Cointelegraph follows the development of a new blockchain, from inception to mainnet, and beyond. This series is called Inside the Blockchain Developer’s Mind. In previous parts, Andrew Levine of Koinos Group discussed some of the challenges the team has faced since identifying the key issues they intend to solve and outlined three of the “crises” that are holding back blockchain adoption: upgradeabilityscalability, and governance
Because they can be used in many different ways, blockchain testnets are fascinating. My goal in this article is to use my experience as CEO of Koinos Group, developers of Koinos, to help you understand testnets and give you some insight into their impact on prices.
The name testnet is the best place to begin. A testnet’s purpose is to test a network. There are two types of testnet at a high level. One is a testnet released before a mainnet (mainnet), while the other is a testnet released after a mainnet has been in operation. These functions are very similar but the context in the which they are released greatly impacts their perception and impact.
Because it is simpler, I will start with the second type of testnet. Testnets are used to test existing networks such as Bitcoin and Ethereum. They serve two main functions. They provide a live environment for developers to test their decentralized applications. Testnets are a way for developers to test their code in a similar environment to the main chain (e.g. Ethereum). Testnets allow developers to test their code in a controlled environment that is virtually risk-free (e.g. Ethereum). The testnet is expected to fail and the tokens will be useless.
Related: London Fork enters the Ethereum testnet as a difficulty bomb observes delay
Testnets allow decentralized app (DApp) developers the opportunity to increase their application’s value (i.e. make their apps more useful) because there is no expectation for full functionality or wealth creation. The value of a testnet is in part due to its lack of worthlessness.
DApp developers vs. blockchain developers
Testnets are a two-sided system. This brings us to the second function testnets serve. It is not for the DApp developer but the platform developer (in this case the blockchain developer). From my unique perspective, I was surprised at how often DApp developers get confused with blockchain developers. People who write smart contracts don’t usually become blockchain developers. Blockchain developers spend very little time writing smart contract.
Ironically, Koinos is causing a major problem with this distinction. Its entire system is built on smart contracts. The upgradeability of Koinos smart contract means that any feature can easily be added to the blockchain. However, it also means that people who are developing the blockchain, such as members of the Koinos Group, are using the same toolchain and toolkit developers will use to create their DApps. This feature is unique to Koinos so let’s not get into that.
Every other blockchain requires that the developers of the blockchain must develop updates in the programming language used to create the blockchain (C++ or Rust, Haskell). They are currently working on a complex system known as a “monolithic infrastructure” and must develop updates in the appropriate programming language (C++, Rust, Haskell, etc.). This increases the chance of making changes.
Developers of blockchain need to have a real environment where they can test their changes and find out what goes wrong. They want the environment to look as real as possible. This means they need their code to interact with other code.
There are two sides to testnets
This highlights the dual nature of testnets. Both platform developers and developers of applications can use them to communicate with each other and test their code in a safe environment. However, the stakes are very low. Both groups can improve their products and make them more useful to their users.
We can now see why testnets have such an effect on token prices. Price impact can be expected if we assume that price is a function value. Testnets are used to help developers increase their product’s value. This correlation has resulted in several unfavorable outcomes. For the sole purpose to increase their token price, projects will release “testnets” that have no utility to developers. Many people will assume that the testnet announcement is valuable and will therefore increase the price.
Before mainnet, testnets
I have been focusing on testnets’ utility in relation to existing blockchains. This is because they provide a safe environment for developers to test their apps and for developers to upgrade to the underlying platform. This will allow you to understand the context in which testnets can be released before the mainnet is released.
Although testing remains the main objective, the system is more important than ever because it is new and untested. It is still new so there won’t be any apps running on it. The situation is now more one-sided. Blockchain developers will make up the majority of those working on the codebase. The goal is to make the platform accessible to developers so they can actually use it.
Developers will first need to prove that the platform is sufficiently safe. This should be the primary directive behind any tests that are performed. Once developers have established that the platform is safe, they will need to be trained on how to use it. The testnet is a learning tool that allows developers to understand how the platform works and also helps to test its security.
As they test the network and learn how to use it they will undoubtedly find areas where the platform can be improved. They might need libraries or documentation to better understand the system. These valuable feedback is vital for platform developers to use in order to improve the platform before mainnet implementations are completed.
Computer networks are becoming a significant part of our daily lives, whether we realize it. The testnets are an essential step in the development of new, innovative computer networks that will add value to our lives. You will be better equipped to assess specific testnet releases and determine if they have been launched for the right reasons.
This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Andrew Levine, the CEO of Koinos Group is the former Steem development team member. They create blockchain-based solutions that empower individuals to take control and ownership over their digital lives. The Koinos Group’s foundational product, Koinos is a high-performance, blockchain-based solution. It was built on a new framework that allows developers to create and manage smart contracts on Koinos.