TheDinarian
News • Business • Investing & Finance
"A Letter to Jamie Dimon" and Anyone Else Struggling To Understand Bitcoin And Cryptocurrencies
Written in 2018 by Adam Ludwin - CHAIN Co-Founder & CEO
March 20, 2023
post photo preview

(Dinarian Note: This letter has been virtually erased from the internet. It was a letter written by Chain's (Now Being Rebranded as "ONYX") Co-Founder and CEO, to Jaimie Dimon of JP Morgan, who is working on a new financial program called, yep you guessed it, "ONYX". Onyx will be a inter-Intra bank Unified Ledger Platform. Pure coincidence im sure... I advise everyone read this, then watch the video below and it will connect the dots nicely as to why this letter is so darn IMPORTANT...) 

To Mr. Dimon, and anyone struggling to understand cryptocurrencies.

Hi Mr Damon, I'm Adam Ludwin and I have a company called "Chain". I have been working in the cryptocurrency field for many years. You spoke publicly about Bitcoin last week:

It is not difficult to convince people that cryptocurrencies have no intrinsic value, or that governments will easily destroy them.

At the same time, another theory is becoming more and more popular: that cryptocurrencies will rewrite the way banks and governments operate, and then Silicon Valley giants will rule the world.

Both extreme statements are not true.

The real facts are carefully understood and are very important.

That's why I decided to write this letter to you, hoping it will help you gain a deeper understanding of what cryptocurrencies really are. Let me start with what I believe: the current cryptocurrency market is overheated and irrationally exuberant. There are a lot of people who pretend to be creating cryptocurrencies and scams are everywhere.

  • Few people in the media understand what it's all about
  • Few people in finance understand what it's all about
  • Few people in technology understand what it's all about
  • Few people in academia and politics understand what it's all about
  • Few of the people who buy crypto understand how it all works and probably neither do I.

Besides: Banks and governments are not going away, traditional software is not going away either.

To put it simply: there is a lot of noise, but there is also a real message in it. To grasp it, we need to start by defining a cryptocurrency. Without a specific definition in place, when most people argue about cryptocurrencies, they are talking differently. Because they never stopped to ask each other's definition of cryptocurrency.

Here's my definition: "Cryptocurrency is a new asset class characterized by its ability to power decentralized applications".

If I'm right, your view of cryptocurrencies really has to come from your view of decentralized applications and their value compared to current software models, not from your view of traditional currencies or securities Regardless of its evaluation. If you don't have an opinion on decentralized applications, then, sorry, you can't have an opinion on cryptocurrencies yet.

Please read on!

Since this is not a comparison between cryptocurrencies and traditional currencies, let's stop using the word "currency". This is a misnomer, the word has too many connotations. Mr. Dimon, I noticed that when you talk about bitcoin publicly, you often compare it to the dollar, the euro, the yen, etc. Such analogies will not help you understand the truth of the matter. In fact, it can actually get in the way. So, next, I will use "crypto assets" to refer to so-called cryptocurrencies. Let’s review: cryptocurrencies are a new asset class that is uniquely positioned to power decentralized applications.

As with other classes of assets, there must exist a mechanism for allocating resources to a particular form of organization. Although the recent short-sighted focus of all parties has been on the trading of encrypted assets, the purpose of their existence is not just to be traded.

That said, crypto assets are not meant to exist, at least in principle. To help you understand, we can refer to other asset classes and the organization of their corresponding services: Company Shares vs. Corporations Government Bonds v.s. State, Levels of Government Mortgages vs. Asset Owners Then, now we're talking about: Cryptoassets v.s. Decentralized Applications.

Decentralized applications are a new form of organization, and a new form of software: a new model of creating, supporting, and operating software services in a completely decentralized manner. This does not mean that this new model must be better or worse than the existing software operation methods or companies.

We'll discuss the main pros and cons of this in a moment. We can only say that encrypted assets and decentralized applications are fundamentally different from the current software operations and their corresponding organizational forms that we are familiar with.

How different?

Think of this analogy: You grow up in a rainforest, and I give you a cactus and tell you it's a tree. How would you react? You might laugh and say it's not a tree, because a tree doesn't have to store a bunch of water in its body and then protect it with armor. Yes, after all, in the tropical rainforest, water is everywhere! This is pretty much the first reaction of many people working in Silicon Valley to decentralized applications. I digress, I should give you a good explanation:

What are decentralized applications?

Decentralized applications are a way of creating services that don't have a single actor. We'll discuss whether they actually have value in a moment, but for now, you need to understand how they work.

Let's go back to the beginning of this idea.

It was November 2008, and the financial crisis was sweeping the world. An anonymous author published a paper explaining how to build a viable electronic payment system without a trusted third party such as Chase, PayPal, or the Federal Reserve Bank. This is the first time in history that a decentralized application of this type has been proposed. It's about decentralized applications for payments.

The title of the paper is: Bitcoin

How does this work?

How is it possible to send an electronic payment without a pre-designated entity that can track and update everyone's account balance?

Electronic data is not a bearer instrument, and data requires a reliable intermediary and authentication.

This paper proposes a solution: form a peer-to-peer network, open the network, and publish every transaction to everyone on the network.

When you post a transaction, point to the account information on this network involved in the transaction. Use encryption principles to sign your release with the software key of the account so that others can confirm that it is your account.

Nearly working, there is one more requirement: if there are two releases competing with each other (ie, you want to spend the same money twice) only one release will be adopted. Wrong solution: Design a unit that timestamps transactions, and then incorporates the earliest.

But in this way, you have to rely on a third-party unit, which is tantamount to doing nothing. An epoch-making solution: Let all units compete to be "time stamp executors"! We must have a unit to perform the action, but we can avoid appointing a specific person in advance, or using the same person every time, to perform the action.

"Let's compete!" sounds like a market economy. What is missing? Competitive rewards. excitation. Or, assets. Let's call this asset "Bitcoin". Let's call the parties competing to validate the timestamp of the latest batch of transactions "miners". Let's open up the code and the web so anyone can join the race at any time. Now, we need a real competition.

This article shows a way: get ready, start! Find a random number generated by the Internet! This random number is very, very difficult to solve, so difficult that the only way is to use a lot of computing power and consume electricity to find it. Just like in "Charlie and the Chocolate Factory", the spoiled Veruca asked her father and the poor laborers to help her find a lucky golden ticket to visit the chocolate factory, and the miners used calculations to search for their lucky gold "number" ".

Why such deliberate and resource-intensive competition for something as simple as timestamping the network? Because we want to ensure that the competitors will pay the real cost for this, so that if they really win the game of finding random numbers and become the designated time stamp executors, they will not do evil with this power (such as review transactions).

Instead, they diligently scan every pending transaction, weed out any users attempting to double-spend the same funds, ensure all rules are followed, and broadcast authenticated batches to other network participants.

Because if they play by the rules, the network is designed to reward them...in newly minted bitcoins, and transaction fees in bitcoins for those who want to transact. (Can we now know why they are called miners instead of timestamp messengers?)

That is to say, miners follow the rules because of self-interested motives and act beneficial to the entire network. You know, Adam Smith, the father of economics, said:

Our supper is not in the benevolence of the butcher, the vintner, or the baker, but in their regard to their own interests.

Encrypted Assets: The Invisible Hand of the Internet.

Bitcoin is capitalism, pure and simple. You should love it!

So, now that these miners have bills to pay (mainly electricity), they should sell their newly earned bitcoins on the open market for whatever fiat they need to pay for them, and the rest is profit. So bitcoins will go into circulation, bought by those who need them, and even speculators can participate (more on who “needs” it, and who speculates later.)

Got it?

This kills two birds with one stone: a financial asset that replaces our need for a trusted centralized authority with a market of In the payment network, it is used as a digital bearer paper for circulation (yes! This is a circular argument, I know.) Now that you understand Bitcoin, let's further extend this logic to the discussion of decentralized applications as a whole superior.

Generally speaking, decentralized applications allow us to do many things (such as payments) that we can do today without a trusted central authority. Another example: Filecoin, a decentralized application, allows users to store files on computers in a peer-to-peer network without the need for centralized file storage services such as Dropbox or Amazon's S3.

The app's encrypted asset, also called Filecoin, is used to incentivize the public to share excess hard drive space with the network. Digital file storage is not a new concept, nor is electronic payment.

What's new is that these services don't need a company to operate, which is a new form of organization. Let's talk about another example. Be warned, this can be a bit confusing as the application is a much lower level concept.

There is a decentralized application called "Ethereum" (Ethereum), Ethereum is a decentralized application for building decentralized applications.

I believe that most readers have heard the words ICO (Initial Coin Offering) and Token (token), most of which are issued on Ethereum. To build a decentralized application, you don't have to start from scratch like Bitcoin, you can choose to do it on Ethereum because: a) the network is already working, and b) it is specially designed to build various applications. sex platform.

Ethereum's protocol is designed to incentivize parties to contribute computing resources to the network in order to earn Ether (Ether; Ethereum's encrypted asset). This makes Ethereum a new computing platform for decentralized applications of these new types of software.

This is not cloud computing, because Ethereum itself is decentralized (you can look up the meaning of the word ether in the history of physics), which is why its founder, Vitalik Buterin, calls Ethereum the "world computer." To sum it up, in just a few short years, the world has found a way to build software services without a central operator.

These services are called decentralized applications, and the main key is to use encrypted assets to motivate non-specific people on the network to contribute the resources required to provide services, including computing, storage, computing, etc. At this point, you can take a breath and feel that this thing is actually amazing.

All we need is the Internet, a set of open protocols, and a new type of asset, and we can build a network that can organically integrate resources and provide various services. Many people believe that this is the path that all software will eventually take in the future, and that this can fundamentally challenge the four kings of FANG (Annotation: Facebook, Amazon, Netflix, Google) and venture capital.

Except for one feature.

And this is not just a superior property of all decentralized applications, it's the only way we know how to do it.

What am I talking about? That is, censorship resistance.

This is the real message that is not easy to grasp in the interference I mentioned. Free from censorship means: the use of decentralized applications is open and unrestricted, and service transactions cannot be stopped.

More specifically, there is nothing stopping me from sending bitcoins to whoever I want, nothing stopping me from executing code on Ethereum, nothing stopping me from storing files on the Filecoin network... just I can connect to the network and pay network transaction fees with the corresponding encrypted assets, and I am free to do whatever I want. (If Bitcoin is pure capitalism, it's also pure freedom. This is where libertarians might be obsessed.) If you're a cryptocurrency fanatic and don't want to take my word for it, at least you're willing to listen.

What did Adam Back say to Charlie Lee?

So, we certainly cannot say that Bitcoin is better than Visa for everyone, but it is possible that for some users, Bitcoin is the only way they can pay. We can ask the question: "For whom does this trade-off make sense?

Who needs freedom from censorship over the speed, cost, scalability, and user experience of a centralized service?

If decentralized applications are to be valuable to a certain group of people, then they must choose such services out of the consideration of being free from censorship.

Of course, this is not from the point of view of investment speculation, but in essence. Who are these people? Although there is not very complete data to analyze, it seems that users of decentralized applications can be roughly divided into the following two categories:

  1. People who want to connect to the world: There are many parts of the world where people don't get enough services that operate in traditional ways, but still have ways to get online.
  2. People who don't want to be connected to the world: Anyone who doesn't want their transactions reviewed or known.

Under this framework, one can further ask:

  • For whom is Bitcoin the best or only form of payment?
  • For whom is Filecoin the best or only way to store files?
  • For whom is Ethereum the best or only way to execute programs?

These questions point directly to the ultimate value behind this technology.

Currently, most decentralized applications are not of much use. In the case of Bitcoin, fewer mainstream U.S. merchants accept it as a payment option than in 2014.

A lot of people talk about the use of Bitcoin as a payment system in developing countries, but in China for example, traditional software applications such as Alipay or WeChat Pay are really the way to drive the big revolution in payments here.

At the same time, the considerations of using bitcoin on the darknet or ransomware are obvious.

But don't people use Bitcoin for "store of value" reasons?

Of course, this is just another claim that people invest in Bitcoin to hold it for the long term. But remember I haven't talked about investing in cryptoassets, I'm talking about whether decentralized payment applications powered by this asset are useful to some people.

Only on the premise that human beings are willing to live and work in buildings in the future can real estate have the function of long-term value preservation. The same goes for decentralized applications.

So how to understand Ethereum in terms of immunity from censorship? After all, it seems like a lot of developers are using it these days.

Since Ethereum is a development platform for decentralized applications, are many developers being censored or restricted? In a way, yes. Developers or new entrepreneurs who want to develop financial products do not have open and unlimited access to the world's financial infrastructure.

Of course, Ethereum has no way to provide such usage rights, but it provides another different infrastructure for all parties to use, such as creating and executing a financial contract.

Because Ethereum is a platform, its ultimate value comes from the sum of the value of the applications built on it. In other words, we can evaluate whether Ethereum is useful by looking at whether things built on Ethereum are useful. For example, do we need a censorship-free prediction market? Censorship-free meme? A censorship-free YouTube or Twitter?

It’s still early days, but if none of the 730+ decentralized applications that have been created on Ethereum so far seem to be useful, then it seems like something is going to mean something. Even in the first year of the internet, there were chat rooms, e-mail, cat photos and sports scores worth talking about. Where is Ethereum's killer app today?

So, what does this mean?

Decentralized applications have characteristics so different from the software applications we know and love, is anyone really going to use them? Do they have the chance to become an integral part of the economic system? It's hard to say, because the answer, although related to the technological evolution of the technology, is more important to society's acceptance of them.

For example, sending encrypted messages is usually only used by hackers, spies and neurotic users, and this phenomenon does not seem to change until recently, after the Snowden and Trump era, almost everyone from Silicon Valley to the Acela corridor started using Signal or It's Telegram, WhatsApp is end-to-end encrypted, and the press uses SecureDrop to pay fees... There have been some improvements in technology in this area, but the most important thing is that social changes are driving popularization.

In other words, we grew up in the rainforest, but sometimes the environment changes, and it would be helpful to know how to adapt to other environments.

This is the basic discourse on investing in encrypted assets and decentralized applications at present: it is still too early to draw conclusions, this change is too big, if one or two decentralized applications really become part of the future world, then the Cryptoassets are going to be extremely valuable, so invest early and see how things play out, don't quit just because you haven't seen a killer app yet.

That's a pretty good statement, and I'm inclined to agree.

Let me summarize: In the long run, the value of cryptoassets is driven by the usage of the decentralized applications they support. Although it is still early, the current high valuation still makes sense, because even if the probability of mass popularization is not high, the potential impact is huge, so it is not bad to get in the car first and follow along to see the future development.

But how to explain the latest madness?

Bitcoin has increased five times within a year, and Ethereum has increased thirty times. The total market capitalization of cryptocurrencies has soared to as high as $175 billion from $12 billion a year ago. Why? (Annotation: This is the statistics of 2017.10.17)

As with all crazy history, irrationality is the most rational option right now.

In order to understand the truth of the matter, let us examine the thinking logic of buyers and sellers. Start with the buyer.

If you started investing in bitcoin or ethereum early on, you made a windfall. In psychology, it is called the "banker effect". You start to disregard this money as your real money. You feel that you are very powerful and more willing to take risks, and you may even spread the risk to one or two other encrypted assets.

If you haven't invested yet, the fear of missing out continues to build up until the moment comes when you go all out and buy. Maybe you just saw the news about Bitcoin and didn't understand it, so you followed Buffett's (good) advice and didn't buy it. Friends around you bought it and made money, but you still ignored them. Then you saw the news about Ethereum, and you didn’t understand it, and you didn’t buy it, and then your friends bought it and started planning for retirement. This lesson seems to be contrary to Buffett's teachings. It seems that you should only invest in things you don't understand? So people started rechecking their investment logic from the ground up, and when Bitcoin hit new highs, they finally got in.

it's not a good thing.

Because, there will always be sellers in the market to fill the demand, especially when the demand comes from a group of people who think they will never understand and decide to bet their money on anything that sounds complicated and can make a big difference.

Check out the seller now. I don't mean the people who buy and sell, but the issuers, the teams that create new cryptoassets.

The basic model is: before the planned decentralized application is launched, a certain proportion of newly created encrypted assets is pre-sold for development funds. This means that the funds so raised are a) non-dilutive, not securities, and b) not debt, and you have no obligation to pay anyone back. Basically free money, even the dot-com bubble of the 90s wasn't such a good thing, it was the golden age of entrepreneurs. Therefore, this lure attracts people from all walks of life to rush into ICOs, not even to develop decentralized applications. After all, an ICO can get you out of the game before it goes live!

There is another effect that catalyzes entrepreneurs to create new encrypted assets: selling encrypted assets early creates a group of "visionary investors" who bought your assets early and actively assist you in promoting them. Impossible to exist.

The problem with this kind of thinking is that it merges the roles of early investors and early adopters. There is very little overlap between people who buy digital assets and people who use services associated with them, especially in the current market situation. This creates an illusion of product versus market. Yes, people are buying your cryptocurrency, but only because they want to get rich, and what you're selling is "the way to get rich".

But "it's okay" because everyone is getting rich right now.

The most rational choice right now is to be irrational.

As long as that line graph is always going up.

Only when the tide goes out do you know who's without pants.

At the same time, I would not be bearish on crypto assets.

Those who live off crystal balls end up swallowing broken glass.

Consider the following scenario: the total market value of encrypted assets increases by an order of magnitude every few years, so how much will it reach in 2022? It is certain that many (or most?) cryptoassets created today will not exist then, but many cryptoassets (known as altcoins) started in 2013/2014 are also long gone now. The only exception is Ethereum, which has driven this wave of enthusiasm by relying on platform functions to support other encrypted assets.

Mr. Dimon, what is the conclusion?

Let me conclude by summarizing.

  • Cryptocurrencies (what I prefer to call cryptoassets) are a new asset class for the development of decentralized applications.
  • Decentralized applications provide services that we already enjoy today, such as payment, storage or computing, but the difference is that the services here do not need a centralized institution.
  • This new way of operating software is useful for people who need protection from censorship, often because they either can't use normal services or don't want to be identified.
  • It is better for most people to use the current normal application services, because they are 10 times better than decentralized applications in all aspects, at least for now.
  • Society's embrace or rejection of new technologies is hard to predict (think of the example of encrypted communications).
  • In the long run, the value of encrypted assets depends on whether the decentralized applications they provide are useful. In the short term, the volatility will be intense, with FOMO competing with FUD, doubt competing with understanding, greed competing with fear (both buyers and sellers).
  • Most people who buy crypto assets have re-examined their investment logic.
  • Most of the sellers who create new crypto assets are not actually building dapps, they are just selling their new tokens along the mad bull market; this does not mean that dapps are bad, it just means that someone is taking advantage of ignorance , and even they themselves know little about it.
  • Don’t take the long-term view of cryptoassets in a bad light: we’re approaching the 10th anniversary of the Bitcoin thesis, cryptoassets are still showing no signs of fading, and decentralized applications are likely to have a place in the world like the ones we’ve long taken for granted same organization.

I wish you well,

Adam

p.s.You may have noticed that I didn't use the word "blockchain", which I think probably created more confusion than knowledge.

p.p.s.—There is a related topic that I did not mention here: encrypted ledgers used by enterprises. My views on this can be found here.

(Annotation: All pictures come from the original content)

Link

 

 

community logo
Join the TheDinarian Community
To read more articles like this, sign up and join my community today
0
What else you may like…
Videos
Podcasts
Posts
Articles
Pay Attention Here...😉

These two crypto Ponzi schemes are about to collapse…

👉 Sharplink Gaming & Microstrategy

Source: @chooserich 🗣️

00:04:41
Introducing Arc, the home for stablecoin finance.

Arc is an open Layer-1 blockchain purpose-built to drive the next chapter of financial innovation powered by stablecoins.

Designed to provide an enterprise-grade foundation for payments, FX, and capital markets, Arc delivers the performance, reliability, and liquidity builders need to meet global financial demands.

Arc features:
✅ USDC as native gas
✅ Built-in FX engine
✅ Deterministic sub-second finality
✅ Opt-in privacy
✅ Full Circle platform integration

Open, composable, and EVM-compatible, Arc is designed to interoperate seamlessly with the broader multichain ecosystem.

As part of our mission to advance blockchain infrastructure, we're excited to welcome the Malachite team and IP from Informal Systems to Circle. Arc is built on Malachite’s high-performance consensus engine.

In line with our commitment to open-source development, the core software for Arc will be released under a permissive license, enabling the broader developer community to contribute, extend, and build ...

00:02:50
The Stellar Foundation: Trustless doesn’t mean trust-free.

This weekend at Friends with Benefits FEST, we explored how protocol design, engineering, and community work together to make “trustless” systems work — and why trust matters for blockchain adoption.

00:00:35
👉 Coinbase just launched an AI agent for Crypto Trading

Custom AI assistants that print money in your sleep? 🔜

The future of Crypto x AI is about to go crazy.

👉 Here’s what you need to know:

💠 'Based Agent' enables creation of custom AI agents
💠 Users set up personalized agents in < 3 minutes
💠 Equipped w/ crypto wallet and on-chain functions
💠 Capable of completing trades, swaps, and staking
💠 Integrates with Coinbase’s SDK, OpenAI, & Replit

👉 What this means for the future of Crypto:

1. Open Access: Democratized access to advanced trading
2. Automated Txns: Complex trades + streamlined on-chain activity
3. AI Dominance: Est ~80% of crypto 👉txns done by AI agents by 2025

🚨 I personally wouldn't bet against Brian Armstrong and Jesse Pollak.

👉 Coinbase just launched an AI agent for Crypto Trading
The Future Of Crypto Self Custody Will Change Everyrhing...

Tomas Susanka, CTO at Trezor, joined me to discuss the latest updates with Trezor and the future of crypto self custody.
Topics:

Trezor's hardware wallets
Fighting against new scams and attacks
Crypto security
Seed Phrases innovation
Future of self custody
Trezor vs Ledger
Crypto market outlook

Gemini Post

Prepare your bags.

https://x.com/Gemini/status/1958540596101976117

Visit the placement at the SW Corner of 29th & Broadway New York, NY.

https://x.com/Gemini/status/1958540600396992940

post photo preview
Pyth Network (PYTH) To Rally Higher? This Emerging Fractal Setup Saying Yes!

The cryptocurrency market is undergoing a healthy cooldown as Ethereum (ETH) eases to $4,440 from its recent peak of $4,780. The pullback has weighed on most major altcoins — including Pyth Network (PYTH) — which is down about 5% over the past week.

But while the short-term dip might look discouraging, PYTH’s chart is showing something far more interesting: a price structure that mirrors the exact same bullish breakout pattern that sent Skale (SKL) soaring by triple digits earlier this month.

PYTH Mirrors SKL’s Breakout Structure

A glance at SKL’s daily chart reveals a textbook falling wedge formation — a well-known bullish reversal pattern. Once SKL broke above the wedge and printed a higher high followed by a higher low, it flipped both the 200-day and 100-day moving averages into firm support. That technical shift triggered a 148% rally in just days.

PYTH appears to be tracing the same path.

Like SKL, PYTH has already broken out from its falling wedge and formed a higher high and higher low. It is now consolidating just beneath a critical confluence of resistance, with the 100-day MA at $0.1235 and the 200-day MA at $0.1481 — a setup eerily similar to SKL’s pre-breakout structure.

What’s Next for PYTH?

For the bullish fractal to fully play out, PYTH will need to close decisively above the $0.1235–$0.1481 zone, ideally on rising volume. A confirmed breakout could open the door to the first upside target of $0.21, representing roughly 78% potential gains from current levels.

However, confirmation is key. Until PYTH clears these moving average hurdles, it remains vulnerable to extended consolidation or even a false breakout. Still, the fractal similarity to SKL is hard to overlook — and if history repeats, PYTH bulls could be on the verge of a major move.

Source

🙏 Donations Accepted 🙏

If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below 📲
2) or visit https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

Read full Article
post photo preview
Deep Dive into Pyth Network 💎💎💎💎💎
👉From November 2024😉

What are Oracles?

Blockchains in and of themselves are useful already, for trustless and permissionless transactions without censorship. No trust or verification from the user is required because it is stored on a decentralised ledger with global consensus. What if certain transactions require reliable and real-time data from external sources that do not necessarily have a global consensus or can be stored on the same ledger? For example:

  • Products that rely on price feeds of assets from other blockchains or real-world markets: Many decentralized finance (DeFi) applications, like decentralized exchanges or lending platforms, need accurate and timely information about asset prices (e.g., stocks, cryptocurrencies, commodities). Since these prices are continuously changing in real-world markets, blockchains need a way to securely access this off-chain data.
  • Products that require verifiable and secure random numbers: Randomness is crucial for a variety of blockchain use cases, such as lotteries, gaming, and even secure cryptographic protocols. However, generating truly random numbers on-chain is challenging without introducing bias or predictability. Off-chain randomness, when provided by a reliable source, is often needed.
  • Products dependent on historical price data: Some DeFi platforms and financial products might need access to archived price data for risk assessment, backtesting trading strategies, or offering historical analysis. Since blockchains primarily focus on storing current state information, they need external sources to provide this historical data efficiently.

To address these challenges, Oracles were introduced. Oracles serve as bridges between blockchains and the external world, providing smart contracts with access to off-chain data. They connect external data providers—such as market data owners, web APIs, or IoT devices—to decentralized applications across multiple blockchains. Oracles enable these applications to securely and reliably obtain real-time data, execute transactions based on external events, and interact with data that cannot be directly stored on-chain.

Why can this data be trusted? Oracles provide a robust mechanism for ensuring the integrity and reliability of off-chain data before it is used on the blockchain. An oracle network verifies the:

  • Authenticity: To ensure that the data is genuine and comes from a legitimate source, oracle networks source data from multiple trusted providers or verifiable APIs. This process reduces the risk of malicious or false information being introduced into smart contracts.
  • Accuracy: Accurate data is crucial for smart contracts to function correctly. Oracles achieve this by aggregating data from several independent sources. Instead of relying on a single provider, an oracle network will query multiple data sources and compare their responses.
  • Reliability: Oracle networks enhance reliability by using decentralized nodes, which increases resilience against failures or malicious activity. If one data source or node fails or provides incorrect information, the other nodes in the network can continue to operate and provide valid data.

The demand for accurate and reliable off-chain data is growing as the number of real-world use-cases and adoption of blockchain increases. Users of applications are more than willing to pay for an oracle service that is accurate and reliable and covers a large variety of use-cases.

Pyth Network versus Other Oracles

Read the blog post of Battle of the Oracles to learn more about the different oracles solutions. To recap, Pyth Network is a high-frequency oracle leveraging Solana's technology, offering a robust solution for off-chain data sharing for primarily decentralized finance applications (DeFi). It provides services like real-time price feeds and benchmarks, accessible to a wide range of financial service providers. PYTH is the governance token and utility token of the Pyth Network. Supply and demand for the PYTH token is directly related to level of usage and total demand of Pyth’s services and Pyth Network’s Tokenomics.

Total Value Secured by Oracles

While Chainlink holds the lion’s share of the total value secured by oracles, Pyth has shown by far the largest growth in terms of TVS, number of protocols supported and number of DApps. Pyth is expanding rapidly, across different networks and protocols, supporting more DApps, data providers and integration partners every day. In the same time frame, Chainlink’s marketshare has decreased. Comparing the main metrics of MCAP/TVS ratio and MCAP/TTV ratio, we notice that based on market capitalization (circulating supply), Pyth is undervalued whereas the TVS ratio based on fully diluted value paints a different picture. This is because only 37% of PYTH tokens are unlocked, the next significant PYTH token unlock takes place in May of 2025 and happens yearly thereafter on the same date until the full amount of tokens has been unlocked by 2027.

Use-cases Enabled by Pyth

Products and Services:

  • Price Feeds: real-time market data for smart contracts, blockchains, and applications
  • Benchmarks: historical market data for smart contracts, blockchains, and applications
  • Express Relay: smart contracts or protocols that need protection against MEV (Express Relay) Express Relay is one of a kind product that offers developers to auction off valuable transactions directly to MEV searchers without validator interference
  • Entropy: smart contracts that require secure on-chain random numbers. Secure and verifiable random numbers are incredibly important for creating a fair and unpredictable on-chain actions (e.g., for games)
  • Pyth DAO Governance model

Examples:

  • Decentralised Exchanges (DEXs) require reliable real-time price feeds to provide users accurate trades.
  • Pyth’s data pull model provides data directly from the source, such as exchanges, market makers or DeFi protocols. Because data is pulled only on demand and not pushed at a given interval, it scales efficiently, and costs are offloaded to users where updates are demand-based.

Case Study: Drift (DEX)

Refresher: What is a DEX?

Decentralized Exchange (DEX) allows users to trade cryptocurrencies directly, without intermediaries, using smart contracts on a blockchain. DEXes operate peer-to-peer, providing greater privacy and control over assets compared to centralized exchanges.

There are two main types of DEXes:

  1. Order Book DEXes: These platforms match buy and sell orders using a live order book, similar to traditional exchanges. Examples include dYdX.
  2. Automated Market Makers (AMMs): AMMs use liquidity pools and algorithms to determine asset prices, allowing users to trade instantly without needing a counterparty. Examples include Uniswap and SushiSwap.

Context

Drift is a perpetual trading DEX built on Solana. Speed, reliability, and performance make or break a perpetual trading ecosystem. Drift is a perpetual trading platform that allows traders to create leveraged positions against the performance of synthetic assets.

Why Pyth?

Drift seeks to offer the most feature-rich, powerful perpetual DEX with lightning-fast execution. This ambition necessitates a robust Oracle solution. Legacy oracles are slow and susceptible to front and back running.

Pyth and Drift partnered to rapidly deploy a proof-of-concept. This successful relationship satisfies the ultra-fast network requirements of Drift’s execution tools and is capable of supporting thousands of users and hundreds of assets.

This is only one of many examples of an effective partnership and integration that gives Web3 users an enhanced user experience than DApps that use other Oracle solutions. There are presently over 410 integration partners supporting the transition from push to pull Oracles with Pyth Networks.

Pyth versus Chainlink

We compare Chainlink and Pyth Network with two main metrics: Total Value Secured (TVS) and Total Transaction Volume (TTV)

Total Value Secured

Pyth’s Total Value Secured (TVS) is more distributed across different blockchains and applications compared to Chainlink, offering greater resilience and diversification. Here's how the comparison breaks down:

  • Blockchain Distribution: Pyth’s TVS shows a broader spread across multiple blockchains. For instance, only 61.1% of Pyth’s TVS is concentrated on the Solana blockchain, which means the remaining value is distributed across other blockchains, contributing to its decentralized footprint. In contrast, 97.1% of Chainlink’s TVS is concentrated on Ethereum, creating a higher dependence on a single blockchain. This heavy reliance on Ethereum makes Chainlink more vulnerable to network-specific issues, such as scalability concerns or market downturns affecting Ethereum.
  • Application Distribution: Pyth also demonstrates a healthier diversification across different applications. Only 23.8% of Pyth’s TVS is tied to its top application, meaning the remaining value is distributed among various other applications. This broader application spread lowers the risk of one dominant app affecting the network’s overall performance. Chainlink, however, has 48.8% of its TVS tied to its top application, meaning nearly half of its secured value relies on a single application. This concentration creates a potential single point of failure, making Chainlink more sensitive to shifts in the usage or success of that key application.

Pyth's more balanced distribution of TVS across different blockchains and applications enhances its resilience. With a healthier spread of its value, Pyth is better positioned to withstand market fluctuations or downturns that may affect individual blockchains or applications, making it less exposed to risks associated with dependency on any single network or product. This diversified approach gives Pyth a structural advantage in terms of long-term stability and adaptability.

Total Transaction Volume

Another, perhaps better, metric to measure the true market share and usage of an Oracle network is TTV (Total Transaction Volume). TTV is strongly correlated with the frequency of oracle price updates and therefore oracle revenue and true demand for its products and services. TVS can overstate or understate an application’s demand for price updates, because an application could have a disproportionate amount of locked value relative to the amount of Oracle interactions one would expect to observe.

Chainlink, the traditional market leader of oracle networks, is losing ground after being slow to serve customers needing faster data updates, though they've recently launched a new high-speed service. Pyth has become a successful competitor by focusing on rapid data delivery across multiple platforms, making it easier for financial applications to access real-time price information. Large trading platforms are increasingly building their own internal price tracking systems rather than paying external providers, suggesting cost is a major factor in their decisions.

The key to future success in digital trading will be speed - traditional exchanges currently have an advantage with their centralized systems, but new platforms are starting to close this gap by developing faster price update capabilities.

Pyth Network Governance

The Pyth Network operates a decentralized governance system that empowers the community by allowing all PYTH token holders to have a direct say in the network's development and decision-making processes. This decentralized governance model ensures that control of the network is distributed among its users, promoting transparency and inclusion.

To participate in governance, token holders must stake their PYTH tokens through the Pyth staking program. By staking their tokens, users gain the ability to vote on community governance proposals, ensuring that they have a voice in the key decisions shaping the future of the Pyth Network.

In addition to voting, any PYTH token holder has the right to submit proposals to the Pyth DAO, provided they meet the requirement of holding and staking at least 0.25% of the total PYTH tokens staked. The proposals that can be brought to the DAO are diverse and impact many critical aspects of the network's functionality, including:

  • Determining the size of update fees: Proposals can influence the fees charged for updates to the network, ensuring that they remain fair and competitive.
  • Reward distribution mechanisms for publishers: The community can vote on how rewards are allocated to data publishers, ensuring that those contributing accurate and reliable data are fairly compensated.
  • Approving software updates across blockchains: The Pyth Network operates across multiple blockchains, and governance participants have the power to approve essential updates to on-chain programs, ensuring the network remains up to date and secure.
  • Listing price feeds and determining their reference data: Token holders can vote on which price feeds are listed on Pyth, as well as set the technical parameters for these feeds, such as the number of decimal places in the prices and the reference exchanges used to determine the data.
  • Selecting data publishers: The governance system allows the community to permission publishers, or select which entities are allowed to provide data for each price feed. This ensures that only trusted and verified data sources are contributing to the network.

Conclusion

The Pyth Network stands out as a disruptive force in the decentralized oracle space, rapidly growing across protocols and blockchains and setting new standards for both data speed and diversification. Leveraging Solana technology, Pyth brings high-frequency, real-time market data directly from first-party sources—including exchanges and trading firms—to an expanding universe of DeFi and TradFi applications. Compared to its primary competitors, Pyth demonstrates healthier resilience by distributing its Total Value Secured across multiple blockchains and applications, reducing dependencies and systemic risk.

Recent market trends show Pyth gaining ground in metrics like Total Transaction Volume, challenging traditional leaders like Chainlink and reflecting a broader shift toward fast, reliable, and diversified data solutions in decentralized finance. Its innovative approach—such as direct publisher sourcing, sub-second updates, and auditable aggregation—addresses the needs of financial markets with unique precision and transparency.

Ultimately, for developers, institutions, and investors seeking reliable off-chain data with speed and global reach, Pyth Network is quickly becoming a cornerstone oracle solution—and its trajectory signals a new era of dynamic, decentralized connectivity for global finance.

 

Source

🙏 Donations Accepted 🙏

If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below 📲
2) or visit https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

 

 

 

 

 

Read full Article
post photo preview
Understanding the Crypto Alt Season

The next altcoin season is poised to ignite the crypto market, promising to turn savvy investors' portfolios into goldmines. As Bitcoin's dominance wanes, a new era of blockchain innovation is dawning—are you ready to ride the wave?

Market behavior often exhibits distinct patterns and cycles. One such phenomenon that has captured the attention of traders and investors alike is the "Alt Season"—a period when alternative cryptocurrencies, or "altcoins," outperform Bitcoin and experience significant price surges.

The concept of market cycles and seasonality is not unique to crypto; it's a well-established principle in traditional financial markets. However, in volatile crypto space, these cycles can be more pronounced and occur with greater frequency.  

In this article, we’ll try to cover these and other topics: 

  1. The nature and characteristics of Alt Seasons
  2. The importance of recognizing market cycles in cryptocurrency trading
  3. Alt Season indicators and how to interpret them
  4. Predictions and speculatins about the next potential Alt Season

What Is Crypto Alt Season?

Crypto Alt Season, short for "Alternative Cryptocurrency Season," refers to a period in the cryptocurrency market when alternative cryptocurrencies (altcoins) significantly outperform Bitcoin in terms of price appreciation. During an Alt Season:

  1. Many altcoins experience rapid price increases.
  2. The market share of altcoins grows relative to Bitcoin.
  3. Trading volume for altcoins typically increases.
  4. Investor attention shifts from Bitcoin to various altcoin projects.

An Alt Season can last anywhere from a few weeks to several months. It's often characterized by increased risk appetite among investors, who are willing to allocate more capital to smaller, potentially higher-risk crypto projects in search of higher returns.

Is Crypto Season the Same As Crypto Alt Season?

While related, Crypto Season and Crypto Alt Season are not exactly the same:

  1. Crypto Season:
    • Refers to a broader bullish period in the entire cryptocurrency market.
    • Typically includes price appreciation for both Bitcoin and altcoins.
    • Can be longer in duration, sometimes lasting for many months or even a year or more.
    • Often starts with a Bitcoin rally, followed by increased interest in the broader crypto market.
  2. Crypto Alt Season:
    • Specifically focuses on the outperformance of altcoins compared to Bitcoin.
    • Can occur within a broader Crypto Season but is more narrowly defined.
    • Generally shorter in duration than a full Crypto Season.
    • May happen towards the latter part of a broader Crypto Season, as investors seek higher returns in smaller cap coins.

Key Differences:

  • Scope: Crypto Season encompasses the entire market, while Alt Season focuses on altcoins.
  • Duration: Crypto Seasons are generally longer than Alt Seasons.
  • Market Dynamics: In a Crypto Season, Bitcoin often leads the rally, while in an Alt Season, altcoins outperform Bitcoin.

It's important to note that these terms are not officially defined and can be subject to different interpretations within the cryptocurrency community. However, understanding the distinction can help investors and traders better analyze market trends and potential opportunities in different segments of the crypto market.

What Is Alt Season Indicator?

The Alt Season Indicator is a tool used by cryptocurrency traders and investors to gauge whether the market is entering or currently in an "Alt Season" — a period when altcoins are outperforming Bitcoin. While there isn't a single, universally accepted Alt Season Indicator, several metrics and tools are commonly used to assess the likelihood of an Alt Season. Here are some key aspects of Alt Season Indicators:

Bitcoin Dominance

One of the most widely used indicators is Bitcoin Dominance, which measures Bitcoin's market capitalization as a percentage of the total cryptocurrency market cap.

  • Calculation: (Bitcoin Market Cap / Total Crypto Market Cap) * 100
  • Interpretation: A declining Bitcoin Dominance often signals a potential Alt Season, as it indicates that capital is flowing from Bitcoin into altcoins.
  • Threshold: Some traders consider Bitcoin Dominance below 50% as a potential indicator of an Alt Season.

Altcoin Market Cap Ratio

This indicator compares the total market capitalization of altcoins to Bitcoin's market cap.

  • Calculation: Total Altcoin Market Cap / Bitcoin Market Cap
  • Interpretation: An increasing ratio suggests growing strength in the altcoin market relative to Bitcoin.

Top 10 Altcoins Performance

This indicator tracks the performance of the top 10 altcoins by market cap (excluding Bitcoin) compared to Bitcoin over a specific period.

  • Calculation: Average percentage gain of top 10 altcoins vs. Bitcoin's percentage gain
  • Interpretation: When a majority of top altcoins consistently outperform Bitcoin, it may indicate an Alt Season.

Alt Season Index

Some crypto data platforms offer a proprietary Alt Season Index, which combines various metrics to provide a single score indicating the likelihood of an Alt Season.

  • Scale: Often presented as a percentage or a 0-100 score
  • Interpretation: Higher scores (e.g., above 75%) suggest a higher probability of an ongoing Alt Season

Trading Volume Ratios

This indicator compares the trading volumes of altcoins to Bitcoin's trading volume.

  • Calculation: Total Altcoin Trading Volume / Bitcoin Trading Volume
  • Interpretation: An increase in this ratio may indicate growing interest in altcoins, potentially signaling an Alt Season.

Important Considerations:

  1. No single indicator is foolproof. Traders often use a combination of indicators for a more comprehensive analysis.
  2. Market conditions can change rapidly, and past patterns don't guarantee future results.
  3. Different traders may use different thresholds or interpretations of these indicators.
  4. The crypto market's evolving nature means that indicators may need to be adjusted over time to remain relevant.

Understanding and effectively using Alt Season Indicators can help traders and investors make more informed decisions about allocating their resources between Bitcoin and altcoins. However, it's crucial to combine these indicators with broader market analysis and risk management strategies.

Alt Seasons: Historical Perspective, Current Situation, and Future Predictions

Previous Altcoin Seasons

In crypto, two periods stand out as particularly significant for altcoins. These "alt seasons" saw unprecedented growth and interest in cryptocurrencies beyond Bitcoin, reshaping the landscape of digital assets.

The 2017-2018 Alt Season

Duration: December 2017 to January 2018

Context:

  • Bitcoin (BTC) experienced its most remarkable bull run to date, reaching nearly $20,000 in December 2017.
  • This surge in Bitcoin's price and public interest created a ripple effect throughout the crypto market.

Key Developments:

  1. Proliferation of New Coins: The success of Bitcoin catalyzed the launch of numerous new cryptocurrencies.
  2. Investor Frenzy: Buoyed by Bitcoin's success, investors eagerly sought the "next Bitcoin," pouring capital into various altcoins.
  3. ICO Boom: This period saw a surge in Initial Coin Offerings (ICOs), with many projects raising millions in a matter of hours or days.
  4. Market Expansion: The total cryptocurrency market cap reached unprecedented levels, briefly surpassing $800 billion in January 2018.

Notable Altcoins: Ethereum (ETH), Ripple (XRP), and Litecoin (LTC) saw significant price increases during this period.

The 2020-2021 Alt Season

Duration: December 2020 to April 2021

Context:

  • Bitcoin broke its previous all-time high, surpassing $60,000 in March 2021.
  • The COVID-19 pandemic had accelerated digital adoption and increased interest in alternative investments.

Key Developments:

  1. DeFi Explosion: Decentralized Finance (DeFi) projects gained massive traction, with many tokens seeing exponential growth.
  2. NFT Boom: Non-Fungible Tokens (NFTs) entered the mainstream, driving interest in blockchain-based digital assets.
  3. Institutional Adoption: Major companies and institutional investors began adding cryptocurrencies to their balance sheets.
  4. Technological Advancements: Many altcoins introduced innovative features, scaling solutions, and use cases.

Notable Altcoins: Ethereum (ETH) reached new highs, while projects like Binance Coin (BNB), Cardano (ADA), and Polkadot (DOT) saw remarkable growth.

Comparative Analysis: Both alt seasons shared some common characteristics:

  • They were preceded by significant Bitcoin price rallies.
  • New projects and tokens gained rapid popularity and valuation.
  • Retail investor participation increased dramatically.
  • The overall cryptocurrency market capitalization reached new heights.

However, the 2020-2021 alt season was marked by greater institutional involvement and a broader range of technological innovations, particularly in DeFi and NFTs.

Is It Alt Season?

Based on the indicators discussed above, it's not currently an altcoin season. The Altcoin Season Index at 41 and Bitcoin's market dominance at 61.3% both suggest that Bitcoin is still the dominant force in the crypto market at this time.

When Is Alt Season?

Based on the information we could gather from various experts, we can analyze the predictions for the next altcoin season as follows:

  • Based on the latest analysis from experts and on-chain data, here’s what we know about the next altcoin season:

     

    Current Status (August 2025):

     

    • The altcoin season index—a metric that signals how many altcoins outperform Bitcoin—currently sits around 37. For a “full-blown” alt season, it typically needs to rise above 75.

    • Bitcoin dominance is approximately 61-62%. Historically, dropping below 60% often coincides with a rapid rotation into altcoins and the start of alt season.

     

    Key Indicators to Watch:

     

    • Altcoin Season Index (ASI): Above 75 signals a true altcoin season.

    • Bitcoin Dominance: A move below 60% usually marks the transition; sub-50% dominance is associated with peak alt season inflows.

    • Market Activity: Increasing volumes in major altcoins and Layer 1s, meme coin rallies, and spikes in DeFi activity are early warning signs.

    • Ethereum Outperformance: When ETH surges relative to BTC, this historically precedes broader altcoin rallies.

     

    Expert Predictions for 2025:

     

    • Analysts point to a pivotal window for alt season starting as early as August 2025 and extending through the fall, with many expecting true acceleration of altcoin gains if Bitcoin’s price consolidates and capital rotates further into alts.

    • There is strong consensus that macroeconomic catalysts, such as potential U.S. interest rate cuts and ongoing Bitcoin ETF momentum, could fuel a major altcoin rally in late 2025 if positive conditions persist.

    Summary Table: Key Factors & Targets

    SignalAlt Season TriggerStatus (Aug 2025)
    Altcoin Season Index (ASI)>75 ~37
    Bitcoin dominance<60% ~61–62% (near trigger)
    Altcoin trading volumeSustained surge across many alts Rising, but not explosive
    Ethereum outperformanceETH/ BTC breakout, >$3,700 Near, ETH ~$3,500
    Market narrativesAI, DeFi, meme coins, new L1 inflows Strengthening
     

    Bottom Line:
    Most analysts agree the groundwork for altcoin season in 2025 is building. We are currently in a transition phase: if Bitcoin dominance continues to fall and the Altcoin Season Index rises above 75, a full-fledged alt season could ignite during the second half of 2025. Monitor these key indicators to stay ahead as market momentum shifts from Bitcoin into a broader range of altltcoins.

Key Factors to Consider

  • Technology: Look for coins with innovative solutions to existing blockchain challenges.
  • Adoption: Consider projects with growing partnerships and real-world use cases.
  • Market Position: Established coins with room for growth may offer a balance of stability and potential returns.
  • Tokenomics: Understanding supply dynamics can help predict potential price movements.

It's crucial to conduct thorough research before investing. The cryptocurrency market is highly volatile, and past performance doesn't guarantee future results. Always invest responsibly and within your risk tolerance.

How to Win in Next Alt Season?

Capitalizing on the next altcoin season requires a strategic approach. Here's how to maximize potential gains:

  • Research and Diversification: Thoroughly research potential investments, analyzing both fundamentals and technical aspects to identify promising altcoins. Diversify your holdings across different projects to mitigate risk and maximize potential returns. Don't put all your eggs in one basket.
  • Strategic Timing: Utilize technical analysis tools like support/resistance levels and RSI to pinpoint optimal entry and exit points. Monitor market sentiment and price trends to make informed decisions. A clear entry and exit strategy is crucial for managing risk and maximizing profits during volatile periods.
  • Newer Projects: Consider participating in newer altcoin projects. This provides early access to potentially high-growth projects at discounted prices. Research upcoming defi projects with use cases, focusing on innovative projects with strong potential. Investing early can yield substantial returns as the project develops.

Conclusion

In summary, an altcoin season, marked by significant price increases in non-Bitcoin cryptocurrencies, may be on the horizon.  This potential surge could be driven by investors seeking higher returns in smaller-cap cryptocurrencies, technological advancements in altcoin projects, increased blockchain adoption, and the transition of projects from speculative ventures to real-world applications

Remember, while the potential for significant gains exists during an altcoin season, the cryptocurrency market remains highly volatile. Always invest responsibly.

Source

🙏 Donations Accepted 🙏

If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below 📲
2) or visit https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

Read full Article
See More
Available on mobile and TV devices
google store google store app store app store
google store google store app tv store app tv store amazon store amazon store roku store roku store
Powered by Locals