With the rise of cryptocurrency and NFTs, the prominence of the blockchain has become more apparent than ever. It’s the subject of both controversy and praise in the media at a moment’s notice and is the reason why you can find millionaire teenagers standing next to a wall of servers in the headlines. What exactly is blockchain? How is it connected to the world of cryptocurrencies? What does the blockchain have to do with NFTs? Most importantly, how can you use the blockchain’s features to improve your life in the ever-increasing digital world?
The Blockchain explained
Blockchain explanations can be found all over the internet, but rarely without a handful of niche terms that overcomplicate what is actually going on. To put it simply, a blockchain is a special database that contains information (most likely transactional information) that can only be written to and can’t be manipulated or deleted. This makes the database act like a list containing all the information in chronological order and ensures the information’s integrity and authenticity. To make things even better, the database is really a distributed database; a distributed database stores the information in multiple different servers in separate physical locations. The distribution of the data helps make sure that this list is more available and redundant than any centralized database ever could be.
The most common applications for the blockchain are tied to the advent of cryptocurrency and non-fungible tokens (NFTs). Bitcoin has turned into a household word thanks to its recent increase in value. These mainstream blockchains are so large that they use an added consensus mechanism to authenticate the data. A consensus mechanism means that all the available nodes must approve the added data for it to be added to the blockchain and make a transaction. This added level of authentication means that all of the nodes involved in the blockchain will be using the same data and helps to further secure the validity of the transactional data on the blockchain.
What’s all of this security for?
Blockchain’s decentralization paired with its consensus-based validation process makes it a very reliable technology for storing and processing data. You can find several different websites & companies that are selling & trading cryptocurrencies. Companies like crypto.com, coinbase.com, and binance.com utilize the blockchain with the purpose of making sure that average people can get into the world of crypto currency. Additionally you don’t even need to keep you crypto currency wallet connected to the internet. With a little bit of technical know-how, you can keep your crypto currency on a physical storage device that’s with you, thus making sure that your money is only accessible by you even if someone else had your login credentials.
Blockchain technology has rose to prominence in other ways too, though. Another one of its famous implementations is the technology’s use to create and trade non-fungible tokens (NFTs). When people think of NFTs they usually think of digital art or photographs, but they don’t need to be. Once of the most famous sales of an NFT is the founder of twitter, Jack Dorsey’s first tweet selling for nearly three million dollars. This wasn’t a jpeg of some cartoon or even a unique photographer selling their only copy of a photograph, it was a tweet! Using blockchain technology someone was able to buy and now owns a special piece of social media’s history.
The consensus mechanism built into blockchain technology allows for very effective authentication methods to make sure that the NFT you bought isn’t duplicated or otherwise inauthentic, meaning real value for NFTs can be established.
How can you get involved in the blockchain
Besides buying & trading crypto currencies as if they were stocks, you might be wondering how you can get involved in the blockchain & really put it to use in your everyday life. Here are a few ways you can start.
Cryptocurrencies offer something in addition to security: speed.With just a few clicks you can have your money converted into crypto currency that is kept secure on the blockchain and then use that crypto currency to effectively move your money to somewhere or someone else as you please. The speed that you can do this with is monumentally faster than a bank can provide. Now you can send and control your money with out waiting through processing times or filling out forms to formally authenticate what you wish to do with your money.
Smart contracts are another useful possibility afforded to you through blockchain technology. These are automatic contracts that exist on the Ethereum blockchain and can process transactions autonomously when the criteria in the contract are met. Smart contracts can help you automate transactions that would normally be done manually by a human, thus saving you time and potentially money.
It may seem confusing & unwieldy at first, but understanding what the blockchain is & what applications it can have in your life can change how you interact with the world. In 2022 this new technology is affecting countries, global markets, business, and in a few ways eve you. Learning how it’s affecting you and how you can use it to your advantage may even change your life and help you better use the ever-growing digital world.