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Monero (XMR-USD) is a privacy-focused cryptocurrency that was first launched in 2014. It has gained a reputation as one of the most secure and anonymous digital currencies available and it is probably the cryptocurrency which best exhibits the physical qualities of money. Yet, it isn't talked about much in crypto industry circles or on investment sites. This article brings some clarity onto what XMR is and what its investment merits are.

The bottom-line up front is that XMR has a lot of strengths as a cryptocurrency aiming to be money due to its fungibility and greater potential for decentralization. Much of this potential does not seem to be priced in when we compare its market capitalization to that of Bitcoin (BTC-USD), the dominant cryptocurrency aiming to be money. The drawback is that Monero is yet to achieve the kind of network effect Bitcoin enjoys, and this is probably its biggest headwind.

Monero aims to be money. Among all cryptocurrencies, XMR probably best meets the physical characteristics of money:

Bitcoin is not truly fungible. Every satoshi on Bitcoin has a public transaction history which can be traced back to when it was first mined. Imagine if each dollar bill came attached with a list of who owned it previously, and that this list stretched all the way back to when the bill was first printed. Also imagine if anyone could have access to the list on any dollar bill. The result would be that dollar bills would no longer be fungible. Some bills might be worth more because they were once owned by a celebrity. Some bills might be worth less because they were used by criminals and people understandably don't want to be associated with illicit activities. BTC suffers from this exact problem because the entire transaction history of each BTC is always visible to anyone.

There is an ongoing discussion of how Ordinals NFTs, a technique of inscribing data onto individual satoshis, will permanently mark certain satoshis and forever reduce the fungibility of the network and hurt BTC's chance of becoming money. Because Bitcoin is a publicly accessible and totally transparent database, it runs the risk of having satoshis used to store data for other things. Imagine dollar bills being used as tiny canvases for paintings or a place to write down intellectual property. If this happened to a lot of dollar bills, the effective supply of fungible bills would be in question.

Monero does not have this issue because the blockchain is designed for privacy. Without getting into overly technical details, Monero ensures privacy and security through a combination of three cryptographic techniques:

These techniques ensure that the sender, receiver, and transaction amount are all hidden from the public. This is functionally as private as transactions using physical dollar bills. This privacy creates an unknowable transaction history and guarantees XMR's fungibility. By being digital, XMR is also much more transportable and divisible than physical currency.

As a proof-of-work (PoW) blockchain, Monero has the potential for the same amount of security and immutability as Bitcoin. PoW ensures illegitimate transactions can only be processed if the perpetrator performs more computational work than the rest of the network. The larger the network, the harder it would be to cheat the intended spending mechanisms.

Monero is better than Bitcoin insofar as being a blockchain that promotes decentralization. Monero uses the ASIC-resistant RandomX mining algorithm. ASIC means "application-specific integrated circuit." While ASICs can be specifically optimized for Bitcoin mining, they cannot be optimized for Monero mining. The result is that Bitcoin miners will require capital-intensive investment into ASICs to remain competitive while anyone with a normal personal computer can be competitive as a Monero miner (one could still get more computers to be more competitive in Monero mining, but the point of ASIC-resistance is that it would be hard to specifically optimize computers with the intent to use it for mining XMR). This increases Monero's potential for greater decentralization because barriers to entry and profitability are lower. In contrast, a large percentage of Bitcoin's hash rate belongs to several large-scale mining rigs filled with ASICs.

Another benefit of Monero is its dynamic block size. While Bitcoin blocks have a hard cap on how big they can be (currently at about 4 MB depending on the type of transactions in the block), Monero's miners can increase the block size to service an increase in transactions. Block size limits drive up transaction fees during times of high transaction demand because fee bidding determines which transactions are included in the next block. A dynamic block size allows Monero to expand the transaction capacity, effectively creating more supply to meet demand increases and keep prices stable.

Furthermore, the Monero network takes an average of 2 minutes to add a new block. Bitcoin takes an average of 10 minutes. As a result, Monero transactions appear and are confirmed faster. The table below compares the two. Together, the dynamic block size and the faster block time affords Monero a better overall user experience.

Comparison between Monero and Bitcoin block times (Monero.how)

All these features-privacy, fungibility, ASIC-resistance, dynamic block size, faster block times-collectively give Monero an edge over Bitcoin at being decentralized money. Currently, Bitcoin's only strength as far as this comparison goes is that its hash rate is much higher than Monero's. The chart below shows just how true this is. I had to show the logarithmic scale because Monero is on the horizontal axis in a linear scale chart. As of April 2023, Bitcoin's hash rate is 370 x 10^18, Monero's hash rate is just under 3 x 10^9.

XMR and BTC hash rates in the last 3 years (BitInfoCharts)

But this alone warrants a higher price for Bitcoin. Hash rate embodies the work used to secure the network. Even though Monero as a tech stack is superior to Bitcoin, it simply does not have Bitcoin's security. If a portion of Bitcoin miners decided to 51% attack Monero, they could succeed because they have much more computing power. Of course, Monero's ASIC-resistance does offer some protection against such an event. Monero might be better protected than say Bitcoin SV (BSV-USD) or Bitcoin Cash (BCH-USD). Those two Bitcoin hard forks have much higher hash rates than Monero, but they are not ASIC-resistant.

The robustness of the ledger will always be critical to the long-term adoption of any decentralized currency. Monero's smaller hash rate is a weakness it must overcome to increase its market share. The frustrating reality Monero believers must come to terms with is that Monero's superior features do not matter if the ledger isn't secured by a high hash rate. This is the same headwind faced by BSV and BCH. Both blockchains add interesting things to Bitcoin but neither coin (nor XMR) is even in the top 10 of cryptocurrencies by market cap.

Bitcoin's dominance in hash rate is a testament to its superior network effect. This network may be the biggest headwind for XMR adoption. People who enter the crypto space hear about BTC first. Prospective miners usually aim to be Bitcoin miners. This is a flywheel effect which continuously reinforces Bitcoin's security and dominance.

Monero might escape this cycle if the Monero community can sufficiently educate enough people about Monero's benefits. The good news is that there are several real benefits which aren't exceedingly hard to communicate or understand. For investors who believe strongly in finding misunderstood but established assets, XMR likely presents one of the most attractive opportunities in the entire digital asset space. The bad news is that XMR's real benefits need to be actually realized by users, and this process could take a very long time. Even the process of educating people about Bitcoin can take a while and understanding Bitcoin is pretty much a prerequisite for understanding Monero and its advantages.

Another headwind is that Monero's emphasis on privacy allows it to be unfairly but understandably associated with illicit activities. This makes the "public relations" for Monero trickier to navigate. BTC is more traceable than cash, and this fact automatically nullifies any serious arguments of BTC being useful for crime. XMR, on the other hand, is nearly the perfect tool for criminals who desire an untraceable medium of exchange. The only way it could be better is if people used it more often. Whether this means Monero ought to warrant negative government attention is a normative assessment. The fact is that it already has to some extent and will likely face increased regulatory opposition as it gains more recognition.

Overcoming this headwind will also require educating the public. If enough people can see that XMR's privacy protection is a requirement to create a truly fungible decentralized currency, then the criminal use case may be regarded by the mainstream as an unfortunate side-effect of innovation. For example, the Internet enables cybercrimes, but no one seriously believes this is a good reason to shut down the Internet.

Some in the crypto community have raised criticisms of Monero. One such criticism is that Monero's "tail emission" makes XMR a perpetually inflationary asset, which seemingly runs contrary to sound money principles that BTC proponents tout as a major benefit of Bitcoin. First, what is the tail emission?

Bitcoin miners get a "block reward" in the form of an amount of BTC distributed to the miner when a new block is successfully mined. The specific amount of BTC is determined by a halving schedule, in which the reward is halved every 210,000 blocks (since Bitcoin's block time is 10 minutes on average, this works out to 2.1 million minutes, or one halving every ~4 years). Eventually, the reward will become smaller than a satoshi and the block reward will cease to introduce any new satoshis to the supply. This will occur in the year 2140, when all 21 million BTC will have been mined. Monero does a similar thing, except instead of a zero-block reward at a certain point, it does a 0.6 XMR block reward into perpetuity. This reward is called tail emission. Unlike Bitcoin, Monero halving has already ceased as of May 2022 and it is now in the tail emission phase.

This is in fact inflationary, but not in the way the critics have framed it. A regular, fixed number increase in the supply is an asymptotically-zero percent inflation. XMR started tail emissions when there were about 18.132 million XMR in circulation. At a rate of 0.6 XMR per block and 2 minutes per block, this is a fixed 157,680 XMR added to the supply each year. The annual inflation rate would be this fixed 157,680 divided by an ever-increasing denominator of existing supply. Currently, the inflation rate is under 1% and it will only asymptotically approach 0.

There is also the argument that tail emission is necessary to incentivize continuous mining. PoW miners are compensated through two sources: block rewards and transaction fees. The total compensation must exceed the cost of mining, which includes electricity and capital expenditures on mining machinery, for miners to remain profitable. Because there may not always be transactions to include in blocks, miners might experience periods without earning any transaction fees. Unless the block reward can compensate them, there is a chance that the network will experience a significant decrease in mining activity and therefore a decrease in security. Some people view this as a ticking time bomb for Bitcoin security. When the BTC block reward becomes 0, the miners would be solely reliant on consistent fees revenue. Because there may or may not be (consistent) fees, it follows that there may or may not be stable security once block rewards go to 0. To this point, one could argue that by 2140 if Bitcoin has achieved sizeable adoption, then there probably will be consistent fee revenue. Usage should at least be global and spanning all time zones, so every moment will have users "in business hours."

Another criticism of Monero is that privacy isn't really a necessary feature since the effect can be replicated on Bitcoin using privacy-oriented wallets and other backward-compatible upgrades (soft forks). While these are technically solutions for privacy on Bitcoin, they are not mandatory for all users. This has the effect of reducing the anonymity set and singling out people who opt for privacy. Because there is an additional step (and cost) for privacy, there may be some implication of culpability for all who do it. In contrast, privacy is the default on Monero and there isn't really a way around that. This of course might imply that everyone using Monero has a similar implication of culpability, but that argument must dismiss all the other reasons to use Monero outside of privacy. With Bitcoin, users opting for privacy are clearly opting for privacy whereas Monero users might be in it for the faster block time or lower barriers to mining.

Monero is sometimes criticized for being centralized because it has a history of hard forks every few months. ASIC-resistance is a quality that requires regular hard forks because specialized mining software and ASIC-resistant software are effectively locked in a constant arms race. Privacy is also an arms race because new encryption and cryptographic technologies are always being conceived. Monero developers have been vigilant in studying these developments and implementing them.

The issue with the centralization critiques is that hard forks are agreed upon by the vast majority of the Monero community - the software upgrades are widely perceived as beneficial to the network. No one is forced to comply with the forks by updating their software, but in fact most of the community voluntarily do so anyway. Older versions of Monero are basically inactive and the newest fork is always the undisputed, canonical chain. A good comparison with Bitcoin is that while Bitcoin users tend to prefer the older version, Monero users tend to prefer the newer version. It is unreasonable to say one set of users is more centralized than the other if every individual in both sets are just doing what they want.

Monero has an extremely objective and intelligent community. As I researched (and continue to research) Monero, I was very impressed by the community's honesty and culture. Because cryptocurrencies like Monero lack a central planner for its activities, the community becomes a substitute akin to gaining insight into how "management" or "governance" works.

Unlike the Bitcoin community, Monero doesn't seem to have extremely outspoken "maximalists" or "maxis" who regurgitate bite-sized talking points and angrily dismiss acute criticisms. Maximalism sometimes approaches religious fanaticism in cryptocurrencies like Bitcoin and Ethereum. It is off-putting to newcomers, it strengthens groupthink and confirmation bias, and it is generally just stupid.

As a community, Monero does "Skepticism Sundays" on Reddit where criticisms are encouraged. The guidelines specifically say:

Please stay on topic: this post is only for comments discussing the uncertainties, shortcomings, and concerns some may have about Monero.

NOT the positive aspects of it.

Discussion can relate to the technology itself or economics.

Talk about community and price is not wanted, but some discussion about it maybe allowed if it relates well.

Note that XMR price is not a desired topic. Note that positive aspects (which add to confirmation bias) are not allowed. Note that these discussions occur every Sunday. This is just one example of the healthy culture in Monero being a tailwind for iteratively developing the best decentralized currency.

It is precisely this willingness, even discipline, to openly discuss shortcomings that allows Monero to maintain cohesion after numerous hard forks. The community is well aligned with the overall mission for privacy, security, and decentralization and tech upgrades are seen as the means to achieve this mission. It is yet to reach critical mass because most people simply don't know about Monero. All they see from crypto are Bitcoin, altcoins, and some memecoins and their "analysis" is little more than drawing lines on the chart.

I am not long XMR, though I hold the technology and its community in very high regard and plan to personally contribute to Monero in the future. It's probably clear from this article that I like Monero as a technology over Bitcoin. Monero is like a better version of Bitcoin in almost all ways except the current hash rate. But hash rate is a major factor and its importance cannot be overstated.

XMR is a speculative bet that a good amount of people will realize Monero's edge and choose XMR over BTC. A lot of them might decide that the low barriers to mining is worth an attempt to participate in the network. This would increase Monero's hash rate, security, decentralization, and network effect. Concurrently, some people who transact with BTC might decide to use XMR instead.

XMR's market cap is $2.9 billion while BTC's is $531 billion - BTC is over 180 times larger than XMR. If these things occur and XMR gets to just 5% of Bitcoin's market share, XMR could easily be a multi-bagger from present levels. Assuming the market cap scales with market share, this would be about a ~10x increase. But this might never occur, and BTC might never even catch on. This is of course a ubiquitous risk for digital assets.

I think there is a margin of safety which comes from an uninformed and presently uninterested public. This is based on Monero's very real merits and its relatively small size compared to Bitcoin, and on how undercovered and even "miscovered" (coverage tends to be focused on illicit use cases and little else) XMR is. Thus, I rate XMR a speculative buy - a good chance of going nowhere but a visible path to outsized profits. XMR appears a great "deep value" play in digital assets today.

If there was a clearer method for educating people about Monero with a high probability of success, I would be pretty comfortable with giving a strong buy rating and personally taking a big position. This would be the catalyst for the deep value to materialize.

The problem with going long right now is that it isn't convenient. Most crypto exchanges available in the US don't have XMR as a tradable asset. XMR's privacy renders KYC utterly meaningless. Since sender, receiver, and amount transacted are all hidden, no one can tell what happens to the XMR after someone buys it from an exchange and moves it to a self-custodied wallet.

Another way to get XMR is to mine it. Because of ASIC-resistance, a normal personal computer can be used to join a mining pool and start earning XMR from block rewards and transaction fees. There are plenty of options to start mining XMR with a personal computer.

So, should you invest? The answer is an admittedly anti-climactic: "it depends." It depends mostly on your investment style and whether you want to take the time to get familiar with the nuance of owning a highly promising digital currency and privacy technology.

Link:

Monero: An Ideal Long-Term Opportunity In Digital Assets? (XMR ... - Seeking Alpha

The Government of Assam is mulling a massive overhaul of the administration making the district as an administrative and economic unit.To give a major push in that direction, Chief Minister of Assam, Himanta Biswa Sarma held a preparatory meeting for the forthcoming three-day DCs conference slated to be held in Tinsukia from May 12 to 14.

The Chief Minister said the upcoming DCs conference will bring about a major transformation in the administration with the Office of the Deputy Commissioner becoming a fulcrum of administration. "Unlike the traditional and conventional way of functioning, the DCs will henceforth focus on improving the GDP of his respective districts, GST generation, raising of per capita income, power consumption, industrial activity, agricultural diversification, creation of industrial landbank et al," he quipped. "As per the directive of Prime Minister to the Chief Secretaries, the district has to become the focal point of administration. The DCs have to act as Chief Secretary of their respective districts with the state only facilitating it. It will be a model of decentralization of powers to the district administrative level," he added.

Sarma underscored the Deputy Commissioners to hold crime conference, encore meetings to contain drugs and other important issues such as completion of Aadhaar enrolment prior to the DC's conference. The Chief Minister made it crystal clear that based on the performance of the DCs on different parameters, an assessment report will be made which will form the basis of Annual Confidential Report (ACR).

The three-day upcoming DC's conference will have cluster level meetings of six to seven DCs with senior most secretaries, divisional commissioners, guardian secretaries spread in Tinsukia, Dibrugarh and other places. A closed door session will be held on the last day where the Chief Minister, the Chief Secretary and DGP will be present.

See more here:

Government of Assam is mulling a massive overhaul of the administration making the district as an administ - The Economic Times

Web3 development, built around blockchain technology, a fertile ground for growing non-fungible tokens (NFTs), is poised to impact innovations for e-commerce transactions without cryptocurrency use.

For starters, Nike and Starbucks have shifted their customer loyalty programs to Web3. Although they do not designate the rewards they offer as NFTs, the parallels are unmistakable.

Various industry e-commerce reports show that an e-commerce revolution is unfolding as Web3 lays the groundwork for a permissionless and decentralized internet that can survive with or without crypto funding.

Both companies made this shift to cash in on blockchains ability to provide the kind of personalization that brands need to authenticate transactions better, according to Ketan Rahangdale, CEO and co-founder of Unitea.

By expanding their loyalty offerings, these brands and others can add an additional layer to existing engagement practices and further gamify the customer experience, he told CRM Buyer.

His company, an engage-to-earn platform in the music space, already operates with this model and has delivered next-generation engagement experiences through partnerships with festivals such as Dirty Bird, Gem & Jam, and Breakaway.

Web3 is a decentralized approach used in gaming, and no central authority controls any aspect of a game environment or platform.

Still relatively young, Web3 comprises a series of open-source and interconnected decentralized applications powered by blockchain computing architecture. That notion of decentralization is the power Web3 brings to improving how e-commerce exists over the internet.

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Like the Metaverse, much of what Web3 does involves blockchains. But the two online entities are not synonymous or fully interchangeable. However, both overlapping technologies benefit from an equally open-source environment.

Web3 is not necessarily new technology for customers to engage with. However, its use is more fine-tuned than in previous years. A lot of early focus was limited to NFTs, but brands are continuing to explore more stable means of leveraging the technology, Rahangdale said.

He added that what will matter more over the next few years is providing users with functionality over this kind of fanfare, which ultimately strengthens relationships between all parties.

As Web3 grows in popularity, the personalized experiences it brings to consumers will boost the effectiveness of CRM platforms. This technology enables businesses to collect and analyze customer data in a decentralized way.

In essence, it eliminates the need for blind trust or intermediaries facilitating virtual transactions. Also, blockchain technology ensures that transactions are more secure and payments are reliable.

In return, it lets businesses provide highly personalized customer experiences, which can lead to increased engagement, loyalty, and revenue over time.

Web3s decentralization is vital for greater authority over personal data and data storage. Its decentralized structure shifts control of the internet from big tech companies to those who use it. It can also better protect user privacy.

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Unitea is heavily invested in the engage-to-earn approach to building better brand loyalty as it maximizes its engagement platform. Engage-to-earn does not apply to cash or credit, he explained. With the model, users attention and time are being valued like cash or credit would be traditionally.

This gives people the opportunity to earn rewards of tangible value without the need to pay for them and does not have to be exclusive to NFTs at all. The Brave (web browser) attention token is a great example of this in practice, Rahangdale offered.

CRM Buyer discussed with Ketan Rahangdale the intricacies and the impact of Web3 on marketing strategies and the role engage-to-earn plays in customer engagement.

Ketan Rahangdale: Brand-sponsored activities work better to engage customers because they can often layer over existing events or initiatives with established and engaged audiences.

For example, music festivals draw sponsorships from across industries and provide ample space for marketers to leverage or enhance attendees experience, whether through physical product giveaways or technical partnerships.

Rahangdale: The beauty of engage-to-earn is that it is not exclusive to any industry. It has worked particularly well in the music space. The model can support any environment with a passion for a certain topic or idea and an opportunity to provide unique or experiential rewards.

Rahangdale: What is key to think about when adapting that to other consumer bases is the why. What impact are you looking to make that could not be done through more traditional means of outreach? How much value can you offer to those most passionate about your product or service?

Rahangdale: Adopting engage-to-earn allows brands to access additional customer bases that may have differing interests from their primary targets day to day. When you remove more financial barriers to entry and instead leverage existing loyalty, it can level the playing field and add an additional arm to their marketing mix.

Rahangdale: While engage-to-earn may feature similarities with other approaches to brand loyalty, it is unique in its ability to authenticate user experiences and rewards. Regardless of the industry in which it is applied, incentivizing customer behavior gives brands opportunities to connect with that base in an innovative way.

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Rahangdale: Cryptos use is not limited to the creator community. We see it as a means of transacting digitally and efficiently for consumers.

Rahangdale: To be clear, using Unitea does not require any interest in or access to cryptocurrencies. We do leverage blockchain technology to authenticate certain user rewards, but the environment prioritizes passion first and foremost. Crypto is neither a necessary piece of the engage-to-earn puzzle nor a part of ours.

Rahangdale: We have always employed gamification as a method to reward fans. It was a natural progression of our innovation roadmap, which saw us starting with custodial wallets for ease of onboarding for our existing Web 2.0 audience. Today, engage-to-earn is capable of supplementing other customer engagement points. It currently does so for artists and users alike.

Rahangdale: Engage-to-earn is so exciting to us because of the equity it has in the ability to create. Our app is free, and the prevalence of consumer device use allows a much larger user base to leverage time and attention to earn products, discounts, and experiences. It is truly a system where everyone involved wins.

Read more:

Participation Over Payment Is the Future of Brand Loyalty - CRM Buyer

Blockchain has been recognized for its potential to transform finance and other industries that rely on data, but what happens when innovation meets the worlds oldest industry agriculture? It turns out that blockchain has a lot to offer to the food and agriculture sectors, especially when merged with other innovative technologies such as artificial intelligence (AI), satellites and the Internet of Things (IoT).

The agricultural sector can join the tech revolution to upgrade every aspect that has to do with transactions and data. For example, blockchain could streamline processes related to the supply chain by increasing traceability and bringing automation to the table.

A report from InsightAce Analyticsfound that blockchain in the agriculture and food supply chain is a market valued at over $280 million as of 2022, and is expected to grow to over $7billion by 2031, demonstrating a compound annual growth rate (CAGR) of 43.76% during that period.

Thanks to its unique architecture that involves decentralization, blockchain ensures the highest possible degree of transparency and traceability, which are key elements in the agricultural sector. Decentralized networks enable participants, including farmers, producers, retailers and exporters, to monitor and address major challenges showing up in the supply chain. Eventually, blockchain records can be used for analysis purposes to improve various aspects of the supply chain.

The adoption of blockchain in agriculture can also help regulatory compliance and reporting. By ensuring the provision of accurate, up-to-date, tamper-proof data, stakeholders can make better-informed decisions and implement proper corporate governance. Decentralized networks also simplify the distribution of certification data among relevant parties.

Besides transparency, blockchain can facilitate other advancements in the agricultural sector. For instance, it can enable better management of land rights, more efficient food safety tracking, and enhanced traceability of inputs like seeds and fertilizers.

Tech giants have realized the potential of decentralized ledger technology for agriculture. For example, IBM provides businesses with a permissioned blockchain platform called IBM Food Trust, which offers multiple features, including proof of origin, traceability, fraud monitoring and documentation, among others.

Agricultural companies can also leverage blockchain solutions that rely on public networks, which ensure a higher degree of decentralization and security. One example is Dimitra, an AgTech company that aims to help farmers reduce the amount of labor required to complete manual tasks by integrating its technology stack, which combines blockchain, AI, IoT, drones and satellites.

Source: Dimitra

Dimitra offers digital solutions to help farmers gather data to make smarter and faster decisions to improve their crop yields and increase sustainability.

For Dimitra CEO Jon Trask, the integration of blockchain and other innovative technologies into agricultural processes is natural and imperative. He said: Every smallholder farmer, regardless of economic status, should be able to benefit from simple, beautiful and useful technology, because when farmers thrive, economies thrive.

Dimitra offers four main AgTech applications:

Source: Dimitra

The Dimitra ecosystem is fueled by its proprietary Ethereum-based token, DMTR. It acts as a utility token for the Connected Farmer app that helps farmers worldwide increase sustainability and make informed decisions.

To spread its mission and technology, Dimitra is also working with governments, agencies, NGOs and for-profit organizations. The company was awarded a contract from the OBC Indian Chamber of Commerce, Industries and Agriculture for deploying its Connected Farmer app to 1.3 million farms for soil assessment and remediation. Elsewhere, Dimitra partnered with an organization in the worlds third-largest fruit producing country, the Brazilian Association of Fruit Producers and Exporters. Its members represent more than 85% of the total fruit exported by Brazil.

Dimitra has demonstrated that integrating blockchain with other innovations like AI, satellites and IoT can revolutionize the agricultural sector. By increasing transparency, traceability and efficiency, these advancements offer major opportunities for improving supply chain management, regulatory compliance and land rights management.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you with all important information that we could obtain in this sponsored article, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor can this article be considered as investment advice.

Originally posted here:

Unlocking agricultures full potential with blockchain and innovative tech - Cointelegraph

When building Bitcoin, Satoshi Nakamoto envisioned a decentralized digital currency that could operate without the need for centralized institutions such as banks and governments.

Satoshi did not picture a situation where a few entities controlled a significant portion of the entire network, essentially centralizing power and influence.

Bitcoin mining centralization, a result of market competition over the years, goes against the fundamental principle of cryptocurrency.

Bitcoin mining centralization is the concentration of mining power among a few dominant players. Originally, anyone with a computer and internet connection could mine Bitcoin. However, the network grew with time, and as a result, mining became more competitive.

This led to the development of specialized chips known as ASICs (Application Specific Integrated Circuits), which outperformed GPUs and CPUs by being more efficient. Unfortunately, ASICs are expensive and out of reach for most people, and the fact that newer, better, but more costly versions are released exacerbates the situation.

Miners began to form pools to combine their computing power and share the rewards earned. The largest pools also acquire the latest technologies to stay ahead of the competition, which caused others who couldn't keep up to drop off.

Over time, a few large mining pools, including Foundry USA, Antpool, and F2Pool, have come to dominate the Bitcoin mining industry, controlling a significant percentage of the total hash rate at any given time. This beats the logic of cryptocurrency, which is supposed to distribute power among many players.

Several factors contribute to the centralization of Bitcoin mining. Most of these factors also apply in a typical competitive market. They include

While Bitcoin mining centralization is a natural process inspired by competition, it presents a few challenges to the network and ecosystem.

All these challenges require careful consideration and action if the integrity and security of the Bitcoin ecosystem are to be preserved. But how?

Over time, various parties have suggested ways to solve the centralization issue.

Bitcoin Core developer Matt Corrallo proposed the BetterHash Protocol, which involves decentralizing the selection of transactions going into a block to individual hardware operators. However, it didn't provide a mechanism that would ensure miners will choose transactions that create a balanced difficulty for the Bitcoin network hence opening another loophole for centralization. It also introduced inefficiencies due to the need to constantly monitor the network, which was hard to adopt.

Meanwhile, the crypto mining pool P2Pool suggested decentralizing payouts to address the issue. However, by decentralizing payouts, small miners who rely on consistent payouts to cover costs would be disadvantaged. Also, it required low-latency connections between miners and the P2Pool server, which meant whenever a miner experienced high latency, their mining performance would be negatively impacted. For these reasons, it didn't incentivize its adoption.

The most direct way to solve Bitcoin mining centralization is to decentralize the mining pools. This can be achieved through incentives that encourage the use of smaller and more decentralized mining pools. A practical incentive would be to fund innovation and experimentation by small miners, leading to better and more competitive mining strategies.

Notably, former Twitter CEO Jack Dorsey's payment company, Block, started working on an open Bitcoin mining system to make the network more decentralized and permissionless. Block aimed to build its own high-performance open-source ASIC and a Bitcoin wallet to make Bitcoin custody more mainstream.

Nevertheless, incentives alone may not be enough to encourage decentralization. Regulatory policies, network upgrades, and community initiatives may also be necessary to encourage the growth of smaller and more decentralized mining pools.

It's difficult to predict that Bitcoin mining will become more decentralized. Mining power will remain centralized among dominant players as mining becomes more expensive.

Due to economies of scale and other bottlenecks, smaller miners continue to struggle against the big dogs. As a result, it would take tremendous efforts by the rest of the Bitcoin network to implement strategies and solutions to solve Bitcoin mining centralization.

Read the original post:

What Is Bitcoin Mining Centralization and Why Is It a Concern? - MUO - MakeUseOf