Demystifying testnets and their impact on prices


Testnets are the most obvious place to start with blockchain and cryptocurrency. The main purpose of these networks is to test a network. Notably, there are two flavors of these testnets. First, a testnet is released before the mainnet and the second one is released after a mainnet launch. Both the test networks serve a similar purpose but with different contexts. While talking about these networks, we can consider some existing networks like Bitcoin and Ether whose test networks serve two main functions. These networks are live environments in which developers can test their decentralized applications (dApps), whether the codes are perfect. 

Blockchain and dApps devs both needs testnets

Surprisingly, dApps developers are always conflated with blockchain or the main platform developers. It is noted that devs writing smart contracts are never developing the platform and vice versa. If any smart contract is upgradeable, it means any feature can be added to the blockchain network that too without any hard fork. 

But on such networks, devs working on the blockchain are using and developing the very same toolchain and toolkit that the devs will use to create their dApps. However, this is a feature that is In every other blockchain, the devs have to bring updates in whatever programming language the chain is written in, and they are developing on a very large and complicated system called a “monolithic architecture.” Within such architectures, altering any part of the system can influence any other part of the system, so the risk of making modifications is that much higher.

Blockchain devs also need a live environment with low chances where they can test out their alterations and see what ruptures. Like application devs, they want this environment to be as intimate to the real network as possible, which means that they want their code to interact with code that application developers will be running as well.

Test networks have two sides

The aforementioned utility of the testnets reveals the two-sided aspect of the network. Such networks enable both the devs of applications and the devs of platforms to interact with one another and safely test their code in as close to a live environment as possible, with very low risk. Ultimately, the measure enables both groups to refine their products and make them more practical to their users.

Why do test networks impact token price?

Implying the price is a function of value and testnets are something that helps devs to increase the value of their outputs, then price collision is anticipated. The dilemma is that this correlation has overseen several icky outcomes. Indeed, projects will frequently acquire a “testnet” that has no utility to devs for the sole motive of aiding their token price. Unfortunately, many folks will see the testnet announcement and just infer that something valuable has been acquitted, and so the act will have the desired influence on the price.

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