Mintlayer: A Sustainable Blockchain Technology
The Future of Decentralized Finance
Where It All Started
When it comes to the topic of blockchain technology, the conversation inevitably goes back to Bitcoin, the novel digital currency launched in January 2009 that promised security without the involvement of central authorities like governments or banks. In some way, Bitcoin has become a forerunner of sorts to virtually all cryptocurrencies that have been developed over the past ten years . The aim of the creation of Bitcoin was to provide an alternative to national currencies and thus it remains to be a medium of exchange and a store of value.
With this groundbreaking technology, other cryptocurrencies have followed suit to further develop and build on the blockchain technology to expand its use. One of the most successful networks to do this is Ethereum. Launched in 2015, it is the largest and the most well established, open-ended decentralized software platform . While BTC’s aim is to establish itself as an alternative monetary system, Ethereum as a platform aims to facilitate immutable, programmatic contracts and applications through its own currency. Because of this key difference, Ethereum has become a robust foundational protocol that companies use to build new decentralized programs and applications on . In fact, the innovation that Ethereum put forward paved the way for a thriving decentralized finance setting.
Where We Are Today
The unprecedented embrace of cryptocurrency has allowed for various developments and expansions to the blockchain technology and in a way, Bitcoin has been left behind. Currently, Bitcoin investors cannot diversify their portfolios in DeFi without the involvement of centralized exchanges. On the flip side, Ethereum’s Proof-of-Work (PoW) consensus mechanism has steadily driven gas fees to exorbitant heights, making small transactions unprofitable and unappealing. Because the PoW mechanism allows miners to choose which transactions to prioritize and process, higher-value transactions that provide miners a higher cut through higher gas fees are expedited while lower-value transactions endure longer waiting times . Ethereum’s solution to this is to transition to Etherium 2.0 which uses a Proof-of-Stake (PoS) consensus mechanism. Unfortunately, this solution is less than perfect in that it favors those in the position to stake ETH, a.k.a. those with more buying power, to decide which transactions will be validated. This approach will neither be appealing nor sustainable for the everyday person. In addition, leading blockchains for DeFi pose privacy and security concerns in that entire investment histories and portfolios are made public .
What the Future Could Look Like
Given the existing problems without clear solutions in the current leading cryptocurrency networks, a viable alternative is needed. And this is where the Mintlayer Blockchain comes in. Born from issues that the existing blockchain technology face, Mintlayer marries different ideas to come up with a long-term solution. Inheriting its security model from Bitcoin, Mintlayer allows Bitcoin holders to trade BTC for tokenized assets directly and without intermediaries, thereby providing Bitcoin with the tools needed to create new models of decentralized finance, an area where Bitcoin has lagged behind in recent times. Built on several layers, Mintlayer’s base is a programmable settlement blockchain layer that shrinks transactions to use less size and CPU power. Additionally, the payment layer is attractive in that it uses HTLC smart-contracts that allow up to millions of transactions per second with instant confirmation, significantly reducing fees. Finally, Mintlayer is designed to offer its users a high level of privacy where confidential transactions can be enabled without compromising existing laws and regulations. All these features address current and recurring issues and inefficiencies present in existing networks. All in all, Mintlayer offers a secure, scalable and sustainable solution that allows for an already expanding cryptocurrency ecosystem to continue to grow and evolve in the years to come.
Why We Decided to Invest
“In a free-market economy, every individual should be free to produce, store, exchange assets and access financial markets without any constraints.”
— Enrico Rubboli, Mintlayer Blockchain Core Engineer
The Mintlayer Blockchain offers a much-needed option where decentralization does not need to be sacrificed in the pursuit of scalability. It posits an essential notion where users don’t need to choose between transaction speed versus transaction fees. It also allows users the benefit of keeping their privacy and security while maintaining convenience and usability within the blockchain .
With a compelling vision to build the future of a borderless finance that is open and accessible to all for the benefit of today’s society, the Mintlayer Blockchain manages to deftly incorporate innovation with real world relevance.