Unlocking the Power of Blockchain, Crypto, and Smart Contracts: A Beginner's Guide
"Dive Deeper: Exploring the Technicalities of Blockchain, Crypto, and Smart Contracts"
Wait! Wait! Wait! But before moving forwards why you should even consider investing your time in reading this blog? The answer is preety obvious, Web 3.0 is the future of WebNet. The one with proper Skill Set can get a high paying job into this or one can build their own startup out of it. The latest news here is Google Adds Web3 Features to Cloud Offerings. Web 3.0 startups can now get specialized services when they build using Google Cloud. NOW WE ALL KNOW THAT IT IS GOING TO BE HUGE!!!
Welcome to Web 3.0
So now that you know the importance of the topic, Find a comfortable position and give yourself the space to fully absorb and understand the topic. So before plunging headfirst into what Blockchain, Crypto, and Smart Contracts are, we will first look into what Web 3.0 is and how it is different and way more advanced than Web 1.0 and Web 2.0 -->
Web 1.0: It was the earliest form of the Internet. This web version dealt was dedicated to users searching for data. This web version is sometimes called “read-only” because it lacks the necessary forms, visuals, controls, and interactivity we enjoy on today’s Internet.Web 2.0: This Internet form emphasizes User-Generated Content (UGC), ease of use, interactivity, and improved compatibility with other systems and devices. Web 2.0 is all about the end user's experience. This web version is sometimes called “read-write" because here webnet allows individuals to share and collaborate while also allowing them to express themselves online.Web 3.0: This WebNet provides a more intelligent, connection, and decentralized internet. Web 3.0 technologies such as blockchain, smart contracts, and decentralized apps (dApps) aim to create a more open and transparent web, where users have greater control over their data and can interact with each other directly without intermediaries. Web 3.0 also places a greater emphasis on privacy, security, and personalization. In short, it is "read-write-own"
Introduction to Blockchain:
Before moving toward the bookish answer, I will explain it in the form of a story format for a crystal clear understanding of basic blockchain technology.
Blockchain is like a really special kind of book where everyone who has a copy of the book can see what's written in it, but nobody can change what's written without everyone else knowing. Every time someone wants to add something new to the book, everyone who has a copy of the book checks to make sure it's okay before it gets added. Once it's added, it's there forever and can't be changed. This special book is used to keep track of things like money or other important information, and it helps people know that everything is fair and nobody is cheating.
Wasn't that simple to understand? Yup, I know it was. Now how will I say the same in terms of technology?
So blockchain could be a data structure that could be a growing list of information blocks. The knowledge blocks area unit coupled along, such recent blocks can’t be removed or altered. The blockchain is a distributed database of records of all transactions or digital events that have been executed and shared among participating parties. Blockchain is the backbone Technology of Digital cryptocurrency (We will look into crypto soon). Each transaction is verified by the majority of participants of the system. It contains every single record of each transaction. Bitcoin is the most popular cryptocurrency an example of the blockchain.
Didn't you wonder how does Blockchain Technology Work?
To explain this I will take the example of Bitcoin as a cryptocurrency. Bitcoin is used to exchange digital assets online. Bitcoin uses cryptographic proof instead of third-party trust for two parties to execute transactions over the Internet. Each transaction protects through a digital signature.
Distributed Database: There is no Central Server or System which keeps the data of the Blockchain. The data is distributed over Millions of Computers around the world which are connected to the Blockchain. This system allows the Notarization of Data as it is present on every Node and is publicly verifiable.
A network of nodes: A node is a computer connected to the Blockchain Network. Node gets connected with Blockchain using the client. The client helps in validating and propagate transactions onto the Blockchain. When a computer connects to the Blockchain, a copy of the Blockchain data gets downloaded into the system and the node comes in sync with the latest block of data on the Blockchain. The Node connected to the Blockchain which helps in the execution of a Transaction in return for an incentive is called Miners.
Advantages of Blockchain Technology:
Time-saving, Cost-saving, Tighter security, Collaboration, Reliability.
Where does this technology lack (disadvantage):
Scalability, Energy Consumption, Adoption. But overall, in conclusion, the advantages of blockchain technology are significant and have the potential to revolutionize many industries.
Basics of CRYPTO:
From Rags to Riches: Cryptocurrency Have Created Millionaires Overnight
Cryptocurrency comes under many names, You have probably read about some of the most popular types of cryptocurrencies such as Bitcoin, Litecoin, and Ethereum.
A cryptocurrency is a digital currency, which is an alternative form of payment created using encryption algorithms. The use of encryption technologies means that cryptocurrencies function both as a currency and as a virtual accounting system. Cryptocurrencies are relatively old but still new to many people, and the market for these digital currencies is very volatile. Since cryptocurrencies don't need banks or any other third party to regulate them, they tend to be uninsured and are hard to convert into a form of tangible currency.
How you can start using cryptocurrency?
- To use cryptocurrencies, you need a cryptocurrency wallet (for ex: Metamask) These wallets can be software that is a cloud-based service or is stored on your computer or on your mobile device. The wallets are the tool through which you store your encryption keys that confirm your identity and link to your cryptocurrency.
My advice: That may save you from having nightmares -> Make sure you save/remember the Secret Recovery Phrase that you get when you make an account for your wallet. Because if you lose your wallet (or access to it or to wallet backups), you have lost your entire cryptocurrency investment.
Introduction to smart contracts:
Before moving towards bookish language let's actually understand what are smart contracts with a story:
Imagine you and your classmate are having a bicycle race. Let's say you bet him $10 that you will win the race. He is confident he'll be the winner and agrees to the bet. In the end, you finish the race well ahead of him and are the clear winner. But your classmate refuses to pay out on the bet, claiming you must have cheated.
This example illustrates the problem with any non-smart agreement. Even if the conditions of the agreement get met (i.e. you are the winner of the race), you must still trust another person to fulfill the agreement (i.e. payout on the bet).
Smart contracts in Blockchain:
Smart contracts digitize agreements by turning the terms of an agreement into computer code that automatically executes when the contract terms are met. Smart contracts are the fundamental building blocks of Blockchain applications. They are computer programs stored on the blockchain that allow converting traditional contracts into digital parallels. Smart contracts are very logical - following an if this then that structure. This means they behave exactly as programmed and cannot be changed.
It can be also said as A digital vending machine:
A simple metaphor for a smart contract is a vending machine, which works somewhat similarly to a smart contract-specific inputs guarantee predetermined outputs.
You select a product
The vending machine returns the amount required to purchase the product
You insert the correct amount
The vending machine verifies you have inserted the correct amount
The vending machine dispenses the product of choice
The vending machine will only dispense your desired product after all requirements are met. If you don't select a product or insert enough money, the vending machine won't give out your product.
Smart contract use cases:
So, smart contracts are computer programs that live on the blockchain. They can execute automatically. You can track their transactions, predict how they act and even use them pseudonymously. That's cool. But what are they good for? Well, smart contracts can do essentially anything that other computer programs do.
They can perform computations, create currency, store data, mint NFTs, send communications and even generate graphics. Here are some popular, real-world examples:
In conclusion, blockchain, cryptocurrency, and smart contracts are interconnected technologies that have the potential to transform various industries, including finance, healthcare, logistics, and more. Blockchain provides a secure and transparent way of recording and verifying transactions,
while cryptocurrencies offer an alternative to traditional currencies that can be transferred and exchanged without intermediaries.
Smart contracts, built on blockchain technology, allow for automation and the execution of agreements in a secure and efficient manner.
Together, these technologies offer new possibilities for decentralization, transparency, and efficiency in various fields, and their continued development and adoption are likely to shape the future of many industries.
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