What is a mainnet of Cryptocurrency?

Although cryptocurrency values ​​have so far been difficult to predict, there are some key components to determining the success of a project. One of the biggest factors is technology. While investors do not necessarily need to know the technical details of a project, it is still important to see progress in this area. The testnets are able to show a sort of working prototype for blockchain projects. However, mainnets they are an even more important aspect of the evaluation of the implementation of a cryptocurrency in the real world. In this article we will discuss everything you should know about the main networks and we will analyze two of the most recent ones to be launched.

What is a Mainnet?

Basically, every blockchain project has a mainnet. So, what's it? In short, a mainnet is a blockchain that actually performs the functionality of digital currency transfer from senders to recipients. This is different from a testnet, which is basically just a test of that transaction functionality. The easiest way to think about it is that the testnets are the prototypes that demonstrate the potential of a project. The mainnet networks are the real "final product", which is available to the public. However, just like test networks or code structures, major networks can be changed whenever project teams or open source cryptocurrency communities decide that updates and / or revisions are needed.

Do I have to invest in a project without a Mainnet?

While it might be ideal that all projects already have a mainnet released at the time of the ICO, this is rarely the case. In fact, many projects do not even have a testnet prepared during the ICO period. In terms of fundraising, tons of blockchain projects have been able to raise sufficient capital based on potential use cases, technical concepts and other factors such as the project team and partnerships. Often teams use a lot of money from their ICOs to build the testnet and mainnet versions of their projects.

So, how can a mainnet help an investor / user of a particular cryptocurrency? From the investor's point of view, the main network shows that a project is making technical progress. Even if you do not want to invest in a project before the launch of mainnet, it is important to realize how a mainnet can have a positive (or even potentially negative) impact on the value of a cryptocurrency. Many investors choose to buy cryptocurrencies before a mainnet because a successful launch can sometimes lead to significant increases in value.

How does a launch on Mainnet affect prices?

Is a successful main network related to higher price values ​​than a certain cryptocurrency? Not necessarily. It is also important to understand the market context. For better understanding, here are two events related to the mainnet of this year so far.

BTC and the Lightning network: March 2018

As illustrated earlier in this post, the initialnet launches are not the only major milestone in determining the success of a cryptocurrency project. Continuous updates and additions to the main network are also an important part of trying to understand the ever-changing value of each cryptocurrency date.

A recent example is the launch of Lightning Network on the main Bitcoin network on March 15, 2018. The Lightning network is a non-chain solution that adds a "second level" over the blockchain. While this project will eventually try to help all the cryptocurrencies climb, the most important implementation to date is on the main Bitcoin network. The Lightning network is significant because it aims to make BTC a more scalable cryptocurrency by adding the ability to handle many more transactions per second. Without the Lightning network, BTC can handle only about 7 transactions per second.

Despite the launch of the main network of Lightning Network, BTC prices did not increase soon after. Looking at the data, in the period from March 1 to March 30, the value actually declined from about $ 10,600 to about $ 6,900.

Because that's how it is? It is important to watch this event in the context of the market. In March, virtually the entire cryptocurrency market achieved stagnant or declining prices in an extremely bearish market. Although this was an important technical milestone, other factors have limited BTC's prices from the increase at that time. Therefore, it is difficult to say whether the launch of Lightning Network on the main Bitcoin network had a real effect on the short-term value of BTC.

Golem Mainnet Launch in April 2018

The source code of Golem & # 39; s Brass Mainnet was released on Github on 10 April 2018. The purpose of Golem (GNT) is to offer a P2P system to share computing power. Essentially, users who need extra computing power pay GNT to network users who have extra computing power. Looking at the data from March 31 to April 29, the price has risen from about $ 0.20 to $ 0.60. This includes a peak at $ 0.73 on April 13th.

At first glance, this would indicate a direct correlation between the launch of Brass Mainnet and the increases in value. However, just like the launch of Lightning Network on the main Bitcoin network, it is also important to consider this case in a market context. It is possible to conjecture that the value of GNT has increased at a more significant rate due to the main network (especially on 13 April), but it is still difficult to conclude with certainty. This is because most cryptocurrencies increased in value in the April bull market. It could be argued that the price would have increased at the same rate simply because of favorable market conditions.

Conclusion

The mainnet networks are important because they demonstrate or refute the ability of a project to take a blockchain project from ideation to implementation. Although the initial version of a main network does not always give a clear view of the overall progress of a project, it is an essential technical aspect to consider when investing in cryptocurrencies. As seen in many cases in the past, it is difficult to say exactly what effect the main networks have on short-term price changes. However, they indicate the potential for better overall functionality.

However, other factors, such as general market trends and adoption in the real world, are equally, if not more, important to consider. Regardless of whether an initial version of mainnet is considered successful or not, it is important to remember that mainnet networks constantly improve with new iterations, making cryptocurrency projects more innovative and functional over time.

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