Building Blocks: Getting to grips with all the blockchain terminology
Every week Blockchain Sensei will be walking you through the basics of blockchain technology. Consider this your crash course in all things web3!
In today’s ever-evolving financial landscape, grasping the fundamentals of digital assets is paramount. As we delve into the realm of blockchain technology and exchange-traded funds (ETFs), let’s go back to the start.
The blockchain is the cornerstone of modern digital transactions. For advocates, it epitomises the pinnacle of transparency, transmutability and democratised ownership. Its significance lies in its uniquely decentralised structure; accessible to anyone with an internet connection, but without a single point of ownership. The ‘decentralised’ architecture means the data isn’t as vulnerable as ‘centralised’ systems – which of course increases the blockchain’s resilience against attacks both natural and cyber. As personal data becomes increasingly more valuable, blockchain remains the single point of truth for every asset, with a perfect record of any and all changes to anything within it.
One real-world example of blockchain technology at work is in supply chain management. For instance, Walmart, one of the world’s largest retailers, implemented blockchain technology to track the movement of food products through its supply chain. By using blockchain, Walmart can quickly trace the origin of contaminated food products, reducing the time it takes to identify the source of outbreaks from weeks to mere seconds. This not only improves food safety but also minimizes the impact of recalls, saves costs, and enhances consumer trust.
Similarly, other industries such as pharmaceuticals, luxury goods, and agriculture are also exploring the use of blockchain to improve supply chain transparency, combat counterfeiting, and ensure the authenticity and safety of products.
Our weekly articles aim to demystify what can sometimes be a complex world of acronyms, shadowy figures and buzzwords. Take the ‘blockchain’. Where did it come from? Blockchain technology originated with the invention of Bitcoin in 2008 by an anonymous person or group of people using the pseudonym Satoshi Nakamoto. The blockchain serves as the underlying technology for Bitcoin, a decentralized and immutable ledger to record transactions without the need for intermediaries.
Looking ahead, we will be exploring topics such as blockchain use cases, institutional involvement, consensus mechanisms (Proof of Work vs Proof of Stake), interoperability, real world asset tokenization which will be imperative for navigating the complexities of the digital asset ecosystem. Right now this may all feel like gobbedegook – but we’ll get there.
As the tech continues to evolve, understanding the nuances of blockchain and ETFs will empower investors to make informed decisions and capitalize on emerging opportunities in the digital asset space.