Blockchain FAQs - Handbook!
Akshat Tyagi
Research and Insights | Cybersecurity | Emerging Technology | AI | Blockchain | Quantum Computing | Metaverse | Ex. Gartner | Ex. EY | Ex. Wipro
In my opinion, we are still very early in the web3 and Blockchain ecosystem and to make it a mainstream technology I believe we need to make our basics very strong and clear. This newsletter can be an ultimate handbook for anyone who wants to address some of the top Blockchain and crypto FAQs.
WHAT THE FAQs? ??
What is a blockchain - A blockchain is a growing list of records, called "blocks" that are linked using cryptography (technique of securing information through the use of codes). It is a digital ledger that keeps the records of all the peer-to-peer transactions. The encrypted information can be shared across multiple providers with pseudonymous, thereby reducing the risk of a privacy breach.
What is NFT - NFT stands for Non-Fungible Tokens i.e., something that is one of its kind and also has some monetary value attached to it. Some of the examples of unique collectibles can be - artwork, ancient coins, or maybe some rear Pokemon cards.
What is Web3.0 - Web3.0 is the third generation of the world wide web. Some of the features are: Web with AI (artificial intelligence) infused which means it provides AI-enabled and machine-interpretable?metadata?of the already published data and has Decentralised Data Architecture i.e., every device is connected to the web, and the services can be used everywhere. Examples can be: Apple’s Siri and?Wolfram?Alpha.
What are the different types of blockchains - Some of the most common types are:
What are the building blocks of any Blockchain?
Who are the participants of the Blockchain - In Bitcoin and Ethereum, transactions take place between peers (P2P), identified through their public keys/ addresses, which are difficult to trace to real-world entities. Whereas, the main actors in the blockchain network are:
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How does Bitcoin work and What is Bitcoin mining - Firstly, each Bitcoin is a computer file, which is stored in a ‘digital wallet’ application, it can also be termed as a decentralized cryptocurrency that is powered by?blockchain. Secondly, Bitcoin mining is the process by which new bitcoins are entered into circulation.?Mining?is performed using hardware that solves extremely complex computational math problems. The first computer to find the solution to the problem is awarded the next block of Bitcoin and the process begins again.
What does a Bitcoin Blockchain’s Block contain? Who owns Bitcoin Blockchain? Bitcoin Blockchain is a publicly-owned blockchain and is open for anyone to transact, download, store, and mine. It works like a decentralized autonomous organization without an owner group. Any decisions regarding the up-gradation of the software etc, are uploaded in the form of suggestions in public portals like GitHub and voted upon by the community. Major proposals need to be adopted by over 95 % of votes for inclusion.
What is the difference between Bitcoin and Ethereum - Bitcoin is the first-ever cryptocurrency. It introduced the concept of a decentralized currency that can be exchanged peer-to-peer without the need for a central authority or other intermediaries. Whereas Ethereum is a decentralized, open-source blockchain with smart contract functionality. It allows users to create decentralized applications (dApps) on top of the Ethereum blockchain and issue their tokens. Ether is the token used to transact on the Ethereum blockchain.
What are Smart Contracts - At the most basic level, a?smart contract?is an on-chain agreement. They essentially execute assigned tasks when certain events occur - for example, as a part of EMI payment against a loan, the smart contract would send 1 ETH every month to the bank's wallet address. To make it simpler it works on a simple "Trigger and Execution" mechanism i.e., "IF" one month has passed (the trigger) "THEN" smart contract will send 1 ETH (the execution). Lastly, it can be said that smart contracts only follow one law i.e., "Law of Code", which means that if it is not in the code it won't happen.
What is the difference between Tokens and Coins - So to start with, a coin uses its blockchain to keep the track of all the data (Transactions, Dapps, etc.). Unlike coins, tokens do not have their blockchain. Instead, they operate on other crypto coins' blockchains, such as Ethereum. Some of the most commonly seen tokens on Ethereum include BAT, BNT, Tether, and stable coins like the?USDC. Additionally, another key difference is that the coin can be mined which means the crypto coins can be generated or can be created via various types of?consensus?mechanisms.
What Is Tokenomics - Tokenomics is understanding the supply and demand characteristics of cryptocurrency. It involves the complete framework explaining how the digital asset (coin or token) works i.e., from explaining how the mechanics of the asset would work to revealing the ICO (initial coin offerings) as well as the psychological or behavioral forces that could affect its value long term.
Soon I'll be addressing each of the above-mentioned topics separately and will dive deep into them.
I hope the information comes in handy for you all! ??