On this page, we will be Summarising the crypto intermediate section
Now we have seen some of the more advanced capabilities and opportunities available by moving onto blockchain technology or creating new concepts in the cryptocurrency ecosystem. These attributes allow cryptocurrencies to be affected by both Micro and Macroeconomic factors. As demonstrated from REITs and CEX v DEX moving/ integrating onto the blockchain allows all the current benefits of fiat microeconomics whilst minimising the “cost”, incentivising people to switch to cryptocurrencies. This influx of migration to crypto has impacted global economies, forcing them to implement bans and regulations; especially if they believe that their population is moving to crypto as an ersatz economy. For example China. However, most regulations are in place to protect the users and the validity of their trades from fraud and market manipulation.
Here are some questions to recap what we have learnt in the crypto Intermediate section.
1) What is the current transactional speed on the Ethereum mainnet compared to an L2 solution?
Ethereum is currently at 15 transactions per second whereas Polygon has clocked over 9 million transactions a day. Which approximately is a 700% increase in transactions a day.
2) Why does Layer 2 help scale cryptocurrency projects?
Layer 2 offers scalability of mainnet projects because of its higher transaction processing capacity, lower gas fees and faster confirmation time without sacrificing security.
3) How does a user buy and sell in a liquidity pool?
The user buys and sells directly to other users at a set price quoted by the algorithm set by the LP
4)What are the dangers of Liquidity pools?
There are some dangers to Liquidity pools which include: Impermanent loss, possible smart contract bugs and Liquidity pool hacks.
5)How will the Ethereum network allocate staking rewards post-merger?
The network will reallocate transaction fees from miners to validators instead of increasing the ETH issuance.
6)Why does the change from POW - POS increase the price of ETH?
The change will have both supply and demand side effects. The supply side: The validators will be incentivised to hold ETH, this means supply reduces also the burn rate will remain the same; further reducing supply. Resulting in a price increase. The demand side: with both a high yield and a reduction in energy consumption incentivising new users and existing users to buy in. this means demand has increased resulting in the price increasing. So this shows the change will benefit the user.
7)Where does Web3 differ from Web2?
Web 3 differs from web 2 by not having centralised nodes ( Decentralised) This means no one entity has the power to control the individual nodes (Trustless and Permissionless). It will understand this info in a human-like way AI. Being no multiple nodes it will be ubiquitous.
8)Why does web 3 benefit the individual?
Web 3 benefits the individual because it is Decentralised, so instead of big tech giants getting paid to control the user’s data, the user gets paid to control their data.
9)Why is a DEX considered “safer” compared to CEX?
As a DEX is a P2P exchange, there is no intermediary. This means there is no 3rd party making a profit over the transaction. This minimizes the risk of fraud in transactions.
10) Even though DEX are safer, why might some day-to-day users prefer CEX?
CEX are faster than DEX because the data is stored in a single location. Also, it is more user-friendly.
11)What is the current speculation for the future of crypto in China?
Chinese Government officials are endorsing blockchain technology leading people to speculate that China intends to be a world leader in the digital currency space.
12)Why are Countries ( economies) putting regulations and bans in place on cryptocurrencies?
Cryptocurrencies have a lot of benefits. However, those benefits due to a lack of laws and policies create opportunities for widespread fraud, scams rug pulls and market manipulation.
13)How does an Equity REIT and Mortgage REIT differ?
An equity REIT acquires, manages, builds, renovates and sells income-producing real estate; resulting in their revenue mainly generated through rental incomes. Whereas an mREIT invests in mortgages so their revenue stream is generated through the interest on their investment. For example company A collects rent from their tenants each month = Equity REIT. Whereas company B generates income from the interest from the investment = mREIT.
14)Why do REITs benefit by moving onto the Blockchain?
-Makes real estate a liquid asset.
- Every investor can see the assets in a centralised marketplace.
-The security measures on blockchain guarantee ownership without legal documentation.
-Real estate can be divided even smaller minimising the barrier of entry for new investors.
Well done for completing this section, next we are going to learn about different cryptocurrencies on the Know your Crypto section...