Mark Cuban: What I look at when comparing blockchains like bitcoin and ethereum

Mark Cuban: What I look at when comparing blockchains like bitcoin and ethereum

When comparing different blockchains, billionaire Mark Cuban looks at a few specific characteristics before investing.

“Most people look at speed and cost compared to BTC [bitcoin] or ETH [ethereum],” Cuban tells CNBC Make It. “While those things can be important, I look at blockchains as networks with development platforms via smart contracts.”

Cuban is referring to the capabilities of each blockchain beyond speed and cost of cryptocurrency transactions. Each blockchain, which is a decentralized digital ledger that documents cryptocurrency transactions and other information, is unique.

For example, the ethereum blockchain can execute smart contracts, which power decentralized applications like DeFi, or decentralized finance, and NFTs, or nonfungible tokens. The ethereum blockchain features its cryptocurrency ether, but can also work as a platform for other digital coins.

These aspects of ethereum are appealing to Cuban, he previously said. Due to its smart contracts, he likens this blockchain to the internet, since different platforms, from things like DeFi to social media sites, can be built on it.

Other experts agree. “Ethereum [is] looking for ways to become a fully working infrastructure platform,” Kathy Lien of BK Asset Management recently told CNBC. “Ethereum itself can perform a number of economic tasks, so it goes beyond” bitcoin, which is known as a peer-to-peer electronic cash system.

That’s why, according to Cuban, “the platforms that have the most active developers and create applications with significant utility for their users will have a network effect.” In turn, the blockchain could “generate significant fees,” which could fund the network, making it investible.

To mint, or blockchain verify, a token — like an NFT, for example — and transact on the blockchain, a user is typically charged a fee by the blockchain’s miners. These fees can be especially costly during high demand or congested periods.

In Cuban’s opinion, “depending on how fees are distributed, [it can] create a real revenue stream that increases the values of the tokens they mint,” he says.

For example, ethereum collects gas fees. That “makes it an income producing asset whose value should rise as its network expands,” Lien says.

Though some people may think that blockchains are only used for cryptocurrency transactions, the platforms could potentially be used for much more than that, as ethereum is. That’s why Cuban looks at the possible use cases for each blockchain before investing, rather than just the speed and cost to use them.

Cuban has invested in many blockchain companies this year, all of which are centered around smart contract capabilities. His portfolio includes NFT platforms, DeFi companies and ethereum scaling solutions.

Cuban has also been investing in cryptocurrencies like ethereum, bitcoin and others.

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Don’t miss: This 25-year-old says he’s a millionaire after investing early in ether and bitcoin

Keep an eye on these 5 Ethereum alternatives

5 min read

By Anastasia Chernikova

In 2013, software engineer Vitalik Buterin proposed that blockchain, the technology that underlies cryptocurrencies, can be used to support not only finance but all sorts of decentralized applications. Buterin’s idea became the basis of Ethereum, the second-largest cryptocurrency and the “world computer,” a platform for running applications without the need for centralized servers.

From social networking to collectible cards, news publishing, and virtual reality games, the Ethereum blockchain powers all sorts of decentralized apps (dapps) today. But as the first blockchain of its kind, Ethereum is not a perfect platform. It suffers from high energy consumption, slow transaction speeds, and high transaction costs. It also suffered from scalability issues, which means transactions and applications become slower as more and more users are added to Ethereum.

In recent years, several other blockchains have emerged that provide platforms for exchanging monetary value and running applications while addressing the shortcomings of Ethereum. Here are five Ethereum alternatives that have great potential and are worth watching in the next few years.

Free TON

Free TON is a high-performance, scalable, and secure blockchain platform with a throughput of millions of transactions per second. It is a spin-off from the Telegram Open Network (TON) project, the original plan of messaging platform Telegram to move its application to its own blockchain.

Free TON runs on multiple blockchains, which gives it the power to speed millions of transactions. The platform supports the development of services and applications for a wide range of sectors, from government bodies to private companies and individual users.

Unlike Ethereum, Free TON is not run and maintained by a centralized organization. It is supported by a decentralized autonomous organization (DAO), a community of diverse parties that use smart contracts to vote and approve changes and directions of the project.

Free TON’s currency is the TON Crystal. Among the key features of the TON Crystal are its fast speed and very small transaction fees. TON users will be able to make transactions for less than $0.01 in fees and pay less than $0.05 per coin exchange transaction (swaps). Free TON also uses the proof-of-stake consensus mechanism to approve and register new transactions on its blockchain, which is much more energy-efficient and environment-friendly than the compute-heavy proof-of-work consensus used in Ethereum and Bitcoin.

Polkadot

Polkadot is a multi-chain network that joins various blockchains together, which is why it is known as the “blockchain of blockchains.” It acts as a framework that makes it easy for developers to create dapps and smart contracts for various blockchains and cryptocurrencies without worrying about the underlying mechanisms that connect them together.

DOT is Polkadot’s cryptocurrency. Aside from its monetary value, DOT allows holders to vote on potential code changes, which then automatically upgrade across the network if a consensus is reached. Like Free TON, DOT uses the proof-of-stake consensus mechanism to verify and approve new transactions.

Since its launch in 2020, Polkadot has climbed to become among the top-ten cryptocurrencies with over $40 billion in market cap and $14 million in 24-hour trading volume. The Polkadot multi-chain already hosts more than 430 projects with more being added every day. And despite being young, it has already been endorsed and listed on several top exchanges. Polkadot also hosts its own decentralized exchange (DEX) platform, Polkastarter.

Cosmos

Cosmos aims to be an “internet of blockchains.” Like Polkadot, Cosmos’s vision is not to have a “blockchain to rule them all” but to have a constellation of blockchains that can coexist and interoperate (hence the name Cosmos). Cosmos has a streamlined model that allows developers to create their own blockchains in a short time. To show the power of the system, the creators of Cosmos used the platform to create an Ethereum clone called Ethermint, which not only supports smart contracts and dapps, but is also compatible with the original Ethereum.

Cosmos is composed of three components. Tendermint is a consensus mechanism that allows developers to create proof-of-stake protocols that are scalable, fast, and secure. The Cosmos SDK is the programming platform that allows developers to build their own blockchains on Tendermint. And the Inter-Blockchain Communication protocol (IBC) is the system that enables different blockchains to communicate with each other.

The native cryptocurrency of the Cosmos network is ATOM. ATOMs give their holder the ability to stake and validate blocks, vote on governance issues, and pay for transaction fees.

EOS

EOS launched in 2019 as a direct competitor to Ethereum. The developers and supporters of EOS market it as “Ethereum for big business” and say it is meant to solve the problems of scale and usability that developers face when building applications on top of the Ethereum blockchain.

Like Ethereum, EOS supports dapps and smart contracts. However, the blockchain outperforms Ethereum in terms of execution and transaction speed.

EOS is owned by the company block.one. Among its developers is Daniel Larimer, who is a veteran of other blockchain projects (BitShares and Steemit) and has allegedly been in touch with Nakamoto in the early days of bitcoin.

EOS’s cryptocurrency is the EOS Token, which is used to exchange value on the EOS blockchain. It is currently among the top-20 most valuable cryptocurrencies. EOS also has an operating system, EOS.IO, which manages and controls dapps and smart contracts on the EOS blockchain. Developers must hold EOS Tokens to be eligible to use network resources and run apps on the blockchain. EOS supports between 10,000 and 100,000 transactions per second, which is why it presents itself as a suitable platform for large-scale businesses.

EOS uses the “delegated proof-of-stake” consensus mechanism, in which token holders elect a limited number of voters to maintain transactions and updates to the EOS blockchain.

Cardano

Cardano is another blockchain that, like Ethereum, is meant to run decentralized applications. Among the key features of Cardano are speed and scalability.

Cardano is developed by three organizations: IOHK, Cardano Foundation, and EMURGO. IOHK is doing the bulk of the engineering effort, and one of the key characteristics that set it apart from other blockchain development teams is its devotion to scientific methods. IOHK works with academic researchers across the globe to peer-review and vet updates before deploying them on the platform. Among Cardano’s founders is Charles Hoskinson, one of the co-founders of Ethereum.

Cardano has already established several robust applications on its blockchain in the banking, identity management, retail, supply chain, and education sectors.

Cardano’s cryptocurrency is ADA, which is supported by the environment-friendly proof-of-stake consensus algorithm and is currently among the top-20 most valuable cryptocurrencies.

Some closing thoughts

While cryptocurrencies and blockchains are still in their infancy in comparison to fiat currencies and centralized banks, they hold a lot of promise and can be the future of money and computing. The landscape is still diverse and fragmented, and not all existing solutions will make it to the finish line. Utility, scale, speed, and community adoption are four key traits to look out for when examining blockchains and cryptocurrencies.

About the author

Anastasia (Nastya) Chernikova is a tech journalist whose articles have been featured in Forbes and Esquire in Russia, Business Insider, Inc.com, and other publications. She has interviewed prominent tech founders, such as WhatsApp founder Jan Koum right after Facebook bought his app for $19 billion, and Vitalik Buterin, Ethereum founder, when his cryptocurrency ether was just in the beginning of its triumph. She is keen on the idea of the decentralized world and what the blockchain brings to the financial system.

Ethereum, Litecoin, and Ripple’s XRP – Daily Tech Analysis – May 28th, 2021

Ethereum

Ethereum slid by 4.98% on Thursday. Partially reversing a 6.72% gain from Wednesday, Ethereum ended the day at $2,745.51.

A mixed start to the day saw Ethereum rise to an early morning intraday high $2,893.96 before hitting reverse.

Falling short of the first major resistance level at $2,987, Ethereum fell to an early morning intraday low $2,639.32.

Ethereum fell through the 38.2% FIB of $2,740 and the first major support level at $2,720.

Finding late morning support, Ethereum revisited $2,880 levels before another sell-off late in the day.

Ethereum fell back through the 38.2% FIB and the first major support level before ending the day at $2,745 levels.

At the time of writing, Ethereum was down by 0.58% to $2,729.68. A bearish start to the day saw Ethereum fall from an early morning high $2,745.25 to a low $2,709.44.

While leaving the major support and resistance levels untested, Ethereum fell through the 38.2S% FIB of $2,740 early on.

For the day ahead

Ethereum would need to move back through the 38.2% FIB of $2,740 and the $2,760 pivot to bring the first major resistance level at $2,880 into play.

Support from the broader market would be needed, however, for Ethereum to break back through to $2,800 levels.

Barring an extended crypto rally, the first major resistance level and resistance at Thursday’s high $2,893.96 would likely cap any upside.

In the event of a broad-based crypto rally, Ethereum could test resistance at $3,000. The second major resistance level sits at $3,014.

Failure to move through the 38.2% FIB and the $2,760 pivot would bring the first major support level at $2,625 into play.

Barring an extended sell-off, however, Ethereum should steer clear of sub-$2,500 levels. The second major support level at $2,505 should limit the downside.

Looking at the Technical Indicators

First Major Support Level: $2,625

Pivot Level: $2,760

First Major Resistance Level: $2,880

23.6% FIB Retracement Level: $3,369

38.2% FIB Retracement Level: $2,740

Story continues

62% FIB Retracement Level: $1,725

Litecoin

Litecoin fell by 2.43% on Thursday. Partially reversing an 8.28% rally from Wednesday, Litecoin ended the day at $194.41.

A bearish start to the day saw Litecoin fall to an early morning intraday low $180.61 before finding support.

Litecoin fell through the first major support level at $184 before rising to an early afternoon intraday high $208.98.

Coming up against the first major resistance level at $209, however, Litecoin slid back to end the day at $194 levels.

At the time of writing, Litecoin was down by 1.80% to $190.92. A bearish start to the day saw Litecoin fall from an early morning high $194.57 to a low $190.40.

Litecoin left the major support and resistance levels untested early on.

For the day ahead

Litecoin would need to move through the $195 pivot to bring the first major resistance level at $209 into play.

Support from the broader market would be needed, however, for Litecoin to break back through to $200 levels.

Barring an extended crypto rally, the first major resistance level and Thursday’s high $208.98 would likely cap any upside.

In the event of an extended breakout, Litecoin could test resistance at $230. The second major resistance level sits at $223.

Failure to move through the $195 pivot would bring the first major support level at $180 into play.

Barring an extended sell-off, however, Litecoin should steer clear of the 62% FIB of $174. The second major support level sits at $166.

A sustained fall through the 62% FIB of $174 would form a near-term bearish trend from 10th May’s swing hi $413.91.

Looking at the Technical Indicators

First Major Support Level: $180

Pivot Level: $195

First Major Resistance Level: $209

23.6% FIB Retracement Level: $322

38.2% FIB Retracement Level: $265

62% FIB Retracement Level: $174

Ripple’s XRP

Ripple’s XRP fell by 5.79% on Thursday. Reversing a 5.83% gain from Wednesday, Ripple’s XRP ended the day at $0.97083.

A mixed start to the day saw Ripple’s XRP rise to an early morning intraday high $1.04420 before hitting reverse.

Falling short of the first major resistance level at $1.0853, Ripple’s XRP fell to an early morning intraday low $0.93482.

Ripple’s XRP fell through the first major support level at $0.9650 before briefly revisiting $1.03 levels.

A bearish end to the day, however, saw Ripple’s XRP fall back to sub-$0.96 levels before ending the day at $0.97 levels.

The first major support level at $0.9650 limited the downside late in the day.

At the time of writing, Ripple’s XRP was down by 1.16% to $0.95955. A bearish start to the day saw Ripple’s XRP fall from an early morning high $0.97450 to a low $0.95799.

Ripple’s XRP left the major support and resistance levels untested early on.

For the day ahead

Ripple’s XRP will need to move through the $0.9833 pivot to bring the first major resistance level at $1.0317 into play.

Support from the broader market would be needed, however, for Ripple’s XRP to break back through to $1.00 levels.

Barring an extended crypto rally, the first major resistance level and Thursday’s high $1.04420 would likely cap any upside.

In the event of an extended rally, Ripple’s XRP could test resistance at $1.15. The second major resistance level sits at $1.0927.

Failure to move through the $0.9833 pivot would bring the first major support level at $0.9224 into play.

Barring another extended sell-off, however, Ripple’s XRP should steer clear of sub-$0.90 levels. The second major support level sits at $0.8739.

A sustained fall through the 62% FIB of $0.8573 would form a near-term bearish trend from 14th April’s swing hi $1.96598.

Looking at the Technical Indicators

First Major Support Level: $0.9224

Pivot Level: $0.9833

First Major resistance Level: $1.0317

23.6% FIB Retracement Level: $1.5426

38.2% FIB Retracement Level: $1.2807

62% FIB Retracement Level: $0.8573

Please let us know what you think in the comments below.

Thanks, Bob

This article was originally posted on FX Empire

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