What is a Cryptocurrency Mainnet: A Detailed Look<\/b><\/h2>\n
As alluded to above, think of a cryptocurrency mainnet as the main network for a blockchain project such as Bitcoin or Ethereum. These mainnents are made of distributed computer nodes that all communicate to form a peer-to-peer network keeping that blockchain live.<\/p>\n
Often referred to simply as “nodes”, these individual computers or servers all form a cryptocurrency mainnet\u2013 as opposed to a single computer, therefore a single point of failure, hosting the mainnet. These nodes are incentivized by various financial mechanisms to verify, process, validate, and record user transactions\u2013 whether that be through Proof-of-Work mining, or Proof-of-Stake staking, or whatever new consensus algorithm emerges to keep these hosts incentivized.<\/p>\n
It’s important to note that mainnet’s typically refer to Layer-1 projects, such as Bitcoin, Ethereum, Solana, Binance Smart Chain, which have their own native currency. ERC-20 tokens, for example, run on Ethereum.<\/p>\n
Testnets are the prototypes that demonstrate the potential capabilities of a project. Mainnets are the actual \u201cend product\u201d, which is available for the public to use. <\/span>However, just like testnets or code frameworks, mainnets can be changed whenever project teams or cryptocurrency open-source communities decide there is a need for updates and\/or revisions.<\/span><\/p>\n While it might be ideal that all projects already have a mainnet released at the time of ICO, this is rarely the case. In fact, a lot of projects don\u2019t 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 like the team behind the project and partnerships. Oftentimes, teams use a lot of the funds from their ICOs towards building out the testnet and mainnet versions of their projects. <\/span><\/p>\n So how does a mainnet help an investor\/user of a particular cryptocurrency? \u00a0From an investor\u2019s perspective, the mainnet proves that a project is making technical progress. Even if you don’t want to invest in a project before the mainnet launch, it’s important to realize how a mainnet can have a positive (or even potentially negative) impact on a cryptocurrency\u2019s value. Many investors choose to buy cryptocurrencies in advance of a mainnet because a successful launch can sometimes lead to significant increases in value.<\/span><\/p>\n Does a successful mainnet correlate to higher price values of a given cryptocurrency? Not necessarily. It\u2019s also important to understand the market context as well. To get a better understanding, here are two mainnet-related events from this year so far. <\/span><\/p>\n As outlined earlier in this post, initial main nets launches aren\u2019t the only important milestone determining the success of a cryptocurrency project. Continuous updates and integrations to the mainnet are also a major part of trying to understand the ever-changing value of any given cryptocurrency. <\/span><\/p>\n One recent example is the\u00a0Lightning Network<\/a> launch on the Bitcoin mainnet on March 15, 2018. The Lightning Network is an off-chain solution that adds a \u201csecond layer\u201d on top of the blockchain. While this project will ultimately try to help all cryptocurrencies scale up, the most important implementation to date is on the Bitcoin mainnet. The Lightning Network is significant because it aims to make BTC a more scalable cryptocurrency by adding the capability to handle far more transactions per second. Without the Lightning Network, BTC can only handle around 7 transactions per second. <\/span><\/p>\n Despite the launch of the Lightning Network mainnet, BTC\u2019s prices didn\u2019t increase immediately afterward. Looking at the data, in the period from March 1 to March 30, the value actually decreased from around $10,600 to around $6,900. <\/span><\/p>\n Why is this the case? It\u2019s important to look at this event in the context of the market. In March, pretty much the entire cryptocurrency market realized stagnant or declining prices in an extremely bear market. Even though this was a significant technical milestone, other factors limited BTC’s prices from rising at that time. Therefore, it\u2019s difficult to say whether or not the Lightning Network\u2019s launch on the Bitcoin mainnet had any real effect on BTC\u2019s value in the short-term.<\/span><\/p>\n Golem (GNT) first launched as an Ethereum token, but it was not an ERC-20. It swapped over to an ERC-20 contract in November 2020, changing its ticker to GLM. The following example follows the original GNT mainnet.<\/p>\n Golem\u2019s<\/a> Brass Mainnet source code was released on Github<\/a> on April 10, 2018. The purpose of Golem (GNT) is to offer a P2P system for sharing computing power. Essentially, users who need extra computing power pay GNT to users on the network who have extra computing power. Looking at the data from March 31 to April 29, the price did increase from around $0.20 to $0.60. This includes a spike to $0.73 on April 13.<\/span><\/p>\n At first glance, this would indicate a direct correlation between the Brass Mainnet launch and value increases. However, just like the Lightning Network launch on Bitcoin’s mainnet, it\u2019s also important to look at this case in a market context. It\u2019s possible to conjecture that GNT\u2019s value increased at a more significant rate because of the mainnet (especially on April 13), but this is still difficult to conclude for certain. That\u2019s because a vast majority of cryptocurrencies increased in value throughout April\u2019s bullish market. It could very well be argued that the price would have risen at the same rate simply due to favorable market conditions.<\/span><\/p>\n Mainnets are important because they prove or disprove the ability of a project to take a blockchain project from ideation to implementation. While the initial release of a mainnet doesn\u2019t always give a good insight into a project\u2019s overall progress, it’s an essential technical aspect to consider when investing in cryptocurrencies. As seen in many cases throughout the past, it\u2019s difficult to tell exactly what effect mainnets have on short-term price changes. However, they do indicate the potential for better overall functionality. <\/span><\/p>\n Still, other factors like the overall market trends and real-world adoption are also equally, if not more, important to consider. Regardless if an initial mainnet version is considered a success or not, it\u2019s important to remember that mainnets are constantly improving with new iterations, making cryptocurrency projects more innovative and functional over time.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" A mainnet is an important technical foundation of any blockchain project. But what are mainnets exactly, and what impact do they have on cryptocurrency prices?<\/p>\n","protected":false},"author":130,"featured_media":25059,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"iawp_total_views":94,"footnotes":""},"categories":[5712],"tags":[10772],"class_list":{"0":"post-8776","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-guides","8":"tag-mainnet"},"wppr_data":[],"yoast_head":"\nShould I Invest in a Project Without a Mainnet?<\/b><\/h2>\n
How Does a Mainnet Launch Affect Prices?<\/b><\/h2>\n
BTC and the Lightning Network: March 2018<\/h3>\n
![\"Bitcoin](\"https:\/\/coincentral.com\/wp-content\/uploads\/2018\/05\/BTCprice.png\")
<\/p>\nGolem (GNT) Mainnet Launch in April 2018<\/b><\/h3>\n
![\"Golem](\"https:\/\/coincentral.com\/wp-content\/uploads\/2018\/05\/GNT-price.png\")
<\/p>\nFinal Thoughts: How Should We Look at Cryptocurrency Mainnets?<\/strong><\/h2>\n