#3 Why Blockchain And Why Crypto For Dummies
By Xini on ALTCOIN MAGAZINE
Having been stumbling in the crypto world for over a year while forever scratching the surface of blockchain technology, I’d love to share my thoughts and understanding of blockchain and crypto — it is indeed an as lucrative / highly risky field as drug and gambling, yet its future grows like a tree in the rock.
Can you imagine that there are, on average, 13 stakeholders between each credit transaction? Are you as upset as myself, when a good chunk of your hard-earned money disappears during the cross-border transactions?
The biggest value of blockchain is TRUST management: Replace the centralized third-party authorities with the decentralized nodes which are verified by multiple (anonymous) parties, to reduce the costs of trust.
Blockchain is a type of distributed ledger technology (DLT). DLT, fundamentally, is a database that exists across several locations or among multiple participants. It reduces the risk of the failure of the single entry point —i.e. centralized authority — because data is stored in multiple locations or requires several stakeholders to validate and process the transaction. A unique signature and timestamp will be generated and recorded, so that all history is available for public inspection.
It is not impossible to unite multiple participants to fake the records or roll back the blockchain to rewrite history. But the decentralization of the community and a wide range of token holders increase the difficulty of fraud.
Then comes the question. What’s the relation between blockchain and crypto, as the later witnesses so many scams and frauds? What’s the role of crypto in the blockchain?
In short, it bridges the gap between hardcore technology and its mass adoption under the help of capital. Miners consume computer power to update the ledge of transactions and “chain the blocks”, while Bitcoin is paid to miners as rewards for their validation work. Bitcoin was merely a token, not any different to membership rewards, until the early adopter spent 10,000 Bitcoin on pizza on 9th May in 2010. The value of Bitcoin has been linked to the use cases in the real world, from buying a cup of coffee to booking a flight. The wider the adoption spreads, the more token holders can enjoy the benefits of low transaction fee and instant transaction (thanks to Lightning Network, Bitcoin is one step further down the mass adoption. Bitcoin then became a currency, with the definition of “the money in use in a particular country”.
Other than Bitcoin, other types of tokens also exist. Utility token, security token and stable coin can be simplified and referred to loyalty points can that be cashed out, stocks that don’t require a huge scale of business and dominant currencies like US Dollar or GB Pound. — It mirrors the conventional monetization on the basis of blockchain.
That sounds wonderful, right? Only one problem — We are HUMAN after all.(Per Yuval Noah Harari’s definition, Human is irrational due to the emotions while Economist only makes rational decisions.) Greed and selfishness are amplified under the microscope of fast-and-easy money. ICO hype, IEO hype, price speculation and manipulation, scam, hacks and frauds… I might go into details in the next few weeks.
To summarize, I believe in the huge potentials of blockchain technology, as well as the values and dynamics crypto bring onto the table. You are likely to earn a lot of money here, but stay alert and don’t get lost.
- I’m not a financial nor IT professional (not even close), nor do I have top skillsets to skyrocket my asset values in the crypto hype — so… welcome any critics, corrections and discussions here.
