{"id":140112,"date":"2021-08-04T14:16:53","date_gmt":"2021-08-04T14:16:53","guid":{"rendered":"https:\/\/www.regenesys.net\/reginsights\/?p=140112"},"modified":"2024-06-25T12:39:17","modified_gmt":"2024-06-25T07:09:17","slug":"blockchain-explained-part-4","status":"publish","type":"post","link":"https:\/\/www.regenesys.net\/reginsights\/blockchain-explained-part-4","title":{"rendered":"Blockchain Explained \u2013 Part 4"},"content":{"rendered":"

[vc_row][vc_column][vc_column_text single_style=””]In the first part of this series, you were introduced to databases and the blockchain. We introduced Bitcoin as a cryptocurrency, and we defined money.<\/p>\n

Secondly, we illustrated the drivers behind the value of cryptocurrencies and brought you the experts\u2019 opinions on whether you should buy Bitcoin.<\/p>\n

Thirdly, we discussed current regulations (or rather the lack thereof) and the potential impact on monetary systems in future.<\/p>\n

Please read here in case you missed the previous editions: <\/em><\/strong>Part 1<\/em><\/strong><\/a>, <\/em><\/strong>Part 2<\/em><\/strong><\/a>, and <\/em><\/strong>Part 3<\/em><\/strong><\/a>. \u00a0<\/em><\/strong><\/p>\n

In this final part of our series, we will define fungible tokens vs non-fungible tokens and discuss the Ethereum blockchain. We will introduce you to yield farming and staking and conclude with our panellists’ final comments regarding blockchain technology.<\/p>\n

Fungible vs non-fungible tokens<\/strong><\/p>\n

Fungible tokens are similar units of exchange, i.e. Kruger Rands, South African Rands and even Bitcoin. Non-fungible tokens (NFT’s) are dissimilar and unique units that contain information regarding the items’ ownership and copyright.<\/p>\n

Ethereum blockchain and application of non-fungible tokens<\/strong><\/p>\n

The Ethereum blockchain currently holds non-fungible tokens, wherein unique bits of information are captured with regards to these tokens. They then become tradeable over the Ethereum blockchain, which acts as a settlement layer.<\/p>\n

At present, the market is experimenting with digital native assets, i.e. \u201cdigital artwork\u201d that gets \u201ctokenised\u201d and recorded on the Ethereum blockchain. Read more on the application of decentralised gaming.<\/p>\n

Entrepreneurs are experimenting with in-gaming assets, for example, different \u201cskins\u201d in online games, choosing different avatars and swords for players. These assets can be moved across gaming applications and be traded on the Ethereum blockchain. Trending at present in the gaming environment, are smart contracts on the Ethereum blockchain, where fleets of digital assets are being held (i.e. spaceships or battleships used in gaming applications) for rental to others.<\/p>\n

It is expected that these digital assets may soon come to the \u201creal world\u201d.\u00a0 It is already possible to purchase a \u201cportion\u201d of commercial property and earn monthly dividends on its performance.<\/p>\n

\"Blockchain<\/a>Earning revenue through yield farming and staking<\/strong><\/p>\n

Yield farming and staking provide investors in cryptocurrencies to earn a form of revenue, by merely acquiring cryptocurrency. Yield farming is also known as liquidity mining and may be compared to traditional lending in the crypto space.<\/p>\n

Investors are incentivised to purchase and lock up cryptocurrency pairs in liquidity pools.\u00a0 In return for providing liquidity, investors are rewarded with additional rewards exceeding normal interest rates. Yield farmers \u201clock in\u201d the value of NFT\u2019s, in exchange for fees.<\/p>\n

Read further on the process of yield farming<\/a>.<\/p>\n

Crypto staking refers to the “locking up” of crypto holdings to obtain rewards or earn interest. When cryptocurrencies are bought using blockchain technology, these transactions are verified, and the data is stored on the blockchain.<\/p>\n

Staking describes validating these transactions on a blockchain. These validation processes are called “proof-of-stake” or “proof-of-work”. Both these processes assist crypto networks to achieve consensus or confirm that the transaction data adds up to what it should.<\/p>\n

Participants who actively hold onto or lock up their crypto holdings in their digital wallets are participating in the consensus-taking processes of these networks.\u00a0 Stakers can therefore be seen as approving and verifying transactions on the blockchain. These verifications are being awarded by the networks with returns equal to earning interest on a fixed deposit.<\/p>\n

Read further on the process of staking<\/a>.<\/p>\n

Scalability of blockchain technology networks<\/strong><\/p>\n

When we refer to a “scalable” blockchain, we refer to a blockchain that can achieve a high TPS (transaction per second).<\/p>\n