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Welcome to Introduction to Blockchain and Crypto

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Should Everything Use Blockchain?

Not everything in the world should be decentralized and put on a blockchain.

A blockchain is a very specific technology that has very specific use cases. Some things could massively benefit from decentralization, while others should probably remain on traditional centralized technology.

Blockchain

A blockchain is a network of computers all hosting, maintaining, and creating new blocks of data that are all chained together using cryptography.

This allows us to keep an immutable ledger of the entire history of events that have happened on the network.

Consensus Mechanisms

In blockchain, a Consensus Mechanism is the mechanism by which all the different computers in the blockchain network, nodes, come to agree on what data the ledger contains.

There are many different types of consensus mechanisms, such as:

  • Proof of Work (PoW)
  • Proof of Stake (PoS)
  • Proof of Transfer (PoX)
  • Proof of Burn (PoB)
  • Proof of History (PoH)
  • Proof of Space (PoS)
  • Proof of Authority (PoA)
  • Proof of Access

Proof of Stake (PoS) Consensus Mechanism

In blockchain, the Proof of Stake (PoS) Consensus Mechanism is the consensus method used by Ethereum.

It involves participants staking their tokens (the native currency of the network) in exchange for a chance to mine the next block and earn a reward. Tokens can be “slashed” if participants partake in dishonest behavior.

Proof of Work (PoW)

In blockchain, the Proof of Work (PoW) Consensus Mechanism is the consensus mechanism used by Bitcoin.

It involves computers doing a massive amount of cryptographic work in order to potentially win a chance at mining the next block and earning a block reward.

Decentralized Application (Dapp)

In blockchain, a Decentralized Application (Dapp) is shorthand for a piece of software that has at least some decentralized component.

Blockchain Layers

In blockchain, layers are different blockchains and systems that run on top of a base blockchain in order to unlock or improve existing functionality that may not be possible on the base layer.

Smart Contracts

Smart contracts are pieces of code that are deployed to the blockchain via a ledger system. Smart contract code gets deployed and recorded to the blockchain for all to see forever.

Anybody can call or view this smart contract code to enable transparent, censorship-resistant software that is not owned or controlled by any single entity.

Non-Fungible Tokens (NFTs)

Non-Fungible Tokens (NFTs) can be thought of as records of ownership represented on the blockchain.

These records of ownership are cryptographically verified and permanently stored on the blockchain.

Uses for Blockchain

Blockchain can be used for many things, including:

  • Money
  • Smart contracts
  • Decentralized Finance (DeFi)
  • Non-Fungible Tokens (NFTs)
  • Decentralized Autonomous Organizations (DAOs)
  • Metaverse

Decentralized Autonomous Organizations (DAOs)

Decentralized Autonomous Organizations (DAOs) are organizations that run on the blockchain. They still require management and leadership, but everything is:

  • Transparent
  • Verifiable
  • Decentralized

DAOs allow for functions like voting and membership that are all cryptographically verified and transparent.

Metaverse

In blockchain, a Metaverse is essentially a collection of the various protocols and technologies used to create some sort of decentralized system that people can take part in.

Often, this can refer to a sort of virtual reality where user can experience blockchain-based, digital second lives.