Over the last decade, cryptocurrencies, such as Bitcoin and Ethereum, have dominated the cryptocurrency industry when it comes to price, volume, and market capitalisation. However, Bitcoin has always been on top of the leaderboards considering that it was the first-ever established digital currency that was released to the public. Though Ethereum has reigned over the DeFi (Decentralised Finance) landscape, Bitcoin was always on the lead in terms of liquidity and ease of convenience with transactions. The platform of Bitcoin Profit offers easy to use and secure software to help you through your trading journey.
By now, you’ve probably heard about cryptocurrencies, especially third-generation cryptocurrencies in particular, and wondered what it means by that. To get the general gist of it, the goal of 3rd gen cryptos and blockchains is to ultimately solve the issues faced by the first two generations, which is considered to be Ethereum and Bitcoin. But what are those issues? And are there any of those in the market already? In this article, we will answer both of those questions as we learn more about 3rd generation cryptocurrencies.
The Evolution of Blockchain Technology
Despite the numerous benefits blockchain technology provides, there are still several challenges to overcome before individuals and businesses adopt crypto, and those challenges range from lack of regulation to low scalability. Furthermore, scalability is one of the main problems concerning blockchain’s technology; it refers to the limited rate the crypto transactions are being processed. Big names in the crypto industry, such as Ethereum and Bitcoin, have faced scalability issues due to their technological setup.
With that in mind, many view 1st and 2nd gen’s scalability as something that we can easily achieve off-chain, while decentralisation and security should be maxed out on the blockchain itself. Off-chaining refers to the process of allowing transactions to be performed without the blockchain being overcharged. By now, there are already some interesting off-chain solutions currently being explored so that the scalability issue will be resolved, ranging from the use of accelerated chips, sidechains, and sharding.
The Third Generation Cryptos
In 2021, there are already many third-generation blockchain projects that are circulating the market already. There’s already Polkadot and Cardano, and both are great examples of 3rd gen cryptos that have already made noise in the world of cryptocurrencies. In Cardano’s case, it can already process around a thousand transactions per second, not to mention that it operates on a proof-of-stake mechanism, which means that the users can also stake their ADA coin to earn interests.
Polkadot, on the other hand, is quite similar to Cardano in regards to how they both can process thousands of transactions per second with the same proof-of-stake mechanism. However, Polkadot’s ecosystem is deemed to be more developed than the other as they are currently having projects such as Ocean Protocol and Kusama already on their blockchain.
Will 3rd Gen Cryptos Replace Its Predecessors?
If digital coin projects such as Polkadot or Cardano offer a much superior technology compared to the early releases, will they surpass the 1st and 2nd gen coins in regards to usage and market cap? That answer to that is no one knows for sure; however, you should never underestimate how Ethereum and Bitcoin have the first-mover advantage.
Furthermore, Ethereum and Bitcoin have already proven themselves with trillions of dollars in the market cap as both coins maintained surprisingly secure over the years. However, despite crypto’s scalability issues, it’s clear that investors have not given up on them anytime soon. Regardless, there’s still a significant amount of interest for 3rd generation cryptos, and investors will continue to pour into the technology while hoping they will ultimately become the next Bitcoin or Ethereum.
When it comes to digital currencies, it’s needless to say that the only thing permanent about them is change. People will have 3rd generation cryptos and blockchains coming into the picture in 2021, as all of them will try to solve the issues that the 1st and 2nd gen cryptos face, of course, in their unique ways. With that in mind, the platform’s blockchain that will scale fast will eventually see the break-even point in the market, not to mention the speculation that surrounds them.
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