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Parallel Financial System – Function of cryptocurrencies

Parallel Financial System

Blockchain technology has helped create a new parallel financial system in which currencies like BTC and ETH work. ETH is often referred to as a currency that works as decentralized finance or DeFi format.

With additional blockchains like Cardano, Avalanche, and Solana entering the scene, a growing number of digital currency enthusiasts are doubting whether ETH’s position of privilege as the number one DeFi chain persists.
It is the reason why we can see a good increase of these alternative Blockchains being found smoothly. There is an exaggerated idea that ETH works only for the rich. It is one of the networks that remains very stuck and has high transaction fees.

The challenge of a financial system

Then comes another problem, which continues to affect ETH, they are having hacking attacks and contract theft. We have been hearing news about the DeFi protocol on ETH regarding hacking due to the defenselessness of smart contracts. Interestingly, the Bitcoin blockchain is often seen as still very traditional when we talk about it from a smart contract perspective.

We still find that Bitcoin lacks things like affordability and expressiveness, while ETH offers a lot. The smart contracts that come from ETH seem too notorious and complex to argue for even more unwanted complications due to their comprehensive nature.

We could see that there are consistently high amounts of transactions that further congest the blockchain and make hacker attacks constant. Therefore, it costs users a lot of money. Something highly anticipated is ETH 2. Enthusiasm for the upgrade remains high, we see an excellent network with ample capacity.

The road ahead

It would be fair to say that ETH had an unexpected effect. Some people would argue about the ETH approach. In early 2014, we saw the launch of ETH as a world computer. As we see the world’s computer develop and demand infrastructure, there seems to be an increase in the mass appearance of Web 3 applications in 2017.

Later in 2020, DeFi turned out to be a popular option to make payments. With the growing importance of payments in different financial applications, it seems that there are vocal exponents of the ETH community who have started to recognize various financial applications that have been around since the recent past.

The solution

ETH arrived in 2014 as a world computer, which further enhanced the growth of the infrastructure, making Web 3 popular in 2017. However, after three years, in 2020, DeFi seemed to become more popular as the market emerged. payment requirement. As payment became very important, various financial apps seemed to be growing at a faster rate.

Although many people within the ETH community seemed to deny finding ETH to be called money, they have the ability to treat it as money. There is a big question mark when we talk about the fact that ETH will play some role in it.

Develop a strong foundation

So the big question is, how can we develop a good foundation? Well, there are other Blockchains, including Avalanche, Cardano, and Solana. When we talk about fundamental solid money, BTC remains unparalleled. When we compare it to various other Blockchain assets, Bitcoin holds its own. At the same time, BTC continues to have a simple monetary policy and the unlimited supply comes from human discretion, which can be offered by other virtual currency-based assets.

Bitcoin monetary policy acts on algorithmically determined parameters, which furthermore remains a perfectly predictable, emotion-driven, rule-based choice. With the help of the depoliticization of monetary policy coupled with confidence in money creation found in the market, we can see the Bitcoin monetary asset behaving neutrally. Bitcoin is really commendable money as it offers the best features including security, reliability and stability.

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