What is Block Time?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let’s explore another one of those cryptic blockchain terms: Block Time. What is it and why does it matter?

Remember that blockchains are just long historic records of every transaction that ever happened. It’s like a family tree - a historical representation of an evolving document.

Computers do the hard work of validating those transactions. They need to make sure that nobody tried to sneak a fake transaction in to inflate their wallet balance - just like you want to make sure that your prankster uncle doesn’t change your grandmother's name on your family tree. In blockchains, when enough computers come to the consensus that the record of transactions up to this point is correct, the network approves it.

Now, this may take a little while to do. Bitcoin is famously slow because it forces computers to solve arbitrary puzzles to deter the bad guys from spamming the network with fake transactions. And because that is a known problem, transactions get bundled in so-called blocks. Instead of doing a puzzle for every single transaction, the puzzle is per block.

And there you have it: Block time is the time it takes for such a block to be fully verified. For example, Bitcoin’s block time is about 10 minutes. And if you know that Bitcoin is limited to about 1500 transactions per block, you can quickly calculate that it can only handle 2.5 transactions per second.

And those 2.5 transactions per second are not a lot at all, but you need to realize 10 mins block time in itself is also a very long time. Standing in line for ice cream and waiting that long for every single person ahead of you to pay would be absolutely no fun!

So, you see - Block Time matters, because even thousands of transactions per second won’t solve a problem if you have to wait for a long time for YOURS to process.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

What is a Blockchain Bridge?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today: What does a blockchain bridge do, and how does it work?

The problem those bridges are trying to solve is almost as old as money itself. Imagine traveling to a different country and trying to spend the bills in your wallet at a restaurant. It will most likely not accept it and demand payment in their own local currency.

That's why you can exchange money, say from your US Dollars to Euros or the other way around. But how does this work?

It's all about collateral, or creating a reserve. An exchange kiosk at the airport would take your US Dollar and put it in the vault, then give you Euro in exchange. Your dollars are now the reserve that backs the Euros you've been given.

Of course, because there are many people going to the same kiosk every day, your exact Dollar bill may end up in a different person's wallet, but the principle remains the same.

Crypto bridges do the same thing. Because blockchains are separated, normally there would be no way to use, just as an example, Bitcoin on Solana. But people may want to do that, because they like Bitcoin, but want to take advantage of faster transactions on the Solana technology.

The bridges will take your Bitcoin, and put it in a sort of digital vault. The technical term is literally "locking them up". In return, they'll create a new token that operates on Solana, representing the value of a Bitcoin. Let's call it SolanaBit. Anyone with a SolanaBit can go back to the bridge and free their Bitcoins in exchange for letting them invalidate the SolanaBit.

And there are billions of coins locked up in vaults because they have been transferred over to other blockchains. But before you do that, know that there are big risks too - like any vault, if the bridge has security flaws, someone could break into it. The Wormhole Bridge lost $325m Ethereum in a hack just recently for example.

And that's what a blockchain bridge does! If you use then, use them with caution!

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

Why is the European Union trying to ban Bitcoin and Ethereum?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let’s talk about a recently proposed law that would have made it illegal to use blockchains like Bitcoin and Ethereum in the European Union.

So! Why would anyone want to do that?

Because of big concerns about the environment. The EU has ambitious climate goals, and some blockchains consume excessive amounts of energy.

At the heart of the proposal was banning those chains that use “proof of work”, which is how some blockchains verify transactions.

This process is, in fact, MEANT to WASTE energy BY DESIGN. This is to deter bad actors from trying to overtake the network with fake requests, as every one of those would cost them restrictively high energy bills.

Of course, although cleverly conceived with good intentions by the inventor of Bitcoin, this turned out to be a catastrophic idea for the planet: Bitcoin alone consumes more energy than Norway.

And nowadays, there are alternatives that use massively better methods, all the way to carbon NEGATIVE blockchains.

But making Bitcoin, Ethereum, and others that use “proof of work” illegal would have cut millions of crypto investors in the EU out of their investments. And so the law was changed to not include this provision - at least for now.

What do you think? Should we have laws that force blockchains to become planet friendly?

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

What is Biden's Executive Order on Crypto about?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let's take a deeper look into US President Biden's executive order on crypto and what it means.

An executive order is a written instruction the US President can give to all of the federal agencies he has control over. It's called an executive order, because it is not a law - but it instructs agencies to interpret existing laws in certain ways, which can have significant impact in practice.

One such area is cryptocurrencies. In its order, the Biden administration made a first attempt to clear the path for rules around when and how they are legal to use.

And that is important. To date, rules mostly exist around taxation, but not around how to build and market crypto projects. But the crypto industry might become a major economic factor in tech, and without clear rules, companies may decide to go elsewhere. Large exchanges like FTX have already left the US and gone to Hong Kong for example. Other companies like Coinbase have long advocated for clear laws and rules instead of unknowns.

So what exactly does the order include?

First, it acknowledges that crypto is a major trend. But as a government, a balance has to be found between allowing legal innovation and protecting consumers. Take stable coins as an example - many are not as stable as they promise, and there is nobody to protect you from that today. Another important factor mentioned is the protection of the environment.

Second, the order encourages the agencies to continue their research into a "digital dollar" - which could be a sort of crypto currency controlled by the US government.

And lastly, because crypto can be so complicated, it also asks the attorney general to determine if the existing agencies are actually capable of handling a crypto future - or if the creation of a new entity, entirely focused on the topic, is necessary.

All this is encouraging for crypto innovation in the United States. But remember - this is only an exploration of what could be. Laws will still have to be written and passed.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

What is a Consensus Mechanism in blockchains?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let's talk about consensus mechanisms in blockchains and why they are one of the most important concepts to understand.

But first, let's quickly revisit how blockchains memorize transactions.

Imagine blockchains are like your family history. Many members of your family have a copy of your family tree, but when you compare notes at your reunion, suddenly your uncle has a strange version where a few names are very different.

So: If there are two or more copies of something, and they are not all exactly the same, who decides which one is the right one?

That's where those consensus mechanisms come in. Consus here means agreeing how to validate information. Your family could decide: Any version of your family tree that has the most identical copies is the correct one. Or you can say: We designate a person we always trust to maintain our family history, because we know they are great at that stuff.

Blockchains are the same, but deal with financial transaction history. Much like your family tree is in multiple peoples' hands, the blockchain is copied onto multiple computers, sometimes even thousands.

Without a well-designed consensus mechanism anyone could just make up new information and assign their wallet money they never had. These rules are designed to make that as hard as possible. And quite successfully actually - Bitcoin and Ethereum have never been tricked into accepting fake information.

And about that uncle - turns out he was just pranking everyone. Good that you had a working consensus mechanism in place!

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

What is a Store of Value?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

You've probably heard the term "store of value", which is usually used in reference to Bitcoin. But what does that actually mean?

Store of value simply means that an asset is seen as one created to park money in.

The most famous store of value is physical gold. People have long invested in it to diversify their portfolio in hopes of steady and relatively stable value increases over time. And there was more to it: throughout history owning gold showed: I am wealthy, and I am powerful.

The idea itself is interesting if you think about it some more: While it finds application in products like electronics and jewelry, the amount of money parked in Gold is much higher than it should be if you just think about its practical use.

You can already see the parallels to Bitcoin. Because it was a proof of concept from the early crypto days, the technology can not keep up with today's demand for speed, transaction volume, and programmability. It does, however, have a place in many investment portfolios with the intention to treat it as a kind of digital gold.

Calling it a store of value though is a pretty large misnomer. Due to the volatility of the crypto markets, Bitcoin's price shoots up and down violently, much more than Gold does.

So: As always, you'll be the judge. Digital gold or simply another speculative asset?

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

Why is a big Hedge Fund betting against a stable coin?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

A short seller called Fir Capital is making huge bets against Tether. A hedge fund betting on the decline of an investment wouldn't be newsworthy under normal circumstances, but this is different.

Tether is a stable coin, and as such you'd expect it would always be the same value as the US dollar. And hedge funds speculate on huge price changes, not stability... So, what is going on here?

Essentially, Fir Capital is saying they don't believe the coin is stable. In fact, they are so sure that they bet $4bn on the collapse of Tether.

How does this make sense at all? Well, unlike other stable coins, Tether is not transparent about the investments they have made with the money put into their stable coin. Their reserve, also called backing, is suspected to be tied up in large Chinese real estate companies, and the hedge fund thinks those will lose a lot of value soon. This would make Tether unable to repay a larger amount of users who may want to exchange their USDT back into dollar.

It's the perfect bet if you think about it. Tether is never going to be worth over $1, representing almost zero risk for the hedge fund. And if things do go wrong for Tether, they may win big time.

A Hedge Fund betting against a crypto project for lack of transparency – ironic, but probably a good thing for consumers in the end. Just don't get caught in the middle. Goes to show: Always do your research and fully understand what's going on under the hood.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

What is “Transactions per second” (TPS) and why does it matter?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today, let's look into one the most fundamental requirement any blockchain will have to meet: That it can process enough transactions to handle the intended use cases.

Transactions per Second, or TPS in short, is a measure of that capability. Why does it matter?

Let's assume you create a new, amazing blockchain. Your goal is ambitious: It will be one global currency, poised to replace traditional payments entirely.

Now, that would be a lot of payments. VISA, for example, processes a few thousand transactions every second, and that is only one credit card company in a few countries. Just how many your blockchain would really need to support is hard to guess, but we can safely assume it's hundreds of thousands of TPS.

And guess what? Others have also tried and failed miserably. Bitcoin can handle only 7 TPS, a number that doesn't even support a single large supermarket. Ethereum does 14, so people pay to jump in front of the queue, and transaction fees become astronomical and impractical for smaller payments.

You see, it sounds easier than it is, and any blockchain that wants to have a real shot will need to support massive TPS, and they need to be cheap as well. When you evaluate a project, keep an eye on it.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

What is a governance token?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

By now, you know that there are many different kinds of tokens: for example regular cryptocurrency like Bitcoin, and stable coins like USD Coin.

But you’ve probably also heard the term “governance token”. So what’s up with that?

A governance token represents the right to vote on the future of the crypto project that it was created for. Think of it like a decision in your local sports club - everyone who is involved gets a say in key decisions.

Here’s how that works: A new wave of companies, called Web 3 organizations, are starting to democratize ownership and influence over their decisions. They mint a crypto token and give that away to whoever they feel like. Usually that is active or early users, collaborators, and the like. That token then allows the holder to propose changes, or vote in proposals from others. Any proposal that passes will be implemented.

But because the governance token is nothing other than a small computer program on the blockchain, this process is always going to work. Nothing can really interrupt it, and nobody can steal control. Unlike your local sports club, where the elected president can just decide to change the color of the building against the majority decision, here the code determines the rules.

An interesting example of this is AAVE. This blockchain based borrowing and lending system has over 100,000 governance token holders. They use a forum to exchange ideas, such as making a new crypto currency available for users to borrow or lend on their platform.

So, you see, decentralizing control actually happens in practice. There is more to crypto than just trading.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.

What the meow are Cryptokitties?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today: What the meow are Cryptokitties?

CryptoKitties are one of the first crypto based games. The game lives on the Ethereum blockchain and the goal is to breed the most unique CryptoKitten.

It starts like this: You enter the game with a virtual cat, and the cat has various traits, such as mouth shape, what kind of fur, etc. In total, 12 different traits exist.

Then you can breed your kitten with that of another player or one of your own. It works like evolution - the traits mix and create new unique kittens. Yellow and Brown fur could create red fur for example.

Kittens are represented as images with the images showcasing those unique traits. And the more unique a CryptoKitten is, the more expensive you can trade it for.

And that’s Cryptokittens. A fun game or just another crazy crypto ponzi scheme? As always, we’ll let you judge!

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.