*obligatory not financial advice*
What is Mina?
The Mina Protocol is a smart contract blockchain that was designed to overcome a problem that all cryptocurrencies are facing in the long term, their ever growing blockchain. To process transactions of a cryptocurrency, the miners and staking pools need to store its entire blockchain somewhere. This is a problem because they keep growing as more transactions and blocks are added. The Bitcoin blockchain for example has currently a size of more than 350 GB and with each new block it grows 1 MB. Eventually no normal computer could store all that data alone and miners of any cryptocurrency will depend on pools and cloud services. Once we reach such a level of centralization there will be no point in even using cryptocurrencies. Mina solves this issue and has a unique blockchain that is always 22 KB big thanks to zero-knowledge technology.
As almost all blockchains are constantly growing they will eventually face some serious problems in the long run, but Mina will not. Mina is sustainable and could get a lot of attention in the next few years.
How does Mina work?
The Mina Protocol is very difficult to understand and even more difficult to explain, but I will try!
Mina keeps its blockchain at a constant size with the help of Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge (zk-SNARKs), which are a cryptographic proof that allows someone to authenticate information without revealing said information. Basically, instead of keeping the entire blockchain as proof of past blocks, the network participants need only a proof of the proof.
If you buy a house and want to show it to your aunt in another country you could either lift the entire house out of the ground and carry it to her, or the better option, you just make a photo and show her that. Bitcoin and Ethereum are carrying the entire house around while Mina carries only a photo. If you have multiple transactions, or in this example a house and a car you want to show someone, then Mina would make a photo of the house and a photo of the car, then it would make a photo of both photos so that is only has to carry one photo. Its actually even more complex because Mina doesn't actually reveal any information like a photo would.
These photos of photos are the zk-SNARKS. They are created by SNARKERS who sell them in exchange for a fee to blockproducers who need them to build the next block and replace the blockchain with a new version. This entire process takes its time and transactions on the Mina protocol need about the same time to be finalized as transactions with Bitcoin, which is very slow. The developers are currently aiming to find a solution to make it faster.
The zk-SNARKS can also be used to reveal information without actually revealing any information. For example you could share your credit score with a DeFi protocol on Mina without revealing your identity, this could be a new milestone for DeFi in general. It could also become possible with them to log into a website using your email address, without actually giving them your email address, you just give them the proof of a proof of your address. You can see that the project is quite bizarre and difficult to understand but there could soon be an entirely new kind of DApps that build on Mina.
Mina is a proof of stake blockchain and it uses a similar Ouroboros system that Cardano is also using. Mina holders can delegate their coins to a blockproducer to earn a part of the rewards.
The MINA Coin
MINA is the native cryptocurrency of the Mina Protocol. It is used for staking, paying network fees and will soon be used for governance in the network. It started with a supply of 1 billion coins and it has no max supply, there is currently a yearly inflation of 12% but this will drop to 7% in 2 years. The yearly inflation can be changed by a community vote. The inflation is very high, but you can stake your MINA for a 12% APY. So, if you stake your funds they are not losing any value.
Obviously, the value of the coin depends on how many people use it and how many DApps run on it. As it enables unique features and is more sustainable than many other blockchains in the long run it will likely grow in importance in the future.
MINA has a very low market cap, it really is a moonshot. This makes it riskier to invest in than for example Ethereum, but the growth potential is very high. One thing that could make its price higher is a listing on Coinbase, which hasn't listed it yet but will very likely because they invested into the project. Vitalik Buterin, the founder of Ethereum, is also a fan of Mina and the Ethereum Foundation and the Mina Foundation are working on a bridge between the blockchains to make it possible to use Mina's tech on Ethereum. That would make it possible to take out an under-collateralized loan on Ethereum by providing a zk-SNARK of your credit score.
On the other hand, Mina is very slow because creating zk-SNARKS takes its time. One even bigger problem is the security. The founders claim that the past state of the blockchain is unnecessary information but despite that they actually safe the entire blockchain history on archive nodes, in case an application needs historical data or in case the protocol needs to be reconstructed. If Mina is facing any big problem it would need to reference the archive nodes to get the blockchain running again. Many of the archive nodes store the entire blockchain history on Google Cloud, so even the decentralization of the network is questionable.
Nonetheless, Mina is ground-breaking and will enable many new useful features for DApps. The network speed and the importance of the archive nodes will hopefully change in the near future. I don't think that MINA will grow much for the remainder of this bull cycle but it should definitely be on your watch list for the next one.
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