Fantom is a decentralized, open-source smart contract platform that supports decentralized applications (dApps) and digital assets. It’s one of many blockchain networks built as a faster, more efficient alternative to Ethereum, thanks to its powerful proof-of-stake consensus mechanism.
Ethereum was the first crypto to power smart contracts, but Fantom coin is nipping at its heels in terms of scalability. This guide explains how Fantom and FTM coin work, why Fantom is poised to compete with Ethereum in the DeFi space, and how Fantom may help fuel the digital infrastructure of tomorrow’s smart cities.
How Does Fantom (FTM) Work?
Like many other crypto platforms, Fantom describes itself as a decentralized, permissionless, open-source smart contract platform — meaning that Fantom and Fantom crypto exist on a programmable blockchain that supports a wide range of DeFi assets. The difference, though, lies with Fantom’s architecture and consensus mechanism which, proponents say, is positioned to solve the crypto “trilemma” of scalability, security, and decentralization
How Fantom Operates
Fantom’s mainnet is called Opera (like many forms of crypto, Fantom also enjoys a bit of wordplay). Opera is compatible with the Ethereum Virtual Machine (EVM), meaning that dApps can be imported from one platform to the other.
Fantom employs a directed acyclic graph (DAG) algorithm for each node. This enables nodes to confirm transactions independently. Confirmed batches are then compiled into finalized blocks to be confirmed on the wider Fantom network.
In addition, Fantom’s so-called Lachesis consensus mechanism is a proof-of-stake protocol that uses an asynchronous Byzantine Fault Tolerant (aBFT) system. That means the network is leaderless, and data can be processed asynchronously, which speeds transactions. In fact, transactions can be finalized in a few seconds — or with “near finality” as some say — unlike the time-consuming process involved in proof-of-work (PoW) systems like Bitcoin and Ethereum. This makes Fantom not only faster but more scalable.
The architecture has three distinct layers: the core layer for consensus across nodes in the Lachesis protocol, the Middleware Layer to execute functions, such as issuing rewards and payments, and an Application Layer that hosts the APIs.
Flexible and Adaptable
Fantom is compatible with Ethereum. Because of its versatility, developers can update existing Ethereum dApps using Fantom architecture for cheaper and better performance. Because all dApps use the same infrastructure, bottlenecks often slow processing, but Fantom is unaffected by congestion because each application has its own blockchain. These blockchains, although independent, can interact with one another to form a “network of networks.”
According to the Fantom Foundation, FTM crypto is so scalable it has the potential to become “the IoT infrastructure backbone” for smart cities and their public utilities. But Fantom has pivoted from this IoT focus to concentrate more on its DeFi offerings.
Advantages and Disadvantages of Fantom (FTM)
What are the pros and cons of this compelling crypto network? Let’s have a look.
Fantom’s capabilities are impressive, offering thousands of transactions per second, 1 to 2-second finality, and fees that are a fraction of a cent.
Unlike other small cryptocurrencies, Fantom is easy to buy on popular exchanges and can be traded on the decentralized exchanges Uniswap and Sushiswap. These exchanges have lower fees, and there are no know-your-customer (KYC) requirements (regulations that require platforms to authenticate the identity of traders).
Rather than incentivizing users through liquidity pools, Fantom offers rewards to builders, not just users, which may be a more sustainable method for building liquidity on the platform.
Fantom is open-source, so anyone can run a node, but operating a validator node requires at least 3,125,000 FTM staked. Coming up with that much money — millions of USD as of March 2022 — is a high bar (unless you’re a so-called whale). It’s also tied to the fact that Fantom lacks a large number of validators. This over-centralization on the platform has raised security concerns.
The challenges for Fantom are competition from market entrants such as Cardano (ADA) and Solana (SOL), two other platforms that also offer near-instantaneous transactions. Also, the anticipated upgrade to Ethereum 2.0, with its new PoS ecosystem, also promises to have faster transaction speeds and lower fees.
Lastly, Fantom’s use cases for the IoT industry and smart cities are, so far, limited because they are still nascent concepts.
• Solid capabilities: fast transaction speeds, near instant finality, ultra low fees.
• Very expensive to join and run a node, resulting in more centralization, which can compromise security.
• Despite its smaller size, FTM crypto is available on many exchanges.
• Competitors are emerging (Cardano, Solana, Ethereum 2.0).
• Fantom offers a unique incentive system aimed at builders rather than users.
• Internet of Things (IoT) use cases for Fantom are, so far, limited.
Who Created Fantom (FTM)?
Dr. Ahn Byung Ik, a South Korean scientist, was the creator and CEO of Fantom. In 2018, the technology was a concept then launched by Ahn Byung Ik and Matthew Hur to address the difficulties in scaling that were hampering existing blockchains.
Ahn Byung Ik has since left Fantom, and the platform is now run by CEO Michael Krong, DeFi architect Andre Cronje, who may have led Fantom to its current focus on DeFi assets.
Why Does Fantom (FTM) Have Value?
Fantom stands out from its competitors because it is one of the first DAG-based smart contracts and DApps products. DAGs process data in such a way to help networks achieve greater scalability and faster transaction speeds.
Fantom has already made an impression by facilitating digital payments, authenticating identities, and automating medical and legal records on a global scale.
Price of Fantom (FTM)
As of March 4, 2022, FTM crypto was the world’s 32nd biggest cryptocurrency with a price of $1.80 and a market cap of $4.38 billion. The circulating supply of FTM is 2.55 billion against a maximum supply of 3.175 billion coins.
The price has risen more than 19,500% since its launch in December 2019. Like any crypto, however, its prices are highly volatile.
Why Use Fantom (FTM)?
What is the value of FTM crypto to investors? FTM is unique because it is compatible with Ethereum, and it is scalable, which means it can be used at the industry level. Smart contracts written in Ethereum’s language (Solidity) can be deployed faster, more cheaply, and securely on Fantom.
The circulating supply of Fantom crypto is 2.5 billion, and if the market value of Fantom multiplies, it could become one of the biggest cryptocurrencies by market cap and volume, particularly if it continues its advances in the DeFi space.
Fantom’s native FTM crypto powers the entire Fantom ecosystem. FTM tokens are versatile, being used for staking, governance, payments, and fees on the network. FTM is also available as an ERC-20 token in the Ethereum ecosystem, and a BEP-2 token in the Binance ecosystem.
How Can I Buy Fantom (FTM)?
Those who already have accounts on apps or exchanges that list FTM can place a buy order. Otherwise, the following steps are required. Also, be sure to review how crypto exchanges work, as well as any fees that may apply.
Step 1: Set up a crypto account.
Choose an exchange that trades FTM, and open an account. You can fund the account with a secure wire transfer, or even with a credit or debit card transfer (check with your bank in the case of restrictions). Fees may apply.
Step 2: Connect a crypto wallet.
Just as you might keep money in a physical wallet, cryptocurrencies are held in digital “wallets.” Be sure to set up a crypto wallet that supports FTM coin.
Note that some crypto exchange accounts come with a custodial wallet, and there may be restrictions in terms of moving your crypto off-platform.
Step 3. Trade FTM.
Place a buy order and start trading FTM!
Depending on where you buy or sell your crypto, different trading platforms may require different forms of ID. Some exchanges require you to set up an account that adheres to Know Your Customer (KYC) rules, a set of standards in the finance sector that requires investors to disclose certain information. Others may allow anonymous or P2P transactions.
How to Sell Fantom (FTM)
Once you’ve decided to sell FTM, the next step is deciding whether you plan to cash out for a fiat currency like U.S. dollars (USD) or trade another type of crypto.
Step 1. Set up your trade.
Select your trading pair (e.g. FTM/ETH). If you’re exchanging FTM for USD, the steps may be different than if you’re buying another form of crypto.
Step 2. Find the best price.
Crypto prices fluctuate by the minute, so do your research beforehand so you know a good offer when you see one.
Step 3. Make the trade.
Complete the trade and move your crypto (or cash) to your wallet, unless you plan to keep trading on the exchange.
Step 4. Keep taxes in mind.
Remember that gains from cryptocurrency are subject to taxes
. Be sure to consider the tax implications of selling FTM coin, and consult a professional as needed.
Does Fantom (FTM) Have Staking?
Users can stake FTM coin and be rewarded with FTM tokens. Users can stake directly from their phone or PC, and they need a minimum amount of 1 FTM to stake.
Recommended: What Is Staking Crypto?
Fantom has established a reputation as a viable crypto and is one of the cryptos applied to smart contracts. Fantom’s aBFT consensus proof-of-stake (PoS) infrastructure ensures security while maximizing speed, so transactions occur in a second and with little or no congestion.
As long as competitor cryptos do not eclipse Fantom’s market position, Fantom could continue to gain traction in the DeFi space. FTM coin is versatile and is compatible with Ethereum, making it a popular investment for crypto coin speculators.
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