While cryptocurrency values have so far been difficult to predict, there are a few key components that determine a project’s success. One of the biggest factors is technology. While investors don’t necessarily know about the technical details of a project, it’s still important to see some progress in this area. The testnet can show a kind of working prototype for blockchain projects. However, the mainnet is an even more important aspect of valuing real-world implementations in cryptocurrencies. In this article, we’ll break down everything you should know about the mainnet and break down two of the most recent to launch.
What is Mainnet?
Basically, every blockchain project has a mainnet. So what is mainnet? Simply put, the mainnet is a blockchain that actually performs the function of transferring digital money from sender to receiver. This is different from testnet, which is basically just testing such transactional functionality. The easiest way to think about it is that prototypes are prototypes that represent the potential capabilities of a project. The mainnet is the de facto end product, available for public use. However, like betas or code frameworks, the mainnets can be changed whenever crypto project teams or open source communities decide an update and/or modification is needed.
Should I Invest in a Project Without Mainnet?
While it may be ideal for all projects to have a mainnet released at the time of the ICO, this is rarely the case. In fact, a lot of these projects even have a testnet prepared during the ICO phase. In terms of fundraising, thousands of blockchain projects were able to raise enough capital based on potential use cases, technical concepts, and other factors such as the team behind the project and the partnership. Usually, teams use a lot of money from their ICO to build testnet and mainnet versions of their projects.
So how does a mainnet help an investor/user of a particular cryptocurrency? From an investor’s point of view, the mainnet proves that a project is making technical progress. Even if you don’t want to invest in a project before the mainnet launch, it’s important to recognize how a mainnet can have a positive (or even potentially negative) impact on your business. cryptocurrency value. Many investors choose to buy crypto before a mainnet because a successful launch can sometimes lead to a significant increase in value.
How Does Mainnet Launch Affect Price?
Does a successful mainnet correlate with a higher price value of a given cryptocurrency? Unnecessary. It is also important to understand the market context as well. To understand better, let’s consider the following two events:
Lightning Network Case
As stated earlier in this post, initial server launch is not the only milestone that determines the success of a crypto project. Constant updates and integrations into the mainnet are also a major part of trying to understand the ever-changing value of any particular cryptocurrency.
A recent example is the Lightning Network that launched on the Bitcoin mainnet on March 15, 2018. Lightning Network is an off-chain solution that adds a second layer, on top of the blockchain. While this project will eventually strive to help all cryptocurrencies scale, the most significant implementation by far is on the Bitcoin mainnet. The Lightning Network makes a lot of sense because it aims to turn BTC into a more scalable cryptocurrency by adding the ability to process more transactions per second. Without the Lightning Network, BTC can only process about 7 transactions per second.
Despite the launch of the Lightning Network, the price of BTC did not immediately increase. Looking at the data, between March 1 and March 30, the value actually fell from about $10,600 to about $6,900.
Why is this the case? It’s important to consider this event in the context of the market. In March, nearly the entire crypto market realized price stagnation or decline in an extremely bear market. While this is an important technical milestone, other factors have restrained BTC price from rising from that point on. Therefore, it is difficult to say whether Lightning Network can launch on the Bitcoin mainnet or not have a real effect on BTC BTC value in the short term.
The Tomochain case
Contrary to Lighting Network, Tomochain after a successful mainnet launch in December 2018, the price has reached 130% in just 2 months, bringing the market capitalization of TOMO coin to $36 million.
Mainnets are important because they demonstrate or disprove a project’s ability to take a blockchain project from concept to implementation. While the initial release of the mainnet doesn’t always provide an insight into the overall progress of the project, it is an essential technical aspect to consider when investing in crypto. death. As seen in many cases throughout the period, it is difficult to say exactly what hosts affect short-term price changes. However, they point to the potential for better overall functionality.
However, other factors such as overall market trends and real-world adoption are equally, if not more important. Regardless of whether the initial mainnet release is considered a success, it is important to remember that mainnets are constantly improving with new iterations, making crypto projects innovative and active. more dynamic over time.
Beam announces plans to incorporate Mimblewimble compatible Lightning Network
What is the Lightning Network and how will it affect Bitcoin and Litecoin?
What is Lightning Network? Why is it important for Bitcoin futures?
Follow the Twitter page | Subscribe to Telegram channel | Follow the Facebook page