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What Is the Metaverse?

Created by - shera academy

What Is the Metaverse?

Metaverse is the concept of a persistent 3D online universe that combines several different virtual spaces. You can think of it as the future iteration of the internet. Metaverse will allow users to collaborate, meet, play, and socialize in these 3D spaces.The Metaverse is not yet fully rendered, but some platforms contain Metaverse-like elements. Video games currently offer the closest metaverse experience. Developers push the boundaries of gaming by hosting in-game events and creating virtual economies.While not required, cryptocurrencies can be good metaverse candidates. They can create digital economies using different types of utility tokens and virtual collectibles (NFTs). The Metaverse will also benefit from using crypto wallets like Trust Wallet and MetaMask. In addition, blockchain technology can provide a transparent and reliable governance system.Blockchain, Metaverse-like applications already exist and provide people with a livable income. Axie Infinity is a money-making game that many users play to support their income. SecondLife and Decentraland are further examples of the successful combination of the blockchain world and virtual reality applications.Looking ahead, big tech giants are trying to lead the way. However, the decentralized aspect of the blockchain industry also allows smaller players to participate in the development of Metaverse.IntroductionThe financial, virtual, and physical worlds are increasingly interconnected. The devices we use to manage our lives allow us to access almost anything we want at the touch of a button. The crypto ecosystem has not escaped this either. NFTs, blockchain games, and crypto payments are no longer just for crypto geeks. They're all readily available now as part of a growing metaverse.What is the definition of metaverse?Metaverse is a 3D online virtual space concept that connects all aspects of users' lives. It will connect multiple platforms, similar to the internet containing different websites that can be accessed through a single browser.The concept was developed in Neil Stephenson's science fiction novel Avalanche. While the idea of ​​a metaverse was once fictional, it now looks like it could become a reality in the future.The Metaverse is powered by augmented reality, with each user controlling a character or avatar. For example, you can host a mixed reality meeting with an Oculus VR headset in a virtual office, get work done and relax in a blockchain-based game, and then manage your crypto portfolio and finances within Metaverse.Some aspects of Metaverse can already be seen in the existing virtual video game world. Games like Second Life and Fortnite or work social tools like Gather. town brings together the many elements of our online world. While these applications are not Metaverse, they are somewhat similar. Metaverse doesn't exist yet.In addition to supporting games or social media, Metaverse will also incorporate applications such as economy, digital identity, and decentralized governance. Today, users creating and owning valuable items and currencies are helping to develop a single, unified metaverse. All these features give blockchain the potential to advance this future technology.Why are video games associated with the metaverse?Due to the emphasis on 3D virtual reality, video games currently offer the most immersive metaverse experience. It's not just because they're 3D, though. The services and functions that video games now provide extend to other aspects of our lives. The video game Roblox even hosts virtual events like concerts and parties. Players don't just play games anymore; they also use them for other activities and part of their lives in "cyberspace". In the multiplayer game Fortnite, for example, 12.3 million players took Travis Scott's in-game virtual musical tour.How does encryption fit into the metaverse?Games provide the 3D aspect of the virtual world but don't cover everything you need in a virtual world that can cover every aspect of life. Crypto can provide other key components required such as B. Digital proof of ownership, value transfer, governance, and accessibility. But what exactly do these mean?In the future, as we work, socialize, and even buy virtual items in virtual worlds, we need a safe way to demonstrate ownership. We also need to move these items and money securely in the virtual world. Finally, when virtual worlds are going to be such an important part of our lives, we also want to play a role in decision-making.Some video games already contain some basic solutions, but many developers are using crypto and blockchain as better options. Blockchain provides a decentralized and transparent approach to these issues, while video-game development is more centralized.Blockchain developers are also influenced by the video game world. Gamification is common in Decentralized Finance (DeFi) and GameFi. It seems that there will be enough similarities in the future for the two worlds to become more integrated. The key aspects of a blockchain suitable for Metaverse are:1. Digital Proof of Ownership: By having a wallet that has access to your private keys, you can instantly prove that you own activity or asset on the blockchain. For example, as you work, you can display an accurate record of your transactions on the blockchain for accountability. Wallets are one of the safest and most reliable ways to create digital identities and proof of ownership.2. Digital collectability: Just as we can tell who owns something, we can also prove that an item is original and unique. This is important for a metaverse that wants to integrate more real-world activities. With NFTs, we can create objects that are 100% unique and can never be fully replicated or counterfeited. Blockchains can also represent ownership of physical objects.3. Value transfer: Metaverse needs a secure way to transfer the value of user trust. The in-game currency in multiplayer games is not as secure as cryptocurrencies on the blockchain. If users spend a lot of time in Metaverse or even make money there, they need a reliable currency.4. Governance: The ability to control the rules of how they interact with the virtual world should also be important to users. In real life, we can have voting rights in corporations and elect leaders and governments. Metaverse also needs a way to achieve fair governance, and blockchain is already a proven approach.5. Accessibility: Creating a wallet is open to anyone on public blockchains around the world. Unlike a bank account, you don't need to deposit any funds or provide any details. This makes it one of the most convenient ways to manage your financial and online digital identity.6. Interoperability: Blockchain technology continuously improves the compatibility between different platforms. Projects such as Polkadot (DOT) and Avalanche (AVAX) allow the creation of custom blockchains that can interact with each other. A single Metaverse needs to connect multiple projects, and blockchain technology already has a solution.What is Metaverse Work?As mentioned earlier, the Metaverse will bring all aspects of life together in one place. While many people are already working from home, in the Metaverse you can enter a 3D office and interact with your colleagues' avatars. Your work can also be associated with the metaverse, providing you with income that can be used directly in the metaverse. In fact, such work already exists in a similar form.GameFi and the gaming monetization model are now providing a steady stream of income to people all over the world. These online jobs are excellent candidates for future Metaverse implementation, as they show that people are willing to spend time living in virtual worlds and earning money. Money-making games like Axie Infinity and Gods Unchained don't even have 3D worlds or avatars. However, the principle is that they can become part of the metaverse and make money entirely in the online world.Metaverse ExampleWhile we don't yet have a single, linked Metaverse, we do have many Metaverse-like platforms and projects. Often, these also include NFTs and other blockchain elements. Let's look at three examples:Second live broadcast‌SecondLife is a 3D virtual environment in which users can control avatars to connect, learn, and conduct business. The project also has an NFT marketplace for trading collectibles. In September 2020, SecondLife hosted the Binance Smart Chain Harvest Festival as part of its one-year anniversary. The virtual expo showcases various projects in the BSC ecosystem for users to explore and interact with.Axe UnlimitedAxie Infinity is a money-making game that offers players in developing countries the opportunity to earn a steady income. By purchasing or gifting three creatures called Axies, players can start farming Smooth Love Potion (SLP) tokens. Sold on the open market, someone can make around $200 to $1000 (USD) depending on how much they play and the market price.While Axie Infinity doesn't offer a single 3D character or avatar, it does give users a Metaverse-like job option. You may have heard famous stories of Filipinos using it as an alternative to full-time jobs or benefits.decentralizationDecentraland is an online digital world that combines social elements with cryptocurrencies, NFTs, and virtual real estate. Additionally, players also play an active role in the governance of the platform. Like other blockchain games, NFTs are used to represent cosmetic collectibles. They are also used for LAND, 16 x 16 meters of land that users can buy in-game with the cryptocurrency MANA. The combination of all this creates a complex cryptoeconomy.What is the future of the metaverse?Facebook is one of the loudest voices in creating a unified metaverse. This is especially interesting for the crypto-driven metaverse, thanks to Facebook's stable coin project Diem. Mark Zuckerberg specifically mentioned his plans to use the Metaverse project to support remote work and improve financial opportunities for people in developing countries. Facebook's ownership of the social media, communications, and encryption platform give it a head start in merging all these worlds. Other big tech companies are also working on creating virtual worlds, including Microsoft, Apple, and Google.When it comes to a crypto-powered metaverse, further integration between NFT markets and 3D virtual universes seems to be the next step. NFT holders can already sell their wares from multiple sources on marketplaces like OpenSea and BakerySwap, but there is no popular 3D platform yet. On a larger scale, Blockchain developers can build popular Metaverse-like applications with more natural users than big tech giants.final thoughtsWhile a single, unified metaverse may still be a long way off, we can already see developments that could lead to its formation. It seems to be another sci-fi use case for blockchain technology and cryptocurrencies. Whether we'll ever actually reach the point of the metaverse is uncertain. But at the same time, we can already see Metaverse-like projects that integrate blockchain more and more into our daily lives.

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Published - Sun, 13 Mar 2022

What are NFT games and how do they work?

Created by - shera academy

What are NFT games and how do they work?

NFTs are unique digital collectibles on the blockchain. This property makes them suitable for use in games as representations for characters, consumables, and other tradable items.NFT games have become popular in the Game-Fi world to generate revenue. You can sell your in-game NFTs to other collectors and players, and even earn tokens through the game earning model.When moving game NFTs, make sure to transfer them to a compatible wallet. Also be aware of common scams when submitting NFTs to NFT marketplaces or other users. Finally, read carefully the rules of every NFT game you play to see the probability of losing.NFT games are mainly represented by Ethereum and Binance Smart Chain (BSC). Some use collectible figures like CryptoBlades and Axie Infinity to provide the combat experience, others use trading cards like Sorare.IntroductionSince the start of the CryptoKitties craze, NFT games have grown and started offering a game-money model. As we all know, Game-Fi merges the worlds of finance and gaming, offering players the opportunity to earn money while playing. You no longer have to rely solely on winning, finding or cultivating rare collectibles worth thousands of dollars. In addition to collectible animals, players can now try out multiple game models with different themes.What is NFT?Non-Fungible Tokens (NFTs) are digital cryptographic tokens on the blockchain that represent a unique element. There are many use cases for NFTs. It can be an in-game digital asset, a collectible piece of encrypted art, or even a real-world object like real estate. NFTs solve the long-standing problem of creating decentralized digital collectibles and ownership in a "copy-paste" world.NFTs are irreplaceable. This property means that each token is unique and can never be exchanged for another token in the same way. You can exchange 1 BTC (Bitcoin) for 1 BTC in any way. This is not possible with NFTs, even if the NFT art is released in a multi-version series. In this case, the metadata is different for each NFT, like a series of numbered prints.How do NFT games work?NFT gaming is not the same as just keeping crypto-collectibles in a wallet. NFT games use NFTs in their rules, mechanics, and player interactions. For example, a game might represent your unique character or avatar as an NFT. Digital items you find throughout the game may also be NFTs. You can then make profitable trades with other players or trade your NFTs. An updated game earning model also allows you to earn income from NFT games, which we'll cover in more detail later.So how do you apply NFTs to a gaming environment? To exchange, create and implement NFTs in games, developers create smart contracts to form the rules of the NFTs used. Smart contracts are self-executing code stored on the blockchain.For example, CryptoKitties has a small number of main contracts for building games. Best known for their genetic science contract, which determines the random mechanism for generating new cats. The game developers initially kept their code secret. Interested players have even developed tools to analyze the likelihood of certain traits appearing in cats. Armed with this information, players can optimize their chances of developing more valuable rare races.What is an earning NFT game?Play-to-earn NFT games give users the opportunity to generate revenue streams by playing the game. Typically, players are rewarded with tokens, and occasionally NFTs, and earn more the longer they play. Tokens earned are often part of the game production process.The token method is usually the more stable method of the two because tokens can be obtained stably through games, while NFT drops are more random. Play-to-earn is particularly popular among users in low-income countries as an alternative or supplement to fixed income or social security.Axie Infinity has become one of the most famous money-making games. The game requires an initial investment to buy three Axies, or you can get free perks from other players. Once you have a team of beginners and start completing tasks and challenges, you can earn Smooth Love Potion (SLP), an exchange-traded ERC-20 token.Breeders use SLP to breed new shafts, creating an economy for the project. Axie Infinity has become particularly popular in the Philippines, with many users starting to make a living from its gaming monetization model. Many players make $200 to $1000 per month, or more, depending on market price and time invested.What are NFTs in games?In-game NFTs provide you with another opportunity to earn income by playing NFT games. Instead of getting fungible ERC-20 tokens like SLPs in Axie Infinity or SKILLS in CryptoBlades, you get NFTs that represent collectibles. This game mechanic is the traditional way to generate income from NFT games. The value of items depends on their appearance, rarity, or usefulness in the game.CryptoKitties is an example of a game that relies solely on in-game NFT collectability. Without the opportunity factor, it is impossible to continue playing the game and earn regular income. The latest NFT games offer a combination of in-game NFTs and in-game NFTs.How to make money in NFT games?The amount you can earn by playing NFT games depends on the specific game mechanics and market demand. The money you earn comes from other users who appreciate NFTs or cryptocurrencies earned in the game. You must cash in by selling the item on a market, stock exchange, or auction house. For NFT games, the value comes from NFT or token collectability or in-game utility. These two factors have also sparked speculation.Will I lose money playing NFT games?You may lose money when playing NFT games. The exact amount depends on the type of game you're playing, its mechanics, and the value of the NFT you're dealing with. Losing money doesn't necessarily mean you've been scammed. Since NFTs are speculative, their value depends on people's bets, and your losses also depend on market forces. As with any crypto investment, only spend what you can afford to lose.Can I lose my NFTs?In terms of the value of some NFTs, there is a general fear of losing them while playing games or interacting with the blockchain. Whether you buy NFTs or get them in-game, you need to keep them safe. In short, if you are not careful, you can lose your NFTs. However, if you follow the best practices we'll describe later, your chances of losing them are slim.You can lose NFTs in several ways:You are trying to transfer it from your wallet to another wallet that does not support your NFT token standard.You are the victim of a scam or scam and are sending your NFTs to the scammers.You give malicious smart contract access to your wallet and it takes your NFTs.You lose it as part of the rules of the game.Apart from the latter, you can avoid the above with some knowledge about NFTS, blockchain technology, and scams in general. Just as you wouldn't use PayPal without understanding how to properly use it, or online banking, the same goes for NFTs. To make sure you don't lose your NFT, you should:Confirm that you are not being scammed by sending your NFTs to another wallet. You can see the 5 most common cryptocurrency scams and how to avoid them in our guide.Learn about the types of tokens and blockchains your wallet or platform supports. ERC-721 and ERC-1155 are the most common NFT token protocols on Ethereum, while BEP-721 and BEP-1155 are the most common on Binance Smart Chain (BSC). Always make sure to send them to the correct address and never assume their compatibility.Only interact with smart contracts in reputable projects that you can trust. If you allow a smart contract to interact with your wallet, be aware of the risk that the contract may remove your funds.Look carefully at the rules of the game you are playing. Some NFT games allow you to trade with other users or use NFT consumables. For example, these can be items or potions. Get familiar with the game to avoid unnecessary surprises.Popular NFT GamesThere are many types of NFT games, most of which are on BSC and Ethereum. Some offer a more traditional video game experience, while others rely primarily on NFT collectability.Axe UnlimitedAs mentioned, Axie Infinity follows a similar model to Pokemon, with collectible creatures and battles. Axie Infinity lives on the Ethereum blockchain and provides users with potential income based on transactions Small Love Potions (SLP), Axies, and Axie Infinity Shards (AXS). Both SLP and AXS can be traded on Binance.that rareSorare is a fantasy football game featuring collectible, tradeable real football players. You can create a futsal team with a free beginner card or by purchasing a token card. You can level up by earning points for every game you win, every goal you score, or other activities you complete.the gods unleashedGods Unchained is a tradable NFT card game on Ethereum similar to Magic The Gathering or Hearthstone. Players build decks of varying strengths and advantages to battle, other players. When you win, you'll find in-game items that you can use or sell. When you win ranked matches, you can start earning Flux, which you can use to craft powerful NFT cards. You can then make a profit by selling them or reinvesting them in a new card and continue the process.final thoughtsNFT games take digital collectibles and create rules for players to interact with each other's NFTs. While some people value the collectability of NFTs, others want them to be useful. Many NFT games work like collectible card games, but not everyone who collects cards intends to play. Game-fi now creates a new NFT gaming economy, changing the way people make money from NFTs. Making money is no longer just about luck and collecting; it's also about playing.

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Published - Sun, 13 Mar 2022

Smart Chain vs Ethereum: What's the Difference?

Created by - shera academy

Smart Chain vs Ethereum: What's the Difference?

Binance Smart Chain (BSC) is a hard fork of the Go Ethereum (Geth) protocol and thus shares many similarities with the Ethereum blockchain. However, BSC developers have made significant changes in several key areas. The biggest change is BSC’s consensus mechanism, which allows for cheaper and faster transactions.IntroductionAt first glance, Binance Smart Chain (BSC) and Ethereum look very similar. DApps and tokens built on BSC are compatible with the Ethereum Virtual Machine (EVM). You may have noticed that your public wallet address is the same on both blockchains. There are even cross-chain projects running on both networks. Still, there are some notable differences between the two chains. If you're wondering which one to use, it's best to know and understand the differences.Blockchain Traffic and DApp EcosystemAs of June 2021, Ethereum hosts over 2,800 DApps on the blockchain, compared to around 810 on BSC. This is a significant difference, but given the youth of BSC, it shows a strong and growing ecosystem.Active addresses are also an important on-chain metric to consider. Despite being a relatively new blockchain, BSC recorded a peak of 2,105,367 addresses on June 7, 2021 — more than double Ethereum’s all-time high of 799,580 addresses on May 9, 2021.So what is the reason for the sudden and massive growth of BSC? Much of this comes down to faster confirmation times and low fees. The growth of BSC may also be related to the hype surrounding NFTs and compatibility with popular crypto wallets such as Trust Wallet and MetaMask.If we look at day-to-day transactions, the difference between the two is even greater. On BSC, users can transfer funds and interact with smart contracts faster and cheaper. Below is the current state of BSC's daily transaction volume of around 12 million at its peak and over 4 million.On the other hand, Ethereum’s daily transaction volume has never exceeded 1.75 million. BSC seems to be the more popular option for users who need to transfer funds on a regular basis. Daily transactions must also be viewed in the context of active addresses. At the time of writing, BSC currently has more users who are also transacting more on average.Most used DeFi DApps on Ethereum and BSCIn terms of decentralized finance, there is a lot of DApp conversion between BSC and Ethereum due to blockchain compatibility. Developers can easily port applications from Ethereum to BSC, and new BSC projects often use a different name for the Ethereum open-source code. Let’s take a look at the top five DApps on Ethereum by users on DAppRadar.Here you can see a combination of two DeFi automated market makers (Uniswap and SushiSwap), a crypto game (Axie Infinity), and a peer-to-peer marketplace (OpenSea). If you look at BSC's top 5, you'll find a lot of similarities.PancakeSwap was developed as a hard fork of Uniswap. Autofarm and Pancake Bunny are yield farms - a category we don't see in Ethereum's top 5. Both Biswap and Apeswap are automated market makers. Binance Smart Chain yield farms tend to be more efficient as BSC fees are very cheap and transactions are significantly faster. These factors make them a popular choice for BSC users.When it comes to crypto gaming, Ethereum is indeed home to the most popular games. While there are some projects on BSC that are very similar to CryptoKitties and Axie Infinity, they don’t get as much audience as the classic games on Ethereum.transmission between networksIf you made BEP-20 or ERC-20 deposits into your wallet, you may have noticed that your Ethereum and BSC wallet addresses are the same. So, for example, if you choose the wrong network when withdrawing coins from one exchange, you can easily retrieve them from another blockchain.If you accidentally withdraw ERC-20 tokens to BSC, you can still find them at the corresponding BSC address. You can also perform the same process if you accidentally send tokens from BSC to Ethereum. Fortunately, in either case, your money is not permanently lost. For a more detailed guide, see How to recover cryptocurrency transferred to the wrong network on Binance.transaction feeBoth BSC and Ethereum use the transaction fee gas model to measure transaction complexity. BSC users can set gas prices according to network needs, and miners will give priority to transactions with higher gas prices. However, Ethereum’s London hard fork brought some new modifications that could eliminate the need for high fees.The Ethereum update created a new pricing mechanism with a base fee per block. Base fees change based on transaction demand, so users no longer need to decide their own gas prices.Historically, Ethereum gas fees are much higher than BSC. The highest average observed in May 2021 is $68.72. That trend has started to change, but Ethereum is still more expensive right now.Let's take a look at Etherscan's average Ethereum cost to get a better picture. The first three numbers show Ethereum’s current gas price. For BSC and Ethereum, one Gwei is equal to 0.000000001 BNB and ETH, respectively. If you pay a lower price, your transaction will take longer.For a simple transfer of ERC-20 tokens to another wallet, the average price at the time of writing is $2.46. This number increases to $7.58 when using Uniswap liquidity pools spanning multiple transactions.Below we see a transaction on BSC with a fee of just $0.03, which is equivalent to an ERC-20 transfer in the Ethereum gas tracker. BSC is calculated by multiplying the gas price (5 gwei) by the gas consumed by the transaction (21,000).transaction hourMeasuring the average transaction time on a blockchain can be a bit tricky. While the transaction is technically complete once the miner validates the block it is on, other aspects may affect the latency:If you don't set the fee high enough, miners may delay your transaction or not include it in a block at all.More complex interactions with the blockchain require multiple transactions. For example, adding liquidity to a liquidity pool.Most services only consider a transaction valid after a certain number of blocks have been confirmed. These additional confirmations reduce the risk of merchants and service providers reversing payments if the block is rejected by the network.If we look at the Ethereum gas stats above, we can see that transaction times vary from 30 seconds to 16 minutes. These figures take into account successful transactions but do not take into account additional confirmation requirements.For example, if you deposit ETH (ERC-20) into your Binance account, you will need to wait for 12 network confirmations. As the graph below shows, a block is mined approximately every 13 seconds, which adds an additional 156 seconds when ETH is deposited into your Spot wallet.On BSC, the average block time is 3 seconds. If we compare this to Ethereum's 13 seconds, we see a ~4.3x speedup.consensus mechanismWhile Ethereum's Proof of Work (PoW) consensus mechanism is similar to Bitcoin's, it is very different from BSC's Proof of Stake Authority (PoSA). However, this difference doesn't last long. In Ethereum 2.0, the network will use a proof-of-stake (PoS) mechanism instead.BSC's PoSA combines aspects of Proof of Authority (PoA) and Delegated Proof of Stake (DPoS). 21 validators take turns producing blocks and are rewarded with BNB transaction fees. To become a validator, you must run a node and wager at least 10,000 BNB to become an elected candidate.Other users, called proxies, put BNB behind candidates after elections. The 21 best candidates selected by stake amount will take turns working on the blocks. This entire process repeats every 24 hours. Delegators also receive a portion of the rewards that validators receive.Ethereum's PoW is a very different system. It's not the community choosing validators, it's a race to solve an arithmetic puzzle. Anyone can participate, but special mining equipment must be purchased or rented. The more processing power you have, the more likely you are to solve a puzzle and validate a block first. Successful miners are rewarded with transaction fees and ETH.While PoW is an effective way to build consensus and secure the network, developers have explored the use of other mechanisms. Their goal is to find more efficient and environmentally friendly alternatives without compromising safety.For these reasons, the Ethereum network will eventually transition to Proof of Stake. Validators will stake ETH for a chance to produce blocks. Other validators will "validate" the block and check that it is correct. If someone produces a block with an incorrect transaction, they risk losing all their staked tokens. Validators are then rewarded for successful blocks and any confirmations they make. Malicious validators can lose funds by directly depositing and staking large amounts of ETH.final thoughtsIt is clear that Binance Smart Chain and Ethereum have many similarities. In a way, this makes it so easy for Ethereum users to migrate and experiment with BSC. But despite the similarities, BSC makes interesting changes to improve performance and efficiency. The Proof of Stake (PoSA) consensus mechanism allows users to enjoy cheaper and faster blockchain transactions.

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Published - Sun, 13 Mar 2022

What are blockchain transaction fees?

Created by - shera academy

What are blockchain transaction fees?

As far as blockchain networks are concerned, transaction fees serve two main purposes. They reward miners or validators who help confirm transactions and protect the network from spam attacks.Depending on network activity, transaction fees can be small and high. Market forces can also affect the fees you pay. While high fees may hinder wider blockchain adoption, very low fees may raise security concerns.Why charge a transaction fee?Transaction fees have been and have been an integral part of most blockchain systems since their inception of most blockchain systems. You've likely encountered them when sending, depositing, or withdrawing cryptocurrencies.Most cryptocurrencies use transaction fees for two important reasons. First, the fee reduces the amount of spam on the web. It also makes large-scale spam attacks expensive and costly to implement. Second, transaction fees are an incentive for users who help validate and validate transactions. Think of it as a reward for helping the network.Transaction fees are fairly cheap for most blockchains but can become quite expensive depending on network traffic. As a user, the amount of fees you pay determines the priority of your transactions when they are added to the next block. The higher the fee paid, the faster the confirmation process.Bitcoin transaction feesAs the world's first blockchain network, Bitcoin set the standard for transaction fees used by many cryptocurrencies today. Satoshi Nakamoto realized those transaction fees protect the network from massive spam attacks and incentivize good behavior.Bitcoin miners collect transaction fees for transactions that confirm new blocks. The pool of in-doubt transactions is called the mempool (or mempool). Of course, when miners send their BTC to another Bitcoin wallet, they prioritize transactions with higher fees that users agree to.As a result, malicious actors who want to slow down the network must pay a fee associated with each transaction. If they set the fee too low, miners may ignore their transactions. If they bring them to the proper level, their economic cost is high. Transaction fees can also act as a simple but effective spam filter.How are BTC transaction fees calculated?On the Bitcoin network, some crypto wallets allow users to manually set transaction fees. It is also possible to send BTC for free, but miners will likely ignore such transactions, meaning they will not be verified.Contrary to what some believe, Bitcoin fees do not depend on the amount sent, but on the transaction size (in bytes). For example, assuming your transaction size is 400 bytes, the average transaction fee is now 80 satoshis per byte. In this case, you would have to pay around 32,000 satoshis (or 0.00032 BTC) to have a good chance of adding your transaction to the next block.When network traffic is high and the demand to send BTC is high, the transaction fee required to confirm quickly increases as other Bitcoin users try to do the same. This can happen during periods of high market volatility.Therefore, high fees can make BTC difficult to use in everyday life. Buying a $3 cup of coffee may not be practical when the cost is much higher.A block can only contain a certain number of transactions, limited to 1 MB (that is, the block size). Miners add these blocks to the blockchain as fast as they can, but their speed is still limited​​.The scalability of cryptocurrency networks is a key issue when determining network fees. Blockchain developers are constantly working to solve this problem. Previous network updates have helped improve scalabilities, such as B. SegWit and the implementation of the Lightning Network.Ethereum transaction feesEthereum's transaction fees are different from Bitcoin's. This fee takes into account the computing power required to process the transaction, known as gas. Gas also has a variable price, measured in ether (ETH), the network’s native token.While the natural gas required for a particular transaction may remain the same, the price of natural gas may rise or fall. This gas price is directly related to network traffic. If you pay a higher gas price, miners may give priority to your transaction.How are Ethereum transaction fees calculated?The total gas fee is just a price that covers the cost plus an incentive to process your transaction. However, you should also consider the gas limit, which defines the maximum price for that transaction or task.In other words, the gas cost is the amount of work required, and gas price is the price paid "per hour" for work. The ratio between these two and the gas limit defines the total fee for an Ethereum transaction or smart contract operation.Let's take a random transaction on Etherscan.io as an example. The transaction cost is 21,000 gas and the gas price is 71 Gwei. So the total transaction fee is 1,491,000 Gwei or 0.001491 ETH.Gas fees are expected to decrease as Ethereum moves to a proof-of-stake model (see Casper). The amount of gas required to confirm a transaction will be less because the network requires a fraction of the computing power to validate the transaction. However, network traffic still affects transaction fees, as validators prioritize paying higher transactions.Binance Chain transaction feesBinance Chain is a blockchain network that allows users to trade and trade BNB and other BEP-2 tokens. They can also create and distribute their own tokens. Binance Chain uses a consensus mechanism called Delegated Proof of Stake. Therefore, we have validators instead of miners.Binance Chain also operates the Binance DEX (Decentralized Exchange) where users can trade crypto assets directly from their wallets. Transaction fees on Binance Chain and DEX are paid in BNB.Note that Binance Chain and BNB Smart Chain are two different blockchains. For more information, see Introduction to BNB Smart Chain (BSC).How are Binance Chain transaction fees calculated?Depending on the action you wish to take, the fee structure specified in BNB will apply. There is a difference between transaction fees (e.g. sending BNB) and transaction fees on Binance DEX. In addition, the total price of transactions may rise or fall based on the market price of BNB.For non-commercial transactions, such as, for example, withdrawing or depositing BNB into a wallet, fees are paid in BNB only. Fees for trading-related activities on Binance DEX are paid in trading tokens, but there is a discount in BNB. This scheme helps to increase the adoption rate of BNB and build its user base.BNB Smart Chain Transaction FeeThe BNB Smart Chain (BSC) is another blockchain (i.e. two separate networks) that runs in parallel with Binance Chain. BNB running on Binance Chain is a BEP-2 token, while BNB on BSC is a BEP-20 token.The BNB Smart Chain allows the creation of smart contracts, making them more customizable. The fee structure of BSC is not as fixed as Binance Chain. Instead, it uses a gas system (similar to Ethereum) that mirrors the computing power required to execute transactions and smart contract operations.The BSC network operates a proof-of-stake authoritative consensus mechanism. Network users must use BNB to become a validator, and upon successfully validating a block, they will receive an included transaction fee.How are BNB smart chain transaction fees calculated?As mentioned earlier, the BSC fee structure is very similar to Ethereum. Transaction fees are measured in Gwei, which is a small denomination of BNB equal to 0.000000001. Users can set their gas prices to prioritize transactions they add to blocks.To find current and historical average gas prices, BscScan provides daily average prices as well as minimum and maximum prices. As of March 2021, the average fee for BSC is around 13 Gwei.In the example below (from Bscscan.com), the gas price is 10 Gwei. Note that the gas limit is set to 622,732 Gwei, but this transaction only used 352,755 (52.31%) Gwei, resulting in a transaction fee of 0.00325755 BNB.BSC fees are usually very low, but if you try to send tokens without BNB in ​​your account, the network will notify you of insufficient funds. Make sure you have some extra BNB in ​​your wallet to cover your transaction fees.Binance Withdrawal FeesWhen you withdraw funds on the Binance exchange, you must pay the associated transaction fees. These fees vary by cryptocurrency and network used. Binance has its own fee structure for transactions that take place within its exchange. However, withdrawal fees are subject to external factors beyond Binance’s control.Withdrawing your cryptocurrency depends on the work of miners or validators who are not part of the Binance ecosystem. Therefore, Binance needs to regularly adjust withdrawal fees based on network conditions, including traffic and demand.Binance also places a minimum limit on the number of cryptocurrencies that can be withdrawn. You can view the current limit on the Fee Summary page.Transaction fees are based on the VIP level of your account and are independent of withdrawal fees. Your cumulative monthly trading volume determines your account's VIP tier. The highest fee currently charged is 0.1% of the cryptocurrency trading as a maker and taker. Remember that users who pay with BNB have lower fees when transacting.final thoughtsTransaction fees are an integral part of the cryptoeconomics of blockchain networks. They are part of the user incentives to keep the network running. Fees also protect against malicious behavior and spam.However, the traffic received by some networks resulted in a significant increase in fees. The decentralized nature of most blockchains makes scaling difficult. It is true that some networks offer high scalability and high transaction throughput, but this often comes at the expense of security or decentralization.Still, some researchers and developers are working on improvements, hoping to bring more inclusivity to cryptocurrencies in developing countries.

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Published - Sun, 13 Mar 2022

Crypto Market Capitalization Explained

Created by - shera academy

Crypto Market Capitalization Explained

Market capitalization applies to the stock market as well as cryptocurrency and blockchain projects. It tells us the current market value of a particular cryptocurrency or blockchain network.An equally important metric is the total market capitalization of the entire crypto industry. In a sense, it serves as an estimate of the cumulative value of the blockchain and cryptocurrency industry.IntroductionCalculating the market capitalization of a cryptocurrency project is relatively easy. While most enthusiasts compare the market capitalization of individual projects, it is also useful to keep the big picture in mind.The total value of all crypto assets is far greater than Bitcoin or Ethereum, although these are the two largest projects in terms of their respective market capitalizations.All of the leading cryptocurrency data aggregators report the total market capitalization of cryptocurrencies, making it relatively easy to keep an eye on this metric. But what does this mean and what can it tell us about the market? Let's keep reading.What is cryptocurrency market capitalization?Often referred to as "market cap," market cap is the current market value of a cryptocurrency network. It is calculated by multiplying the circulating supply of a cryptoasset by the price of a single unit.Suppose we have two networks, AliceCoin and BobCoin. The total supply of AliceCoin is 1,000 coins and they are all in circulation. BobCoin is a proof-of-work chain with 60,000 coins currently in circulation with a maximum supply of 100,000. The current market price of AliceCoin is $100, while BobCoin is $2. Which coin has a bigger market cap?Market cap = circulating supply × priceAliceCoin market cap = 1,000 × $100 = $100,000BobCoin market cap = 60,000 × $2 = $120,000Although BobCoin is 50 times cheaper than AliceCoin, the value of the BobCoin network is still higher than AliceCoin. Therefore, the market cap is a better estimate of the value of the network, not just the price of a single coin.What is the total market capitalization of cryptocurrencies?Total market capitalization shows the total value of Bitcoin, altcoins, stablecoins, tokens, and all other cryptoassets on the market. Many consider this metric important because it reflects the size of the industry as a whole.Total cryptocurrency market capitalization since 2013. Source: CoinmarketCap.Due to the relatively high volatility of the cryptocurrency market, values ​​tend to change considerably. In the first six and a half years of cryptocurrency existence, the total market capitalization never exceeded $20 billion. It has fluctuated around hundreds of billions of dollars since hitting a recent peak of $770 billion in 2018.Why does total cryptocurrency market capitalization matter?The combined cryptocurrency market capitalization is often used as a basis for comparisons with other sectors in the broader economy. For example, many analysts often compare total crypto market capitalization to precious metals or stock market capitalization.Still, no one knows what the best way to estimate the valuation of cryptocurrency and blockchain projects is. These comparisons can be useful, but they should not be trusted blindly.Comparing different financial markets is often futile. Different industries attract different types of investors. Cryptocurrencies do not automatically attract stock traders, foreign exchange traders or precious metals speculators. Cryptocurrencies are an emerging and booming asset class and should be treated as such.Why is the total cryptocurrency market cap misleading?Making financial decisions based on total crypto market capitalization can be misleading for many different reasons.First, it is important to ensure the correct market valuation for each project. To do this, multiply the supply quantity by the price of each asset.Why do they do this? Well, it can give you a rough estimate of where the entire crypto market will grow over the next few years and decades.However, it can be difficult to determine the correct supply information. If this data is incorrect, all further calculations are automatically invalidated.Second, it is possible to manipulate the market value of some projects. Some projects do this to create a false sense of security and worth. Staring at total market capitalization without questioning what it actually means can lead to potentially damaging financial decisions.In the end, a total market capitalization is just a number that represents a specific point in time. It can be nine figures today, ten figures next week, and eight figures six months from now. It only represented a snapshot of the cryptocurrency industry at the time.Diluted cryptocurrency market capThere are several ways to calculate market capitalization. One method of estimating the future value of a network is called a diluted market cap. Let's see what it is.The term "diluted market capitalization" comes from the stock market. In this field, this number represents the company's valuation when all stock options are exercised and all securities are converted into shares.It is also important to keep a close eye on the current and future supply of cryptoassets. Currently, not all cryptocurrencies, tokens and assets have their full range of availability.As an example, we know there will be a maximum of 21 million bitcoins. There are 18.505 million bitcoins in circulation today. This equates to a market cap of around $195.2 billion and a price of around $10,550 per BTC.The calculation of the diluted market cap will take into account the maximum Bitcoin supply. So let's multiply $21 million by the current BTC price of $10,550. The result of this total is Bitcoin's diluted market capitalization, which is around $221.5 billion.The same concept can be applied to any other crypto asset in the market. The diluted market cap is simply the current price of the asset multiplied by the maximum supply that will be in circulation. This is by no means an accurate indicator given how the prices of these assets will fluctuate. Still, it can help determine whether an asset is likely to be undervalued or overvalued.signs of deflationThe circulating supply of many cryptocurrencies will increase over the years. Under these circumstances, the diluted market capitalization of the cryptocurrency would be higher than it is today, even if the price remained the same.At the same time, there are signs of deflation trying to aggressively reduce supply. This can be done in a number of ways, one of which is through a process called coin burning. This helps reduce the maximum future supply of the asset.If the asset's value does not increase over time and its supply continues to decrease, its diluted market capitalization may be lower than it is today in the next few years.As an example, BurnCoin currently has a maximum supply of 20 million tokens at a price of $1 per token. However, the team decided to buy back tokens from the market and burn them, reducing the maximum supply to 18 million BurnCoins.After the Coin Burn announcement, the BurnCoin price remained at $1. Knowing that token burns will occur in the future, we can calculate the diluted market cap as follows:18 million burnt coins x $1 = $18 millionHowever, when the token burn was announced, the market cap was:20 million burn coins x $1 = $20 millionIn this case, the diluted market capitalization is actually lower than the current market capitalization. Considering the example above, a lot can happen in the time between the announcement and the actual coin burn.Even after burning, prices can still go up or down. Diluted market cap, especially for deflationary tokens with active token burning, is far from an accurate indicator. You might think of it as a snapshot, like the current market capitalization - but it's an attempt to gauge future value.final thoughtsCryptocurrency market capitalization is one of the most noteworthy metrics. It shows the ebb and flow of valuations across the cryptocurrency industry. It is also useful to distinguish between what is being reported now and what may be diluted market cap in the future.At the same time, it is also important to consider other metrics. Market capitalization is only one piece of the puzzle. There are other aspects of the industry to study before making any financial commitments.

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Published - Mon, 14 Mar 2022

Connecting MetaMask to Binance Smart Chain

Created by - shera academy

Connecting MetaMask to Binance Smart Chain

MetaMask installation and setupMetaMask is available for download on Chrome and Firefox, as well as iOS and Android if you're a mobile user. For the purposes of this tutorial, we'll be using the Firefox version, but the instructions are more or less the same for each platform.First, you should go to the MetaMask download page. From there select the platform you are using and follow the steps to install it on your device. Light!Next, follow the settings provided by the app. Go ahead and click Create Wallet. Write down the backup mnemonic in a secret place (preferably not on an internet-connected device). Without this sentence, your money cannot be recovered if your device is damaged or lost. Make sure you write them down on the next page.That's it! You should now see your wallet, ready to send and receive fundsConfigure walletYou may notice right away that we are still dealing with Ethereum wallets. At best, this does not apply to Binance Smart Chain DApps. In the worst case, you could lose money by sending them to addresses you can't actually use.Let's change the settings we want to access to point the wallet to the Binance Smart Chain node.We want to manually add Binance Smart Chain by clicking Add Network in the upper right corner - MetaMask does not. It is important to note that we can use two networks here: testnet or mainnet. Below are each required parameter.Mainnet (this may be what you are looking for)Network Name: Smart ChainNew RPC URL: https://bsc-dataseed.binance.org/Chain Number: 56Symbol: BNBBlock Explorer URL: https://bscscan.comtestnetNetwork Name: Smart Chain - TestnetNew RPC URL: https://data-seed-prebsc-1-s1.binance.org:8545/Chain Number: 97Symbol: BNBBlock Browser URL: https://testnet.bscscan.comWe'll be using the test mesh for this tutorial, but you may want to use the main mesh. If you want to transfer BNB or Binance Smart Chain tokens using MetaMask, we recommend adding both.After saving the network and returning to the main view, you will notice two things: the network is automatically set to what you just entered, and the units are no longer ETH but BNB.Make a transaction (on testnet)Don't be fooled by the Ethereum logo - we're tuned to the BSC testnet. Next, let's get some money to play. Hover over Account 1 and click to copy your address to the clipboard. We go to the Binance Smart Chain Faucet and paste it into the form.If you are testing an application that supports BEP-20 tokens, Peggy Coins may be of interest to you. They are simply tokens issued on Binance Smart Chain, "pegged" to other on-chain assets (such as BTC, XRP, USDT, etc.), meaning they trade at the same price.Let's stay with BNB for now. Click the Send me BNB drop-down menu and select the amount you would like to receive. You may have to wait a few minutes, but the funds will appear in your testnet wallet shortly.From here we send the money somewhere to demonstrate how it works. We just found a random address for the BscScan testnet we will be donating to. Go ahead and click Submit.We left with a 1 BNB deal. We leave the fee the same and click Next. Then we have another chance to verify the transaction - if everything is OK, click Confirm. That's it! You will be notified when the transaction is complete.final thoughtsMetaMask has long been the go-to passport for accessing the vast Ethereum environment. But with little effort, anyone can configure it to point to Binance Smart Chain. In this way, they benefit from years of development that have made MetaMask an indispensable tool for anyone interacting with decentralized applications.

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Published - Mon, 14 Mar 2022

What is a smart contract?

Created by - shera academy

What is a smart contract?

introduceSmart contracts were first described by Nick Szabo in the 1990s. At that time, he defined a smart contract as a tool for formalizing and securing computer networks by combining protocols with user interfaces.Szabo discussed the potential use of smart contracts in various areas involving contractual agreements - such as credit systems, payment processing, and content rights management.In the cryptocurrency world, we can define a smart contract as an application or program that runs on a blockchain. Typically, they act as digital protocols enforced by a specific set of rules. These rules are predefined by computer code that is replicated and executed by all network nodes.Blockchain smart contracts support the creation of trusted agreements. This means that two parties can make commitments through the blockchain without needing to know or trust each other. You can be sure that if the conditions are not met, the contract will not be executed. Other than that, the use of smart contracts can remove the need for intermediaries, reducing operational costs significantly.Although the Bitcoin protocol has supported smart contracts for years, they were popularized by Ethereum founder and co-founder Vitalik Buterin. However, it is worth noting that each blockchain can represent a different approach to smart contract implementation.This article focuses on smart contracts running on the Ethereum Virtual Machine (EVM), an integral part of the Ethereum blockchain.How do you work?Simply put, a smart contract is a deterministic program. It performs a specific task if certain conditions are met. Therefore, smart contract systems usually follow the "if...then..." statement. But despite the popular terminology, smart contracts are not legal contracts, nor are they smart. They are just a piece of code running on a distributed system (blockchain).Basically, an Ethereum smart contract consists of a contract code and two public keys. The first public key is the public key provided by the contract creator. The other key represents the contract itself and acts as a digital identifier unique to each smart contract.Smart contracts are deployed through blockchain transactions and can only be activated when called by an EOA (or other smart contracts). However, the first trigger is always caused by the EOA (user).main featureEthereum smart contracts usually have the following characteristics:Decentralized. Smart contracts are replicated and distributed across all nodes in the Ethereum network. This is one of the main differences from other centralized server-based solutions.deterministic. Smart contracts will only do what they are designed to do as long as the requirements are met. Also, no matter who runs them, the results will always be the same.autonomy. Smart contracts can automate various tasks and work like automated programs. However, in most cases, if the smart contract is not triggered, it stays "sleep" and does nothing.Immutable. Once a smart contract is deployed, it cannot be modified. They can only be "removed" if specific functionality has been implemented beforehand. Therefore, we can say that smart contracts can provide tamper-proof code.customizable. Smart contracts can be coded in a number of different ways before deployment. As such, they can be used to build many types of decentralized applications (DApps). This is because Ethereum is a complete Turing blockchain.Trustless. Two or more parties can interact via smart contracts without knowing or trusting each other. In addition, blockchain technology ensures that data is accurate.Transparent. Since smart contracts are based on public blockchains, their source code is not only immutable but also visible to everyone.Can I modify or delete smart contracts?It is not possible to add new functionality to an Ethereum smart contract after deployment. However, if its creator built a function called SELF-DESTRUCT in the code, he could "delete" the smart contract in the future - and replace it with a new one. However, if the function was not in the code before, it cannot be removed.In particular, so-called updatable smart contracts allow developers greater flexibility in terms of contract immutability. There are many ways to create scalable smart contracts with varying levels of complexity.For a simplified example, let's assume a smart contract is divided into several smaller contracts. Some of them are designed to be immutable, while others have deletes enabled. This means that parts of the code (smart contracts) can be removed and replaced, while other functions remain.Benefits and Use CasesAs programmable code, smart contracts are highly customizable and can be designed in many different ways, providing many types of services and solutions.As decentralized and self-executing programs, smart contracts can provide greater transparency and lower operating costs. Depending on how they are implemented, they can also increase efficiency and reduce bureaucracy.Smart contracts are especially useful in situations where funds are transferred or exchanged between two or more parties.In other words, smart contracts can be designed for various use cases. Some examples include token asset creation, voting systems, crypto wallets, decentralized exchanges, games, and mobile applications. They can also be deployed alongside other blockchain solutions addressing healthcare, philanthropy, supply chain, governance, and decentralized finance (DeFi).ERC-20Tokens issued on the Ethereum blockchain follow a standard called ERC-20. This standard describes the core functionality of all Ethereum-based tokens. As such, these digital assets are often referred to as ERC-20 tokens and represent a significant portion of existing cryptocurrencies.Many blockchain companies and startups use smart contracts to issue their digital tokens on the Ethereum network. After the launch, most of these companies distributed their ERC-20 tokens through an initial coin offering (ICO) campaign. In most cases, the use of smart contracts enabled the exchange of funds, and distribution of tokens, in a trustless and efficient way.limitationSmart contracts consist of computer code written by humans. This presents many risks as the code is exposed to bugs and bugs. Ideally, they should be written and deployed by experienced programmers, especially when dealing with sensitive information or large amounts of money.Having said that, some believe that a centralized system can provide most of the solutions and functions provided by smart contracts. The main difference is that smart contracts run on a distributed P2P network rather than on a central server. And because they are based on blockchain systems, they tend to be immutable or hard to change.Immutable can be great in some cases, but terrible in others. For example, when a decentralized autonomous organization (DAO) called "The DAO" was hacked in 2016, millions of ether (ETH) were stolen due to errors in its smart contract code.Because their smart contracts are immutable, developers cannot fix the code. This eventually led to a hard fork that resulted in a second Ethereum chain. In short, a chain "reset" the hack and returned the funds to the rightful owner (which is part of the current Ethereum blockchain). Another chain decided not to participate in the hack, saying that what happened on the blockchain should never change (this chain is now called Ethereum Classic).It’s worth noting that the issue did not originate with the Ethereum blockchain. Instead, it was caused by a flawed smart contract implementation.Another limitation of smart contracts is related to their uncertain legal status. Not only because it is a grey area in most countries, but also because smart contracts do not fit into the current legal framework.For example, many contracts require both parties to be properly identified and at least 18 years old. The pseudonyms provided by blockchain technology coupled with the lack of intermediaries could jeopardize these requirements. There are solutions to this, but the legal enforceability of smart contracts is a real challenge — especially when it comes to borderless distributed networks.criticizeSome blockchain enthusiasts see smart contracts as a solution that will soon replace and automate much of our business and bureaucratic systems. While this is a possible reality, it may be far from the norm.Smart contracts are certainly an interesting technology. However, since they are distributed, deterministic, transparent, and to some extent immutable, they may be less attractive in some cases.The criticism is largely based on the fact that smart contracts are not a suitable solution to many practical problems. In fact, some organizations are better off using traditional server-based alternatives.Compared to smart contracts, centralized servers are easier and less expensive to maintain, and tend to be more efficient in terms of speed and communication (interoperability) across the network.final thoughtsThere is no doubt that smart contracts have had a major impact on the cryptocurrency world, and they have undoubtedly revolutionized the blockchain space. While end-users may not interact directly with smart contracts, in the future these may support a wide range of applications from financial services to supply chain management.In conclusion, smart contracts and blockchain have the potential to disrupt almost every aspect of our society. But only time will tell if these breakthrough technologies can successfully overcome the many barriers to mass adoption.

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Published - Mon, 11 Apr 2022

What is blockchain technology? Ultimate Guide

Created by - shera academy

What is blockchain technology? Ultimate Guide

What is blockchain?A blockchain is a special type of database. You may also have heard the term distributed ledger technology (or DLT) - in many cases, they refer to the same thing.Blockchains have certain unique properties. There are rules about how data is added, and once data is stored, it is nearly impossible to change or delete it.Data is added over time into structures called blocks. Each block builds on the last block and contains information related to the previous block. By looking at the most recent block, we can verify that it was created after the last block. So if we go all the way down the "chain", we reach our first block - called the genesis block.Suppose you have a table with two columns for an analogy. In the first cell of the first row, enter any data you want to save.The data for the first cell is converted to a two-letter identifier, which is then used as part of the next input. In this example, the next cell in the second row (defKP) must be filled with the two-letter identifier KP. So if you change the first input data (abcAA), you will get a different letter combination in every other cell.Now if we look at line 4, our latest identifier is TH. Remember when we said you can't go back and delete or delete an entry? That's because it's easy for anyone to know it's done and they'll ignore your attempts to change it.Let's say you changed the data in the first cell - you will get different identifiers, which means your second block will have different data, resulting in different identifiers in row 2, and so on. TH is essentially the product of all the information preceding it.How are the blocks connected?What we discussed above — using our two-letter identifiers — is a simplified analogy of how blockchains use hash functions. The hash is the glue that holds the blocks together. It consists of taking data of any size and running it through a mathematical function to produce an output (hash) of always the same length.The hashes used in blockchains are interesting because the chances of you finding two pieces of data that return the exact same output are very small. As with our identifiers above, any slight change in our input data can lead to completely different results.Let's illustrate this with SHA256, a feature commonly used in Bitcoin. As you can see, even changing the case of the letters is enough to completely encrypt the output.The fact that there are no known SHA256 collisions (i.e. two different inputs give us the same output) is very valuable in the context of blockchain. This means that each block can refer to the previous block by including its hash, and any attempt to edit the old block will be immediately visible.Blockchain and DecentralizationWe have explained the basic structure of blockchain. But when you hear people talking about blockchain technology, they're probably not just talking about the database itself, but the ecosystem built around it.As an independent data structure, blockchain only really makes sense in niche applications. It gets interesting when we use them as tools for strangers to coordinate with each other. Combined with other technologies and some game theories, blockchain can act as a distributed ledger that is not controlled by anyone.This means that no one has permission to edit entries outside of system rules (more on rules later). In this sense, one could argue that the ledger belongs to everyone at the same time: the participants agree on how it should look at any given moment.The Byzantine General's ProblemThe real challenge hindering the above system is the problem of Byzantine generals. Conceived in the 1980s, it describes a dilemma in which isolated actors must communicate to coordinate their actions. The specific dilemma involves a handful of army generals besieging a city and deciding whether to attack it. The generals could only communicate through messengers.Everyone must decide whether to attack or retreat. As long as all generals agree on a common decision, it doesn't matter whether they attack or retreat. If they decide to attack, they will only succeed if they enter at the same time. So how do we make sure they are successful?We need a strategy that allows consensus to be reached even if participants become malicious or messages are intercepted. Not being able to maintain a database is not a life-or-death situation like raiding a city without reinforcements, but the same principles apply. Users need to be able to communicate with each other if there is no one monitoring the blockchain and giving users the "correct" information.In order to overcome the potential failure of one (or more) users, the mechanism of the blockchain must be carefully designed to withstand such setbacks. A system that can achieve this is called Byzantine Fault Tolerance. As we will see later, consensus algorithms are used to enforce robust rules.Why does blockchain need to be decentralized?Of course, you can also run the blockchain yourself. But you end up with a clunky database compared to the premium alternatives. Its true potential can be realized in a decentralized environment — that is, in an environment where all users are equal. This way, the blockchain cannot be erased or maliciously taken over. It's a single source of truth that everyone can see.What is a peer-to-peer network?The peer-to-peer (P2P) network is our user layer (or general in our previous example). There is no administrator. So instead of calling a central server every time they want to exchange information with another user, users send it directly to their colleagues.Consider the diagram below. On the left, A must route its message to F through the server. On the right, however, they are connected without an intermediary.Usually, the server contains all the information the user needs. Ask their servers to deliver all articles to you when you visit Binance Academy. If the site is offline, you won't be able to see it. However, once you have everything downloaded, you can download it to your computer without querying Binance Academy.Essentially, this is what each peer does with the blockchain: the entire database is stored on their computer. If someone leaves the network, the remaining users can still access the blockchain and share information with each other. When a new block is added to the chain, the data is propagated through the network, allowing everyone to update their own copy of the ledger.Be sure to check out Peer-to-Peer Networks Explained for a more in-depth discussion of these types of networks.What is a blockchain node?Nodes are what we call machines connected to the network - they store copies of the blockchain and share information with other machines. The user does not have to deal with these processes manually. Generally, all they have to do is download and run the blockchain’s software, and the rest is done automatically.The above describes what a node is in its purest sense, but the definition can also include other users who interact with the network in some way. For example, in cryptocurrency, a simple wallet app on your phone is called a light node.Public vs Private BlockchainAs you probably know, Bitcoin laid the groundwork for the blockchain industry to grow into what it is today. Since Bitcoin proved itself as a legitimate financial asset, innovators have begun to think about the underlying technology's potential in other areas. This has led to the exploration of blockchain for myriad use cases beyond finance.Bitcoin is what we call a public blockchain. This means that anyone can view transactions on it, and all that is required to participate is an internet connection and the necessary software. Since there are no other participation requirements, we can call it a license-free environment.In contrast, there are other types of blockchains called private blockchains. These systems set rules about who can see and interact with the blockchain. Therefore, we refer to them as approved environments. While private blockchains may seem redundant at first, they do have some important applications – mainly in enterprise settings.How does the transaction work?If Alice wants to pay Bob via bank transfer, she will notify her bank. For simplicity, we assume that both parties use the same bank. The bank checks that Alice has enough funds to complete the transaction (eg, $50 to Alice, $50 to Bob) before updating its database.This is not very different from what happens with blockchain. After all, it's also a database. The main difference is that there is no unilateral checking and updating of balances. All nodes must do this.When Alice wants to send 5 bitcoins to Bob, she sends the appropriate message to the network. It's not immediately added to the blockchain - the node will see it, but other actions must be done to confirm the transaction. See How do I add blocks to the blockchain?Once the transaction is added to the blockchain, all nodes can see that it has gone through. They will update their copy of the blockchain to reflect it. Now, Alice can’t send those same five units to Carol (thus, double-spending), because the network knows that she’s already spent them in an earlier transaction.There is no concept of username and password - public-key cryptography is used to prove ownership of funds. In order to get any money, Bob needs to generate a private key. It's just a very long random number that is almost impossible to guess even after hundreds of years. But if he gives someone his private key, he can prove ownership of his funds (and thus spend them). So it's important that he keeps it secret.However, what Bob can do is derive a public key from his private key. He can then give the public key to anyone, as it is nearly impossible for him to reverse engineer it to obtain the private key. In most cases, it does some other operations (like hashing) the public key to get the public address.He would give Alice a public address so she would know where to send money. She creates a transaction stating that the funds will be paid to this public address. To prove to the network that she is not trying to spend funds that do not belong to her, she uses her private key to generate a digital signature. Anyone can take Alice's signed message and compare it to her public key, and say with certainty that she has the right to send those funds to Bob.How to trade bitcoinTo illustrate how Bitcoin transactions work, let's imagine two different scenarios. The first is when you withdraw Bitcoin from Binance, and the second is when you send funds from TrustWallet to your Electrum wallet.How to withdraw bitcoin from Binance1. Log in to your Binance account. If you don't have bitcoin yet, check out our bitcoin guide to learn how to buy one.2. Hover over Wallet and select Spot Wallet.3. Click Withdrawal in the left sidebar.4. Select the coin you want to withdraw - in this case BTC.5. Copy the address where you want to withdraw bitcoin and paste it into the recipient's BTC address.6. Enter the amount you want to withdraw.7. Click Submit.8. You will receive a confirmation email shortly. Double check that the address is correct. If so, please confirm the transaction in email.9. Wait for your transaction to complete on the blockchain. You can monitor its status on the deposit and withdrawal history tab or using the block explorer.How to Send Bitcoin from Trust Wallet to ElectrumIn this example, we are sending some bitcoins from Trust Wallet to Electrum.1. Open the Trust Wallet app.2. Click on your Bitcoin account.3. Click Send.4. Open your Electrum wallet.5. In Electrum, click the Receive tab and copy the address.Alternatively, you can go back to Trust Wallet and tap on the [–] icon to scan the QR code pointing to your Electrum address.6. Paste your Bitcoin address to Recipient Address in Trust Wallet.7. Specify the amount.8. If everything seems correct, confirm the transaction.9. You’re done! Wait for your transaction to be confirmed on the blockchain. You can monitor its status by copying your address into a block explorer.Who invented blockchain technology?Blockchain technology was formalized in 2009 with the release of Bitcoin — the first and most popular blockchain. However, its pseudonymous creator, Satoshi Nakamoto, took inspiration from previous techniques and advice.Blockchains make extensive use of hash functions and cryptography that existed decades before Bitcoin was released. Interestingly, the structure of the blockchain dates back to the early 1990s, even though its sole purpose was to time-stamp files so they couldn’t be changed later.Advantages and disadvantages of blockchain technologyProperly constructed blockchains solve problems plaguing stakeholders in a range of industries, from finance to agriculture. A distributed network offers many advantages over the traditional client-server model, but it also brings some tradeoffs.benefitOne of the immediate benefits mentioned in the Bitcoin white paper is that payments can be transferred without involving an intermediary. Subsequent blockchains took it a step further, allowing users to send all kinds of information. Eliminating counterparties means less risk for the users involved and lower fees as there are no middlemen to cut them.As mentioned earlier, public blockchain networks are also permissionless — there are no barriers to entry because no one is in charge. If potential users can connect to the Internet, they can interact with other peers on the network.Many would argue that the most important property of blockchains is that they have a high degree of censorship resistance. To shut down a centralized service, malicious actors only need to attack a single server. But in a peer-to-peer network, each node acts as its own server.A system like Bitcoin has over 10,000 visible nodes scattered around the world, making it virtually impossible for even a well-resourced attacker to compromise the network. It should be noted that there are many hidden nodes, too, which aren’t visible to the broader network.shortcomingBlockchain is not a panacea for all problems. By optimizing for the benefits in the previous section, they are lacking in other areas. The most obvious obstacle to the mass adoption of blockchain is that it does not scale well.This applies to any distributed network. Because all participants must stay in sync, new information cannot be added too quickly as nodes may not be able to keep up. Therefore, developers tend to intentionally limit the rate at which the blockchain can be updated to ensure that the system remains decentralized.For network users, this can manifest as long wait times when too many people are trying to transact. A block can only contain so much data and is not immediately added to the chain. If the number of transactions exceeds the capacity of the block, everyone else has to wait for the next block.Another potential disadvantage of decentralized blockchain systems is that they are not easily updated. If you create your own software, you can add new functionality as needed. You don't need to collaborate with others or ask permission to make changes.In an environment with potentially millions of users, making changes is much more difficult. You can change some parameters of the node software, but eventually, you will find yourself disconnected from the network. If the modified software is not compatible with other nodes, they will recognize this and refuse to interact with your node.Suppose you want to change the rules about block size (from 1MB to 2MB). You could try sending this block to the nodes you are connected to, but they have a rule that says "blocks larger than 1MB are not accepted". If they get something bigger, they don't include it in their copy of the blockchain.

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Published - Mon, 11 Apr 2022

How Does Blockchain Work?

Created by - shera academy

How Does Blockchain Work?

What is blockchain?Simply put, a blockchain is a list of records as a decentralized digital ledger. Data is organized in blocks, which are arranged in chronological order and protected by cryptography.The earliest blockchain models were created in the early 1990s, when computer scientist Stuart Haber and physicist W. Scott Stornetta used cryptography on blockchains to protect digital documents from data tampering.The work of Haber and Stornetta has undoubtedly inspired the work of many other computer scientists and cryptography enthusiasts - culminating in Bitcoin being the first decentralized electronic payment system (or simply the first cryptocurrency).Although blockchain technology predates cryptocurrencies, its potential was not recognized until after the launch of Bitcoin in 2008. since then, the interest in blockchain technology has been growing gradually and cryptocurrencies are now being acknowledged on a larger scale.Blockchain technology is primarily used to record cryptocurrency transactions, but can be used for many other types of digital data and can be applied to a variety of use cases. The oldest, most secure, and largest blockchain network is the Bitcoin network, whose design is a clever combination of cryptography and game theory.How does blockchain work?In the context of cryptocurrencies, a blockchain consists of a stable chain where each block stores a list of previously confirmed transactions. Since the blockchain network is managed by a large number of computers distributed around the world, it acts as a decentralized database (or ledger). This means that each participant (node) maintains a copy of the blockchain data and communicates with each other to ensure they are all on the same page (or block).Thus, blockchain transactions take place in a global peer-to-peer network, which makes Bitcoin a decentralized digital currency, borderless and censorship-resistant. Furthermore, most blockchain systems are considered trustworthy because they do not require any type of trust. There is no single authority that controls Bitcoin.A core part of almost every blockchain is a mining process based on a hashing algorithm. Bitcoin uses the SHA-256 algorithm (Secure Hash Algorithm 256 bits). It accepts input of arbitrary length and produces output that is always the same length. The resulting output is called a "hash" and in this case, always consists of 64 characters (256 bits).So no matter how many times the process is repeated, the same input will lead to the same output. However, when the input changes slightly, the output changes completely. Therefore, hash functions are deterministic and in the cryptocurrency world, most of them are designed as a one-way hash function.Because it's a one-way function, it's nearly impossible to compute the input from the output. One can only guess what the input was, but the chances of it being correct are very small. This is one of the reasons why the Bitcoin blockchain is secure.Now that we know what the algorithm does, let's demonstrate how the blockchain works with a simple transaction example.Imagine we have Alice and Bob and their bitcoin balances. Suppose Alice owes Bob 2 bitcoins.In order for Alice to send these 2 bitcoins to Bob, Alice sends a message to all miners in the network containing the transaction she wants to make.In this transaction, Alice gives miner Bob the address and the amount of bitcoin she wants to send, along with a digital signature and her public key. The signature is created using Alice's private key, and miners can verify that Alice is indeed the owner of these coins.Once miners determine that a transaction is valid, they can put it into a block along with many other transactions and try to mine that block. This is done by running the block through the SHA-256 algorithm. The output must start with a certain number of zeros to be considered valid. The number of zeros required depends on the so-called "difficulty", which varies according to the computing power in the network.To initially produce an output hash with a desired number of zeros, miners add so-called "random numbers" to blocks before running through the algorithm. Because a small change in the input can completely change the output, miners try random nonces until they find a valid output hash.Once the block is mined, the miner sends this newly mined block to all other miners. They then verify that the block is valid so they can add it to their copy of the blockchain and the transaction is complete. But in the block, the miner must also include the output hash of the previous block so that all blocks are connected, hence the name blockchain. This is an important part because trust works in the system.Each miner has their own copy of the blockchain on their computer, and everyone trusts the most computationally expensive and longest blockchain. If a minor changes a transaction in the previous block, the output hash of that block will change, causing all subsequent hashes to change as well because blocks with hashes are popular. Miners have to redo all the work for everyone to accept that their blockchain is correct. Therefore, if a miner wants to cheat, he will need more than 50% of the network processing power, which is very unlikely. This type of cyber attack is called a 51% attack.The model of making computers work to produce blocks is called Proof of Work (PoW). There are other models, such as Proof of Stake (PoS), which don’t require much processing power and are said to consume less power while being able to scale for more users.

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Published - Sun, 17 Apr 2022

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How does a blockchain work?
How does a blockchain work?
 The blockchain is a database that allows you to add information but not edit it, therefore making it the go-to place for accurate information. In the digital world, we live in, it is very easy to manipulate information. In fact, it's getting harder and harder to know what's real and who to trust. This is where blockchain comes into play.A blockchain is essentially a database that allows information to be recorded in it, shared, and made available to everyone, but makes the information uneditable. This means that once the information is on the blockchain, it cannot be changed, misinterpreted, or deleted. In this way, the blockchain acts as a source of truth.To understand how blockchain works, let's assume you're moving and start by packing your kitchen utensils.How blockchain works in different industries:health care. Medical records are added to the blockchain so doctors can view accurate health records in real time.music industry. Songwriters put their creations on the blockchain, so true ownership of the work is recorded and other artists cannot copy their work.aerospace industry. NASA uses blockchain to keep its space shuttle information accurate and protect its information from hackers.As you can see, blockchain technology is spreading beyond cryptocurrencies and helping us create a safer, more transparent and more secure world. It is used where the risk is high and the information should not be manipulated. This is what makes blockchain powerful.

Thu, 28 Apr 2022

How do I buy cryptocurrencies?
How do I buy cryptocurrencies?
 “Cryptocurrency exchanges” are platforms that allow you to buy, sell and trade cryptocurrencies. The most common way to buy cryptocurrencies is through online platforms that allow you to buy, sell, and trade cryptocurrencies, known as "cryptocurrency exchanges" or simply "exchanges." The exchange usually behaves like your online broker.Canadian exchanges like ours at Netcoins allow you to deposit Canadian dollars directly into your Netcoins account via Interac electronic transfer, online bill pay, or wire transfer.That's it! It's that simple, fast, and painless. While this is great, it's still important to be aware of the other options available to you when buying cryptocurrencies.Bitcoin ATM.A Bitcoin ATM is similar to a regular ATM, but it does not require a PIN. Instead, it uses a QR code from your cryptocurrency wallet app. This code requires the ATM to send bitcoins directly to your wallet. Of course, the first step is to deposit cash into a Bitcoin ATM.Buy Bitcoin in person.Some people prefer human interaction. Because of this, some Bitcoin companies offer brick-and-mortar stores where you will meet someone from their team who will walk you through the buying process from start to finish.Buy Bitcoin in person.Some people prefer human interaction. Because of this, some Bitcoin companies offer brick-and-mortar stores where you will meet someone from their team who will walk you through the buying process from start to finish.Buy bitcoin privately.People who value privacy can meet friends they trust to buy bitcoin from them. LocalBitcoins.com also offers a marketplace where you can set your own bitcoin buying and selling prices and meet in person to complete your purchase.Whatever you like, make sure you do your research and know what you're investing in. If you are meeting with strangers in person, it is recommended that you meet at a police station or bank with guards and cameras (for security reasons).

Thu, 28 Apr 2022

What are cryptocurrencies?
What are cryptocurrencies?
 Cryptocurrencies are digital money not owned or controlled by banks or governments.Shells, livestock, wine, cigarettes, and gold have all played the role of money (and "means of exchange") throughout the history of money. Today, this role is replaced by banknotes and coins issued, controlled, and managed by governments and banks. This new type of currency is called fiat currency.So what is cryptocurrency?Invented in 2008, cryptocurrencies are a relatively new addition to the monetary system. It is a digital currency and therefore does not exist in physical form (no coins or banknotes!). Instead, it exists only online. Unlike fiat currency, it is a currency that is not controlled by a central bank or government.Fiat currency, on the other hand, was invented in 1971, marking the first time in history that money was controlled by a central bank or government (or “central authority”). Before that, money was created and managed by the market and the people themselves. With cryptocurrencies, we come back to who decides what should be currency and how it should be governed.The problem with currency control is that the central authority can make all decisions about money and print as much money as possible to benefit them, regardless of how it affects the rest of society.Cryptocurrencies, on the other hand, are like democracy. They are run by a group of people who believe in the same philosophy: fair money and fair access to money. Then, a group of developers is working to create an online decentralized system that will allow cryptocurrencies to be sent back and forth (called a "peer-to-peer network"). This allows people to send cryptocurrency to each other without going through banks or governments that charge fees or interest rates or delay people's access to funds.Fiat currencies and cryptocurrencies share some similarities:(1) They are used to buy and sell goods and services. For example, you can pay for an Air Canada flight with Bitcoin.(2) One cryptocurrency can be exchanged for another cryptocurrency. You can exchange bitcoin for ether just like you can exchange Canadian dollars for euros.(3) Cryptocurrencies can be used as a form of investment. You can cash out and profit when the price goes up.Cryptocurrencies are considered the currency of the people and the next step in the evolution of money. As our world becomes more and more digital, the role of cryptocurrencies will only grow.

Thu, 28 Apr 2022

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