The Birth and Emergence of New Utility Tokens
At any given time, there are over 20,000 developers working on cryptocurrency platforms.
Most new cryptocurrencies are developed on top of another existing mainnet, in a safe “testnet” environment. The testnet development is walled off from the active functions running on that mainnet by use of a unique genesis block – the first block on the testnet’s blockchain – to avoid disruptions or worse of that mainnet if issues occur during this testing phase. Testnets are commonly used for new blockchain testing as well as smart contracts, NFTs, DAOs, DeFi, DEXs, dApps, and other features.
In the case of blockchain development, developers typically choose a mainnet “host” for their testnet activity that’s similar in function and design to its own project. Mainnets like Ethereum and Polkadot are the most popular networks for testnet activity, while Terra, Solana, and NEAR have shown the most recent growth in that area.
As developers evaluate and refine the features and functions of their testnets, they use fake crypto coinage with no value to simulate transactions.
When testing is complete, and the testnet’s features have proved to live up to the functionality promised in the developer’s white paper, the project team can transition their testnet platform and launch its own mainnet, often with published code.
Its status as a mainnet provides an added level of proof that the blockchain project is functional and ready for participation. As time goes on, developer teams will continue to refine their mainnet, an indication of a vibrant and possibly more future-proof cryptocurrency.
Implications for Quality and Longevity
This testnet-to-mainnet process is thorough, but investors who get involved early in a cryptocurrency blockchain development often do so at greater risk. Functionality promises found in a white paper can seem exciting and groundbreaking, but until the blockchain successfully emerges from the “sandbox” testing environment, nothing is certain.
However, once their mainnets are released at the conclusion of this testing process, developers are essentially stating that now their blockchain can be trusted – they’ve tested it in realistic conditions and refined it within that space before releasing it.
The Maturing of the Crypto Industry
As I stated earlier, cryptocurrency is the logical next stage of development for currency and mediums of exchange around the world.
Because crypto represents the privatization of currency, it will often struggle to compete with traditional government-backed currencies used in everyday kinds of commerce – there is no FDIC, no safety nets, and no Federal Reserve Bank to plug the leaks. So no, it’s not easy to transition a nation’s economy from a national currency to a cryptocurrency, and having a few hiccups along the way should naturally be expected.
At the heart of this revolution are the mainnet’s blockchain engines that are forging new inroads into business and industry. Thought leaders are beginning to realize that blockchains cannot succeed over the long run simply by imitating others.
For this reason, it’s the operation of mainnets that’s separating the crypto-men from the crypto-boys.
And if worse comes worse, and by some stretch of the imagination the entire crypto industry were to collapse, it would collapse forward. Just as the dot com world survived the brutal Y2K implosion of 2000, the crypto implosion of 2022 could become the launching pad for our golden future over the years ahead.