH 2.0 testnet can be held.

If requirements are not fulfilled, Medalla’s launch will be delayed for 48 hours. The multi-client testnet will only launch if the two criteria are met.

Progress On Unlocking Medalla

So far, it was reported that roughly more than 150,000 ETH tokens have been deposited, meaning that Medalla testnet has achieved 30.5% of the total number of validators it needs for a successful launch next week. Ethereum collaborated with blockchain tech company Consensys and DeepWork Studio to release the ETH 2.0 validator launchpad.

Ethereum Announces Its Testnet Strategy

The blockchain network told its Ethereum crypto community that the multi-client testnet Medalla, they will continue “fine-tuning the interface” in anticipation of the release of the mainnet. In addition to this, Ethereum also explained that as it was transitioning from Proof-of-Work to Proof-of-Stake, Ethereum 2.0 will be launched in at least 3 phases to make sure that all aspects are covered methodically before release.

By breaking up the phases, a different aspect of Ethereum 2.0 can be focused on at each phase and the mainnet can consequently be perfected.

Phases of ETH 2.0

Phases 0, 1, and 2 each outlines a different concept. Phases 0 focuses on all the machinery behind ETH 2.0’s consensus, and it tracks the validators and their transaction balances.

Phase 1’s main objective is to handle the addition and storage of new and old data associated with ETH 2.0.

Finally, Phase 2 adds execution to ETH 2.0, and this simply allows programs to be run on top of it.

Co-Founder Vitalik Pushed for Phase 1

Co-founder of Ethereum Vitalik Buterin has been actively pushing for phase 1 to begin. The Ethereum mastermind wants to get a better grasp of how phase 1 will work in practice. On Reddit, he said that the “clients team” working on Medalla was behind on phase 0, and though that may be the case, they should still start working on phase 1. Buterin justified his strategy, saying:

“There’s no unfinished research required for phase 1; it’s all spec optimization and development.”

Ethereum And Bitcoin “Bull Races”

This year has been a really good year for Ethereum. With their plans of launching ETH 2.0 mainnet, the blockchain platform has also managed to outrank Bitcoin earlier this month, sitting at approximately $2.5 billion and making it the first time since early 2019 that it has outdone its rival BTC.

The latter has however been picking up its pace on the crypto market after months of staying stagnant. Yesterday, it was reported that BTC surged past the $10, 000 mark. BTC as a hedge has also recently been even more of a hot topic, with the depreciation of USD due to economic stimulus packages released by the US government.

Ready, Set, Launch

With Medalla testnet set to launch on August 4, the year 2020 has been good for Ethereum. Medalla is to be the last testnet produced by the dominant cryptocurrency platform before ETH 2.0 mainnet is officially in service and open for public use.

Bitcoin Trading Should Be Banned by Central Banks, Says Former British Member of Parliament

Former Member of the British Parliament Nick Boles appears to disfavour Bitcoin, saying that the central banks should monitor the cryptocurrency’s trades.

Bole’s problem with Bitcoin seems to have nothing to do with whether the cryptocurrency is a viable asset class. He explained that the reason Bitcoin trading should be banned in his opinion is because of its environmental impact, citing a study that showed that recently, Bitcoin overtook Argentina in annual energy consumption.

The study was compiled by the University of Cambridge and showed that yearly, Bitcoin consumed 121.88 TWh. The cryptocurrency recently overtook Argentina in energy consumption and seems to be closing in on Norway’s annual energy use of 122.20 TWh per year.

Bole tweeted:

“Central banks should ban the trading of it, and force anyone who holds Bitcoin and wants to use it in any transaction, to exchange it for another currency that does not have such a damaging side effect. There are other cyber currencies that do no harm in the real world at all.”

Is proof-of-stake ecosystems the solution then?

A more environmentally friendly solution to Bitcoin mining may be proof-of-stake networks. In an interview with Blockchain.news, PwC Global Crypto Leader Henri Arslanian disclosed that one Bitcoin transaction consumed the same amount of electricity as the average US household would in a twenty-day span.

Proof-of-stake (PoS) blockchains might therefore be a more viable alternative to Proof-of-Work (PoW) protocols, according to industry experts. As Pos blockchains utilize cryptography, the required processing power needed is significantly lower than PoW transactions.

Currently, Ethereum aims to make the transition from a proof-of-work consensus to a pure proof-of-stake mainnet. Once Ethereum 2.0 is completed, the upgrade will enable transactions in a more energy efficient way, in addition to other benefits such as better scalability.

Ethereum Founder Vitalik Buterin Speculates the Merge Will Happen on September 15

Vitalik Buterin, Ethereum’s co-founder, has hinted that the much-anticipated merge might occur around September 15.

The transition from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism called the merge is speculated to be the biggest software upgrade in the Ethereum ecosystem. Nevertheless, it has been quite elusive since it was launched in December 2020.

Despite these revelations by Buterin, ETH developers are anticipated to come up with a conclusive date next week, given that the final test called Goerli was finalized earlier this week.

A recent developers’ call had suggested September 19 as the most probable date for the merge.

Once the merge rolls out, the PoS algorithm will enable the confirmation of blocks in a more cost-efficient and environmentally friendly way because validators will stake Ether instead of solving a cryptographic puzzle.

Meanwhile, American multinational investment bank Citigroup or Citi recently disclosed that transitioning to a PoS consensus mechanism would make Ethereum a deflationary asset.

As a result, the second-largest cryptocurrency would become a “yield-bearing asset.”

Citi also pointed out that the merge would slash the overall Ether issuance by 4.2% annually, making it deflationary. Therefore, shifting to a PoS consensus mechanism would enhance Ethereum’s quest to become a store of value.

Therefore, as a “yield-bearing asset,” Citi added that ETH would experience more cash flows. As a result, prompting more valuation methods that were not available before.

On the other hand, Buterin recently acknowledged that MakerDAO’s consideration to depeg its native token DAI from stablecoin USD Coin (USDC) was a risky and terrible idea, Blockchain.News reported.

This decision might have been reached based on tornado sanctions because MakerDAO intends to replace USDC as collateral with Ethereum.

White House Suggests Banning Proof-Of-Work Crypto

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The White House Office of Science and Technology released a report on Thursday urging the Environmental Protection Agency (EPA) and the Department of Energy (DOE) to take measurable actions to control high energy consumption by crypto mining proof-of-work mechanism.

The report is among the first responses to US President Joe Biden’s executive order on cryptocurrencies.

The document acknowledges that cryptocurrency technologies use a high amount of electricity that contributes to greenhouse gas emissions, additional pollution, noise and other local impacts.

The first section of the report, which serves as an introduction, hints toward banning proof-of-work cryptocurrency mining operations if regulatory action fails to enable the country to achieve its climate goals.

“Should these measures prove ineffective at reducing impacts, the Administration should explore executive actions, and Congress might consider legislation, to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining,” the report said.

The next part of the document explores the impact of crypto mining on national electrical grids. The White House’s Science and Technology team claims that Bitcoin mining, powered by a proof-of-work consensus mechanism, adds stress on the power grid that results in cases of blackouts, fire hazards, and equipment deterioration. According to the report, Bitcoin mining has raised the average electricity cost for local consumers.

“Depending on the energy intensity of the technology used, crypto-assets could hinder broader efforts to achieve net-zero carbon pollution consistent with U.S. climate commitments and goals,” the report elaborated.

The final section of the report suggested ways in which Bitcoin mining can benefit efforts toward achieving U.S. climate goals. The report advocated for the responsible development of digital assets and solutions to drastically reduce crypto energy consumption.

The report recommended the use of the “less energy-intensive consensus mechanism, called Proof of Stake (PoS), which is considered to consume less than 0.001% of global electricity usage.

The White House also encouraged crypto miners to consider using electricity generated from vented and flared methane at oil and gas wells and landfills as another viable alternative.

Why Is the White House Taking an Interest?

In March, U.S. President Biden signed an executive order, calling on the government to examine the risks and benefits of crypto assets.

The measures focused on six key areas like consumer protection, financial inclusion, financial stability, U.S. competitiveness, illicit activity, and responsible innovation.

The executive order was a kind of a ‘call to action’ that laid out a series of policy statements, such as the need to protect consumers, investors, and businesses in the US, as well as the need to support technological advances that promote responsible development and use of digital assets.

The executive order expected a set of reports coordinated through the interagency process from a broad range of executive branch stakeholders.