Crypto News
2022 Prediction #1: L1 Scalability
I start this series just to express my opinions about what crypto may evolve in 2022. Maybe it will not but my hope is they can do better.
With more and more users joining the crypto universe, scalability is a challenge for Layer 1 platforms such as Ethereum and many others. Scalability was a problem that had been identified in 2015. However, blockchain technology was not able to resolve and the issue has been persistent on many platforms.
TL;DR
There is no single solution to the scalability problem in blockchain technology. 2022 will be another year of continually seeking and researching the optimal solutions for future blockchain usage.
Here is a 1 min summary of the article if you want to skip the reading.
Why Scalability
Blockchain provides an ecosystem for users to interact. Unlike the Internet of Things (IoT) in which users share their data with each other, blockchain provides an additional layer of verification for each data to be validated and broadcast to the public. Scalability in blockchain then becomes more costly and slow processes.
Challenge of Scalability
Cost is one of the challenges each blockchain will be faced. To be able to validate each block of information, you require either more validators to work in a more efficient way (or input more energy) so that each data can be processed. The more data to be processed, the costly each validation process and the longer time it will take to process each data.
Solutions of Scalability
One of the currently existing solutions is the Proof of Stake consensus algorithm. With additional two features, Tower BFT (Byzantine Fault Tolerant consensus) and Proof of History from Solana, the blockchain resolves scalability issues temporarily. Both features are technology to determine honest members or nodes in a short time and dedicate them to process validation, a guaranteed way to agree on the timing and order of a set of transactions. Such a consensus algorithm is also being used in Hedera, a project that completely opposes Proof of Work. However, Solana has sacrificed its decentralization feature to reach scalability optimization.
Blockchain Trilemma
There is a trilemma on the blockchain that will continue debating along with the progress of the development. Scalability, security, and decentralization. One can not be solely optimized without sacrificing the other two.
If you sacrifice decentralization to become centralization, then you have scalability and security. Think about credit companies like Visa who control all user’s data as securely as possible and transact payment at lightning speed.
If you sacrifice scalability, you have security and decentralization like Bitcoin. Bitcoin is the most secure cryptocurrency and it is decentralized with many participants working together to improve. But when Bitcoin starts to pursue scalability through Lightning Network, it has to sacrifice its security and only broadcast output of the final transaction while keeping all other intermediate transactions in the black box. It is prone to have security issues during intermediate transactions that no one may be able to discover until later.
If you sacrifice security, then you get scalability and decentralization like Defi projects Uniswap. Then your bank account is open to every hacker to try to test their ability to breach into and eventually lose millions of dollars investors contribute.
Check out my other article: Airdrop?! Not So Lucky Anymore!
2022 Is Scalability Testing Year
Scalability is an ongoing problem in blockchain and many researchers will continue working on it. Ethereum is slowly phasing out Proof of Work into Proof of Stake and many layer 1 solutions that resolve scalability problems have already been implemented by Proof Stake such as Solana. There will be a better way to resolve scalability issues. However, we shall see how others play out.
In Conclusion
Scalability is a problem but it is also an opportunity to introduce better layer 1 solutions. Every competition can help another platform to evolve and become a better version of the cryptocurrency for everyone to participate in.
Stay tuned for the 2022 Prediction #2: L2 Bridges
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The price of bitcoin has shot up in recent weeks and is now trading for over $17K. There is high anticipation that another bull run could be heading our way given that Jerome Powell – the head of the Federal Reserve – is slated to make a speech in the coming days about what the agency’s plans for inflation are.
Could the Federal Reserve Aid BTC for Once?
It is believed that Powell will announce soft inflation tactics, meaning his organization will be able to incorporate methods of fighting further price hikes without running the economy any more than they already have. If this happens, bitcoin could well be on its way to another high point. Danni Hewson – financial analyst at broker AJ Bell – explained in a statement:
The latest U.S. jobs data had something of a ‘Goldilocks’ quality about it, with jobs growth robust enough to hint that the miraculous ‘soft landing’ might still be a possibility for the U.S. economy, while still delivering a slowdown in wage growth which should placate a twitchy Fed.
The Federal Reserve has long been at the center of bitcoin’s ongoing (and horrendous) plight. The currency has been falling into oblivion for about 12 months, the main reason being that the Federal Reserve has been adamant about ongoing rate hikes. These hikes are put in place as a means of fighting inflation, but the fact remains that they haven’t done much when it comes to curbing the prices of food items and gasoline.
By contrast, all they’ve really done is make it so that nobody can afford a car or a house. In addition, crypto prices have been beaten to a bloody pulp and are only starting to show signs of coming back.
Some are not so sure that the Federal Reserve will be able to make such a move just yet. In December, a report emerged showing that job growth had significantly slowed down during the final months of 2022, more proof that the economy was still in an unstable position.
However, Richard Carter – head of fixed interest research at Quilter Cheviot – commented that it was, by contrast, a testament to how far things have come. He stated that despite jobs dying in recent weeks, the country is in a relatively stable position. He commented:
The latest U.S. jobs data is another reminder that the world’s largest economy remains largely intact despite what inflation did in 2022. Attention now turns back to the inflation data to get a better steer on how long the Fed’s hawkish behavior will last.
Soft Tactics May Be Arriving
Susannah Streeter – senior investment and markets analyst at Hargreaves Lansdown – further explained:
Expectations have risen that aggressive moves by the Federal Reserve are finally bruising the resilient labor market and wounding a wage spiral.
The price of Binance Coin (BNB) has been moving in the zone of uptrend since the beginning of the rise on January 14. After reaching a high of $314, the cryptocurrency’s price started to fluctuate below the barrier again.
Binance Coin price long term forecast: bullish
The digital asset is currently in a downtrend after retesting the $320 barrier. However, the uptrend will resume if the recent retracement remains above the 21-day line SMA. If BNB breaks above the $320 resistance, it will continue to rise and retest the overhead resistance at $359. On the other hand, if BNB falls below the moving average lines, it will return to its previous low at $249. At the time of writing, the altcoin is currently trading at $307.90.
Binance Coin indicator display
BNB is declining and is currently at level 59 on the Relative Strength Index for period 14. Since BNB is in the positive trend zone, it is set to rise. The fact that the price bars are higher than the moving average lines suggests that the price of the cryptocurrency will continue to rise. Above level 25 of the daily stochastics, the altcoin is in a bullish momentum.
Technical indicators:
Key resistance levels – $600, $650, $700
Key support levels – $300, $250, $200
What is the next direction for BNB/USD?
BNB has dipped below the moving average lines on the 4-hour chart, but has risen above the 50-day line SMA. The altcoin is currently between the moving average lines. If it crosses SMA on the 21-day line, the cryptocurrency will gain value. In the meantime, if buyers fail to break the resistance level, the sideways movement could continue.
Disclaimer. This analysis and forecast are the personal opinions of the author and are not a recommendation to buy or sell cryptocurrency and should not be viewed as an endorsement by CoinIdol. Readers should do their research before investing in funds.
This is an opinion editorial by Joe Nakamoto, a pseudonymous Bitcoin traveler and reporter who helped create a recent documentary on Madeira’s Bitcoin adoption.
What is a Madeira? Why do Bitcoiners keep talking about it? Does it come with fries? And why did Pleb Music (aka, Max DeMarco) shoot a Bitcoin documentary on this tiny island?
Answering those questions, a band of high-profile Bitcoiners set out to “orange pill” the Portuguese island of Madeira this summer. Pleb Music brought its Bitcoin story to life in a documentary resplendent with swooping drone shots, storytelling sleight of hand and the agile camerawork of his talented videographer friend, @Cinemuck_. With the Northern hemisphere winter biting hard, it’s worth watching. You’ll drink in a warm mug of life on Madeira and find it to be an up-and-coming Bitcoin base.
But before we get to that, let’s reach consensus on Madeira; let’s explore why this Portuguese isle should now feature on any traveling Bitcoiner’s bucket list.
The Pearl Of The Atlantic
The sunkissed island of Madeira rises up from the Atlantic Ocean some 600 miles off the coast of Portugal. A popular tourist destination thanks to Instagram-ready landscapes, a warm, temperate climate and a rich cultural heritage, it’s a peaceful patch of land. There’s a regular direct flight to New York while low-cost airlines whisk passengers to a handful of European capital cities.
Much like other small island developing states, or SIDS, Madeira’s development is restricted by its area. A burgeoning tourism industry props up the local economy, but natural resources are limited. Madeiran bananas and passionfruit — often spotted in my local supermarket on Portugal’s mainland — are plentiful but not profitable. Madeira also exports just enough tea to keep the United Kingdom quenched for about two seconds, as well as Madeiran wine.
Source
Tourism aside, there’s a smattering of remittance sent in from the many Madeirans scattered across the world (oh look, Bitcoin fixes this!), as well as some trade in its ports.
In the winter months, tourism diversification strategies such as ecotourism and enticing digital nomads to work from the island serve two purposes: one, keeping Madeira’s economy ticking over in the low season, and two, driving down the average age of holidaymakers on the island.
Madeira is home to espetada (loads of Madeiran meat piled up on a skewer like a posh kebab), quality steak and scrumptious fish. It certainly appeals to the average Bitcoiner’s diet; while the vegetarians and vegans can be rest assured that a lot of food is cultivated locally.
Quality red meat and fish are abundant on the island. Restaurant: Lá ao fundo. Source: author.
Madeira boasts an educated population, absurdly fast internet and civil engineering infrastructure that made Greg Foss’ jaw drop more frequently than he deploys the f-bomb on Bitcoin podcasts. Indeed, although the Madeiran economy pretty much relies on tourism, Madeira receives a substantial chunk of EU subsidies to build bridges, roads and even cable cars.
One of Madeira’s many highrise, highway tunnels. Source.
For the 2021 to 2027 period, the European Commission will invest a whopping 1.9 billion euros in the “outermost regions” of the EU, which includes the Açores and Madeira. The Açores are Madeira’s bigger, colder brothers, hundreds of miles northwest of the island. The EU money is earmarked for improving the connectivity of the islands, transport and, undoubtedly, tunnels.
Without the substantial EU subsidies, Madeira would likely suffer and economic activity may dwindle. And without tourism — as shown during the COVID-19 pandemic, when Madeira’s GDP contracted by as much as 10% — the island may grind to a halt.
However, the ace up this small island’s sleeve is a certain André Loja. Loja, pronounced “Loshja” (no, not “lo-haa,” Daniel Prince), is a proud Madeiran entrepreneur with business interests that straddle tourism, real estate and, crucially, Bitcoin.
Loja (far left) relaxes after lunch at Restaurante Fajá Dos Padres. Source: author.
Prior to developments on the island, Loja was a rather lonely Bitcoiner. Fortunately, and much like many others Bitcoiners who I have the pleasure of calling friends, he’s unhinged. Because rather than simply try to introduce his friends to Bitcoin, Loja thought, “Fodasse, caralho!” — Portuguese for “fuck it!” — “I’m going to orange pill the president of this island.”
A Madeiran Monetary Transition
Loja’s work, coupled with that of Prince Philip of Serbia, Prince and a brief cameo from Michael Saylor, led to an announcement by the president of Madeira, Miguel Albuquerque, at the Bitcoin 2022 conference. During Samson Mow’s keynote, Albuquerque exclaimed, “I believe in the future and I believe in Bitcoin.”
Source
However, contrary to some rather dodgy crypto media reporting, this outburst does not mean that Madeira adopted bitcoin as legal tender. And nor can it.
Madeira uses the euro and is highly unlikely to replace or even complement the European shitcoin with magic internet money any time soon. With this in mind, our visit to the island in June 2022 was an investigation and an aid to the announcement; an ode to “don’t trust, verify.” The mission would uncover what it means for Madeira to “embrace” Bitcoin, and understand how we, as Bitcoiners, can pitch in.
Sidebar: Like all good Bitcoiners, once upon a time, Madeira shitcoined hard. The Madeira Blockchain Association hosts an annual conference, while the coworking space that Loja runs is a favorite for cRypT0pp digital nomad types. You know the sort: jabbering millennials passionate about something that they can’t quite define but will probably, definitely empower everyone online, all the time, cuz WAGMI, Web3, “Yes it does need a blockchain, here’s why.”
I deeply empathize with Loja, who I sometimes picture in his office next to the coworking space, scrolling on Bitcoin Twitter while overhearing conversations and ideas from his cowork tenants. Ideas such as how to decentralize the luggage storage industry or build the next best dapp on Ethereum that, “Trust me, bro it’s more secure than Bitcoin.
The entrance to Loja’s coworking space, Cowork Funchal. Do you think it accepts bitcoin? Source: author.
Furthermore, similar to Max Keiser and Stacy Herbert’s approach to El Salvador, Loja strives to steer the crypto scams and Ponzi schemes clear of his shores. It’s a thankless, unrelenting task. And it’s undoubtedly why not a single Bitcoiner who participated in the Madeira trip could be considered a “shitcoin sympathizer.” Indeed, for a man who lives by the catchphrase, “I don’t know shit about fuck,” the man knows his shit when it comes to organizing a serious batch of Bitcoin advocates.
Orange Pill Dispensers
And so, over the course of 10 days in June 2022, the all-star team set about showing, sending and sharing Bitcoin with locals in Madeira. From surf shops to civil servants, taxi drivers to tax officials and poncha bars to presidents, they spread the word about Satoshi Nakamoto’s innovation. (FYI, “poncha” is the Madeiran drink of choice. It’s potent. Just ask Jeff Booth).
The surf shop owner Foss and I paid bitcoin to (using the Lightning Network, naturally) for surfboard rentals. Source: author.
Thanks to Loja, the group took a Lightning-guided tour of the island and its infrastructure. Not only had Loja spent hours setting up meetings with policymakers and business leaders in Madeira, but he’d also organized the obligatory Bitcoin boat ride (Yes, my private keys are now on the Atlantic seabed); a cable car to a secluded restaurant and trips through more tunnels than there are shitcoins listed on CoinMarketCap. The group got a real taste of Madeira.
Although DeMarco’s documentary underlines that the pinnacle of the trip was meeting with the president, Madeira is simply a must-visit destination. It has all of the ingredients to become a Bitcoin citadel — or a free private city — just ask Peter Young.
With 200,000-ish people, a manageable, fertile land area, warm weather, cheap cost of living and phenomenal internet speeds, what’s stopping you from moving there? Or at least, entertaining the daydream — I often do.
Câmara de Lobos, formerly an impoverished area of Madeira — now it’s Instagrammable. Source: author.
In addition, the tax incentives are currently among the best for Europeans looking to establish a Bitcoin business or HODL bitcoin long term. Business tax is just 5% if a company registers at the International Business Centre. For retail, as of 2023, if you HODL your bitcoin for 365 days before spending, there is zero tax.
You can buy a house with bitcoin, spend sats at a few merchants and hang out at Bitcoin meetup. The Regional Forum of Economic Education, or F.R.E.E Madeira, is on hand to help you on your journey. Cofounded by Bitcoiners and Madeiran experts, the group hopes to make Madeira one of the new homes for the “new base layer of the new internet,” as Booth explained. And this is just the start.
Source
However. Madeira is not El Salvador. You cannot live on a Bitcoin standard in Madeira. Peer-to-peer interactions, Bitrefill, the Bitcoin Company, FREE Madeira’s assistance and many other Bitcoin workarounds will assist you in using bitcoin on the island, but be aware that cash reigns supreme on Madeira and we are still very early. In this regard, Madeira needs your help.
Ask not what Madeira can do for you, but what you can do…
If you’re reading this, you’re probably a Bitcoin enthusiast or you’re at least Bicurious (no, not the horny kind). I’m going to assume, therefore, that you know 100 times more about Bitcoin than the average Madeiran does. In Madeira, a lot of people have not yet heard of Bitcoin. In my experience, over 95% of the population have not used Lightning and awareness is in its genesis.
Following the Presidential meal, Prince onboarded Madeiran ministers using Muun wallet. Source: author.
Moreover, President Albuquerque is not quite on the same level as laser-eyed President Bukele of El Salvador. The Central American nation executed a top-down Bitcoin adoption strategy when declaring bitcoin as legal tender in 2021.
To continue the El Salvador comparison, while Salvadorans see volcanoes as a source of energy for Bitcoin mining, in Madeira, during our visit, the civil servants at the energy ministry raised the valid question, “How did you know the Bitcoin is here?” The energy specialist had not yet grasped that Bitcoin is digital, and not physical. We are still very early.
The Madeira men in the president’s office. Source: author.
Our conversations with business people, ministers and entrepreneurs were among the first Bitcoin touchpoints. For example, if Madeira was to mine Bitcoin, who would custody the keys? Should it be sold for euros or should it be HODL’d? Is it even legal to do so, and what would the EU think?
To add to this, while the president is fully on board with Bitcoin, how far do his powers extend? It’s worth considering the impact of the EU one day banning Bitcoin mining or the MiCA (markets in crypto assets) regulation on Madeira’s decision to embrace Bitcoin — and to what extent the EU would come down on Madeira, or let it live in a gray area as an EU outer zone.
So, What Can You Do?
First, book your ticket. Take a dip in the natural sea pools, ride cable cars and hike “levadas” (hillside canal walks). Break bread with Bitcoiners and laugh off the clown word we inhabit over a glass of poncha in Maderia’s capital, Funchal.
Consider the cumulative effect of all of these visits and Bitcoin connections on Madeira over the next five to 10 years. It’s a bit like Bitcoin Park in Nashville, or Praia Bitcoin in Brazil or Bitcoin Jungle in Costa Rica. If enough Bitcoiners come down, show interest, set up shop or even relocate to Madeira, the island will reach what Swan Bitcoin has coined the “intransigent minority.”
It’s of course a low-time preference goal, and some ways away. But it’s a future I can get on board with.
In the meantime, I don’t know about you, but shooting the shit with Bitcoiners IRL is far more enjoyable than shitposting on Twitter (or Nostr, sorry). And the best part about this Portuguese paradise? In Madeira, you can do both.
This is a guest post by Joe Nakamoto. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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