What Is Fantom Cryptocurrency?
Fantom cryptocurrency is a blockchain project launched by the Fantom Foundation.
Their trading symbol is FTM.
The coin has been created by their CEO, Ahn Byung.
Fantom is basically aiming to create a decentralized app platform.
So people could program their own blockchain apps via the Fantom Virtual Machine.
It's a similar idea to Ethereum and Cardano, but their blockchain technology is a little bit different.
Well, they're actually implementing a different type of consensus for processing blockchain transactions.
It's called the Directed Acyclic Graph (DAG).
This is a type of cryptography that's designed to be more optimised and efficient than existing blockchains.
However, it hasn't really been tested yet.
And if they're aiming to achieve scalability, their blockchain will require rigorous testing.
What Is The Directed Acyclic Graph (DAG)?
Basically, DAG allows:
- Transactions to be processed faster
- Enhanced scalability
- Cheaper transaction fees on the Fantom network - with practically zero-fees
We'll cover more about how Fantom's model DAG integrates with their OPERA chain and Lachesis Protocol features later.
Fantom tokens are ERC20, from the Ethereum blockchain.
To add FTM tokens to your wallet, sign up to myEtherWallet, then add the contract address/symbol to your wallet.
You can also use MetaMask too to store Fantom tokens.
2. What Makes FTM Scalable?
The problem with most blockchain projects is scalability.
Most blockchain networks slow down when a network processes thousands of transactions at once.
And that's how Fantom cryptocurrency might help.
To understand why FTM could be useful, you need to understand three things:
- How the blockchain works
- Blockchain scalability problems
- And how Fantom could solve these problems
So let's dive into it.
2.1. How The FTM Blockchain Works
The FTM blockchain has several different components.
Cryptocurrency seems like a complex concept, but you can breakdown Fantom's structure into a few key pieces.
So here's how each works.
Public Distributed Ledger
This is basically like an accounting system.
Every transaction that's ever taken place on the blockchain is recorded via a public ledger.
This is a process of validating transactions on the blockchain's public distributed ledger.
Because the blockchain is a peer to peer network, there has to be an overall consensus before a transaction can be validated.
It's basically like a democratic voting system.
Fantom has developed a new type of consensus protocol, where transactions will be computed in a potentially more efficient and optimised way.
(But we're still waiting for this theory to be proven.)Smart Contracts
Smart contracts are basically self-executing contracts on the blockchain.
It's a form of automatic exchange.
Here's an example:
When you're buying a Kindle book on Amazon, you receive the file straight away right?
Well, with a smart contract, once you've paid with your tokens (e.g. Ethereum), you'd receive instant access to whatever you're trying to buy.
For example, this could be a book, real estate or Fantom coins.2.2. Blockchain Scalability Problems
So now that you understand the blockchain, you need to comprehend one of the biggest flaws of the blockchain.
You see, cryptocurrency transactions are slow and aren't really practical for the world.
So in a world where you have millions of payment transactions processing every day, cryptocurrency technology just isn't ready yet.
And so right now, payment services like PayPal and Stripe are far more practical than cryptocurrency.
In fact, it's probably the biggest barrier to the adoption of cryptocurrency technology.
But what's the reason behind that?
Well, this all comes down to mining.
Blockchain technologies like Bitcoin and Ethereum only synchronise the network block by block.
It's not the most efficient model - and causes problems such as:
- Slow block confirmation times
- High transaction fees
- Unscalable technology
Now, smart contracts technology is becoming a popular alternative.
Ethereum and Cardano already have smart contracts - whilst Bitcoin's Core development community are also planning to release a similar feature.
But smart contract functionality still isn't ready yet and requires more tweaking.
So what could be the solution to this blockchain scalability problem?
Potentially, the Fantom's new consensus protocol.3. How Fantom Works3.1. The Directed Acyclic Graph (DAG) Model
Fantom has devised the Directed Acyclic Graph (DAG) model.
DAG is basically a platform for smart contracts.
And FTM are the first cryptocurrency project to adopt DAG for their own ecosystem.
But what makes the DAG different from existing smart contracts?
This all comes down to the "Lachesis Protocol", which is used for consensus on the blockchain.
The "Lachesis Protocol" is built into their OPERA Chain.
With the OPERA chain, as more nodes form part of the blockchain, transactions become faster.
To the point where they can processed almost instantly.
This makes their blockchain infinitely scalable, because as the network grows, so does the number of nodes.
So more users on the Fantom network doesn't slow it down - it actually speeds FTM transactions up.3.2. The Benefits Of Fantom
The vision of Fantom is to create a more scalable, accessible cryptocurrency technology.
Their DAG technology is designed to be more reliable:
It could create a more efficient way of processing consensus protocols on the blockchain.
This could be used for sharing data, processing payments and trading digital assets via a blockchain powered marketplace.
What industries could FTM this impact?
Almost any industry that depends on scalability could use Fantom cryptocurrency.
This might include:
- Financial institutions
- Supply chain and logistics
- Telecoms and network service providers
Also, anyone interested in launching their own Decentralized App (DApp) could use Fantom to create their project.
- Faster transaction times
- Transactions can be processed in real time e.g. real-world payments
- Compatibility across all payment parties
- An ecosystem where transactions operate conveniently across the blockchain
- Very low cost transaction fees
- More accurate transaction data
- And overall, much more scalability for the blockchain
One of the main reasons why existing blockchain technology isn't scalable is because of the consensus protocol.
On a peer-to-peer blockchain network you have nodes.
Every node authenticates a single block at a time.
But the problem is, this type of storage isn't very efficient - and so transactions can take a long time.
For example, at the height of the trading rush in December 2017, Bitcoin transactions speeds took hours.
Now that was mainly because a node by node approach limits the number of blocks that can be created.
This also limits the size of each block that can be verified.
Also, if a node is slow, then transaction speeds will also be slow.
So a blockchain's speed is usually limited by how powerful the nodes are on the network.
And when mass amounts of transactions are required to be verified, the blockchain network's performance drops dramatically.
Fantom suggests creating a parallel model instead - rather than verifying every transaction block by block.
4.2. Transaction Fees
When payments are processed on the blockchain, there are also transaction fees.
These are used as a way of incentivising cryptocurrency miners.
Plus, there's the block reward.
A block reward is used for solving the blockchain's mining algorithm.
So for example:
If you mine Bitcoin, you'd get rewarded with a Bitcoin for mining the next block.
Fees like these help to reduce the threat of DDOS, enhance security levels and stop the threat of a 51% staking attack.
But Fantom argues these fees create a more expensive, inefficient blockchain which ultimately, isn't scalable.
Instead, FTM is using Proof of Stake to validate transactions.
This means you wouldn't need miners on the network.
5. Fantom Virtual Machine5.1. What Is A Virtual Machine?
Just like Ethereum, Fantom has a virtual machine that operates at the heart of their platform.
Well, this allows decentralized apps to be launched via the virtual machine, allowing consensus across the blockchain.
But the problem with most virtual machines is they can create latency across the network.
This means transactions take longer to process, because of the computing power required.
If you compare a virtual machine vs a traditional computer, it's more expensive and slower to run operations virtually on a peer to peer network.
And this creates problems in blockchain scalability.
Fantom cryptocurrency actually state in their whitepaper that they've optimised their Virtual machine.
Well, they've taken a different approach to Ethereum's stack based model.
Instead, their blockchain is register based, to reduce the cost and time of executing code functions on the blockchain.
This allows more capacity for transactions, and reduces the computing power needed to calculate exchanges on the blockchain.5.2. Scala & FTM Programming
To attract more developers to their community, Fantom are going to create a Virtual Machine.
But to program on a Virtual Machine, you need to know the language.
This way you can create code functions, like smart contracts.
One of the problems with cryptocurrencies designed for launching apps, like Ethereum, is that their programming language isn't very well known.
So most developers don't know how to program on there:
And it's expensive to hire an external developer for your project.
In turn, this lack of knowledge hinders the growth of decentralized apps.
Fantom Foundation are making their blockchain programmable via a language called Scala.
It's a programming language with a big development community, and the code is tried and tested.
So whilst Fantom's blockchain technology is new, the programming language behind it isn't.
What are the benefits to programming blockchain apps in Scala?
- There's a lot of documentation and resources about how to write programs with Scala
- It's a fairly easy language for developers to program with
- Because of this, Fantom may attract more developers to their project
- It's cheaper and easier for organizations to find developers who can create decentralized apps with Scala/Fantom
Overall, the FTM Virtual Machine is a strategy to increase user adoption
Fantom also chose Scala's because it's designed for performance:
It's lean but also versatile to program with.
6.1. Why You Should Invest In Fantom (FTM) Cryptocurrency
6.2. Why You Shouldn't Invest In Fantom (FTM) Cryptocurrency