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A cryptocurrency called Ravencoin (NRV -18.96%) flies away in the wake of Ethereumit is (ETH -7.65%) Merge, and his earnings exceed even those of the oft-quoted merger beneficiary Ethereum Classic (ETC -10.05%). This smaller proof-of-work crypto has grown over 90% in the past month. What is Ravencoin and can it continue to soar?

Raven ravencoin crypto cryptocurrency

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What is Ravencoin?

Ravencoin is a proof-of-work cryptocurrency that ranks among the top 60 most valuable cryptos by market capitalization. After its big month, Ravencoin now boasts a market capitalization of $750 million. While Ravencoin has been hot lately, it is by no means a newcomer to the crypto world. Ravencoin started as a Bitcoin (BTC -1.97%) fork in 2018 and is similar to Bitcoin in that it has a hard cap on the total supply of Ravencoin. There is a maximum supply of 21 billion Ravencoin against a maximum supply of 21 million Bitcoin. Ravencoin differs from Bitcoin in that it offers smart contracts and allows holders to create their own tokens by burning 500 Ravencoins.

flight of the crow

Many readers are probably aware of The Ethereum merger event that took place this week. In short, The Merge moves Ethereum’s consensus mechanism from proof of work at proof of stake. Simply put, think of the merge as a software update. The key change will be how Ethereum achieves consensus. Until now, Ethereum miners used energy to solve complex mathematical equations to process transactions. Post-merger, these mining rigs will no longer be used and Ethereum transactions will be processed through staking, in which Ethereum holders can pledge or “participate” a portion of their Ethereum holdings to validate transactions and secure the network. to earn a share of the transaction fees.

This move will bring tangible benefits to many members of the Ethereum community, who can stake their holdings to earn income. But there is one group of network participants who will clearly not benefit from the transition: Ethereum miners. Miners use expensive hardware to mine Ethereum, and this lawsuit is now superfluous, because after The Merge, they can no longer use their hardware to get Ethereum. Also, the hardware they own is on the verge of losing value, as it has few other uses.

The miners might be down, but they haven’t been out, and that’s where Ravencoin comes in. Ethereum mining equipment can’t be used to mine Bitcoin, but it can be used to mine Bitcoin. other proof-of-work cryptocurrencies like Ethereum Classic and Ravencoin. Ethereum Classic made headlines as a beneficiary of the merger as it is a hard fork of Ethereum and is already in the top 20 cryptos by market capitalization, but Ravencoin is also waiting in the wings. Ethereum mining rigs that use graphics processing units (GPUs) can be used to mine Ravencoin, giving this equipment new life. Ravencoin’s hash rate is increasing, indicating that miners have migrated from Ethereum to Ravencoin.

Additionally, FTX, one of the world’s leading crypto exchanges, recently stated that it is adding perpetual futures contracts for Ravencoin. These types of listings on major exchanges can be significant catalysts for smaller cryptos, as they can increase liquidity, trading volume, and interest in the asset.

There’s more to Ravencoin than merging

Ravencoin looks like a winner from Ethereum’s transition to proof-of-stake. However, Ravencoin has more advantages than just being a proof-of-work crypto in the right place at the right time due to its compatibility with GPU mining equipment. Ravencoin has a strong community, an egalitarian approach, and some interesting use cases.

Ravencoin’s mining algorithm is ASIC (Application Specific Integrated Circuit) resistant, which means that ASIC miners cannot dominate the mining process and earn more rewards than ordinary users using mining equipment More affordable and accessible GPU. You can even mine Ravencoin using a computer without a GPU, although this is not as efficient. This also adds to the decentralization and security of Ravencoin.

Also intriguing is Ravencoin’s emphasis on allowing users to create their own tokens. For example, you can tokenize real estate using Ravencoin by dividing an investment property into 100 tokens or even 1,000. Tokenization has many advantages for holders. Real estate is normally a relatively illiquid asset and you would have to sell your property to realize a gain on it. It can be a long and tedious process. With real estate tokens, users have round-the-clock liquidity and can theoretically sell their share of a property to anyone in the world in seconds. Tokenizing a property also makes it more accessible to everyday investors, who may not have the money for an investment property but can purchase a token or multiple tokens to diversify their real estate holdings.

Ravencoin should continue to benefit from the migration of Ethereum miners in the short term. In the long run, there’s a lot to like about the project beyond this catalyst, especially its democratic approach to mining and the potential for tokenization. Cryptocurrencies, especially smaller ones, can be risky and volatile investments, but Ravencoin looks like a buy with a lot of potential for risk-tolerant crypto investors who want to make it a small part of their portfolio.

Michael Byrne has positions in Bitcoin and Ethereum. The Motley Fool has positions and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

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