Kaspa: The Next Bitcoin?

Kaspa is maybe not the most well-known cryptocurrency, considering it has only been with us since November 2021, but it has slowly been building up its market capitalization and now sits as a top 100 project.

Kaspa claims to be the world’s fastest, fully open-source, decentralized, and scalable layer-1 blockchain in the world. But does it really live up to the hype?
What exactly is Kaspa, what does it do, how does it work, and what makes it unique? Today, we find out!

Kaspa comes from the Aramaic word for silver or money but also describes how Kaspa sees itself in the crypto landscape.
Kaspa is a layer-1 blockchain that aims to be the digital cash for a digital future. In short, Kaspa wants to be what Bitcoin was supposed to be.
When Satoshi Nakamoto first envisioned Bitcoin, he envisioned it would become the digital currency for a digital future. However, as Bitcoin developed it became clear it was being treated more like digital gold than digital cash.

This is partially due to Bitcoin being the first cryptocurrency, and getting anything perfect the first time asking is a challenge.
Bitcoin was ahead of its time, but its features are limited when compared to other blockchains that exist today.
The lack of smart contracts, or self-executing transactions, is a prominent example.
Kaspa aims to take the best of Bitcoin, plus some of the best blockchain features from other networks, to become the digital silver to Bitcoin’s digital gold.
Typically, Bitcoin is held and stored like gold, whereas Kaspa aims to become more like silver, which historically was used more for trading than gold due to gold being a lot rarer to find.

Unlike many recent crypto projects, Kaspa has chosen to become a Proof-of-Work blockchain, with miners being responsible for the creation of new KAS tokens.

To recap briefly, on a Proof-of-Work blockchain transactions are verified through a process called mining.

This process involves a network of computers, known as miners, competing to solve a complex mathematical puzzle that verifies a list of transactions and unlocks a reward.

Once a miner solves the puzzle, they broadcast their solution to the network. Other nodes in the network then verify the solution, ensuring its accuracy and authenticity before committing this block of transactions to the blockchain.
If the solution is verified, the block is added to the blockchain, and the miner is rewarded with a small amount of crypto for their efforts.

On top of this, Kaspa is also the world’s first blockDAG, a type of digital ledger that allows parallel blocks to coexist and provide near-instant transaction confirmation.

It also uses the GhostDAG consensus protocol, which is the consensus mechanism that organizes all of these parallel blocks.

It does this by ordering transactions into a linear stream which helps increase the processing speed of the network.
This allows the blockchain to quickly see if the users have enough funds required to make the transactions or if those funds have already been spent elsewhere, which massively reduces the block confirmation time.

Well, the block confirmation time is a large part of what makes Kaspa unique.
You see, Kaspa doesn’t talk about transactions per second, they are interested mostly in blocks per second.
For a transaction to be verified on a blockchain, the list of transactions that form each block of the chain must be verified.
As each block could contain thousands of transactions that will not complete until the block itself has been verified, getting the block verified quickly is of the highest priority when looking to achieve lightning-quick transactions per second.
In short, transactions per second is misleading if you cannot verify the blocks fast enough.
Practically speaking, another feature that makes Kaspa stand out is that the Kaspa blockchain doesn’t “orphan” blocks.

An orphan block is a block created in the time it takes for the correct following block to be delivered to all the nodes in the network and added to the blockchain.

Avoiding orphan blocks is usually the reason for a higher block creation time, as it avoids a higher orphan block rate as there has been enough time for all the nodes to receive and be updated with the correct data.
The higher the orphan block rate, the more opportunities exist for a double-spend attack where someone successfully spends their asset twice.

While good for the buyer, one of the sellers will eventually lose out. However, Kaspa instead runs these blocks in parallel, where they are time-stamped so they can be referenced correctly and recalled later.
This means if someone does double-spend their crypto, the transaction on the orphan block isn’t discarded but is still debited to the buyer’s account.
This is vital for the network, given that Kaspa aims to process 100 blocks per second at its peak.
For reference, Bitcoin produces one new block every 10 minutes to allow enough time for most orphan blocks to be avoided. But even then, there is still the occasional orphaned block from time to time.

Kaspa’s KAS token has a maximum supply of 28.7 billion coins, and a current circulating supply of 17.7 billion, with a release schedule that halves each year.

However, unlike Bitcoin which halves drastically when it does, Kaspa achieves a smooth monthly reduction lowering the supply gradually throughout the year.

Unlike Proof-of-Stake tokens which often have rounds of pre-sales, Kaspa held a fair launch release meaning there was no pre-mining and no KAS given away to early investors or adopters.
That means, if you wanted to get some KAS coins, you had to either mine them or buy them from someone who had mined them for you.

While new, Kaspa is promising. If Kaspa can continue its successful development, it is quite likely that the best days for the platform are still ahead of it.
For example, the upcoming smart contract rollout for the platform could be a game-changer as it will allow for all kinds of interesting dApps to be launched on the network.
This upgrade aims to bring the bridge between the best of Bitcoin and Ethereum a whole lot closer by providing a single blockchain with the benefits of both.