Jan 27, 2025: Our weekly Institutional Insights explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

 explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

The Bank of Japan (BOJ) raised its key policy rate to 0.5% on Friday, marking the highest level since 2008 and reflecting a more optimistic outlook on inflation. This decision, anticipated by the market, follows a two-day meeting led by BOJ Governor Kazuo Ueda, who noted the need to assess wage trends and the impact of Donald Trump's return to the U.S. White House.

The BOJ's statement highlighted stable global financial markets, suggesting it has carefully monitored reactions to the new U.S. administration. Ueda emphasized that future rate adjustments would depend upon economic conditions, indicating no predetermined hike pace. Following the announcement, the yen strengthened against the dollar, and yields on 10-year Japanese government bonds rose.

Market analysts expect further rate increases, possibly by May 2025, contingent on wage pressures. This latest hike is Ueda's third in less than a year, contrasting sharply with the surprise increase in July 2024 that spurred a global market downturn.

Economists had largely predicted this move, with inflation projections now above 2% for the first time. Ueda’s comments on the neutral rate suggest that the BOJ might not align with economists’ expectations of a 1% endpoint, as he believes significant distance remains to reach neutral status.

This rate increase positions Japan uniquely among major central banks, as others, such as the Federal Reserve and ECB, are lowering rates. It allows Japan to respond more traditionally to future economic events. The decision came amid a favorable political climate, with Prime Minister Shigeru Ishiba's cabinet supporting the hike, unlike past cycles that faced strong opposition. Ueda’s confidence, however, remains cautious, due to uncertainties around U.S. economic policy.

Weekly Crypto Highlight — Trump’s Executive Orders to Support Crypto

U.S. president Donald Trump has taken a significant step in supporting the digital asset sector by signing an executive order that establishes a working group to advise the White House on cryptocurrency policy. This group includes key agencies, such as the Treasury, Justice Department, SEC and CFTC, and aims to submit recommendations for a regulatory framework within six months.

The order emphasizes the importance of the crypto industry for U.S. innovation and economic development, while encouraging regulated dollar-backed stablecoins. However, it expresses concerns about central bank digital currencies (CBDCs), citing potential risks to the financial system and privacy.

Industry leaders view this executive action as a historic win, with Matt Hougan of Bitwise Asset Management stating it establishes crypto as a national priority. During the signing, Trump highlighted the potential economic benefits of these actions and expressed a desire for America to lead in the crypto space.

This order aligns with Trump’s campaign promises, which included streamlining regulations and appointing crypto-friendly officials. He has made some strides in this area, including the pardon of Ross Ulbricht, the creator of Silk Road, and the appointment of agency heads supportive of the crypto industry.

In a related move, the SEC repealed a guideline that had restricted banks from offering custody services for digital assets, which the industry has criticized as being limiting. Following these developments, Bitcoin rose 1.5%, reflecting positive market sentiment.

Trump's evolving stance on digital assets, from skepticism to advocacy, coincides with increased political engagement from the crypto sector. His administration's actions suggest a commitment to fostering a favorable regulatory environment for digital currencies, potentially setting the stage for significant growth in the industry.

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Weekly Institutional Insights: Trump’s Executive Orders Might Further Boost Crypto

The cryptocurrency market experienced significant movement following Donald Trump’s inauguration, which traders had closely anticipated. 

The cryptocurrency market experienced significant movement following Donald Trump’s inauguration, which traders had closely anticipated. His promise to establish the United States as the "crypto capital of the planet" and create a strategic Bitcoin reserve resonated positively with market participants. Bitcoin’s market capitalization surged, reaching an all-time high of $109,300 just before the inauguration on Jan 20, 2025. This surge illustrated the optimistic crypto market sentiment surrounding Trump's administration and its potential influence on cryptocurrency regulations.

However, this rally was tempered by a common market phenomenon known as "buy the rumor, sell the news." Following the inauguration, many traders who had invested in anticipation of the event sold their holdings, leading to a price decline. This reaction highlights the volatile nature of cryptocurrency markets, as excitement can quickly turn into profit-taking.

World Liberty Financial and Ethereum Accumulation

In related news, World Liberty Financial (WLF), a cryptocurrency venture associated with Trump and his family, made headlines by significantly increasing its Ethereum (ETH) holdings. From Jan 17–19, 2025, WLF acquired 55,247 ETH, bringing its total to 56,332 ETH, valued at approximately $181.6 million at the time of the report. This acquisition drew attention due to its substantial scale and timing, occurring just days before the inauguration.

WLF's wallet also held a diverse array of assets, including Wrapped Bitcoin (WBTC) and USD Coin (USDC), indicating a strategic investment approach. The rise in attention to WLF's holdings reflects a growing interest in institutional investment in cryptocurrencies, especially in the context of a pro-crypto administration. While Ethereum's price action has been somewhat disappointing compared to that of other altcoins, the accumulation strategy by WLF suggests confidence in Ethereum's long-term potential.

The report also highlights Solana’s remarkable performance, as SOL reached an all-time high of $295 on January 18, 2025. This surge was largely driven by the launch of an official TRUMP meme coin on the Solana network, which generated significant investor interest. The TRUMP meme coin achieved a market cap of $14.92 billion within two days of launching, illustrating the power of meme culture in driving market activity.

The correlation between the TRUMP meme coin's popularity and Solana's price rise indicates how new products can influence established cryptocurrencies. Despite the initial hype surrounding the meme coin, Solana has shown resilience, bouncing back above $258 after the inauguration, suggesting a robust underlying demand.

Looking toward future developments, the report discusses the recent filings for cryptocurrency exchange-traded funds (ETFs) with the U.S. Securities and Exchange Commission (SEC). These filings include proposals for Bitcoin (BTC), Ethereum (ETH) and various meme coins, signaling a potential shift toward mainstream adoption of cryptocurrency-based financial products. The anticipated pro-crypto policies under Trump’s administration could play a crucial role in shaping the regulatory framework for these ETFs.

The SEC’s response to these applications will be a significant indicator of how institutional investment in cryptocurrencies may evolve. Should these ETFs gain approval, it could lead to increased demand and price volatility, particularly as traders react to the outcomes of these regulatory decisions.

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Bybit x Santiment: ETH Faces Pressures as SOL, XRP, Meme Shine

Our weekly crypto derivatives analytics report delves into macro events, the current state of crypto and trading signals from spot trading volume, and futures, options and perpetual contracts.

Trump's inauguration on Jan 20, 2025 was preceded by the launch of two meme coins from the Trump family, TRUMP and MELANIA, which quickly garnered billions in market capitalization. Speculation about a strategic Bitcoin reserve being included in the executive orders signed on the first day of his administration led to a significant bullish shift in derivatives market positioning. This shift resulted in an inversion of the term structure of volatility, increased funding rates on long positions and a tilt in short-tenor volatility smiles toward calls. However, when the anticipated bullish announcements didn’t materialize, implied volatility levels decreased, even as realized volatility increased. Despite this, the bullish skew toward out-of-the-money (OTM) calls persisted.

In the perpetual markets, funding rates remained consistently high across almost all assets, continuing beyond the inauguration event. In the options market, realized volatility surged to post-election highs, even as implied volatility levels fell due to an overestimation of the significance of inauguration day for crypto. Overall, positioning across all tenors remained bullishly tilted.

Please check out the report’s highlights.

During the inauguration weekend, perpetual swap trade volumes hit their highest levels in over a month as traders positioned for expected crypto-friendly executive orders. Notably, SOLUSDT perpetuals experienced a significant surge in activity, reaching new all-time highs and a spike in realized volatility. Trump's launch of the TRUMP meme coin on Solana DEXs allowed Solana’s network to surpass competitors in fee generation, highlighting the symbolic choice of a sitting U.S. president to launch on Solana instead of Ethereum.

Perpetual swap funding rates saw minimal repricing despite the lack of significant announcements on inauguration day, remaining at neutral-to-bullish levels across all coins. Open interest data indicated no major changes in positions, even amidst spot price volatility. Consequently, while options markets adjusted short-term expectations, sentiment in the derivatives market viewed the lackluster inauguration day as just one of many opportunities for future positive news in the industry.

Speculation that the incoming president would announce a strategic Bitcoin reserve in his inaugural speech led to a buildup of short-tenor options positions just before the event. This resulted in a significant increase in call buying and the strongest inversion of at-the-money term structure since the Nov 5, 2024 election. While the extreme pricing of front-end volatility has diminished, the strong skew toward OTM calls remains, reflecting a continued preference for upside exposure as Trump prepares to sign executive orders.

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Bybit X Block Scholes Crypto Derivatives Analytics Report (Jan 22, 2025): Sentiment Cools While Remaining Bullish Following Trump’s First Day

Figuring out how much to invest in crypto can be even more important than deciding which specific coins you want to purchase. Learn more here.

If you keep up with financial news, it can often feel like you’re hearing a story about a self-made crypto millionaire every other day. However, smart investors know that the reality is a little more nuanced. The crypto market comes with high rewards, but it also has high risks. To be successful, you need to be willing to 

 and make wise choices. This guide will explore one of the most basic things you’ll need to decide on before choosing to jump into the world of crypto — how much you should invest in crypto.

Figuring out how much to invest in crypto can be even more important than deciding which specific coins you want to purchase. Not only does the amount you invest in crypto impact your other finances, but it also determines which strategies you can afford to use.

The simple answer to how much you should invest in cryptocurrency is based on your net worth. Someone with millions of dollars can easily risk a lot more than, for instance, a college student without any savings. Traditional investment advice from financial expert Douglas Feldman 

 people shouldn't invest more than 1% to 5% of their total net worth in cryptocurrency. However, some crypto enthusiasts, such as

 be wise to invest up to 10% of your income in cryptocurrency.

Factors to Consider When Deciding How Much to Invest in Crypto

There's a lot of variation in guidelines for how much to invest in crypto. To find the right amount to invest for your specific situation, you'll need to stop and consider these essential factors.

One of the most important factors in determining how much to invest in crypto is the level of risk you’re willing to consider, or your risk appetite. If you have a high risk tolerance, you can invest more. Risk tolerance is partially a matter of personal preference. Some people are naturally cautious, while others are more comfortable making risky moves. However, it’s also wise to factor in your age. A high risk tolerance can work well when you're young because gradual market growth over the years will help balance losses. However, if you're older and closer to retirement age, a lower risk tolerance is advisable.

When planning to invest in crypto, it's a good idea to consider the best-case scenario as well as the worst. Ask yourself: What will happen if my crypto assets suddenly skyrocket in price and I make thousands of dollars overnight? If you're the type of person who would throw in more money or keep holding onto your crypto until the bubble bursts, it might be smart to reduce the portion of your money that you invest in crypto. The flashy profits associated with crypto can lead to overly emotional decisions that can cause problems for certain types of crypto investors.

, the types of coins you're holding make a big difference. Not all types of crypto have the same level of risk. If you intend to go for a risky investment portfolio with nothing but 

, you probably shouldn't take all your assets and invest them in crypto. However, if you intend to invest in a broad range of reliable coins, especially 

, allocating more of your assets toward crypto is a reasonable choice.

Things change fast in the crypto world, so the same advice doesn't always work in different situations. Any time you’re going to invest in crypto, you need to take a look at crypto market conditions. In a 

, prices are consistently high, so you may want to invest less. Meanwhile, in a 

, prices are low, and you can often get big returns by putting extra into crypto investing.

Your liquidity refers to the amount of easily accessible cash you have at hand. Crypto markets are fairly liquid, since you can remove your funds at any time. However, since crypto is a volatile asset class, trying to remove your funds during a bear market can lead to considerable losses. Before putting large sums into crypto investing, think about when you'll need liquid cash. For instance, if you're going to need a large lump sum for a house deposit or another big purchase soon, you need to invest less money in crypto.

Keep in mind that a lot of the recommendations to invest between 1% to 10% of your money in crypto are based on income. However, the reality is that different people have different budgets. Some may need almost all of their income for things like food and housing, so it's not smart to take all your money and invest in crypto. However, others who have more disposable income left over after managing other budgetary needs can invest in crypto more often.

The cryptocurrency market as a whole does follow certain trends, but crypto investments always fare better if you actually understand projects before you invest. It's a poor decision to put a large portion of your assets into obscure crypto you know nothing about. Informed investors only put significant investment into specific cryptocurrencies if they take the time to 

, understand its real-world utility, explore its pricing history and see how well it performs on crypto exchanges.

What Is a Good Allocation for a Well-Balanced Crypto Portfolio?

Once you figure out how much money you want to invest in crypto altogether, you need to consider how much money to put into each specific crypto. It's important to have a diversified portfolio, so a single coin running into issues won't tank your entire crypto investment portfolio. There are a lot of different ways to invest in crypto.

The simplest investment advice, as suggested by

, is simply to put 60% of your money into Bitcoin and 40% into Ethereum. That's a decent choice if you know nothing about crypto assets but still want to invest in crypto. However, if you're willing to research individual coins and pick your favorites, try this asset spread:

If you are open to some speculative exposure, consider allocating a small percentage (2 - 3%) to emerging sectors like 

Compared to some other investments, such as bonds, cryptocurrency is considered risky. The 2020 - 2024 chart below, detailing Bitcoin and S&P's weekly returns, reveals the relatively drastic peaks and troughs of Bitcoin in comparison to S&P 500. Notably, Bitcoin recorded a weekly drop of over 40% and nearly 30% rise in 2020, thugh its volatility has declined over the years. In contrast, S&P 500's gains and losses rarely exceeded 10% throughout the entire period.

Despite Bitcoin's drop in volatility, it is still considered relatively risky to invest in crypto because of the market’s significant price fluctuations and the proliferation of 

s. Additionally, there are countless examples of people who invest in crypto, jumping onto trends and losing their money when prices on the crypto exchange drop. One

 illustrates these dangers: he became interested in crypto during the pandemic and quickly got hooked upon seeing his portfolio values rise. He invested $50,000 into crypto, and eventually built an impressive portfolio worth $300,000. Following a 

, he had only $5,000 left in his account.

Furthermore, crypto markets are still not fully understood by the public, and are less regulated than traditional investments, so it's easier for malicious actors to take advantage of naive investors. For example, crypto-lending company 

 promised to store customers' assets, but when the company went 

, many users found that the company refused to return their invested funds. A similar issue arose when 

, and investors could no longer withdraw funds from their accounts.

Despite its risk, cryptocurrency fills an excellent niche in the financial world. When you invest in crypto, it can ensure your portfolio is diversified and insulate you from stock market crashes and other issues with traditional investments. Deciding to invest in crypto is also a valid option when you want to work with some higher-risk investments. Even beginning traders can find it useful to place a small portion of their investment funds into some reliable cryptos.

Furthermore, cryptocurrency allows people with tech expertise to make highly informed decisions. Finding your niche is always a useful investment strategy. Those who don't keep up with manufacturers and foreign currency exchange rates might find that they can specialize by choosing to invest in crypto. If you enjoy learning about the latest tech news and following online memes, crypto investments can be a great way to turn your knowledge into profits.

However, even though it often works well to invest in crypto, you still need to exercise some caution before working with crypto exchanges. If you want to invest in crypto, it's essential to follow the classic rule of, "Only invest the money you can afford to lose." Those who take out loans to buy 

 or throw their entire retirement account into crypto can end up losing it all if the markets take a turn for the worse. Like any other volatile asset class, crypto needs to be approached with some common sense.

Deciding how much money to invest in crypto is an essential part of your investment strategy. By considering things like risk tolerance and liquidity, you can create an investment portfolio that addresses your unique needs. When you have the right amount of money invested in crypto, you have the potential to make impressive profits without risking all your savings.

Beginner

how much to invest in crypto, how much to invest in bitcoin

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How Much Should You Invest in Crypto? 7 Factors to Consider

Blockchain

Explainers

Understanding how hashing (hash rate) works on blockchain is fundamental to mining. Learn how hashing works and to apply it effectively.

 technology has revolutionized the way we store and secure data, with one of its core components being the concept of hashing. “What is hashing in blockchain?” you might ask. Hashing is the backbone of the blockchain, ensuring data integrity and preventing fraudulent transactions. But what exactly is hashing, and how does it contribute to the secure and robust nature of blockchain systems? This blog post will unveil the mystery of hashing in blockchain and guide you through its various applications and implications.

We will explore the role of hash functions, different hashing algorithms, and the connection between hashing and the 

 consensus algorithm. We will also delve into cryptographic hash functions, their properties, and practical applications in blockchain, such as transaction verification and password storage and security. Finally, we will compare the energy consumption of 

 and Ethereum, shedding light on the environmental impact of their respective consensus mechanisms.

Hashing in blockchain implies the transformation of input data into a fixed size output through a specific algorithm. It establishes data integrity and averts fraudulent transactions. At the core of this process are hash functions, which create unique digital fingerprints for data. The output, known as a hash value, is unique to the input data, even if the input data is altered slightly, the hash value will be drastically different. This property of hash functions makes them an indispensable component of various data structures, including blockchain technology, where each block contains the hash of the previous block.

Different hashing algorithms like SHA-256 for Bitcoin and Scrypt for 

 are available, each boasting unique properties and applications. A good hash function is essential for maintaining the security and integrity of the blockchain, as it guarantees that unique hashes are generated for different inputs, ensuring the authenticity of transactions and preventing tampering.

A cryptographic hash function operates as a cryptographic tool, generating a unique digital fingerprint for data. Different algorithms produce different output sizes, but a good hash function should be deterministic, meaning that the same input will always produce the same output. This property ensures that regardless of how many times the input is hashed, the output will remain consistent, allowing for easy verification of data consistency.

Hash functions also possess the capability to verify message integrity and authenticate information. For instance, 

 and RIPEMD-128 are among the cryptographic hash functions utilized in blockchain technology. These functions aid in securing the data integrity across various applications, including blockchain technology, where each block incorporates the previous block’s hash.

Different blockchains employ different hashing algorithms, with Bitcoin utilizing the Secure Hashing Algorithm 256 (SHA-256) as its hashing algorithm. 

 that generates a 256-bit hash value. It is widely used in various data structures, including blockchain technology, to ensure the security and integrity of data.

The array of hashing algorithms includes Scrypt, a password-based key derivation function used across various cryptocurrencies like Litecoin. Scrypt generates a unique output hash for each input, ensuring the security and integrity of the data.

Ethash, on the other hand, is a memory-hard hashing algorithm specifically designed for implementation in the Ethereum blockchain, developed to counteract the potential for ASIC miners to be utilized. Various hashing algorithms possess distinct levels of complexity, which influences the rate at which miners can find a valid hash, ultimately impacting the security and stability of the blockchain network.

The Connection Between Hashing and Proof of Work

Hashing forms a core part of the Proof of Work consensus algorithm, where miners resolve intricate mathematical problems using hashing to validate transactions and generate new blocks. Mining involves using computational power to find a valid hash for a block of transactions. The first miner to find the valid hash is rewarded with cryptocurrency, incentivizing miners to participate in securing the network.

The mining difficulty undergoes periodic adjustments to uphold a steady rate of block production, thus contributing to the blockchain’s security and stability. Various factors affect the adjustment of mining difficulty, such as:

This process guarantees the integrity and immutability of the blockchain.

Mining in blockchain encompasses the verification and validation of transactions on the blockchain network. Miners utilize computational power to solve intricate mathematical problems, which assists in securing the network and adding new blocks to the blockchain ledger. This process guarantees the integrity and immutability of the blockchain, as it ensures that only valid transactions are added to the chain.

To validate the integrity of a transaction, the hash value of the transaction is compared to the hash value stored in the block. If the two hash values match, it implies that the transaction has not been altered and is considered valid. By utilizing hashing, blockchain technology guarantees the immutability and security of transactions, as any changes to the transaction data would result in a different hash value, making it easily detectable.

Mining difficulty is an adjustable parameter that is periodically modified to ensure the security and stability of the blockchain by maintaining a consistent rate of block production. It is influenced by factors such as:

The mining difficulty of Bitcoin, for example, is adjusted every 2016 blocks, which is estimated to occur every two weeks. This adjustment is based on the amount of time taken to locate the preceding 2016 blocks. If the blocks are found in a shorter than expected duration, the difficulty is increased, and conversely, if the blocks are located over a longer period, the difficulty is decreased. This mechanism ensures that a new block is discovered approximately every 10 minutes, preserving the security and stability of the blockchain network.

Securing Data with Cryptographic Hash Functions

Cryptographic hash functions safeguard data in the blockchain through the following properties:

These properties ensure data integrity and hinder tampering in the data structure of the blockchain.

Comprehending these properties of cryptographic hash functions is necessary for understanding the security and reliability of blockchain technology. These functions provide a strong foundation for the secure storage and transfer of data within decentralized networks, protecting sensitive information and maintaining the integrity of the blockchain.

Deterministic outputs in hashing relate to a hash function’s ability to consistently generate the same hash value for a specified input. This ensures that regardless of how many times the input is hashed, the output will remain consistent, allowing for easy verification of data consistency. In the context of blockchain technology, this property guarantees that the same input will always produce the same result, maintaining uniformity and trust in the blockchain network.

Deterministic output enables foreseeable and verifiable execution of code, which is fundamental for the decentralized nature of blockchain systems. It plays a key role in the validation of transactions in a blockchain, as it guarantees that the same input will always generate the same output, ensuring that all participants in the blockchain network can independently verify the validity of transactions and arrive at a consensus on the state of the blockchain.

Preimage Resistance and Collision Resistance

Preimage resistance and collision resistance constitute significant properties of cryptographic hash functions that establish data integrity and hinder tampering in blockchain technology. Preimage resistance makes it computationally difficult to find the original input (pre-image) given the hash value. This ensures that the hash function is one-way, meaning it is easy to compute the hash value from the input, but difficult to reverse the process and find the input from the hash value.

Collision resistance, on the other hand, ensures that distinct inputs yield distinct hashes, thus preserving the integrity of the data stored in the blockchain. By minimizing the chances of two different inputs producing the same hash value, collision resistance helps maintain the security and trustworthiness of the blockchain network.

Together, preimage resistance and collision resistance form the basis of securing data with cryptographic hash functions in blockchain technology.

Practical Applications of Hashing in Blockchain

Hashing exhibits numerous practical applications in blockchain, encompassing transaction verification and password storage and security. Transaction verification relies on hashing to confirm the authenticity and integrity of data, ensuring that transactions are valid and secure. Hashing is also used to securely store passwords, protecting user data and preventing unauthorized access to accounts.

Understanding the practical applications of hashing in blockchain provides insight into the numerous ways hashing fortifies and secures decentralized networks. From verifying transactions to safeguarding sensitive information, hashing plays a vital role in maintaining the integrity and trustworthiness of blockchain systems.

Transaction verification forms a significant aspect of blockchain technology, ensuring the security and accuracy of transactions. Utilizing hashing, the transaction data is hashed using a hash function, and the resulting hash value is incorporated into the block alongside other transaction data. To validate the integrity of a transaction, the hash value of the transaction is compared to the hash value stored in the block. If the two hash values match, it implies that the transaction has not been altered and is considered valid.

By utilizing hashing, blockchain technology guarantees the immutability and security of transactions, as any changes to the transaction data would result in a different hash value, making it easily detectable. This process of transaction verification is widely used in various blockchains, such as Bitcoin and 

, ensuring the integrity and security of the network.

Blockchain employs hashing to store passwords securely, safeguarding user data and prohibiting unauthorized account access. When a user creates an account or sets a password, the password is hashed using a cryptographic algorithm, and the resulting hash is then stored in the blockchain instead of the actual password. When a user attempts to log in, the entered password is hashed using the same algorithm, and the resulting hash is compared to the stored hash in the blockchain. The hashes are compared. If they match, the user is granted access..

Since the hash is a one-way function, it is computationally infeasible to reverse-engineer the original password from the hash. This makes it extremely difficult for attackers to crack passwords by guessing or using brute-force methods. As a result, hashing is an effective technique for ensuring the security and integrity of password storage in blockchain technology.

Comparing Energy Consumption: Bitcoin vs. Ethereum

Bitcoin and Ethereum exhibit differences in energy consumption, attributable to their respective consensus algorithms. The energy-intensive mining process of Bitcoin raises environmental sustainability concerns. Bitcoin mining, which relies on Proof of Work, consumes a significant amount of energy, estimated to be around 137.68 TWh per year. In contrast, Ethereum’s move to a 

 consensus algorithm aims to reduce its energy consumption by 99%, making it more sustainable and environmentally friendly compared to Bitcoin.

The energy consumption differences between Bitcoin and Ethereum underline the need to consider the environmental impact of blockchain technology. By understanding the implications of different consensus algorithms on energy consumption, we can better appreciate the benefits of more sustainable and energy-efficient solutions such as Ethereum’s Proof of Stake.

Bitcoin’s mining process consumes a significant amount of energy as it relies on Proof of Work and involves solving complex mathematical problems. This energy-intensive nature of Bitcoin mining has raised concerns about its environmental impact, as the estimated energy consumption is approximately 

Various indexes and estimates, such as the Bitcoin Energy Consumption Index provided by platforms like Digiconomist and Cambridge Center for Alternative Finance (CCAF), are used to measure Bitcoin’s energy consumption. These measurements demonstrate the environmental concerns surrounding Bitcoin’s energy consumption and emphasize the need for more sustainable and energy-efficient solutions in blockchain technology.

Ethereum’s shift to a Proof of Stake consensus algorithm signifies a significant move towards enhanced sustainability and environmental responsibility in blockchain technology. By utilizing ETH instead of energy to secure the network, Ethereum’s Proof of Stake system significantly decreases the energy consumption of the blockchain, with an estimated reduction of over 99%.

The environmental benefits of Ethereum’s move to Proof of Stake include:

By adopting more energy-efficient consensus mechanisms, blockchain systems like Ethereum are leading the way towards a more environmentally friendly and sustainable future for decentralized networks.

Throughout this blog post, we have unveiled the mystery of hashing in blockchain, exploring its various applications and implications. From the role of hash functions and different hashing algorithms to the connection between hashing and Proof of Work, we have delved into the critical components of blockchain technology that ensure data integrity and prevent tampering.

As we have seen, hashing is a fundamental aspect of blockchain technology, providing the foundation for secure storage and transfer of data within decentralized networks. By understanding the importance of hashing and its practical applications, we can better appreciate the robustness and security of blockchain systems, ultimately contributing to a more secure and trustworthy digital landscape.

What is hashing in blockchain with example?

Hashing in blockchain is a cryptographic process which takes an input (such as text) and turns it into an output of fixed length and structure known as the 'hash value'. It is always the same length and one-way, meaning it cannot be reversed.

Hashing is the process of transforming data into a fixed-length code using a hash function. This makes it easier to find and employ the original data and is used most commonly for hash tables.

What is the difference between encryption and hashing?

Encryption is a two-way process that scrambles data so it can be unscrambled later, while hashing is a one-way process that maps data to a fixed-length value, used mainly for authentication purposes.

A hash in a blockchain is a cryptographic function that converts random data input into a fixed length and structure output known as a hash value. This makes it easy to identify transactions on the blockchain, as each transaction has its own unique hash.

How does Proof of Work relate to hashing in blockchain?

Proof of Work is a consensus algorithm that leverages hashing to confirm transactions and generate new blocks in the blockchain. Hashing is used to solve complex mathematical problems and produce a valid hash that meets specific requirements.

Explained: What Is Hashing in Blockchain?

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