It is said that bitcoin is king, and it’s often said that it’s not even a cryptocurrency. Bitcoin is bitcoin. It was the first, it has the biggest market share, it’s the best known brand in the whole crypto-space, and there’s no doubt that it’s not a security. There are arguments against other cryptocurrencies, describing them as securities. This is due mostly to the role of the team playing a role in the launch, share, and mostly in management and the fate of a particular coin. XEN Crypto can’t be classified as security because it is a smart contract with no admin keys and no power to change the code. Once deployed, a smart contract can’t be altered or stopped. No one receives handouts, pre-minted tokens, there are no referral links. XEN and bitcoin are very similar under the aspect of being permissionless and trustless.
Difference between XEN and Bitcoin
The main differences lie in the total supply of the coins and in the structure of the code. The Bitcoin supply started at zero and the final supply is 21 million BTC. Bitcoin is mined into existence with computing power. Its initial inflation was very high and it has decreased over time. Currently, over 19 million BTC have been minted into existence. Bitcoin was designed to have adjustable inflation in relation to the mining difficulty. It’s not possible to mine more bitcoin by allocating more hashing power. The software adjusts the difficulty to the number of nodes in such a way that a constant number of bitcoin is mined in a 10 minute time frame. In other words, if blocks are generated too fast, the algorithm adjusts the difficulty to bring them back to the base level.
Due to Bitcoin’s limited supply, there won’t be enough UTXOs for everyone on the Earth, and some people talk about introducing tail emission. Others are concerned that Bitcoin’s hard cap will cause block production problems if block rewards become too small. This would undoubtedly undermine one of the core premises of Bitcoin. Unlike bitcoin, XEN has no finite supply. It can be minted in perpetuity. However, there are aspects of the minting properties of XEN that make it inflationary at the beginning and disinflationary over time as adoption increases. Inflation decreases over time to arrive at a 2% plateau. Penalties for being late to mint the rewards and lost keys will lower this final inflation rate.
Bitcoin mining vs XEN minting
Bitcoin relies on Proof of Work, where a network of mining nodes achieves consensus and receives Bitcoin as a reward for mining blocks. XEN relies on Proof of Participation where users receive XEN tokens as a reward for participating in XEN creation through staking. PoW uses lots of energy to generate the computing power to run the mining farms, and this has a significant environmental impact. XEN doesn’t do that because it relies on the underlying Ethereum network to remain live. It’s estimated that Bitcoin mining uses 177.43TWh of energy per year while Ethereum mining uses 79.69TWh per year. It is believed that the greater the use of energy, the better security and censorship resistance. Proof of Stake maximalists disagree, and I guess it will be decided soon when the states start attacking the networks.