Mechanism of Cryptocurrency

Mechanism of Cryptocurrency

The main evolution of Cryptocurrency was due to the increasing dependency on centralized mega systems, like the Internet, Amazon, etc. Thus, to build a more trustworthy and secure method of transaction which is more transparent, the evolution of blockchain took place. 

Speaking about Blockchains, they can be understood as a virtual register that requires at least a minimum of three members to maintain the records and transferring of virtual coins/currency – Bitcoin and Ethereum. Blockchains are far more effective as they aren’t controlled by any third party and the probability of discrepancies is very low. Bitcoins act as a pretty effective way of rewarding the efforts of the people who maintain the networking of the blockchain internally. However, Ethereum is something that is mostly compared to Bitcoin but isn’t the same. Ethereum is a smart computer.. but an old one. More like a supercomputer. 

Ethereum can be understood as having the functionality of a supercomputer that helps the users to communicate and create transactions via smart contracts as well. The smart contracts are just like other humans present and can take part in the virtual transactions and taking currency in the form of ether. Rather than relying upon an unsure third party, the smart contracts can help maintain a bond that is reliable and can’t be edited once made. Thus, helping in the easy transferring of ether in a smooth and reliable manner. One major added perk of Ethereum as compared to any other normal supercomputer is that since the Ethereum uses nodes to function if the server goes down on a general level, the normal supercomputer will go down and hence pull it’s existing users as well. However, for the nodes it is very slow as one at a time goes down. Hence making it tough for Ethereum to crash. The current rate at which the internet is available and is burgeoning, Ethereum is the smart choice.

In the case of Crypto Kitties, it functions essentially around utilizing the techniques of blockchain for entertainment and recreational purposes. Developed by Axion Zen, the Crypto Kitties basically uses Ethereum’s blockchain algorithm. Let’s talk about the statistics? 

Well, Cryptokitties boasts of having 1.5m users and worth of $40m transactions made essentially in the form of the virtual currency- ether. What exactly are Crypto Kitties? Well, it is a classic form of digital art, which is very user friendly and appealing. It can be a direct virtual replacement of breeding an actual cat which can be rather expensive and quite a tedious task. You can rear the cat, use the various options available, breed it with other cats, and trade it with someone else who desires the characteristics of the cat you’ve bred originally. Also, Crypto Kitties functions on the smart contracts system of the Ethereum, thus enabling all the transactions to be made in Ether- their virtual currency form. There is absolutely no business of a third party as all the transactions are done in a typically decentralized manner, thus, ensuring ethical methods to pay up. Also, this reduces fraud on a major level as no third party is involved.  Crypto Kitties basically provides real-time engagements to the audience in a virtual manner, thus helping the transactions to flow smoothly.  Also, the cat you once rear remains to be largely accessible even after the site crashes down. It will remain etched as a hashtag on Ethereum’s website. So you basically own it! Lastly, noting one example from the blog, the author purchased a hat for his kitty, as an asset however the hat wasn’t owned by him, but rather was owned by his Kitty. That was so smooth! This clearly shows the fluid transferring of the digital assets from one place to get Integrated into another! No wonder this is flourishing at a great pace

Non Fungible Tokens.

 I’d like to take the example of a $1bill which when exchanged with someone else for another dollar, will beget the same result- same characteristics, same features. This is called a Fungible asset. NonFungible Tokens which are essentially used in the form of digital assets, (Crypto Kitties being a major example of the same), are the assets that can’t be merged or be the same. Every token produced is unique and different, having special characteristics that differ from others. Ownership is the major attraction which I’ll talk about later. Mostly, the uniqueness of the asset makes it difficult enough to be swapped- almost negligible. Taking the example of Crypto Kitties throughout, the article went about to explain how scarce the NFTs are. Once swapped or minted can’t be exchanged. Thus minimizing its individual availability, and maximizing its uniqueness. The NFTs as a token is essentially indivisible.

 You can’t withdraw changes once you sell an NFT asset. You sell it as a whole. Thus, adding more to its uniqueness. Once you send around an ERC-21, you can’t expect to get back the same ERC-21 thus implying on its scarcity and uniqueness. One of the major benefits of NFTs is having a proper user-generated value, rather than just being vague or morbid like any other centralized social media platform. Any data created by the user will be having an added token value to it however arbitrary it may be, thus giving the creator a sense of ownership. Taking the example of the Crypto Kitties, the changes you make in your digital cat, however insignificant it might be, you will be provided with ownership to it. Thus making it scarce and unique at the same time. Also, any article or product you make in the digital space will be rotated around and can be traded for real-time ether on the platform. I can safely conclude by adding, that since the marketplace term has been exhaustively used and trading has been occurring on the platform, we have unequivocally entered into the utility phase of digital currency.


Aroona Banerjie

Aroona Banerjie

Aiming to grow at the speed of a thought.

Aroona Banerjie

Aiming to grow at the speed of a thought.

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