Non-consumable tokens: Hype or the future of finance? | Business | Economic and financial news from a German point of view | DW

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Bitcoin, Ether, and several thousand other cryptocurrencies all run on so-called blockchain technology. There is an endless ledger in which all cryptocurrency transactions are written – all payments, all transfers, and everyone can see them for eternity. This truly “cryptic” code contains – you guessed it – cryptocurrency. We use Ether, or Ethereum, the second largest cryptocurrency after Bitcoin.

Each block in the chain has its own nonce and hash which are not easy to find, especially on the big chains. So-called miners use special software to solve the incredibly complex mathematical problem of finding a nonce that generates an accepted hash. There are approximately four billion possible nonce / hash combinations that must be mined before the correct one is found and can be added to the ledger.

You no longer have top-tier intermediaries like central banks or governments overseeing, or possibly tinkering with currencies, as blockchain is essentially a public digital ledger of transactions that is duplicated and distributed across the network. of computer systems on the blockchain.

The principle that digital blocks are distributed instead of being copied or transferred creates a tamper-proof record of an asset, allowing full real-time access and public transparency.

Hungry for energy

Unfortunately, the computational power required to mine or validate block transactions is so huge that the technology has aroused the wrath of environmental activists who criticize its energy use.

China’s cryptomining community was the largest in the world until the government banned their activities

The Ethereum blockchain has announced that it will move to POS as early as next year. Meanwhile, Ethereum along with several other blockchain operators have grown their business far beyond the simple payment services offered on the Bitcoin blockchain.

However, the underlying process – called Proof of Work (POW) – may soon be replaced by the alternative concept Proof of Stake (POS), which gives mining power primarily to miners with the largest amounts of crypto. active. It is said that this process is less energy intensive.

Brave new blockchain world

For the DW auction, two distinct technological features are important: the non-fungible token (NFT) and a digital smart contract.

The NFT is a certificate of authenticity attached to digital data and entered into the blockchain ledger. In our auction, the NFT is called PressFreedomX30 and marks the data as an original work, distinguishing it from copies. It also identifies its owner at all specific times.

Smart contracts are simply programs stored on a blockchain that execute when predetermined conditions are met. Typically, they are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without the involvement or delay of any intermediary.

DW’s smart contract ensures that when the auction is over, the NFT is automatically transferred to the highest bidder’s wallet immediately after they have paid the price. It also includes a 15% fee for the platform operator. In addition, our smart contract ensures that the proceeds from the auction are then transferred to the portfolio of Reporters Without Borders (RWB) – our beneficiaries.

To show our respect to Reporters Without Borders, DW has produced a video presenting “freedom of the press” written in 30 languages ​​in which our organization works.

Blockchain enthusiasts rave about the myriad opportunities that open up with smart contracts and dream of a world of decentralized finance (DeFi) in which even complex derivatives can be traded through wallets for smartphones and without commercial banks as intermediaries.

A network of computers performs the actions when the conditions are met and verified. It could even include contractual obligations, for example provisions for previous owners, when the TVN is sold to someone else.

Decentralized finance has the potential to fundamentally disrupt existing structures and methods in the world of finance. The industry is facing changes comparable only to the upheavals in the entertainment industry following the rise of Spotify, Netflix and others, which have grown bigger than traditional music and movie studios ever were. .

DeFi improves finance?

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