What is Blockchain and what can it do?

What is Blockchain?

At its much simpler blockchain there is a distributed database.

Everyone on the network will have a copy of the same data set and any data changes will automatically be reflected in real time across the network.

Which means everyone has the same data all the time. And the best part is that this is done without the need for a centralized party that oversees everything.

No need for police or courts, custodians of third parties, all transactions are self-imposed and immutable without any realistic way to tamper with them.

Blockchain is the technology that makes possible Bitcoin, Ethereum and all the various coins.

Several coins will go and go, but Blockchain will remain an important innovation for humanity like the wheel, the fire or the internet.

What is Bitcoin?

Bitcoin is digital money and uses Blockchain technology. Indeed, it is the first successful attempt to implement digital money without the need for a central party as a government to oversee it.

Now he is 10 years old and now has several other similar coins like Litecoin, Dogecoin, Bitcoin, Cash, etc.

What is Ethereum?

Ethereum can best be understood as a set of lego blocks that use interesting things that can be built on its Blockchain structure.

In Bitcoin, there are two people, one person A with 20 Bitcoins and one person B with 30 Bitcoins. If A sends B 10 Bitcoin, the result of the transactions will be: A-10 and B + 10.

Which means that A will now have 10 Bitcoins and B will have 30 Bitcoins.

All bitcoin transactions are really more profitable and less. It's simple but powerful if your only goal is to track the money transfer.

Ethereum goes beyond these state changes based on smaller individual transactions.

With Ethereum you can take more than one step and you can do operators beyond simple plus and minus.

Status changes can be programmed. These calculations can become complex and someone has to pay for the computing power. This is paid using GAS (which is basically 1 / 100,000 of an Ether.

This so-called GAS is the fuel that fuels smart contracts on Ethereum Blockchain.

Ethereum goes beyond what Bitcoin does by adding programming capability in it.

What is an ICO, how does it differ from a typical IPO?

Ethereum has made it possible to create other applications on it and create its own tokens.

These so-called utility tokens could be used to pay various taxes on the application once it was created.

An example would be chips in a casino or token in an arcade video game parlor.

But now someone who had an idea for an interesting application to build on Ethereum could create these tokens in advance and sell them instead of selling shares of his business.

So potential users could buy these tokens and help bring interesting ideas to life. Note that these tokens are not supported by any resources, they do not represent any sharing in any activity or anything else. They are just a right to use something in the future.

These so-called utility tokens are generally built on what is known as the ERC 20 standard.

Each of these tokens can be exchanged with other tokens of the same type and new trading platforms have emerged where these tokens could be traded by speculators.

So a proposed arcade video store can issue so-called ARCADE utility tokens using the ERC 20 standard on Ethereum that its users can use to play in the arcade.

These ARCADE tokens can be traded on specialized stock exchanges just like you would with stocks and their price would increase and decrease based on the demand for these tokens.

However, these are not supported by any resources and rather represent a right to the future use of the system rather than ownership of any kind.

Tokens supported by assets

This brings us to the next class of tokens called asset-backed tokens.

They represent the tangible property of something else. For example, these may represent a single house or a car or something else.

Owning the token would represent your property of that physical element. A bit like a title, but represented on the Blockchain.

Security token

Security tokens take the asset-backed token concept by allowing you to own part of the physical element. A share or a unit or a part of an integer.

Security tokens are essentially the normal old school titles featured on the Blockchain.

But putting it on the Blockchain gives them different super powers.

1. Since they are on the Blockchain, they are now suddenly open to typical blockchain investors like the people who dabbled in Bitcoin. This is a huge global audience and a wider reach means that fundraising can be faster.

2. The titles represented on the Blockchain are implicitly liquid. The way Blockchain works means that 2 parts can swap their positions without having to go through a central party. Liquidity means lower cost of capital.

3. Security tokens that use smart contracts provide unprecedented transparency and real-time information on how funds are distributed, giving investors greater participation and protection through better reporting and reporting.

4. You can have programmatic actions, where you can move money based on a predefined set of rules rather than manual intervention. This opens up interesting possibilities on how securities and fund management can happen in the future.

5. Settlements are faster, trade is the settlement. A number of back office costs are simply eliminated leading to lower operating costs.

These are just some of the advantages of security tokens, in the next article we'll take a closer look as they can help real estate developers solve some of their challenges over equity funds for their developments and get faster pre-sales. .