7 Questions Regarding Blockchain/Digital Currencies
I've tried educating myself on the latest developments in technology through online courses, books, and podcasts. The more I learn, the more confused I get. Some sort of applied learning would probably help. This is what I know for sure....and it's not much.
1. What is Decentralization?
One of the major features of digital currencies is that they are decentralized. This means they are not controlled by a single institution like a government or central bank, but instead are divided among a variety of computers, networks, and nodes. In many cases, virtual currencies make use of this decentralized status to attain levels of privacy and security that are typically unavailable to standard currencies and their transactions.
2. What is a Blockchain?
A Blockchain is a linear, chronological chain of blocks containing transaction information about past events.
3. What is a Block?
Think of it as a sealed, transparent box with stuff inside of it. You can inspect what's inside, but you can't change what's inside once it's sealed (immutable).
4. What goes into the block?
* Metadata about the block
* Security measures to ensure it's tamper proof
* List of transactions
5. What is a decentralized autonomous organization (DAO)?
A decentralized autonomous organization (DAO) is exactly what the name says; a group of people who come together without a central leader or company dictating any of the decisions. They are built on a blockchain using smart contracts (digital one-of-one agreements). Members of DAOs often buy their way in, most of the time purchasing a governance token specifically for the DAO that gives them the ability to vote on decisions that are made around how the pool of money is spent and managed. These groups can be made up of people from around the world, who often communicate on Discord channels.
6. What is a smart contract?
A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible.
7. What is an NFT?
A tradeable token representing an asset on the Blockchain, but it's unique and non-fungible. Its uniqueness makes it valuable.