Blockchain, Bitcoin, NFTs, all you need to know under 6 mins
Now that you’re here already, I’m guessing you’re quite a newbie to this theme of topic and you’re definitely feeling the heat of catching up with the trends of knowing the topic of Blockchain, bitcoin, ethereum, NFTs and all those jargons around.
Read through for a few minutes and I’d be here trying my best to simplify the theme as much as possible.
I’m pretty sure that a few of you might have randomly invested into coins like Shiba Inu or Doge with all the hype around and also the thoughts of it being sooooooo cheap xD. There are also a few here who’ve invested into coins like Ethereum, Solana, Bitcoin — the elite group of smart asses xD.
Let’s understand, in the most simplest ways about what all these things are which have probably come up to you in a very short span of time and has flared far and above.
BlockChain
Blockchain in the most simplest way is a book which records every transaction, be it sending money, buying something, receiving money etc. The interesting thing is that there is only one book and all the transactions from everybody around the globe is recorded here.
The transactions is made via crypto currencies, now crypto currencies are coins like bitcoin, ethereum, solana, ripple(XRP) etc. These can be considered as the current currencies that we use for transacting like rupees, dollars, euro etc.
Once somebody makes a transaction using crypto, the details about this transaction is loaded in one of the pages in the book. This cannot be altered and each page has a number associated to it (00001#, 00002#…..)
Every-time a new payment is made by someone, a new page is added in the book and this chain of pages gets created with every transaction and the numbers associated with the pages also keep get adding.
This chain of pages being created is an analogy to the blockchain, every-time a payment is made using crypto by someone, a block is created where the details of the transaction is recorded. The blocks are created with every transaction around the globe and these blocks take up a form of a chain and thus the term blockchain.
A few things to note -
- Every transaction has a number associated to it
- The transaction details cannot be forged or changed as any change will re-allocate the number for the transaction
How’s it different from bank transactions ?
Banks have their own regulations and the bank servers need to be running for the transaction to be completed and also the transaction needs to be approved or in simple terms, the bank regulates every transaction that is being done.
Here in the system of blockchain, the transactions are not regulated, meaning every-time somebody sends money to someone, no institution records or regulates it, it is only the people/computers in the same network on the chain that approve the transaction.
Simplifying — when a farmer takes money from a rich guy in their district, maybe as a loan amount. Here there is no involvement of banks or any regulatory bodies but the farmer and the rich man, but there are people who are considered as witnesses for this transaction. Similarly, in the crypto world, all transactions are approved and allowed by the computers that have logged into the same network and once approved, the transaction details are stored in a block.
One of the advantages of blockchain is the speed at which you can transact with anybody around the globe. This also talks a bit about the disadvantage in terms of inefficient energy usage, but for now let’s keep that topic for another time. Don’t forget to follow my profile for more updates :)
Phew, hoping to have simplified a few things in the most basic sense in the topic of blockchain, let’s now move on to the next topic.
Bitcoin & Ethereum
We know currencies like rupee, dollar, euro and much more, but here comes a new one called bitcoin. Probably not a new one but definitely something that has risen to popularity in the last couple of years.
Bitcoin is a cryptocurrency that you can send and receive to and from around the globe. This is considered to be a form of payments just like how we send and receive money through bank transfers, UPI etc.
The fact here is that bitcoin is limited in supply. This means there is no possibility of making more bitcoins unlike how the govt can print more money. Thus, as the demand for bitcoin increases due to people buying it and saving/storing it, the prices of it would keep appreciating.
Bitcoin is thus compared to gold and is referred to as digital gold
How simple was that?
Now there is this extremely important topic of Ethereum.
Ethereum sometimes also referred to ETH, know that both of these terms are completely different and we’ll come to that in a minute.
Ethereum is an open source platform which is powered by the technology that we spoke above — blockchain.
To understand this, consider ethereum to be a huge piece of land and people come to this land, build businesses, houses, kind of build an entire city components on this land, as and when more people get into the Ethereum land, the more businesses is built and more transactions happen. These transactions happen with the currency called ETH.
Now what kind of businesses can be built on the land? Speaking out of the example terms and coming back to the digital cases, applications can be built on ethereum. These applications can be innovative technologies being introduced etc.
The more people that start building with ethereum as base for their applications(apps), the more transactions that happen with ETH, the more will ETH increase in value.
Now we know what Ethereum is, and we have a decent real-world analogy to help us start to make sense of it.
The world of NFTs
NFTs are taking over all the hype on instagram and every-time you open the app, there is very high chances for you to see something related to NFTs.
Let’s understand in the simplest ways as to what NFT’s are.
Leonardo Da Vinci who painted one of the most elite and exclusive painting of the Monalisa which to date is one of the hottest tourism and display elements in one of the museums in Paris.
Yes, you can download the image of Monalisa from google, take a screenshot somewhere etc but wait, would it still be as valuable as the original painting in Paris? No right?
The same way NFTs are digital art works which is created by an artist and thus is sold as a whole to anybody willing to buy, The buyer gets all the rights for the artwork and can further sell it to someone.
It’s like Paris selling Monalisa artwork to anybody who’d want to buy at a certain price and this buyer sells it to somebody else. One of the advantages for the buyer is that he could use the painting to attract tourism revenues, a sense of fame, be a part of the elite artist community etc.
Likewise, buying an NFT has various use cases, advantages etc. You can be a part of the community that relates to the artwork that you bought.
Another example, there is this artwork called bored ape yatch club which is a collection of apes pictures. Snoop dog owns one of these and if you’re a buyer of one of the apes in the collection, you get a chance to be in the same community as Snoopdog.
It’s like buying a super bike and being a part of that group/community with super bikes that keep going for rides around.
In the NFT world there are a lot more things to talk about and ‘artwork’ here can be of many different forms. Like we know art as such doesn’t define anything in particular.
This kind of brings us to the end of what I would love to simplify.
There are a lot more deeper things that we could talk about but for now this would keep you quite a few steps ahead of your peers who’d still not have gotten into these jargons.
Hopefully you’ve kind of understood the ecosystem and one of the best things that you could do now is to share what you’ve learnt.
Cheers :)
