Blockchain, Cryptocurrency, & NFTs; Everything I Don’t Understand
You read about blockchain technology a few years ago and were confused. This year, you listened to friends brag about 8x BTC and ETH gains, year over. Now you are annoyed with NFT hype because you can’t understand why anyone would buy virtual art. Before you dismiss blockchain, cryptocurrency, and NFTs forever, read on. All three are social, technical, economic game-changers that are interconnected. This blog ties in all the subjects you want to hate and can’t avoid. Here we go…
A Simple Refresher
The price of Bitcoin and Ethereum cryptocurrency coupled with the rise in NFTs (non-fungible tokens) have huddled the masses around blockchain technology. How? Blockchain technology powers cryptocurrency (Bitcoin, Ethereum, stable coins like DAI that don’t fluctuate). The technology is encrypted, immutable, and decentralized all at the same time. A network of users chain blocks of encrypted transactions together through a hash algorithm where each block is timestamped and secured. Cryptocurrency might be blockchain’s claim to fame but that’s not all. The power of a public, open source blockchain like Ethereum (ETH), is its programmability to self execute code and digital agreements called smart contracts without intermediaries. That doesn’t mean intermediaries like Mastercard, Visa, Paypal, JPMorgan, and the likes are on the sidelines.
Blockchain Powers More than Crypto
Wal-mart uses blockchain technology to track the supply of lettuces. In the event of e.coli outbreaks, they can trace the bad batch of romaine lettuce to the specific vendor, the farm it came from, the day it was picked, the picker who picked it and the row from which it grew. What used to take 60 days to trace, now takes 6 seconds with blockchain technology.
Syrian Refugees use blockchain technology to receive entitlements in Jordanian camps through encrypted biometric scanning of their eyes. The World Food Programme’s “Building Blocks” enables refugees to pick their rations and pay without paper vouchers or identification (which most do not have). This eliminates high bank fees, extended reconciliation time, and fraud for the UN.
These real world examples validate blockchain technology and its application in commerce and humanitarian use cases, but you can imagine how smart contracts can be used to automate transactions in real estate, Fintech, art, health records, and digital currency. Speaking of which…
Cryptocurrency is Digital and Encrypted but that doesn’t make it Bad
Bad guys use cash. That doesn’t make cash evil. Bad guys can use cryptocurrency, and that doesn’t make it evil either. Why do we need or want cryptocurrency? The value proposition here is that blockchain technology brings three main characteristics to cryptocurrency; digitization, decentralization, and trust. The digitization and hashing of block transactions promote speedier and more secure transactions and settlements; decentralization removes the need for intermediaries like banks or governments that have manipulated or interfered (Lehman Brothers, Country of Brazil) and relies on a peer-to-peer network, and trust comes from the accountability and transparency inherent in blockchain technology that many fiat currencies lack.
There are three main types of cryptocurrency; Bitcoin (BTC), Altcoins, and Tokens. BTC is purely a digital currency, while “Altcoins” like Ethereum (ETH) are quite different because they are programmable with smart contracts mentioned above. Programmable language can automatically execute transactions when certain conditions are met like “When 25 ETH are sent to Susie, then the CryptoPunk will be Kristjan’s”. Tokens are used in Decentralized Apps (dApps) from finance to gaming and can be speculative in nature. However, stable coins pegged to the US Dollar like USDT, TUSD, USDC, and DAI are very popular to transact with because the value doesn’t fluctuate wildly. Could you imagine using BTC to pay for a pizza? The price would change from the time you ordered to the time you actually paid for it! Don’t use your Bitcoin to buy pizza!
NFTs are made with Blockchain Technology and Transacted with Cryptocurrency
Now we can tie together NFTs (non-fungible tokens) with blockchain technology and cryptocurrency. See my past blog, “Crazy about NFTs” for a recap. Nearly all NFTs are ERC-721 tokens on the Ethereum blockchain (remember Ethereum allows for programmable smart contracts which Bitcoin’s blockchain does not. Bitcoin is used as a store of value). You can mint on Ethereum and pay in DAI which illustrates the different kinds of cryptocurrency depending on your use case. IMO, the most creative and unique descriptive of NFTs is this recent Saturday Night Live’s Skit from March 28, 2021.
Time to Mint
Ready to experiment with blockchain technology, cryptocurrency, and NTFs? Open up your trusted Opera Browser, connect to Opera’s native crypto wallet, and mint your own NFT using a dApp in Opera’s dApp store. Tweet your NFT to @opera and we’ll like it! Na na na na na, na na na na na…