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- š„ Presenting... the Bentley of blockchains
š„ Presenting... the Bentley of blockchains
The ultimate blockchain breakdown
Gm. This is Milk Road. The daily newsletter that brings you the best news from crypto, rain or shine.
I don't know if you checked your portfolio but prices are up BIG.
We haven't seen this much green since Saint Paddy's day.
ETH is up 9% and Bitcoin is up 11% since Friday. Some people think this is a dead cat bounce, but after the year we just had, we'll take it.
Now, onto the good stuff...
Blockchains.
We all use āem. Everyone talks about āem. But not many people know how they actually work.
And the reality is thatās okay, becauseā¦ Blockchains are a lot like cars.
People use them all the time. They get us from Point A ā Point B. But no one really knows whatās going on under the hood or what a Catalytic Converter does.
(Except my mechanic Rico, that mfer is the Car Whisperer.)
The important thing you need to know is there are different cars for different use cases.
You donāt wanna use a Fiat car for your 8-person family. Unless youāre performing at the next Cirque du Soleil.
You donāt wanna use a Diesel-powered Ford F-150 Raptor to drive around New York City. Unless you wanna end up on the cover of Villains of the Environment.
You donāt wanna use a Volkswagen Beetle to drive in the jungle. Unless you wanna end up stranded and on an improv episode of Survivor.
You get the point - different cars for different cases.
Blockchains are the same way. There is no āone-blockchain-fits-all."
One blockchain might be faster, while another is more secure. One might be better for NFTs, while another is better for decentralized finance apps.
Which is exactly why weāre big believers that the future of crypto is multichain.
So today, weāre presenting the Milk Road Blockchain Show. Where weāll take a look under the hood to better understand some of the blockchains and what theyāre good for.
And weāre teaming up with a special friend to make it all happenā¦
thirdweb - they provide tools for companies and developers to build Web3 apps. thirdweb doesnāt just think the future of crypto is multichain, theyāre building tools compatible with over 10 different blockchains, including every single EVM chain.
First up, we gotā¦
BITCOIN
Bitcoin is la creme-de-la-creme of crypto. When you think of Bitcoin, you think of things likeā¦.
Luxury. Security. Durability. And of course, OG status.
So itās only right to compare Bitcoin toā¦ *drumroll* ...The Bentley.
Hereās how Bitcoin and Bentleys are similar:
1/ Both are slow to produce
Bentleys might be fast, but theyāre one of the slowest producing manufacturers out there.
In total, it takes 400+ hours to produce one single Bentley Mulsanne. ~136 hours are spent just on the interior trim.
(Almost as long as my wife takes on her eyeliner. As she says, "Beauty takes timeā.)
Bitcoin is the same way - it's the slowest blockchain out there.
It can only process 7-10 transactions per second and the average transaction time is ~10 minutes. (But those numbers are on a good day - when the stars are aligned, the moon is full, and LeBron is hitting all his 3ās.)
Sometimes transactions can take up to 60 minutes. Which is why all Bitcoin users know this painā¦
2/ Both take a lot of energy & work to produce
Fun fact: it takes ~45 people to build one single Bentley W12 engine. And some of those lucky people have to go through a 600-point checklist before the final sign-off.
In other words, it takes a f*ck ton of energy & work to make the Bentley go vroom.
Bitcoin is the same way. Its whatās called a proof-of-work (PoW) blockchain. Now, we wonāt go into all the nitty gritty details of what PoW is, but all you need to know is...
It takes a lot of work & energy to maintain the Bitcoin blockchain.
Uses 7x more energy than Googleās global operations
Uses more energy than countries like Denmark, Chile, Finland, and the Netherlands
1 BTC transaction uses as much energy as 50 days of power for the avg US house
But all this time & energy are needed. And thatās becauseā¦
3/ Both are secure & durable
You see, blockchains have a trilemma between being scalable, being decentralized, or being secure. And they can only pick 2 out of those 3ā¦
Itās a lot like the college trilemma - you have to pick between good grades, a good social life, or good sleep. Which is why the Milk Man was living on Red Bull and 26-minute power naps. (Donāt try this at home, kids.)
What Bitcoin lacks in scalability, it makes up for in security & decentralization. Itās one of the most secure & durable blockchains out there. Itās lasted 14+ years and hasnāt had a major hack take it down, yet.
Bentleys are similar - theyāre all about durability & security. ~80% of all Bentleys ever created are still functional (#BuiltDifferent).
They even have bullet-proof cars for celebs & royalty like Queen Elizabeth (R.I.P.), James Bond, and the Milk Man.
And finallyā¦
4/ Both are symbols of luxury & have unique use cases
Bitcoin & Bentley are both expensive.
BTC hit an all-time high of $69k and has the largest market cap out of any crypto
Bentleys can cost up to ~$300,000
In other words, if someone owns Bitcoins or Bentleys... youāll know it. Theyāll be at your nearest Country Club or SoHo House talking about it. And yes, Iāll eavesdrop to hear how many they own.
Which makes Bentleys & Bitcoin good for one thing.
Bentleys are a good weekend-flex car. You arenāt gonna use a Bentley to drive in the city much or use it to help you move.
Bitcoin is good as a secure, decentralized, financial asset. Do you like money but donāt like the government? Bitcoin is your answer.
But you arenāt really going to use the Bitcoin blockchain for NFTs or Decentralized applications.
Thatās where other blockchains come inā¦
ETHEREUM
Ethereum can do a lot of things. You can build DeFi apps. You can create NFTs. You can use it as a financial asset.
Itās a multi-purpose chain. So itās only right to compare Ethereum to... Toyota.
Hereās how Ethereum & Toyota are similar:
1/ Both are versatile
Toyotas are used for anything and everything.
Got kids? Say Hello to the Toyota Sienna. The King of all Mini Vans.
Want speed? Look no further than the Toyota Supra.
Want comfort & convenience? Roll up in the Toyota Corolla.
Want to pull a mountain? The Toyota Tundras got your back.
Want to save the environment? Have no fear, the Toyota Prius is here.
Ethereum is the same way. All the most popular NFTs, DeFi apps, etc are on the Ethereum blockchain.
Thatās because Ethereum is scalable. Remember the blockchain trilemma? Well, Vitalik and the Ethereum founders decided to prioritize scalability above all.
And itās all thanks to something called smart contracts. In simple terms, theyāre computer programs stored on the blockchain that run when predetermined conditions are met.
It lets users transact securely & anonymously without having to go through a central authority. Smart contracts are at the core of everything on Ethereum. (DeFi apps, NFTs, etc all use emā.)
2/ Both are eco-friendly
Remember how much work & energy it takes to complete a Bitcoin transaction?
Well, Ethereum is the opposite. Itās now running on whatās called Proof-of-Stake (PoS,) which a lot less energy consuming than PoW.
Ethereum used to use PoW, but it made the switch over to PoS last year during The Merge.
Why? By using PoS, Ethereum is using 99.99% less energy than it did before. In other words, it went from a Toyota Supra (sports car) to a Toyota Prius (eco-friendly, hybrid car.)
We wonāt go through all the specifics here, but if you wanna learn more about it hereās an amazing thread by our friend Jon Wu. The best part is he explains it like a mechanic with a Brooklyn accentā¦ fuhgeddaboudit.
You've probably heard about Ethereum Layer 2 solutions and how they promise to scale the Ethereum network and reduce gas fees.
It's a little confusing.
That's why I'm here to explain ETH L2 to you like a mechanic from Brooklyn:
š§āš§
ā jonwu.eth (@jonwu_)
5:38 PM ā¢ May 27, 2021
And finallyā¦
3/ Both are super popular, which means it can get expensive to use
Ethereum has become one of the most used blockchains.
The most popular NFT collections like Bored Ape, Crypto Punks, etc and DeFi apps like Uniswap, Compound, and Aave are all on Ethereum. Which is greatā¦
Except for the fact that the more popular Ethereum has become, the more expensive it is to use the blockchain to complete transactions. No bueno.
When things are busy on the Ethereum blockchain, it can sometimes cost you up to $100+ just in transaction fees. Itās one of the big downsides of using Ethereum right now.
Which is where Layer 2s come inā¦
LAYER 2s
To help explain, letās go back to the Toyota comparison. Toyotas are one of the most popular cars out there. And itās now become the most used car forā¦
Uber rides.
But as more people use Uber, the more expensive it gets. AKA if youāre using Uber on a Friday night, youāre gonna need to take out a loan from the bank beforehand.
Thatās where Layer 2s come in. You can think of them as yellow taxi cabs.
Sure, theyāre not as convenient or prestigious and sometimes smell like vomit from the drunk guy the night before. BUTā¦
They make it cheaper, faster, and more scalable to do transactions on Ethereum. And there are a few L2s that have been making some noise recently:
ARBITRUM
Arbitrum is a Layer 2 Optimistic Rollup. It makes transactions a lot cheaper & faster.
To compare, sending ETH will cost ~$0.05 on Arbitrum vs $0.82 on Ethereum's main network. (16x cheaper)
And our friends at thirdweb tell us Arbitrum has put up big numbers on their supported blockchain. There have been 10k+ transactions, 500+ unique smart contracts, and 400+ unique deployers.
POLYGON
Polygon is a decentralized Ethereum scaling platform. And it was a top contender for MVP (Most Valuable Protocol) of 2022.
It had the biggest partnerships of the year - including with Starbucks, JP Morgan, and Disney. And its usage & adoption has exploded recently.
Number of transactions on Polygon smart contracts (deployed on thirdweb.)
October: 166,481
November: 232,203
December: 592,738
OPTIMISM
Optimism is a fast, stable, and scalable L2 blockchain ābuilt by Ethereum developers, for Ethereum developers.ā
And itās also seen a huge spike in activity recently. Optimism transactions on thirdweb jumped 6,000% month on month in December. They had 350k+ transactions, 400+ unique contracts, and 100+ deployers.
In a nutshell: The Layer 2 Wave is here. A bunch of DeFi apps, NFT collections, etc are all being built using L2s on Ethereum.
SOLANA
Solana is built for one thingā¦ speed. The creators of Solana were a lot like Tom Cruise in Top Gun.
They feel the need, the need for speed.
So, itās only right to compare Solana toā¦ The Alfa Romeo.
Hereās how Solana & Alfa Romeo are similar:
1/ Theyāre both super fast
Alfa Romeo can hit the speed of 200 mph and can hit 0-to-60 in under 3.6 seconds.
Solana is one of the fastest blockchains out there. It can complete ~65k transactions per second. Itās 10,000 times faster than Bitcoin. 4,000 times faster than Ethereum. 2x faster than a bullet or Usain Bolt.
If you wanna go fast, use Solana. Itās currently used a lot by game developers and users that prefer a faster blockchain.
But be warned. With speed comesā¦
2/ Both have performance issues
Solana and Alfa Romeo are both known to break down more than the McDonalds ice cream machine.
Solana went down 8 times last year
Alfa Romeos are known for breaking down at least once within the first few months of usage. If you donāt know where your local car shop is, you will now.
CONCLUSION
Well ladies & gents, thatās a wrap for this year's Milk Road Car Show. And remember, the future is multichain. There will always be different chains for different cases.
There are a bunch of blockchains we didnāt cover here, so if youād want a Part 2 reply to this email with āEncore please!ā
For blockchains to grow, they need developers. And for developers to build, they need developer tools. thirdweb provides free tools for every major blockchain, and has helped some of the biggest companies in the world navigate blockchain.
If you want to see how Web3 can transform your business, reach out to the thirdweb team!
MILKY MEME
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That's a wrap for today. Stay thirsty & see ya tomorrow! If you want more, be sure to follow our Twitter (@MilkRoadDaily)
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A ROADERS REVIEW
VITALIK PIC OF THE DAY
ETH is up 9% since yesterday
Vitalik's happy
We're happy
Happy Saturday
ā Milk Road (@MilkRoadDaily)
3:23 PM ā¢ Jan 14, 2023
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
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