Blockchain and NFT technology are becoming more common as startups realize their potential to change existing industries and business models radically. But what exactly does it mean when someone says Blockchain? Or when someone talks about NFT? Let’s explore some of the questions you might have, so you can understand what the hype around Blockchain and NFT means. But first, let’s start with Blockchain
WHAT IS BLOCKCHAIN?
The Blockchain is a decentralized, open-source database. It can be used to store anything from digital assets like cryptocurrency, records of ownership or even votes. The Blockchain exists on multiple nodes (computers) across a network. Each node has an identical copy of a ledger, which records these transactions. They’re encrypted with cryptography and are visible to anyone who has access to that Blockchain.
EXAMPLES OF BLOCKCHAIN TECHNOLOGY USE CASES
Blockchain technology allows many data points to be stored in a single database, allowing companies to share information easily. One example of how blockchain technology might be used for this purpose is IBM, which announced its partnership with Maersk, a shipping giant, to explore implementing blockchain technology in their shipping operations. Through this project, IBM and Maersk will be able to share data regarding inventory control. This will allow them to avoid miscommunication and delays while simultaneously ensuring greater security. In addition, they’ll also be able to make more informed decisions about pricing, route planning, etc., since they’ll have access to complete information more than ever before. This represents just one example of how blockchain technology could potentially improve business processes—and there are plenty more where it came from!
WHAT MAKES BLOCKCHAIN DIFFERENT FROM OTHER TECHNOLOGIES
First, Blockchain is decentralized. No single computer or network administrator can control it. The information on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.
To top it all off, blockchains aren’t controlled by any entity. They operate on a system of trust. For a transaction to occur between two parties over a blockchain, both parties must agree (or consent) to the transaction. Once consent is given, every node on the network must agree with that transaction before it can be recorded onto a block and added to the chain.
6 BENEFITS OF USING BLOCKCHAIN TECHNOLOGY
The technology behind cryptocurrencies like Bitcoin has a wide range of uses. The most popular application of blockchain technology is using it as a payments system. However, there are many other ways to apply Blockchain, and these are only a few benefits of using blockchain technology
1. Its more secure than regular data storage: Each block in a blockchain contains its hash or unique fingerprint, and each block can be tracked individually. This makes tampering with data very difficult because any change would also need to be made on all subsequent blocks. This makes blockchains far more secure than standard data storage systems, where information can easily be changed by accessing just one central database.
2. Data is distributed rather than centralized: Blockchains distribute data across a network of computers rather than storing it in one place. This means that no single person or entity can gain control over your personal information, which lowers security risks considerably.
3. It creates permanent records: With traditional record-keeping methods, you must trust that whoever controls access to those records will keep them safe from tampering or deletion. In contrast, every transaction recorded on a blockchain is immutable; it cannot be altered once something has been written to a blockchain.
4. Smart contracts allow for greater automation: Smart contracts are self-executing agreements between two parties. Once certain conditions have been met (such as an agreed-upon date or time), specific actions automatically occur without human input. While traditional contracts require at least one party to perform manual tasks such as printing and mailing documents, smart contracts take care of everything electronically.
5. Faster transactions: One benefit of using cryptocurrencies is reduced payment processing times since they use decentralized networks instead of centralized banking institutions.
6. It eliminates third-party interference: Many people who use digital currencies do so because they want to avoid banks and government regulation. These people don’t want their financial activities monitored by anyone else.
NOW TO NFT
As blockchain technology grows, so makes its potential use cases list. But as innovative as it may be, some are still confused by the concept of non-fungible tokens (NFTs). This article will serve as a simple introduction to NFTs to better understand why they’re important and how they’ll continue to impact Blockchain in the future. Let’s get started!
The history of non-fungible tokens
Non-fungible tokens (NFTs) have been in development for several years now, but it wasn’t until last year that things started to pick up. One of 2017’s biggest crypto trends was bringing cryptocurrencies closer to real-world assets. Projects like CryptoKitties and Gods Unchained helped popularize NFTs by representing items like cats and swords on a blockchain. But what are non-fungible tokens?
WHAT ARE NON-FUNGIBLE TOKENS (NFT)?
A non-fungible token (NFT) is a special crypto token that can be independently owned and validated. NFTs are used by blockchain games such as CryptoKitties, and they’re different from Ethereum’s fungible tokens (ERC20), which are all identical and interchangeable. Because NFTs are 100% unique and cannot be divided into smaller units, they function differently than other cryptocurrencies.
Most cryptocurrencies are fungible tokens—meaning that each token is identical to another. Each unit of a bitcoin, for example, can be substituted for any other unit. But some projects create non-fungible tokens, which are distinguishable from other units of the same asset or currency. For example, you could have one token representing an ounce of gold and another representing an ounce of silver. NFTs might be used as collectables in games like CryptoKitties or as certificates showing ownership in real estate or art pieces.
Non-fungible tokens also have use cases in supply chain and digital identity management systems. You can even use them to represent unique virtual objects in video games. In short, there’s no limit to what you can do with them!
HOW DOES NFT WORK
While most cryptocurrencies are fungible, a non-fungible token (NFT) is unique in that its value cannot be exchanged for something of equal value. NFTs are distinguishable from one another, and their ownership can also be transferred individually, thus making them much more like conventional real estate or collectables.
This characteristic makes NFTs attractive for use in many different blockchain applications such as virtual property management systems, digital art registries, etc. The key features of an NFT include scarcity, uniqueness and immutability. Because they’re not interchangeable, they’re not subject to double-spending issues. And because they’re unique, it doesn’t matter if you lose your private keys—you won’t lose your tokens. You and no one else can only spend them. Another important feature is that NFTs are self-contained smart contracts on a specific blockchain—in other words, each token has its transaction history stored on its chain within the network. Each NFT should have its dedicated node on which it operates; otherwise, users could end up with multiple copies of each token if stored on shared nodes.
The 7 ways Blockchain relates to NFT
Distributed ledger technology, also known as blockchain technology, will revolutionize the world as we know it. It’s already changing how people manage their money and digital assets, so it’s important to understand how Blockchain relates to non-fungible tokens (NFT). In this article, we’ll give you an overview of blockchain basics to help you grasp the basic ideas of the revolutionary technology that powers crypto-tokens and make sense of how Blockchain relates to NFT tokens.
1) Decentralized database
Both centralized and decentralized databases exist in several varieties, and Blockchain is no exception. Like banks or other financial institutions, Blockchain eliminates middlemen by using a shared database. Instead of storing data on a server owned by one entity, it’s stored on all computers that have downloaded or received a copy of the database (usually as part of their core system). Since no single entity owns or controls access to any given entry in that database, there is no single point of failure. Hackers can’t corrupt every computer in existence at once. Additionally, because each user has an identical copy of the database, they can verify that they are accessing correct information without trusting anyone else.
2) Easier bookkeeping
A decentralized ledger system used for record-keeping means there’s no need for a third party or intermediary. This makes it easier to keep track of transactions, payments and transfers of digital goods. This can save businesses time and money in bookkeeping and auditing processes while creating a streamlined workflow. It also allows businesses to save a little cash by avoiding transaction fees from banks and payment processors. Although, some blockchains still charge transaction fees per transaction made through their systems.
3) Privacy and anonymity of transactions
Blockchain can be used as a ledger to store and transfer any information you’d like to prevent it from being copied or tampered with. This property of blockchains is why they’re often associated with cryptocurrencies like Bitcoin, but it’s certainly not their only use case. Many people are already leveraging blockchain technology for purposes outside of finance—to track supply chains, record votes, and even keep tabs on public figures. Some have gone so far as to say that the internet was built for sharing information; Blockchain was built for sharing value.
4) Transparency and immutability of transactions
Blockchain is a transparent and immutable ledger that records transactions on a distributed ledger. As such, players in an ecosystem can view all activity in real-time. While these properties are particularly valuable for public blockchains and public NFTs, they are also relevant for private blockchains. Blockchain makes it easy to track transactions between parties. Anyone with an internet connection can view most transactions on Ethereum’s public Blockchain.
5) Lack of single point of failure
The Blockchain is a distributed ledger that operates on multiple nodes and has no single point of failure. It’s practically impossible for an attacker to manipulate all copies at once, even if one copy is compromised, so there is little worry that your data will be lost or corrupted due to negligence on behalf of a single entity. No central authority: In general, blockchains rely on decentralized networks where any computer can join and leave at will. This means there is no need for a central authority to verify transactions. When it comes to non-fungible tokens (NFTs), you don’t have to trust anyone but yourself when verifying ownership of an asset—and as long as you maintain control over your private keys, you have complete control over what happens with those assets.
6) Transparency encourages fair business practices
With a public ledger that is immutable and distributed across multiple servers, businesses can be assured that their data will not be compromised or manipulated. Since all transactions on a blockchain are completely transparent, no one can tamper with data or figures, nor can they engage in unfair practices such as price-fixing. The transparency and security offered by a decentralized system encourage fair business practices. Businesses can build customer trust by guaranteeing transaction transparency, leading to increased revenues and greater profits.
7) Natural monopoly mitigated by large network effects
One company can produce a product more efficiently than smaller companies in a natural monopoly. But in a true blockchain-based digital ledger, every node on a large network benefits from being part of that ledger; it’s not just producing efficiency but also security and immutability. In other words, while one company may be able to produce cheaper or better records on their system, they would not be able to do so with any greater trust or transparency if they kept that information separate. If you want your record-keeping to have value, you need everyone else to use it. This is why we see projects like Ethereum working towards sharding – breaking up its Blockchain into pieces – because only then will its platform become truly useful for everyone (as opposed to simply those who are willing to pay high transaction fees).
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