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You’ve probably heard the terms blockchain, NFTs, and cryptocurrencies by now. These terms are becoming more common each day, so you may have a vague understanding of what they are. Become.
Let’s break down these terms so you can impress everyone with your blockchain knowledge the next time you have a casual dinner party chat. What exactly is blockchain? And is it as revolutionary as some people say?
Think of a blockchain as a kind of shared database containing a series of blocks that store records of transactions. As the name suggests, these blocks are chained. They are ledgers of transactions. Additionally, this technology ensures that transactions are accurate, immutable, and transparent (each of these aspects will be discussed later).
For example, take Bitcoin, the most popular cryptocurrency. When bitcoins are exchanged, those transactions are recorded in a chain of blocksa blockchain. What makes Bitcoin and other cryptocurrencies so interesting is the underlying (blockchain) technology that makes exchanges and records work as they are. Blockchain technology is not cryptocurrency. Technology is the underlying technology of cryptography. The two words (cryptocurrency and blockchain) are not interchangeable. Blockchain technology can be used for much more than just cryptography.
This is the type of blockchain that we hear the most about. For example, Bitcoin is built on a public, open-source ledger, the blockchain. The identities of participants are protected, but the ledger is open to the public.
A private blockchain is a closed ledger that can only be accessed by specific people, such as members of an organization. Private blockchains can be an excellent option for private organizations that want to use this technology for internal purposes.
These are also known as federated blockchains. They have the capabilities of both public and private blockchain technology. Although they have not been released to the public, they still have some characteristics of public open source blockchains.
Hybrid blockchains, as the name suggests, are a combination of public and private blockchains, but unlike consortium blockchains, hybrid blockchains lack full transparency and no incentive to participate in verification.
The easiest way to explain why blockchain will change the game is with a bank comparison. Most people understand how bank exchanges work, which makes banks a perfect reference point for grasping blockchain technology.
Imagine banking without bank charges and delays. Blockchain is decentralized, so there are no middlemen.no centrosome like a bank Regulation of transactions, allocation of bank charges, setting of time delays. Instead of one central server and authority, blockchain works in a peer-to-peer network. A network of distributed nodes (stakeholders and their devices). These nodes maintain a consensus record.
Decentralized trust. The same rules for transactions above are what we call the trust system. That’s how banking works. When transacting through the banking system, the people involved in the exchange with the bank (including those who work there) are the “trust agents.” In contrast, when transactions occur on a blockchain, trust is in the technology and its underlying verification process.
Records cannot be changed. This property is known as immutability. Bank transactions are reversible and adjustable after the fact. This is not the case for blockchain transactions. Once a transaction has been validated and recorded on the chain, subsequent blocks are built to form an immutable record. This verification process reduces errors and fraud.
TransparencyNot only is data on the blockchain immutable, but transactions are also visible to network participants.
In summary, transfers of assets on the blockchain are permanent, fast, verified, and direct between buyers and sellers.
As mentioned earlier, blockchain technology allows the exchange of different types of assets. Blockchain allows assets to be converted into tokens, fungible tokens or non-fungible tokens.
Fungible tokens are fungible. One can be exchanged for another. Think traditional currency. One peso can be exchanged for another peso. One peso is less unique than another. They both represent the same amount of value. In contrast, non-fungible tokens (NFTs) are unique and not interchangeable. Think of a Picasso painting. You can’t trade Picasso for Van Gogh. No two values are exactly the same.
NFT stands for property ownership, proof of authenticity. They represent ownership of something of value. For example, someone buys his NFT digital painting. Ownership of digital art is represented via tokens. Ownership is transferred when that token is sold or transferred.
Assets such as artwork, music, game tokens, and real estate are being exchanged on the NFT Marketplace. Also, since NFTs are built on blockchain technology, they can take advantage of the technology’s superior properties. Immutability, decentralization, transparency, permissionless access and exchange.
There is still a long way to go before blockchain technology becomes mainstream. However, what we have seen so far shows how NFTs and blockchain technology can impact and disrupt multiple industries. The way we do business, exchange money, store and exchange ownership of assets can all be fundamentally transformed by this technology. No one knows exactly how things will develop. But what we do know is that we’re seeing big changes, and there’s more to come.
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*All investment/financial opinions expressed by NFT Plaza are based on the personal research and experience of the site moderators and are intended for educational material only. , the product should be thoroughly investigated.
Writer and author who likes to simplify the topic of blockchain technology.
