Welcome to Altcoin of the Week, the column where I review and release an alt coin that I feel has some good potential for future gains. In the cryptocurrency space, we now have over 1’300 listed coins on Coinmarketcap, with more coming every single day; naturally, that means plenty of opportunity and money in picking the right horse. Please keep in mind that these are all speculative picks and none of these calls are anything close to “sure money”. At least, that’s what my lawyer tells me. This week we’re looking at Ethereum and enhancements for the blockchain with the 0x protocol.
Ethereum as a network
Ethereum is awesome. It’s the first of what many call “blockchain 2.0”, being a descendant of Bitcoin and showing us the true power of what we could harness with this brand new technology. Bitcoin was the first in the blockchain business, but Ethereum was the cool new kid on the block. Ever since those energetic days with a young Vitalik Buterin, Ethereum’s had plenty of evolutions and advances in both its founding team and technology. We’ve seen groups form such as the Enterprise Ethereum Alliance, troubles resolved with the DAO fork and controversy, and future scaling solutions such as Raiden and Plasma at the forefront of the crypto consciousness. But not everything is sunshine and rainbows for the Ethereum foundation…
The fact is simply that Ethereum is old. It went live on mainnet in July of 2015, almost three years ago, which is an eternity in blockchain. We’ve seen the influx of so many new users and converts that many of the biggest chains experience slowdowns, bottlenecks, and huge amounts of spam. Compared to its big brother Bitcoin, Ethereum has certainly performed better in this aspect – but it’s paltry 15 TPS is simply not enough on some days, with ICO’s and even digital cats clogging up the network, the transactions are immortalized forever. One discussion that’s even taking place recently is clearing out dust in wallets, as they add significant bloat to the chain, which is now over 400 GB.
Evolving the protocol
One of the ways you can improve TPS is by directly increasing the throughput capability of Ethereum. This is one of the direct ways of increasing the robustness and scalability of the network. Another is by offloading as much work as possible before resolving things on chain. This is what 0x does. 0x is essentially a protocol that is universally adaptable across all ERC-20 tokens that enable off-chain scaling solutions for Ethereum. The thing that makes 0x so special is that it reduces the wait times of operations on the network by moving everything off-chain as much as possible and then resolving things back on the Ethereum network. It’s basically like turning Ethereum from this:
0x also has another few tricks up their sleeves. Because their protocol is universal, it basically means that any services and platforms built on the 0x protocol have instant access to the full liquidity pool of every other service running on 0x. It’s like having a massive orderbook that spans every single exchange that is hooked up to this services, giving massive liquidity gains and a huge reduction in slippage for tokens moving across the network. 0x makes things faster, and it does so in a cheaper way. What’s not to like?
Why is this thing valuable?
Metcalfes law of course! I’m a strong proponent of the idea that the more used a service or utility becomes, the more valuable it gets over time. Great examples of this are the Internet, Bitcoin, and (you guessed it) Ethereum. With 0x being implemented on so many platforms in its short lifespan, I am hyper bullish on this project in both the short and long term and think that this is one to hold on to. With all of these platforms using 0x in the background, people who use these crypto services will all be contributing to the use and value of the 0x protocol indirectly:
A second thing that makes these tokens valuable is the fact that using ZRX tokens themselves will give you access to relayer’s liquidity pools – that means that there is a genuine market for these tokens as they will give you access to things non-holders simply wouldn’t be able to use. With increasing amounts of use and adoption, I expect increasing demand on these ZRX tokens, increasing the value even further in the future.
0x is one of my favorite projects because of its elegance and simplicity, as well as addressing a real problem in the Ethereum network – the fact that the developement team is one of the few in crypto to really deliver on their roadmap targets also speaks volumes about the caliber of the squad, and you would be remiss not to be holding some of these tokens in a long term oriented portfolio.