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- Kaspa, with its innovative DAG blockchain technology, addresses the blockchain trilemma, offering decentralization, security and scalability.
- Kaspa’s test network achieves 10 blocks per second, outperforming Bitcoin and promises to compete with traditional financial systems.
Financial privacy, protection of property rights and self-determination are in dark times. In the supposedly “free West,” bank accounts have increasingly been denied, closed or blocked for undesirable individuals.
Commercial banks are forced to act as detectives and accomplices of the state to gather information and confiscate property. Normal tax collection is no longer sufficient to finance the excesses of highly indebted states.
The search for higher tax revenues has resulted in the extensive nationalization of the financial system, anticipating a more intense phase of financial repression for the population. The coincidence of these events does not go unnoticed, being evident in the rapid construction of a comprehensive asset register by the European Union.
CBDCs: the straw that breaks the camel’s back?
In a system where central banks around the world are introducing CBDCs (central bank digital currencies), unprecedented scenarios arise for the state. Let’s imagine that, due to climate concerns, citizens reduce their travel and are forbidden to leave their localities. In this context, CBDCs could be programmed so that the money is only valid within the geographical boundaries of each individual.
If the economy experiences low activity, the money could be assigned an expiration date to encourage more dynamic spending. What if the government needs funds for a new blockade? In theory, it could make unannounced deductions, such as a percentage of the population’s financial assets. The possibilities for economic intervention seem limitless.
Cryptocurrencies as an Alternative Payment System
When it comes to safeguarding assets, the choice of taking refuge in tangible assets such as precious metals, like gold and silver, stands out as a valid and recurring option. These metals have historically proven to be reliable stores of value. However, in the era of globalization, their usefulness as an efficient means of physical payment may be limited. It is in this scenario that cryptocurrencies, led by Bitcoin, are a good alternative.
Despite the susceptibility of cryptocurrencies to price fluctuations and possible hacker attacks on exchanges and wallets, their agility and ability to be transferred quickly over long distances due to their digital nature position them as an alternative payment system.
While precious metals remain entrenched in their role as a store of value, cryptocurrencies offer a different dynamic by facilitating fast and secure transactions in the age of global connectivity.
It is crucial to recognize that while cryptocurrencies present challenges of their own, such as market volatility and security concerns, their potential to transform the current financial system is undeniable.
The ability to efficiently transact internationally, without the physical limitations associated with precious metals, gives cryptocurrencies a prominent role in today’s financial landscape.
The Technological Challenge of Cryptocurrencies
The technological challenge has been a persistent obstacle to the mass acceptance of cryptocurrencies in the financial arena, in addition to the regulatory challenges they also face. This dilemma, known as the “blockchain trilemma,” sheds light on the fundamental reason why cryptocurrencies have failed to effectively gain traction against state-owned alternatives.
The trilemma states that, of the three crucial properties of a blockchain – decentralization, security and scalability – at least one is always compromised. Proof-of-work cryptocurrencies, such as the flagship Bitcoin, stand out for their decentralization and security, as they do not rely on a central authority. However, their limited scalability, handling just seven transactions per second compared to Visa’s estimated 56,000, has been a weakness.
The implementation of the Lightning Network on top of the Bitcoin core layer sought to address scalability, but it is not without its problems, as it involves changes between layers, creating new points of vulnerability and security challenges.
On the other hand, proof-of-stake cryptocurrencies offer greater scalability, competing effectively with systems such as Visa. However, this advancement is not without cost, as these cryptocurrencies often sacrifice decentralization by organizing themselves as centralized entities.
The ability for control and manipulation by the entities distributing the currency from the outset represents a substantial risk, allowing the state to have a central point of attack to regulate the currency, making them inherently insecure.
Block-DAG: A Solution to the Trilemma
Recently, a promising technical breakthrough appears to have emerged that could solve the persistent blockchain trilemma. Yonatan Sompolinsky, sometimes considered one of the possible creators of Bitcoin, has been collaborating with other developers for several years to advance blockchain technology.
This effort has resulted in an innovative DAG (Directed Acyclic Graph) blockchain technology, which rearranges blocks into a more complex system, allowing for a greater number of blocks and thus an increase in transactions per second without compromising security.
The materialization of this technology is reflected in a new cryptocurrency called Kaspa (KAS), conceived as an open source project by idealists in tune with the founding principles of Bitcoin .
Although Bitcoin boasts the “first-mover advantage,” ardent enthusiasts now acknowledge that Kaspa outperforms Bitcoin in technical terms. Some even humorously suggest that Bitcoin may have simply been the test network for Kaspa.
Kaspa, as the world’s fastest proof-of-work cryptocurrency, simultaneously offers decentralization, security and scalability, seemingly solving the blockchain trilemma. Compared to Bitcoin’s block generation speed of one block every 10 minutes, Kaspa’s proof-of-stake network currently operates at a staggering 10 blocks per second, setting a new world record .
It is contemplated to gradually increase this speed, even up to 100 blocks per second. If the plans are successfully implemented, Kaspa could effectively compete with the titans of the credit card and banking industry. All this is achieved without relying on a central authority that can block accounts, manipulate the money supply or devalue the currency through inflation, as Kaspa’s money supply is limited to 28.7 billion KAS.
Hope for Financial Freedom
These solutions are not only limited to acting as stores of value, akin to precious metals and Bitcoin, but are also positioned as reliable, fast and secure payment systems. What stands out is their immunity to manipulation by central banks and corporations. The importance of these developments is not lost on human rights organizations and all those who value freedom, who should keep themselves informed about these promising developments.
