Happy Lunar New Year if you’re celebrating. In the wake of CoronaVirus, please stay safe and healthy.
Welcome back to Triip Token Talk episode 3 ! Let’s get right into it.
How does Coronavirus affect the global economy? How does it affect the cryptocurrency industry?
Wuhan — where Coronavirus first came to light — is a global home for many mega-factories in various industries ranging from car manufacture, oil production, garment manufacture, technology microchip production, etc. Due to priority concerns of employee wellness, many corporations and local companies decide to shut down factories, causing slump in productivity and production delay. This results in huge decline in projected revenues of multinational companies such as Apple, Shell, Tesla, PVH (own clothing line Calvin Klein or Tommy Hilfiger) and many more.
Another aspect that comes with the epidemic and results in increasing demand for bitcoin is a rush to flee from areas allegedly infected with the virus. Bitcoin and other cryptocurrencies, best known for its convenience and privacy privilege in transferring values without government approval and scrutiny, eventually become the ultimate tool for the locals accompany their net worth anywhere they go with ease. Similar patterns can be found in Iraq-Iran rising tension a few months ago. Bitcoin makes it hyper-efficient and easy for anyone to truly become a global citizen and save their life from social, political or in this case, medical catastrophe.
What is Proof of Work?
Proof-Of-Work, combining with various information system technologies such as blockchain or cryptography, make bitcoin truly an original force to challenge existing banking/ value systems. So what exactly is proof-of-work?
In a blockchain network, each computer (or node) would verify the legitimacy of each transaction by solving a computational puzzle to create the next block, then broadcast to all other nodes. These computational puzzles are called proof-of-work problems. The more computational power (or hash power) each node has, the more probable they can get the puzzle right and rewarded coin. By all the nodes seamlessly compete solving proof-of-work problems, it increases the network security and prevents misconducts from occurring.
What is Proof of Stake?
Proof-of-Work nodes (or also called miners) have to heavily rely on electricity used and computational power the computer has, argurably create an unattractive economic benefit much later since bitcoin rewards cut in half every 4 years. Income stream will then come from transaction fee, which isn’t sufficient to run a current mining firm that requires very large capital to sustain.
That’s why cryptographic and blockchain engineers propose Proof-of-Stake as a more environmentally friendly solution to Proof-of-Work. Instead of competing solving puzzles by hash power and electricity to mine, Proof-of-Stake network will require participants to stake a certain amount of that cryptocurrency in order to verify transactions and maintain the network. Ethereum is transitioning itself from PoW to PoS, as planned approximately in Q2 2020. TomoChain is a Proof of Stake Voting, an altered version of PoS yet still function on a similar mechanism.
To compare,
How to bridge the gap between traditional banking economy and cryptocurrency?
In my humble opinion, social struggles will create demand for individual freedom and sovereignty that can help shifting from traditional finance and economy to a decentralized and trustless structure. For ie.
Iraq locals wish to flee from warfare areas yet face challenges to bring their net worth and property with them.
Similar situation with Wuhan locals.
Underprivileged, unbanked and unprofitable citizens whose smartphones are the only tool to connect with the global economy.
Embracing automation, algorithm and decentralized security for global trade participants come with removing trusts in third intermediaries and potential malevolent misconducts
Bankers and finance practitioners reimagine economy system in which reckless quantitative easing (QE) isn’t encouraged.
Politicians are incentivized to better take care of social goods rather personal welfare since there is an alternative.
And so much more.
The question, now, to ask is:
That’s it for this week. See you all in the next episode of Triip Token Talk.
