What Is Blockchain? | Fracas Digital NFT
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Definition of a blockchain

A blockchain is a record of transactions of digital assets across all computer system networks. Each block in a blockchain consists of several online transactions, with any new recorded transactions being automatically distributed throughout the entire network of computer systems. Blockchains are most famously known for their significance within cryptocurrencies and are mostly decentralised.

Decentralisation

Decentralisation is fundamental to blockchain technology. With decentralisation, no one has the ability to control the data. This means that no transactions can therefore be overridden and the system can be at its strongest. Decentralisation builds trust that data cannot be modified, and is verified and virtually impossible for it to be hacked or tampered with.

Distributed ledger technology

A blockchain is a type of Distributed Ledger Technology (DLT) which in other words is a database managed by several participants. Blockchains in particular are a DLT where transaction data is recorded with the use of a cryptographic sign known as a hash. This means that if there were any suspicious activities with any block, it would be evident immediately that someone is trying to violate them.

It is a secure system that stores information in a way that makes it almost impossible to hack into and exploit. All records are encrypted individually, meaning that if a hacker wanted to hack into a blockchain system, they would have to work on all blocks in the blockchain across all versions distributed.

Types of Blockchain

There are many examples of secure blockchains such as the well-known cryptocurrencies Bitcoin blockchain and Ethereum blockchain which are continuously rising with blocks being added to their chain, and this has a significant impact on the security.

There are different types of blockchains in general. This includes private blockchains, public blockchains, and hybrid blockchains. The main types of blockchain will be explained further below.

Private Blockchain

Private blockchains, also known as managed blockchains are not necessarily decentralised, as the general public does not have access to them. Private blockchains require permission to be able to access them and are controlled by the organization of the blockchain itself. An example of private blockchain networks would be a business-to-business digital currency such as currencies like Ripple. The most common private blockchains include Ripple and Hyperledger

Advantages of private blockchain networks

One of the main advantages of a private blockchain is speed. As private blockchains have fewer participants, it takes less time for the network to reach a consensus, meaning that more transactions can be recorded in less time. Private blockchains are able to process and record thousands of transactions per second and when comparing this to public blockchains such as Bitcoin, this is a lot faster.

Another advantage is that private blockchains are a lot more scalable. Because it is centralized, the decision-making process is a lot faster and as only a few nodes are responsible for managing data, the network can process a lot more transactions.

Disadvantages of private blockchain networks

However, there are also drawbacks to private blockchains. The fact that they are not decentralized, is one of the biggest disadvantages. Blockchain was initially introduced to avoid centralization but because of its private network, private blockchains automatically become centralized.

Another disadvantage would be trust. As the validity of records cannot be independently verified by all participants, there is less trust around public blockchains, therefore fewer people find these secure.

This being said, security is in fact another issue with private blockchains. As there are fewer nodes, it becomes a lot easier for hackers to gain control of the network using malicious methods. This means private blockchains are at more of a risk of being hacked into.

Public Blockchain

Public blockchain networks allow anyone to join and no one needs any sort of permission before becoming a member. These are completely decentralised and allow all nodes to have equal rights in regard to accessing the blockchain. Currently, public blockchains are mainly used to buy and sell cryptocurrency as well as mining. There are many well-known examples of such blockchains such as Bitcoin network, Ethereum network, and many more.

Advantages of public

One of the biggest advantages of using a public blockchain is that there is no issue of trust. Everything has to be recorded in public blockchains and therefore cannot be changed. This means that everyone is encouraged to do what is right for the benefit of the network.

Another main advantage of these is security. It is said that the more decentralised and active a blockchain is, the more secure it will be. With there being many people working on the network, it is almost impossible for any type of attack to occur. It is extremely unlikely for any hackers to gain control or tamper with anything.

In addition to the above, another advantage is transparency. All data that is related to transactions are open to the public for them to verify. Transparency in blockchains increases their overall use.

Disadvantages of public

One of the biggest problems with public blockchain is speed. An example would be Bitcoin which is extremely slow and only able to process seven transactions per second which is a major let down compared to others such as Visa, which can manage 24,000 transactions per second. The reason for them being so slow-paced is due to the amount of time it takes to process each block.

Another issue would be energy consumption. Most algorithms rely on proof-of-work which results in using a lot of electricity in order to function. There are however other algorithms such as proof-of-stake, which use much less electricity that they could consider using instead.

Private and Public blockchains colliding

Before discussing the final type of blockchain, there will be a small overview of public and private blockchains, showing how similar and different they can be from one another. Both private and public blockchains are similar in many ways.

Similarities

Firstly, both blockchains can add records but cannot be changed or deleted, meaning they’re unalterable. In order to verify the validity of any records, the majority have to agree on the validity, meaning they aren’t able to tamper with anything and this actually makes it a lot more secure.

Differences

Although they have their similarities, public and private blockchains also have differences. The main difference is the amount of access that participants are given. Considering the principle of decentralisation and to practice it in its fullest extent, public blockchains are completely open and anyone can take part by adding and contributing in the verification of data. The most common and well known examples of public blockchains are Bitcoin and Ethereum. Both of these types of cryptocurrencies have been created with open source computing codes, which can be in use and looked at by anyone.

In opposition, a private blockchain only allows specific individuals to take part in a closed network. Participants are given certain rights as well as restrictions in the network, meaning some can have as much as full access, whereas others would have limited access of the network. This being said, private blockchains are more centralised in nature as not many are in control.

In addition to the above, another point to take into account would be that public blockchains also allow anonymity to a certain extent whereas private blockchains do not. An example of this would be that anyone can buy and sell a cryptocurrency such as Bitcoin without showing their identity, as it allows the equal treatment of everyone. On the other hand, in private blockchains, participants have to show their identity. This is mainly because private blockchains are used in business-to-business situations where it is essential to show ones identity.

Hybrid Blockchain

A hybrid blockchain is a unique type of blockchain technology that combines elements of both public and private blockchains or tries to use the best parts of both blockchains.

Transactions and any records in a hybrid blockchain are made private, however, can be verified when required. This in other words would mean that access can be given through a smart contract. Private data will be kept inside the network, but can still be verified publicly. The difference it has from private blockchains is that, although a private body might own the hybrid blockchain, they do not have the ability to change transactions.

A new user joining a hybrid blockchain has complete access to the network. Their identity is protected from other users until they take part in any sort of transaction. By making a transaction, their identity is shown to other users.

Advantages of hybrid blockchain networks

Hybrid blockchains can prove to be beneficial in many aspects. To start with, a hybrid blockchain protects privacy whilst enabling communication with third parties. Hackers cannot attack even after having 51% to tamper with the network. The reason for this is that hybrid blockchains operate within a closed ecosystem.

Transactions taking place in a hybrid blockchain are cheaper and quicker, along with there being more scalability than a public blockchain network would have. Transactions prove to be cheaper due to there being fewer nodes to verify them in hybrid blockchains.

Hybrid blockchain participants have the ability to choose the participants or decide whether each transaction should be made public. This being the case, guarantees that businesses can use these blockchains in a professional manner.

Although hybrid blockchains have their private side, they still have reliability, security, and transparency whilst being subject to being fully customised.

Hybrid blockchains have been used in global finance and trade, banking, supply chains, within governments, and in many other ways.

Disadvantages of hybrid blockchain networks

It is harder for individuals to implement hybrid blockchains efficiently.

Although public blockchains are more affordable and public, the result from using hybrid blockchains make it worth the money with the results they give.

Cryptocurrency Blockchain

The first decentralised blockchain was bought in theory by Satoshi Nakamoto in 2008, and further launched in 2009. Satoshi had initially created bitcoin to be a form of currency that could be used and sent peer-to-peer without having the involvement of a central bank or any sort of authority to operate and maintain the ledger, unlike how physical cash is.

Although it wasn’t the first digital currency to have been proposed, Bitcoin did in fact solve many issues in the field and to date has been the most successful and well-known digital currency.

The system designed by Satoshi that runs Bitcoin is known as the blockchain. This is the original and largest blockchain and still stores bitcoin transactions as of today.

What is an NFT

Non-Fungible Tokens, also referred to as NFTs are blockchain-based tokens that individually represent a unique asset which can be anything, such as art, media, or digital content. In other words, an NFT is irrevocable digital ownership and authorization for a given asset regardless of whether it is digital or physical. Nonfungible, unlike something fungible, is something that cannot be replaceable. Examples of such NFTs would be the original Mona Lisa art piece which is one of a kind and cannot be replaced, as well as the video of Charlie Bit My Finger that went viral and was sold last May for $500,000. NFT is based on hype as the word has been growing recently with many people taking part in investing in these tokens.

The connection between NFTs and Blockchain

Most NFTs are based on a blockchain named Ethereum. As of now, Ethereum generates a lot of electricity to be able to run these blockchains. Within the last year, the amount of electricity used has increased extremely and there are no signs of any decrease in this in the coming future. NFTs and Ethereum have solved some issues that come with assets on the internet. With everything being digital, it is important to restore the uniqueness of each asset as well as some sort of proof of its ownership. NFTs are mainly bought and sold online, and most are usually bought using cryptocurrencies. They are also encoded with the same software as a lot of cryptocurrencies are encoded by.

There can only be one owner of each NFT at a time and they are well secured by the Ethereum blockchain. This means that no one can make changes to any records of ownership or add new NFTs.

Despite NFTs existing since 2014, it is only recently that NFTs are gaining more hype and are becoming a progressively popular way to buy and sell assets such as digital artwork online. There has been over $120 million spent already on NFTs within the last few years.

The range for NFTs is anything that is one of a kind that needs to have its ownership proved. These can be anything consisting of digital artwork, videos, sports highlights, images, music, and many other assets. Even tweets have been used as NFTs with the famous example of the Twitter co-founder Jack Dorsey selling his first tweet as an NFT for over £2 million.

NFTs are most of the time unique which increases the value and demand of the assets. However, many NFTs already have several digital creations that exist in different forms elsewhere. Using the example again of the viral video Charlie Bit My Finger, it has many copies already over YouTube and other websites and platforms.

Why do people invest in NFTs?

There have been speculations of individuals questioning why people invest so much in digital images or art when they can view these for free online. a valid reason for this would be that an NFT allows the buyer to have full control and own the original item. In addition to this, it also adds in authentication which would be regarded as proof of ownership. Generally, anyone collecting NFTs value these rights almost as much as, or more than the actual item. Blockchain technology and NFTs give artists and content writers a big chance of selling their work. This makes it a lot easier as artists don’t have to go through the hassle of showing their work in galleries or auctions and can instead directly sell as an NFT to buyers. This is also more beneficial as they can keep more of the profit that they earn.

NFT is not a cryptocurrency

A lot have confused NFTs with cryptocurrency. They are merely similar only on the basis that they have similar programming. Cryptocurrency is more of a fungible currency whereas NFTs are a lot different. Each NFT has a digital signature which makes it difficult for NFTs to be exchanged or for them to equal each other.

How to buy NFTs

In order to buy NFTs, there are a few things to keep in mind. Firstly, there is a requirement for a digital wallet to store the NFTs. Most likely, in order to purchase the NFT, buyers will have to purchase some of whichever cryptocurrency the NFT provider accepts, such as Ethereum which they can use to invest in the NFT. A drawback of this is that it will cost a percentage of the transaction when exchanging from crypto to NFT.

Is it worth buying an NFT?

NFTs have their risks as their outcome is unforeseeable. As they are so new, usually individuals invest small amounts to start trying it out. It is really a personal decision as to whether an individual wants to invest in buying NFTs as it comes with its benefits and risks. It all depends on how much in demand they are.

Advantages of NFT

In today's day and age, it is hard to claim ownership of certain assets and to divide them between more than one owner. With NFTs in place, it is a lot easier to divide a digital asset between several owners.

The blockchain technology behind NFTs is secure. As NFTs are created by blockchain, it is almost impossible to hack, tamper with or delete any data.

NFTs can show a broadening benefit to one's investment portfolio. As they are different from other investments like stocks, they offer advantages that are still being uncovered.

Disadvantages of NFT

NFTs are not understood well by a majority of the public as it is something fairly new for many. As they are quite difficult to trade, the number of potential buyers and sellers is not very high.

NFTs do not necessarily produce income. They do not offer any owners any sort of guaranteed income or any income at all. It is all based on the demand for the items.

NFTs have been subject to being used for fraudulent purposes, meaning they can be subject to fraudulent transactions. Even though it has been created by a blockchain that is unquestionably secure, NFTs can still be used in many wrong ways. An example of this is that many artists have recently discovered their work for sale in the form of an NFT without their consent. This is a violation of the uses NFT has been made for. This shows it is hard to ensure that the specific work is original or not.

NFTs are not environmentally friendly. As mentioned above, a huge amount of electricity is used to create and record blockchains, as well as the ongoing debate around the potential harm this will cause in the long run.

WEB 3.0 - The Future of Web

What is Web 3.0

Web 3.0 is the next evolution of the internet involving blockchains and the use of decentralisation. In this, members will have full control over the content that they provide as well as how private or public they want their data to be. This means that users can post anything, anywhere without worrying about it being removed if reported. This consists of groups of programs supported by cryptocurrencies that work together to create an ecosystem of decentralized internet services. This includes anything such as social media, news, search engines and open forums.

How Web 3.0 works

Web 3.0 has been remade to allow users to not have to be dependent on corporations or the government. This means that they are free to do as they wish.

Freedom for users

With web 3.0, companies will not have any CEOs or anyone specifically in charge. They will be run by a voting system where the majority will have success. There will also be no censorship or removal by any authorities on social networks such as Facebook and Twitter

Another factor with web 3.0 is that one's personal identity will not necessarily match their digital identity. This means that people can do anything online such as shopping, playing games, and downloading content without being traced, as there are many ways for participants to anonymize themselves.

Cryptocurrency networks evolving with Web 3.0

The future of web 3.0 could also introduce being able to do shopping or buy stuff online for example by using amazon and paying using metamask. This means that it could also allow the possibility of using cryptocurrencies such as Ethereum to pay for items bought online. This all will not necessarily come into place at once. It will take time to get rid of centralized companies such as Facebook and Google which collect data and make it more decentralised, but will be seen as a work in progress and will change over time.

Conclusion

Blockchain technology has been continuously progressing, and will most definitely continue to change with its ongoing popularity. Blockchain is overall about accessibility and can be used in private or public ways with chances of them both even combining in the future.

It is expected that blockchain will continue to grow in the coming years. Knowing that it is only the start of discovering the capabilities of blockchain, it has the ability to fundamentally bring big changes in the coming future.