It Takes a Village: How Blockchain, Crypto and NFTs Ensure Digital Trust Where blockchain is the digital answer to security, and crypto is the digital answer to money, NFTs are the digital answer to ownership and provenance.
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It's everywhere. Entrepreneurs, businesses and people, in general, are talking about the innovative technology known as blockchain — and buying into its importance. But what exactly is blockchain, and why is it so popular?
Blockchain is one of only a handful of exponential technology innovation trends poised to fundamentally change how we store and trust data in our world. This article will give you a digestible way to look at blockchain, cryptocurrencies and NFTs.
Related: 10 Ways You Can Learn More About Crypto and Blockchain
Blockchain
Blockchain is a particular type of database that stores all kinds of information. But how the information is stored is what makes it different from other databases.
The first step to understanding blockchain is breaking it down into its two most basic components: the creation of a blockchain and the peer review stage.
Blockchain is a decentralized digital ledger that hosts a bit of information in a digital unit known as "a block." Imagine these blocks as being akin to a cell in a spreadsheet that, once created, can never be altered, only appended. New blocks of information about the same transaction connect to existing blocks — like a chain. Thus, the term "blockchain."
Then, that chain of information must be verified by other blockchain peers. This decentralizes the technology so that no single person has complete control. Instead, all users retain control together.
It's key to note that blockchain technology only works if verified peers agree to both host the blockchain and verify transactions. Without these peers, the technology wouldn't be blockchain — it would be standard technology principles.
There are two ways blockchain creates unmatched trust and transparency with transactions. First, the peer-review aspect, and second, the fact that you can't change previous chains. That is why blockchain is so popular — it is not regulated by any government, business, bank, organization or person. Instead, it relies on a public ledger to verify each part of the chain. Blockchain needs peers. It takes a village.
Cryptocurrency
The most popular form of blockchain is its ability to ledger transactions, also known as cryptocurrency. Cryptocurrencies, like Bitcoin, use blockchain technology to create crowd-sourced reviews of currency transactions. In addition, these peer-reviewed blockchains are immutable. This means that Bitcoin transactions are permanent, and anyone holding Bitcoin can view them at any time.
Trust and security are some of the crucial aspects of Bitcoin and blockchain. Because these technologies are constantly being peer-reviewed, they are hard to hack. If a hacker were to alter their chain, it would no longer resemble their peer's chain and would be clearly noticed by other peers as a fraudulent chain.
Cryptocurrency is one of the most popular forms of blockchain, but blockchain applications go beyond the financial aspect, such as the new applications in blockchain-based weather forecasting.
Related: This NFT Blockchain Company Gained $90 Million Asset Overnight
Non-Fungible Tokens (NFTs)
A newer trend in blockchain technology is Non-Fungible Tokens (NFTs).
Where blockchain is the digital answer to security, and crypto is the digital answer to money, NFTs are the digital answer to ownership and provenance. NFTs are like any other collectible — baseball cards, art, classic cars — they are just being digitized now.
Recently, news broke that one of the world's first viral YouTube videos, Charlie bit me, sold as an NFT for over $760,000. A digital photo of Lebron James' famous shot honoring the late Kobe Bryant sold as an NFT for nearly $400,000. Jack Dorsey, CEO and founder of Twitter, sold his first tweet as an NFT for $2.9 million.
But these photos, videos and posts are still available to everyone else on the internet — so what is the point? At the surface level, and concerning those sales, NFTs may seem like the next weird trend of the wealthy or some money laundering scheme. But there are some particularly interesting applications of the technology when it comes to intellectual property.
Essentially, NFTs are a smart contract for the publicly digitally available version. In our connected world, more and more transactions are taking place online, which has given rise to cybercrime and fraud while creating demand for guaranteed and secure online transactions.
Like cryptocurrency, these NFT smart contracts provide that needed security. They cannot be hacked and rely on the public ledger to verify each transaction because they are built on blockchain technology.
From cryptocurrency to NFTs, blockchain technology has various real-world applications, some logical and some crazy. The beauty of blockchain and its successful applications resides in its unique distributed, peer-reviewed structure. Blockchain is already fundamentally changing how we store and trust data in the modern world.
