What is the main network (Mainnet)
Although the cost of cryptocurrency is difficult to predict, there are several key components that determine the success of a project.
One of the most important factors is technology. Although investors do not have to be aware of all the technical details of the project, it is nevertheless necessary to make some progress in this area.
Testnet (Testnet) show a kind of working prototypes of blockchain projects. However, the core network is an even more important aspect when evaluating project implementation in the real world.
In this article, we will discuss everything you need to know about mainnet networks and analyze the last two projects that recently launched the main network.
In fact, every blockchain project has such a network. So what is it? Simply put, mainnet is the blockchain that actually performs the functions of transferring digital currency from senders to recipients.
This differs from the test network, which serves only to verify the functionality of transactions.
The easiest way to imagine a test network as a prototype demonstrating the potential of the project. Mainnet is a true “end product’ that is available to all users.
However, similar to test networks or code frameworks, changes can be made to the Mainnet network whenever project teams or open-source cryptocurrency communities decide that there is a need for updates and changes.
Should I invest in a project without a core network
Although in the ideal case all projects already have mainnet during the ICO, this rarely happens. In fact, many projects during the ICO period do not even have a ready-made test network.
In terms of fundraising, hundreds of blockchain projects were able to raise enough capital, relying only on potential use cases, technical concepts, and other factors, such as team composition and a list of project partners.
Often teams use a significant part of the funds from the ICO to build test and core networks for their projects.
So, what is the meaning of the main network for an investor or user of a certain cryptocurrency? From the point of view of the investor, the presence of the main network shows that the project has achieved some technical progress.
Even if you are not going to invest in the project before the launch of the main network, it is important to understand what positive (or even potentially negative) impact the launch of this network on the value of the cryptocurrency can have.
Many investors prefer to buy cryptocurrencies before the release of mainnet, because a successful launch can sometimes lead to a significant increase in value.
How the launch of Mainnet affects prices
Is there a correlation between the successful launch of mainnet and the higher rate of this cryptocurrency? Not necessary.
It is also important to understand the role of the market context. To explain everything more clearly, we give two examples related to the main networks, the release of which took place this year.
BTC and Lightning Network
As mentioned earlier, the first launch of the main network is not the only important event that determines the success of a cryptocurrency project.
Constant updates and integrations of various functions with the main network are also an important factor in attempts to predict the ever-changing price of any cryptocurrency.
One recent example is the launch of the Lightning Network on the Bitcoin network on March 15, 2018. The Lightning network is an off-chain solution that adds a “second layer” on top of the main chain.
Although this project should ultimately help with the scaling of all cryptocurrencies, its most important implementation today is on the Bitcoin network.
The Lightning network is a significant development, as it aims to make BTC more scalable, providing the ability to process much more transactions per second.
Without a Lightning network, Bitcoin can only process 7 transactions per second.
Despite the launch of the main Lightning Network, there was no immediate increase in BTC prices. If you look at the data for the period from March 1 to 30, the price actually decreased from $ 10,600 to $ 6,900.
Why did this happen? It is very important to consider the project in the context of the market situation. In March, almost the entire cryptocurrency market showed stagnant or declining prices with an extremely bearish general trend.
Despite the importance of this achievement from a technical point of view, other factors limited the increase in BTC prices at that time.
Therefore, it is difficult to say whether the launch of the Lightning Network on the Bitcoin network had a real impact on the cost of BTC in the short term.
Launch of Mainnet Golem
The source code for the Golem Brass core network appeared on Github on April 10, 2018. Golem (GNT) aims to create a P2P system for sharing computing power.
Users who require additional processing power using GNT tokens pay users who have additional processing power.
If you look at the data from March 31 to April 29, the price increased from 0.20 to 0.60 dollars. This includes a sharp rise to 0.73 dollars, which took place on April 13.
At first glance, this indicates a direct correlation between the launch of Mainnet Brass and the increase in the value of the coin.
But, as in the case of the launch of the Lightning Network on the Bitcoin network, it is important to look at this issue in the context of the market situation.
It can be assumed that due to the release of mainnet, the cost of GNT increased more than other coins (especially April 13), but this is difficult to say for sure.
The fact is that in the April bull market, the value of the vast majority of cryptocurrencies has increased.
It can be argued that the price would rise to the same values simply because of favorable market conditions.
Core networks are important because they prove or disprove a team’s ability to bring a blockchain project from idea to implementation.
Although the first release of Mainnet does not always give a good idea of the overall progress of the project, this is an important technical aspect that should be considered when investing in cryptocurrency.
As can be seen in many cases from the past, it is difficult to say exactly what effect the launch of the main network will have on the value of the coin in the short term.
However, they indicate the potential for improving overall functionality.
Of course, many other factors, such as the general market situation and distribution in the real world, are no less, if not more important.
Regardless of whether the initial version of the main network turned out to be successful, it should be remembered that with each new iteration these networks are constantly being improved, making cryptocurrency projects more innovative and functional over time.