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When valuing a cryptocurrency project there are several factors to take into account, among them the technology used in the project. Other factors that determine the type of project may be the testnet and the mainnet. Maybe you don’t understand this last concept, but don’t worry, in this article we will tell you all about what mainnets are.
Every blockchain project has a mainnet. This is a blockchain that is responsible for the operation of the cryptocurrency, that is, for transferring the coins from the sender to the receiver. This concept is totally different from “testnet”, since the testnet is a copy of the mainnet where functionality tests are performed.
While a testnet is the prototype of the capabilities presented by a new project, the mainnet is the network that is available to all users on a fail-safe and error-proof basis. Mainnets can also change. This happens when a project team or a cryptocurrency open source community decides to update the project.
Why is the mainnet important?
The mainnet of a project is the proof that it is progressing in the technical sense. This network, even before it is launched, can tell us whether it will have a positive impact on the cryptocurrency or even a relatively negative impact on the value of the cryptocurrency.
For this reason many investors prefer to buy cryptocurrencies before the mainnet is launched, since once it is launched it can significantly influence the prices and these can increase. However, rarely does a project have a mainnet launched at the time of its ICO (Initial Cryptocurrency Offering), in fact, they may not have the testnet either. This is because teams often use the money raised in ICOs to create mainnets and testnets.
In short, the importance of a mainnet is based on its ability to prove or disprove the potential of a project from its inception to final implementation. However, this is not the only factor to take into account when getting involved in a project. These networks are constantly improving with new implementations or changes, so we should not rely solely on the success of their initial launch.
Bitcoin and Lightning Network
As mentioned before, mainnets can be changed or updated when a project changes. An example of this is the launch of Lightning Network on the Bitcoin mainnet. This launch occurred in March 2018 and was one of the most important in the history of cryptocurrencies.
This implementation is an off-blockchain solution that adds a second layer to the top of the blockchain, so to speak. This project is aimed at helping the rest of the cryptocurrencies to extend their boundaries, however, the largest and most important implementation is on the Bitcoin mainnet.
The launch of LN on the Bitcoin mainnet did not lead to an increase in BTC prices, as there is not always a direct correlation between innovation and prices. At the time, the market was in a down cycle and the context was critical in determining the price movement.
On the other hand, we can analyze the price movement during Golem’s Brass Mainnet source code release on April 10, 2018.
This code aims to offer a new Peer-to-Peer system that allows the sharing of computing power. The idea is that all those users who need additional computing power pay in GNT to the users who rent their additional computing power on the network.
After the launch the value of GNT increased considerably. We could believe that it is a clear relation to the Brass Mainnet launch, but we cannot say for sure. It may be that the price increased due to market conditions, as most cryptocurrencies increased in value in those months. Whether due to market conditions or the launch of the mainnet, it is clear that the mainnet contributes to a better functioning network.
I hope you have been able to understand what a Mainnet is and what functions it performs, and that you can complement it with the article on what a testnet is that we talked about weeks ago.