March 21, 2023

Bitcoin & Ethereum - How Does Minima Stack Up?

Bitcoin & Ethereum - How Does Minima Stack Up?

Minima launches in less than one day, so let’s take a look at how this novel L1 stacks up to the banner bearers of Crypto, Bitcoin & Ethereum.

Bitcoin and Ethereum are two of the most popular cryptocurrencies in the world and need no introduction. Both of them are unique, with their own strengths and weaknesses that make them both excellent, but imperfect.

One way to analyze these strengths and weaknesses is to evaluate what they sacrifice in regards to the Trilemma, which is the idea that a blockchain cannot achieve all three of the following at the same time: security, scalability, and decentralization.

Bitcoin, the Grandaddy of Crypto

Bitcoin is the first and most popular cryptocurrency in the world. It was created in 2009 by an anonymous person or group of people using the pseudonym Satoshi Nakamoto. Bitcoin is designed to be a decentralized, digital currency that can be sent from one user to another without the need for a middleman.

Bitcoin is incredibly secure due to its use of a decentralized network. The network is powered by nodes that verify transactions and maintain the blockchain. This makes it difficult for anyone to manipulate the system or steal funds. Additionally, Bitcoin is a deflationary currency, meaning that there is a limited supply of Bitcoin available. This makes it a good store of value for those who are concerned about inflation.

Secure, decentralized but…

Not very scalable. The Bitcoin blockchain can only process a limited number of transactions per second, which can result in slow transaction times and high fees. Additionally, Bitcoin's mining process is energy-intensive, which makes it environmentally unfriendly. Finally, Bitcoin is not as versatile as Ethereum, as it was primarily designed to be a digital currency.

Bitcoin sacrifices scalability in favor of security and decentralization. Its focus on maintaining a secure and decentralized network means that it cannot handle a large number of transactions at once. This makes it less suitable for applications that require high transaction throughput.

It is also worth adding that although decentralized on paper, the requirement for massive Hash Rates in order to make mining profitable has led to the pooling of nodes into ever larger cartels. Indeed at the time of writing in 2023 80% of Bitcoins Hashing Power is contained within 5 pools. This is up 20% on 2022 so the argument is there that Bitcoin grows less and less decentralized as each day passes - which in turn results in a far less secure blockchain.

But What About Ethereum?

Ethereum is the second most popular cryptocurrency in the world. It was created in 2015 by Vitalik Buterin, and it is designed to be a decentralized platform that enables the creation of smart contracts and decentralized applications (dApps).

One of the main strengths of Ethereum is its unquestionable versatility. The platform enables developers to create and deploy decentralized applications that can run on the blockchain. Additionally, Ethereum is more scalable than Bitcoin, as it can process more transactions per second. This makes it a better option for applications that require high transaction throughput.

Ethereum's scalability is still limited compared to centralized systems though, and it has faced issues with high fees and slow transaction times during times of high network congestion. Additionally, the Ethereum network has faced security issues in the past, such as the DAO hack in 2016. Finally, Ethereum's original mining process was also energy-intensive. This raised the same questions faced by Bitcoin in relation to its environmental unfriendliness.

Ethereum’s answer to this was 2022’s Merge between Ethereum and Beacon Chain, transforming Ethereum into a Proof of Stake chain, greatly improving its carbon footprint but at a huge cost to its decentralization.

Progress at the cost of decentralization

Ethereum sacrificed decentralization in favor of scalability and versatility. This is because as discussed the platform now uses a more centralized consensus algorithm called Proof of Stake (PoS) in order to increase scalability.

By merging with Beacon Chain more than 50% of Ethereum's Staking Power (critical to the validation & security of the blockchain)is controlled by just a small number of wallets.

Additionally, Ethereum's focus on versatility means that it is less secure than Bitcoin, as it is more susceptible to smart contract vulnerabilities and potential hacks.

Enter Minima

Minima is the new decentralized blockchain L1 that aims to combine the strengths of Bitcoin and Ethereum while addressing their shortcomings.

One of the main strengths of Minima is its focus on decentralization and security, which it shares with Bitcoin. Like Bitcoin, Minima uses a decentralized network of nodes to verify transactions and maintain the blockchain, making it highly resistant to manipulation and theft. This is achieved by making Minima so light, a Full Node can run on cell phones & IoT devices.

In addition to its focus on security and decentralization, Minima also shares Ethereum's focus on scalability and versatility. Unlike Bitcoin, Minima is designed to be highly scalable, with the ability to process a high volume of transactions per second. This makes it well-suited for applications that require high transaction throughput. Additionally, Minima is highly versatile, with the ability to support a wide range of decentralized applications (MiniDapps) and smart contracts.

Minima addresses the weaknesses of Bitcoin and Ethereum by combining their strengths. For example, Minima's focus on security and decentralization is similar to Bitcoin's, but its ability to scale and support complex MiniDapps is more in line with Ethereum's strengths. Additionally, Minima's focus on user privacy by making each user responsible for mining their own transactions, holding only the part of the chain that relates to their own transactions, is a solution to the lack of privacy in Bitcoin and Ethereum.

In terms of scalability, Minima's use of a unique consensus algorithm called "TxPOW”, allows for high throughput of transactions while maintaining a high level of security and decentralization. This consensus algorithm allows nodes to validate transactions in parallel and reach consensus without the need for traditional block creation. This makes the network highly scalable and able to process a higher volume of transactions.

From an environmental perspective, Minima is still a PoW chain & therefore does require a high level of power to function. However each individual node runner is able to source their own electricity to run their node. With many running their nodes on their mobile & IoT devices within their own homes, they are free to use solar chargers or make use of the many Green Tariffs available from electricity providers.

This level of choice is unheard of in any other PoW chain where the user is running a full node, enabling the power required by the network to be sourced from green sources.

The Trilemma Solved

By incorporating the best aspects of Bitcoin & Ethereum and easily facilitating the use of green energy sources, Minima has achieved what until recently was considered unachievable.

Security, Scalability & True Decentralization without compromise, making Minima a real and viable alternative to Bitcoin & Ethereum.

Minima - The Only Decentralized Layer 1 Blockchain.