The word cryptocurrency, blockchain technology and a lot of words related to these terms have been trending on the internet. Most often, one may not have any idea what these terminologies mean if he doesn’t associate with them. This article will give you a beginner’s understanding of what most of these terms are and how they work.
What is cryptography?
The word cryptology or Cryptography is driven by a Greek word called “Crypto” which means “hidden” or “hidden” in the English language.
Cryptology or cryptography is the scientific study and practice of techniques to secure communication between two parties in the presence of adversarial behaviour.
In web2, web applications collect a lot of data from users that are sometimes used without user consent. Users began the query for privacy, a way to send and receive information without passing through third parties that can be extracted and hacked. The idea of cryptology is to provide that secure and reliable way to send and receive information on the internet without collecting user data and compromising it.
What is a block?
A block is a space in a blockchain where information is encrypted and stored. Blocks are identified by long numbers which contain encrypted information from previous transactions.
What is blockchain technology?
Blockchain is a digital ledger that contains blocks of cryptographic hash which are not controlled by a central authority. The creation of Cryptocurrency was a result of storing confirmed transactions on public ledgers.
What is Cryptocurrency?
Cryptocurrency is a combination of two words “crypto” which means to secure and “currency” which is an acceptable unit used for trades in a particular region.
Cryptocurrency is a digital or virtual currency that uses cryptography to secure its transactions and control the creation of new units on the blockchain. Cryptocurrencies are completely decentralized meaning they are not controlled by any government or financial institution. It will interest you to know that this form of currency does not exist in any physical form like USD and Euros. Bitcoin is the first and most popular cryptocurrency, which was created in 2009 before others like Ethereum, Dogecoin and others came up. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.
Some Characteristics Of Cryptocurrency include:
The first reason why you should own any form of cryptocurrency is because of security. If your money can be stored without collecting user data that can be compromised.
This means crypto on the blockchain cannot be controlled by a single entity, government organization or financial institution. You have full control over your assets using a decentralised wallet.
- Use case.
This means that you can use a digital currency to make physical and online purchases.
What is a wallet?
Wallets are software that retrieves information and transactions on the blockchain.
There are two types of wallets, Decentralized and centralized wallets.
Centralized wallets are wallets that require opening an account with usernames and passwords and other security such as Binance, Kucoin, Hotbit, gate, and so on. These can be seen as markets having wallets in them, Just like you would store cryptocurrency in your Trustwallet you can also store it here.
Decentralised wallets are financial applications that allow users to access crypto, make transactions, and track payment histories on the blockchain without opening an account like in the centralized wallet. Just by using devices like phones, laptops and others, you create a wallet that uses a key seed (a combination of 12 different words) as a pass to access your cryptocurrency. Common examples include Exodus, Electrum and Trustwallet. Decentralized wallets support the use of web 3.0 applications.
What Is A Smart Contract?
Nick Szabo first described smart contracts in the 1990s. Back then, he defined a smart contract as a tool that formalizes and secures computer networks by combining protocols with user interfaces.~Binance.
In common terms, a smart is a deterministic program that executes a particular task when and if certain conditions and requirements are met. Despite the popular terminology used (Smart contracts), smart contracts are not legal contracts, nor smart. They are just a piece of code running on the blockchain.
Once a smart contract is deployed on the blockchain, It’s impossible to add new functions. However, the creator includes a function called SELF-DESTRUCT in the code, they are able to “delete” the smart contract in the future and replace it.
Web2 Vs Web3.
Web 2.0 is the current state of the internet, which has more user-generated content and usability for end-users compared to its earlier Web 1.0. This means that web 2 is the interactive internet where users can register and make modifications, not like web1 which consists of just static webpages. Popular examples of web 2 applications are Facebook, Instagram and many others.
On the other hand, web 3.0 is the decentralised part of the internet which is also interactive but users don’t need to register with usernames and passwords like web 2.0. Web 3 is an iteration of the world wide web base on the blockchain. Web 3 applications are accessed on Dapps.
NFT stands for non-fungible token.
In simple words, NFT is proof of digital art, media, and other valued digital items. This means that if I owe a painting in form of NFT, I have a legal right to that painting. Opensea is the number one marketplace for NFTs where you can purchase and mint NFTs. In recent times, you can purchase items like domain name
The world keeps on evolving with technical ways to solve problems, I hope you also fully embrace the blockchain as a good solution. With this, you have a basic understanding of the blockchain and how it works if you find this helpful or have other thoughts, you can use the comment section to express yourself and we would swiftly get back to you.