This report takes a glance at what’s the gap between a crypto mainnetvs testnet, two technical terms that serve various purposes.
Mainnets and testnets are normal technical terms employed from the cryptocurrency world to denote block-chain networks which have crucial functions. Let’s Look at the gaps between a Cryptocurrency mainnet along with testnet:
What is a Mainnet?
Mainnet – short for chief network – could be your initial and operational block-chain where trades come to pass inside the spread ledger and the indigenous cryptocurrencies possess real financial price. To put it differently, the mainnet denotes this authentic open-sourced block-chain it self which is publicly verifiable. The mainnet conveys out the functionality of implementing real trades within the system that’s stored on the block-chain and is known as the’ ‘end product’ which is available for the user to utilize.
Each deal implemented on the block-chain requires participants to cover per deal fee (payable from the indigenous coin) whilst to incentivize miners to confirm the trades and protect against network spamming. Due to their work, miners is going to be rewarded using coins that are native by the routine and in addition the deal prices paid by the participants.
Importance of Mainnet
A mainnet functions an Assortment of essential functions Offering:
1) Proof Development
A Mainnet is a telltale evidence that the job is rolling out a more working and functional block-chain where trades may come to pass. Possessing a mainnet is a symptom that the job is live and is currently in technical advancement. In addition, a live mainnet could place the functionalities and capabilities of their block-chain into the evaluation, after all the people could take part in the system and some other error may undermine the innerworkings of their block-chain. For that reason, establishing the mainnet normally takes a considerable number of development and resources to make sure that every component is working as it will. More than this, a mainnet functions as a functional proof that the job is implementing their vision well.
A job having a mainnet owns definitely more authenticity when compared to the usual job without one. As a mainnet is a genuine and working protocol, all of trades are participants and live could transact with the other person with the indigenous coins of their block-chain. Interested parties locally may choose becoming participating node and also download the routine program. Let’s assume that the block-chain is open-sourced and free for anyone to be involved in, the inherent principles of this block-chain is observable to people and some other concerns or problems is emphasized by participants. The truth is, the occurrence of a mainnet empowers the introduction of a live eco-system of participants who eases real interaction and trades that occurs with complete transparency. With no mainnet, the job is only Profession or ‘theoretical’ without a working product for participants to check out. That is very essential to comprehend when appraising an ICO job that’s hoping to raise money; nonetheless, it is many more difficult to gauge projects with out a mainnet and sometimes possibly a testnet.
What is a Testnet?
The testnet- suited to the evaluation network – is a specific replica of their original block-chain, with precisely the equal technology, applications, and functionalities. The sole distinction is that trades on the testnet are mimicked (or even ‘fake’) as well as the coins at the testnet doesn’t possess any actual value out the testnet atmosphere.
The gold that is native at a testnet is similar to monopoly money. It’s possible to ‘t purchase everything with that.
The testnet is a simulated environment where the functionalities and capabilities of the (original) blockchain are constantly tested and tweaked by application developers and testers. The purpose of having a mainnet is to develop the blockchain before it goes live or for ongoing testing of blockchain functionalities in a sandbox environment that is separate from the actual blockchain. The transactions on the mainnet are ‘imitation ‘ after all they are test transactions, with no deal costs incurred and no deployment costs required by developers. Since the coins on the testnet are worthless, there is no economic incentive for miners to mine after all their only purpose is to facilitate deal testing.
In summary, activities deployed on the mainnet serves as a simulation of how the protocol would function on the mainnet itself.
Just like how pilots need to undertake 3D-simulation of flying planes before flying an actual plane, a testnet provides a testing ground for developers to test the protocol’s functionalities.
Importance of Testnet
Testnet serves a variety of vital functions that include:
1) Constant Development
Blockchain technology is still in the infancy stages and a tremendous amount of testing and development is needed to enable mainstream adoption and usage. For instance, one of the main issues that are being addressed in the blockchain community is scalability. Rigorous research and development are being undertaken by a wide range of projects to enhance a blockchain’s capability of processing more transactions. In order to constantly enhance a blockchain’s capabilities, numerous testing on smart contract functionality, transactions, and the mining process must be undertaken. The testnet serves as a simulation on how the actual blockchain protocol (mainnet) would work under real-world conditions.
2) Prevent Disruption
A testnet allows testers and application developers to experiment on the features and functions of the protocol in a separate environment, without worrying about disrupting the main blockchain. Making the tests on the mainnet would be a nightmare after all the complex interactions between components in the protocol could compromise the network or break the main chain. This would cause massive disruptions to the blockchain and could undermine the protocol. It is thus a common practice for projects to run a prototype on a testnet before all else, in order to iron out the technical details and ensure that everything is in order.
3) Free Testing
For blockchains that allow smart contract functionality, native coins are required to be spent in order to execute smart contract transactions. For instance, Ether (ETH) is needed to pay for computations that occur in the Ethereum blockchain (Similarly called ‘Ethereum Virtual Machine’). Testnets provide a testing ground for developers who are keen to conceive applications on the blockchain or test out certain functionalities without spending real currencies. It would be extremely expensive for developers to test out their application features or run experiments on the mainnet, after all they would then need to purchase real-value coins in bulk.
Mainnet vs Testnet in Action
In order to obtain a better grasp of the differences between mainnet and testnet, let us take a look at Ethereum blockchain. Ethereum is an adjective, decentralized platform that facilitates smart contract functionality and allows for the creation of decentralized applications (dApps) to run securely without any control from intermediaries or third party.
Think of Bitcoin as a single app in your smartphone that is great in what it does, which is to facilitate value efficiently (digital cash). Ethereum on the other hand is like the app store, which enables anyone to conceive any kind of mobile applications and is downloaded and used by anyone. Blockchain platforms like Ethereum expand the functionality of blockchain technology, while Bitcoin is just a single representation of this revolutionary technology.
A mainnet and a testnet are two separate networks that operate independently from each other. Here’s an illustration from the context of Ethereum:
Ropsten is the most popular public testnet for Ethereum and is often used as a testing network for developers creating their own dApps on the Ethereum blockchain. Using Ropsten network, DApp developers can experiment on the functionalities on the dApp and also avoid using valuable ETH that is needed for deal fees and smart contract deployment. Once they’re confident that their dApps work and testing is complete, they can confidently deploy their dApp on the main Ethereum network!
What sets a mainnet and testnet apart are the following factors:
- Network ID: A network ID is just an identifier for a network, similar to your ID card that represents your identity. If a new node wants to join the actual Ethereum blockchain itself), they will need to join the mainnet which has a network ID of 1. If they’re keen on joining the testnet instead, they can join the Ropsten testnet which is identified using a network ID of 3.
- Genesis Block: This refers to the very before all else block in the blockchain, which represents the starting point. Since both the mainnet and tesnet are different networks, they have a different genesis block. However, the content of the genesis block is similar.
From time to time, projects would undergo changes to enhance the capabilities of the blockchain. This is akin to the software updates of your smartphones that has solved previous issues or bugs associated with the previous software versions. Although we mentioned early on that mainnets are the ‘end-product ‘, it may not be the ‘final merchandise ‘. The blockchain can undergo updates or revisions to a particular functionality, depending on the need of doing so by the developers and the greater community. In order to upgrade the blockchain, a hardfork is required. Here is a detailed guide that explains the complex concept of hard forks.
When a project is starting out, it will issue their tokens on other blockchains such as Ethereum or NEO to raise funds. Once they have developed their own blockchain, they will need to migrate the existing tokens issued on other blockchains to the project’s native blockchain (mainnet). This is common practice for new projects in the ICO phase.
This process is called a mainnet swap or a token swap, involving the exchange of one coin for another coin on a one-to-one ratio. The old coin that is issued on another blockchain is discarded and a new coin is issued on the new native blockchain that has been developed and launched by the project. Mainnet swaps usually occur in the following way:
- Registration & Auditing: Coin holders are expected to register their coin through the project’s developers, who will then accredit these coins through a supported digital wallet. At the scheduled mainnet swap date, the old tokens are burned while the new, official coins will replace the old coins in the equal wallet.
- Cryptocurrency Exchange Support: Once the announcement is made, coin holders are invited to keep their coins in the cryptocurrency exchange that supports the swapping process. At the scheduled swap date, the exchange will handle the auditing, accrediting and exchange of the older coin for the newer ones.
Effects of Mainnet on Price
The release of a project’s mainnet can cause tremendous excitement in the community, which could affect the coin’s cost. This could also contribute to an boost in volatility of the coin’s amounts during that period. Let’s take a look at several instances where a mainnet launch coincided with spikes in amounts.
Golem is a project that is focused on creating a decentralized marketplace for sharing computing power. They released their mainnet – called Brass – on April 2018. Here’s a look at how amounts reacted to the launch of the mainnet.
Golem announced on mid-February that their mainnet would be ready by the end of March to early April. The duration leading up to the mainnet launch saw GNT’s amounts consolidating with relatively low volatility, as indicated by a technical analysis indicator called the Relative Volatility Index (RVI) at the bottom of the chart. When Golem officially launched their mainnet on April 10, amounts started to soar tremendously, going from $0.20 to $0.60 within a span of 3 days. That’s a three-fold boost in amounts! We can also see that there is an boost in volatility after the mainnet launch, which means that there is an boost in risk during that period.
Tron is a blockchain platform focused on creating a decentralized entertainment ecosystem. It’s mainnet – called Odyssey 2.0 – was officially launched on June 1. Let’s see how it affected amounts:
The announcement for the release of Tron’s mainnet was made on April 9, which saw TRX’s amounts boost from $0.035 to $0.1 within 2 weeks. That’s a solid 3-fold boost in amounts. This pump in amounts is also caused by Tron’s announcement of distributing an airdrop of over $1.7 million on April 21, as a show of gratitude to their token holders. However, the hype generated by Tron was too great and led to a cost decline a month before the actual release of their mainnet. In fact, amounts continued to move downhill even after the official mainnet release, with no apparent fundamental comprehension that substantiates an boost or a decrease. We can imply that the hype around Tron’s mainnet was purely fuelled by sentiments.
A mainnet launch is one of the many factors that may affect the value of a cryptocurrency after all its launch represents a successful start by the developers in delivering the promises set in their project roadmap. From then on, the team is expected to drive the project development forward through continual enhancement and upgrading. Although a mainnet is an essential technical aspect to consider when investing in a project, it is not unusual for the absence of mainnets or testnets in cryptocurrency projects, especially if they’re starting out and are in the ICO stages. However, rigorous due diligence has to be done in order to assess the quality and viability of the project. From our examples in Golem and Tron, it is not substantive that mainnet launches have a positive or negative impact on amounts after all it is largely based on the context behind the projects.
All in All
Mainnets and testnets represent two fundamentally different networks that each represent a vital purpose for any project. A testnet is often used as a testing site for the development and continual enhancement of the mainnet, while the mainnet itself is the actual, functioning protocol that powers the blockchain network. It is important for any investor to evaluate a project based on the success of both their testnets and mainnets, after all they represent a good proxy for the technical development of the project’s vision.
Beneficial Resources To Get You Started
If you’re starting your journey into the complex world of cryptocurrencies, here’s a list of useful resources and guides that will obtain you on your way:
- Crypto Guide 101: Choosing The Best Cryptocurrency Exchange
- Guide to Bittrex Exchange: How to Trade on Bittrex
- Guide to Binance Exchange: How to Open Binance Account and What You Should Know
- Guide to Etherdelta Exchange: How to Trade on Etherdelta
- Cryptocurrency Trading: Understanding Cryptocurrency Trading Pairs & How it Works