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Introduction

Yearly Performance Summary:

• 2021-2022: Kaspa's price increased from virtually nothing to $0.01, showing a growth of approximately 5800% from its trading onset in June 2022.

• 2023: From $0.005278 to a peak of $0.154, Kaspa's price increased significantly, which could be considered around a 2900% growth for the year.

• 2024: The price action showed volatility but overall, Kaspa's value had grown from about $0.154 at the end of 2023 to a new all-time high of $0.2075 mid-year, then settling to around $0.14 by November.

The tech & Innovation behind it

• Directed Acyclic Graph (DAG): Unlike traditional blockchains that form a linear chain, Kaspa uses a BlockDAG, where blocks can be mined in parallel. This structure looks like a complex web rather than a single chain, allowing multiple blocks to co-exist and reference each other.

• Parallel Block Creation: Kaspa's system allows for the simultaneous creation of blocks by different miners, which reduces the problem of 'orphaned blocks' (blocks mined during the time it takes for a block to propagate across the network) and increases transaction throughput.

• GHOSTDAG Protocol: Kaspa implements the GHOSTDAG consensus mechanism, which is a generalization of the Nakamoto Consensus for Directed Acyclic Graphs.
• Security: GHOSTDAG maintains Bitcoin-level security by ensuring that the consensus remains secure against 51% attacks, even with high block rates.
• Scalability: By incorporating orphan blocks into the consensus process, GHOSTDAG allows for higher block rates without sacrificing security. This design inherently supports scalability by allowing the network to handle more transactions per second.
• Decentralization: The mechanism encourages decentralization by not penalizing miners for blocks that would have been orphaned in traditional systems; instead, these blocks contribute to the consensus.

• kHeavyHash Algorithm: This is a modification of the SHA-256 algorithm used for mining. It's designed to be ASIC-friendly, allowing for efficient mining hardware but with adjustments to prevent over-centralization through ASIC dominance.

• Mining Process: Unlike Bitcoin, where only one block can win the reward, Kaspa rewards miners for all blocks mined within a short interval, even if they're not on the "winning" path in the DAG. This reduces wasted computational effort.

• Instant Confirmation: Transactions in Kaspa can be confirmed almost instantly due to the ability to create multiple blocks per second. Each transaction can be included in a block right after it's broadcast.

• Confirmation Time: While the first confirmation might happen in seconds, full confirmation (for security purposes) is designed to take around 10 seconds, a significant improvement over Bitcoin's 10 minutes.

• Infinite Scalability: Theoretically, Kaspa aims for infinite scalability through its BlockDAG structure, where the network's capacity increases with the number of miners without diminishing returns.

• High Throughput: The architecture supports high transaction throughput, with plans to achieve 100 blocks per second, far surpassing Bitcoin's and Ethereum's current capabilities.

• Data Management: Kaspa implements pruning to manage the size of the blockchain. Instead of keeping all historical data, it allows for the removal of older transaction data, reducing storage requirements over time.

• Rust Rewrites: Kaspa has implemented Rust. The transition to Rust for Kaspa, also referred to as Rusty Kaspa, has been progressing with significant milestones. By June 15th, 2024, 97% of Kaspa nodes had completed the migration to Rust which is expected to enhance performance and security, aiming for even faster block times and more efficient operations.

• Smart Contracts: Kaspa KRC20 Smart Contracts: By June 2024, discussions and explorations into Kaspa smart contracts included the mention of KRC20 smart contracts. These are designed to bring scalability, security, interoperability, flexibility, and reduced transaction costs to the ecosystem. This development aims to position Kaspa as a competitive platform for decentralized applications and tokenization. There's a general expectation of smart contract functionality being a game-changer for Kaspa, potentially leading to significant ecosystem growth and adoption. Discussions on platforms like Reddit emphasize the community's interest in seeing smart contracts implemented, which could elevate Kaspa's status among other blockchain platforms.

• Balancing the Trilemma: Kaspa's technology attempts to address the blockchain trilemma by maintaining decentralization and security while significantly improving scalability. Its use of BlockDAG for parallel block creation is a novel approach to scaling PoW blockchains.

• Energy Efficiency: Although Kaspa uses PoW, its mining process, by design, reduces the waste associated with orphan blocks, potentially leading to a more energy-efficient mining process compared to traditional PoW systems.

• Adoption and Network Effects: Kaspa's success in achieving its technological promises will heavily depend on its adoption rate, the ecosystem's growth, and how well it can attract developers and users to leverage its high-speed, scalable network.

Comparison with the top cryptos

• Ethereum: Ethereum, especially with its transition to Ethereum 2.0 (Proof of Stake), has improved its scalability. However, it's historically known for network congestion and high gas fees during peak times.

• Bitcoin: Bitcoin's scalability is limited by design to maintain its security through Proof of Work, with a block time of 10 minutes and a relatively low transaction throughput (7 transactions per second).

• Solana: Solana is designed for high scalability with its Proof of History (PoH) mechanism, claiming up to 65,000 transactions per second (TPS). However, it has faced issues with network stability during high congestion.

• Kaspa: Kaspa's BlockDAG structure allows for parallel block creation, which can theoretically lead to higher throughput than traditional blockchains like Ethereum and Bitcoin. With plans to scale to 400 TPS in 2024 and ambitions to reach 100 blocks per second, Kaspa aims to provide high scalability without sacrificing decentralization or security.

• Ethereum: After Ethereum 2.0, it uses Proof of Stake (PoS), which is less energy-intensive but has centralization concerns due to stake concentration.

• Bitcoin: Uses Proof of Work (PoW), ensuring high security due to the computational power required. However, it's criticized for its energy consumption.

• Solana: Combines PoS with PoH for efficiency, but this has led to debates about its centralization due to the validator setup.

• Kaspa: Utilizes GHOSTDAG, a PoW-based consensus mechanism that generalizes Nakamoto consensus for DAG structures. This allows for faster confirmation times and maintains the benefits of PoW's decentralization and security.

• Ethereum: Transactions can take from seconds to minutes to confirm, depending on network conditions.

• Bitcoin: A transaction can take up to 10 minutes or more to be confirmed.

• Solana: Offers near-instant transaction finality when the network is functioning optimally.

• Kaspa: With its BlockDAG, Kaspa aims for nearly instant transaction confirmation, potentially offering better user experience in terms of transaction speed.

• Bitcoin: Known for high energy consumption due to its PoW mining.

• Ethereum: More energy-efficient with PoS but still requires significant resources for staking and running nodes.

• Solana: Claims to be more energy-efficient than PoW chains but uses a form of PoS.

• Kaspa: While it uses PoW, its design focuses on reducing the energy waste in mining by allowing multiple blocks to be mined in parallel, potentially making it more energy-efficient than traditional PoW systems per transaction processed.

• Ethereum: The de facto platform for smart contracts and dApps with a vast ecosystem.

• Bitcoin: Primarily a store of value, with limited smart contract capabilities via protocols like Ordinals.

• Solana: Has been building its dApp ecosystem aggressively, known for its speed and low transaction fees.

• Kaspa: Although it initially focuses on being a payment protocol, there are plans for smart contract functionality, potentially combining the security of Bitcoin's PoW with Ethereum's programmability.

• Kaspa stands out for its fair launch with no pre-mine or ICO, ensuring that the distribution of coins was as decentralized as possible from the start, which contrasts with Ethereum's ICO and Solana's allocation to insiders.

• Marathon Digital Holdings (MARA): A notable Bitcoin mining company, has been mining Kaspa. Although this doesn't directly imply investment in the form of buying KAS tokens, the act of mining is a form of investment in the network's security and growth.

• Grayscale: There have been discussions and rumors, particularly highlighted in social media, about Grayscale considering adding Kaspa to their asset management suite. This would indicate institutional interest, but as of the last available information, there's no official confirmation of such an addition.