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Top 4 Use Cases of Tokenization

Gwyneth Iredale — Thu, 19 Aug 2021 06:20:53 +0000

Enterprises are exploring the possibilities of blockchain technology and ways to leverage it for their benefit. According to a recent worldwide blockchain survey by Deloitte, almost 95% of enterprises in the survey indicated possibilities for investment in blockchain technology in the coming year. On the other hand, the applications of blockchain by enterprises are largely restricted to the scope of recordkeeping for transactions.

In addition, the concerns of scalability or privacy for enterprises also keep them away from public blockchain networks. However, enterprises have to realize the promising potential associated with blockchain, such as in examples of tokenization use cases. Let us find out more about tokenization and how it finds practical applications across different use cases.

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What is Tokenization?

Before we move towards an outline of blockchain tokenization use cases, it is important to reflect on a brief understanding of tokenization. Many people are quick to relate blockchain to cryptocurrencies without realizing its hidden potential. Token, in the case of blockchain, actually offers digital representation for a unit of value.

You can assign a token to anything of value, such as digital assets or digital representations of real-world assets. Tokenization can help you transform any real-world asset into a digital asset, thereby enabling easier exchange and transfer of assets. Therefore, tokenization basically implies transferring real-world assets to blockchain or transforming the items of value into tokens that reflect the values.

Why Should You Focus on Tokenization Use Cases?

Now, you would be eager to find out the possible factors which drive focus towards use cases of tokenization. Here are some of the important benefits of tokenization that validate its feasibility for a diverse range of use cases.

Tokenization could enable a formidable reduction in barriers to investment, thereby encouraging retail investors to trade assets that were traditionally expensive and featured lower liquidity.
Tokenization could foster asset liquidity by reducing the threshold for market entry alongside the minimum amount of capital for transactions.
Another prolific value advantage in a tokenization example would be the facility of simpler interaction with regulators for adoption of uniform standards.

However, tokenization of different types of assets comes across as one of the formidable obstacles in the form of regulatory uncertainty. Without adequate preparation of legal frameworks in many jurisdictions for transactions using blockchain, regulatory uncertainty becomes a mandatory setback in tokenization.

Furthermore, the lack of common technical standards for trading platforms dealing with tokenized assets also presents challenges. How will tokenization overcome these challenges? The answer to this question can be discovered through reflection on the existing state of tokenization for different types of assets.

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Use Cases of Tokenization

Tokenization basically implies the transformation of real-world assets into digital tokens on blockchain-based systems. The adoption of tokenization depends considerably on a detailed impression of its practical use cases. When you try to find answers to ‘what is an example of tokenization,’ you could come across many promising responses. Here are some of the top use cases related to tokenization which you can find helpful for understanding tokenization clearly.

1. Tokenization of Precious Metals

For many centuries, gold has retained its reputation as a valuable asset and investment vehicle. However, you would have to encounter various complications in moving and storing gold. Furthermore, a major share of the global supply of gold comes under ownership of national banks as reserve assets or brokers serving as representatives of the sole parties which can sell gold directly to average investors.

The use cases of tokenization for precious metals such as gold are rightly valid on the grounds of the comparatively illiquid nature of the market for precious metals. In the case of illiquid markets, larger corporate firms could look for settling bilateral agreements while encouraging information asymmetries along with restrictions on price discovery.

One of the highest barriers for entry in the precious metals market directly points out high minimum investment requisites. In addition, the tightening of international regulations also calls for effective traceability of metals from the production stages to customers across the complete supply chain.

Tokenization provides the benefit of fractionalization, which can reduce entry barriers alongside empowering smaller players to access new markets. Subsequently, the tokenization use cases for precious metals with increased market participation could lead to improved market liquidity.

On the other hand, the larger number of market participants would imply the need for evolution to multilateral trades. With tokenization, support for atomic swaps and smart contracts could ensure secure and almost real-time settlement of complicated multi-party trades.

The notable examples of projects which ensure tokenization of precious metals include Cache. Gold (CGT), Pax Gold, and DGLD. These projects have shown the possibility of increasing fairness in gold markets by introducing instant liquidity and negligible fees.

2. Tokenization for Real Estate Assets

Another prominent entry among blockchain tokenization use cases directly refers to tokenization of real estate assets. The applications of tokenization in real estate focus on creating fractional ownership for a specific asset by leveraging blockchain-based tokens. Tokenization in real estate could involve the digitization of financial instruments, securities, and digital assets.

With the help of Ethereum blockchain, it is possible to program digital assets for including transaction history and ownership rights. In addition, the tokens also include rules for ensuring compliance of the asset issuing, distribution, and transfer processes to regulations. For example, tokenization in real estate can focus on including controls for ensuring the transfer of tokens to specific counterparties only.

The tokenization example in real estate would refer to Elevated Returns. The New York-based asset management firm successfully completed its first real estate deal based on tokenization in 2018. The company had placed the deal for the St. Regis Resort in Aspen, Colorado, with a total value of $18 million on Ethereum blockchain.

Interestingly, Elevated Returns had plans for selling almost half of St. Regis Resort in the form of a single asset. Subsequently, the company settled on offering an 18.9% share in ownership through tokens. Elevated Returns leveraged Indiegogo for sales in collaboration with Templum Markets LLP.

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3. Tokenization in Logistics

The search for answers to ‘what is an example of tokenization in the real world’ will obviously take you to logistics. The logistics industry depends profoundly on the Bill of Lading as a method for issuing proof of ownership. However, the Bill of Lading presents notable discrepancies like delays in delivery or reclaiming of goods if you lose or misplace the Bill of Lading.

CargoX is one of the promising solutions which leverage tokenization for addressing the issues in traditional methods used in logistics. The company utilizes an open system based on the Ethereum blockchain known as the Smart Bill of Lading or B/L. The Smart B/L system has been tailored for working just like the token system.

With the new system by CargoX, the carrier could create the Smart B/L by using their app. Then, the carrier can send the Smart B/L to the exporter. After receiving money from the importer, the exporter can transfer the ownership of Smart B/L token to importers. Subsequently, the importer at the receiving end could claim ownership of the goods by showing Smart B/L token to the carrier. Therefore, it is clearly evident how the use cases of tokenization are transforming the field of logistics.

4. Non-fungible Tokens

Non-fungible tokens or NFTs are one of the popular examples of the application of tokenization on the basis of blockchain. NFTs are suitable for tokenization of assets that cannot be divided into smaller units or exchanged with a similar item. For example, it is difficult to divide ownership of a specific piece of artwork in the real world.

Any individual purchasing a piece of artwork would get complete ownership over the artwork. However, tokenization can transform such conventional precedents easily. The most prolific tokenization use cases in NFTs would point your attention towards NFT Art.

Digital art is one of the most promising use cases for non-fungible tokens in the present times. The tokenization of real artworks helps in promoting authenticity alongside easier transfer of ownership to artists or the highest bidder in an auction for purchasing the artwork. NFTs use the power of blockchain technology and cryptography to ensure better scope of digital proof regarding authenticity and scarcity of virtual artworks.

For example, CryptoPunks, an early addition among NFT projects which shows the feasibility of tokenization for virtual art. You can also find another plausible tokenization example in the Rarible marketplace. With the help of the Rarible marketplace, you could easily procure digital collectibles as NFT art.

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Final Words

The distinct use cases of tokenization showcase the promising potential of tokenization to revolutionize business operations across various industries. While tokenization enables prolific value benefits for the average investor, enterprises could also leverage it for a complete transformation of their business models. The examples of tokenization use cases in precious metals, real estate, NFTs, and logistics show that tokenization is more than a concept now.

Most important of all, the examples showcase how tokenization could offer promising improvements in operational efficiency. Apart from the optimization of business processes, tokenization could also encourage development of new platforms with collaborators from different industries. Learn more about tokenization and how it can change the world right now!

*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post Top 4 Use Cases of Tokenization appeared first on 101 Blockchains.

Blockchain Ecosystem Explained

Diego Geroni — Tue, 10 Aug 2021 07:41:08 +0000

The year 2008 introduced a prominent, revolutionary intervention in the world of technology with blockchain. Satoshi Nakamoto established the foundations of a peer-to-peer electronic cash system and thus paved the way for many groundbreaking applications of blockchain in different sectors. While the focus of blockchain in the initial years largely revolved around cryptocurrency applications, it has slowly evolved to programmable chains which could be tailored for various use cases. As a result, we can witness the blockchain ecosystem growing exponentially in recent years. However, it is important to understand the ecosystem and what value it delivers for blockchain as new, emerging technology. The following discussion helps you uncover the significance of the blockchain ecosystem in 2021 and a brief overview of the significant components of the ecosystem.

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What is the Blockchain Ecosystem?

It is important to note that the success of blockchain applications does not come just like that. As a matter of fact, you need many visionaries with promising and innovative ideas alongside technology experts with the right skills for translating the ideas to reality. This is where you would come across the blockchain ecosystem definition, as the effectiveness of blockchain lies in its use for the automation of cross-enterprise workflows.

The definition of blockchain ecosystems basically points to a group of elements capable of interacting with each other and the surrounding world for creating an environment with desired special features. You can also define a blockchain ecosystem as the agreed-upon governance structure for a specific use case. The governance structure provides a definition of the acceptable behavior of participants, data ownership, funding, exit and entrance criteria, and conditions for information sharing among participants.

You could find credible advantages with a distributed ledger such as decentralization, independence, improved flexibility, audit trail, better transparency, and many more. However, blockchain is also subject to additional concerns, just like any other new technology in modern enterprise operations.

Some of the notable concerns, in this case, including managing the selection of appropriate information for the network and the identity of authors of the concerned information to the shared chain. All of these issues come under the scope of emerging blockchain ecosystem ideas, and relevant planning for their management ensures the success of the project.

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Value of Blockchain Ecosystems

Distributed ledger technology can facilitate cross-enterprise collaboration with the benefit of decentralization. As a result, it can offer astoundingly exciting possibilities for enabling functionality for employees and customers, albeit for most organizations, it can lead to new workflows and approaches for planning development projects.

The first step begins with the identification of a suitable use case for blockchain with better performance than existing solutions. For example, a blockchain-based solution may work better in use cases where data must be shared among dozens of stakeholders. Once you have identified the viable use case, you should define the business value from the new project. So, what is the value of the blockchain ecosystem in 2021?

Blockchain applications follow peer-to-peer interactions by leveraging shared ledgers which facilitate information exchange and business process management throughout an entire ecosystem. At the same time, blockchain also provides adequate support for collaboration without compromising independence. Blockchain can help you in the automation of business processes alongside ensuring selective availability of information to ecosystem participants.

For example, enterprises could choose to avoid giving information on internal business processes to customers while informing them about their manufacturing responsibilities. So, blockchain delivers visibility, albeit with the organization’s control on the type of information to be shared and the identity of the person with whom the information must be shared.

All these traits imply the need for thinking about blockchain solutions from the perspective of an ecosystem of stakeholders. The responsible deployment of blockchain solutions depends considerably on stakeholders within and outside the organization and their abilities to take advantage of trust and transparency in the blockchain. Therefore, a clear analysis of the blockchain ecosystem in 2021 becomes imperative for understanding the dynamics and incentives of the ecosystem.

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Blockchain Ecosystems and Collaboration

Discussions on blockchain ecosystems ultimately round up to the topic of their main purpose. As a matter of fact, the basic idea behind ‘what is the blockchain ecosystem?’ revolves largely around collaboration. Once an enterprise proves the capability of a blockchain solution to deliver unique business value, it must look forward. The next step focuses on scaling the concerned solution throughout multiple supply-chain partners.

Now, it is important to note that the majority of blockchain projects feature cross-enterprise workflows. Therefore, collaboration is definitely one of the crucial success factors for blockchain applications. The governance and operations of the ecosystem would be significant in defining approaches for sharing information across multiple participants.

On the other hand, a lack of emphasis on an ecosystem or prior planning has created formidable setbacks for blockchain projects. As a result, only a trivial share of proposed blockchain projects actually move into production stages. A blockchain ecosystem in 2021 would help in fostering integration throughout enterprise boundaries.

Subsequently, enterprises could deliver products and services which they couldn’t have been able to deliver on their own. With the focus on an ecosystem perspective, enterprises could look beyond the traditional prospects with blockchain technology. Furthermore, ecosystem thinking could also help in overcoming the dynamic limitations associated with a specific blockchain network.

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Driving Improved Collaboration with Blockchain Ecosystems

The existence of blockchain ecosystems points out various possible reasons, with many primary drivers making a formidable statement. First of all, a closed ecosystem with participants involved in producing a good or service has been one of the primary drivers. The example of a renowned apparel manufacturing company shows a closed blockchain ecosystem.

The apparel manufacturing company invited all suppliers from Tier 1 to Tier 3 on blockchain for tracking product lifecycle. The other possible option among emerging blockchain ecosystem ideas would be an industry-wide consortia. The industry-wide consortia could work for improving visibility into fair-trade items like palm oil or coffee.

As you can notice clearly, both ecosystems have different governance approaches and requirements. With the participation of additional buyers and sellers in the ecosystem, services would become more valuable. So, you can notice that many of the successful ecosystems begin with a small footing and then expand gradually.

Starting with a massive ecosystem has formidable setbacks and has limited chances for success. However, successful ecosystems for collaboration come with a clearly defined workflow and governance by leaders. As a result, the model can ensure faster benefits while ensuring the future development of the ecosystem. With the increasing maturity of the network, operations and network governance could change according to evolving requirements of participants.

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Developing a Distributed Ledger Technology Ecosystem

The focus on driving the use of blockchain ecosystem components for improving collaboration has led to many generalized ecosystem models. Many technology providers have started documentation of various generalized models for ecosystem management. Some of the notable mentions among the models for ecosystem management include the prime tenant model or the minimum viable ecosystem (MVE) model. The development of these models would definitely garner attention in the coming years. Interestingly, these models emphasize beginning an ecosystem on a small scale in the initial stages for improving control.

In the initial stages, you can begin with the supply chain for one particular product line. The supply chain must be capable of expansion as the organization grows while showcasing the advantages of blockchain clearly. Subsequently, the solution could grow further for encompassing multiple product lines and probably set some new industry standards.

Blockchain solutions have to be developed around the smaller ecosystems existing already with scope for future expansion. Companies want to move beyond their traditional limits by participating in blockchain ecosystems. As a matter of fact, ecosystems empower businesses for delivering products or services, which was traditionally impossible for them.

Types of Blockchain Ecosystems

You know that a blockchain ecosystem basically refers to a network of participants in a blockchain network with shared business objectives, relationships, and processes. The network is capable of creating and transferring business value efficiently. At the same time, it is important to note that blockchain is actually a complicated alliance that brings in various actors with shared goals.

However, the different actors have different perspectives on achieving the desired objectives. The individual participants in the ecosystem could have different business models with distinct contributions to the ecosystem. It is not a surprise if you find that some of the ecosystem participants are competitors. Basically, everyone in the ecosystem is there for the business value they receive.

Therefore, the selection of a model for shared blockchain projects depends on the person who must participate in the network for best effectiveness. On the other hand, emerging blockchain ecosystem ideas also help in the evolution of the initial model into other models. Here are some of the notable types of collaboration models used for blockchain ecosystems till now.

One-Leader Ecosystem

The first entry among variants of blockchain ecosystems refers to a single-party blockchain project with cross-enterprise workflows. The example of Bumble Bee Foods showcases a one-leader blockchain ecosystem. It has been able to develop an ecosystem comprising of different stakeholders in the fishing industry. The primary focus of the ecosystem rests on improving the traceability of yellow-fin tuna fish from the ocean to dinner tables.

The different stakeholders in the fishing ecosystem, including the fishermen, packagers, transportation personnel, distributors, and retailers, could record details on blockchain networks. The information entered by all participants can be available to the customer with a QR code. As a result, it can improve the confidence of buyers in the brand and the food on their table. Bumble Bee has multiple stakeholders, and the one-leader ecosystem initiative serves as a strategic fit for them with revolutionary prospects.

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Joint Venture or Consortia Ecosystems

When you think of a blockchain ecosystem in 2021, you would obviously think of multiple participants. The joint venture or consortia ecosystems showcase examples of building ecosystems with two or more organizations or governments gaining control. The consortium model for developing blockchain ecosystems has taken the upper hand over formal joint ventures.

However, enterprises have to come across a notable concern when thinking of strategic business associations in blockchain ecosystems. Participants have to decide whether to form a new legal entity for the association or just carry on with formal contractual agreements. Some of the notable factors which could define this decision include taxation, regulatory and financing requirements.

Regulatory Blockchain Ecosystems

The final variant of blockchain ecosystems would focus on shared projects across government agencies that have to self-report for compliance. The example of a shared project by Marine Transport International and the Recycling Association in Britain showcases a regulatory blockchain ecosystem. Both parties aim to leverage a blockchain-based tool for collecting data and addressing compliance requirements for shipping recyclable waste.

A clear overview of the different types of models for blockchain ecosystems shows one of the most common yet crucial considerations in building ecosystems. Enterprises should not forget the source of funding for the blockchain ecosystem definition. It is also important to note that business model funding and ecosystem funding are completely different. Business model funding could include fees for service, annual contributions, for-profit versus non-profit concerns, transaction fees, and other funds.

On the other hand, enterprises have to consider the direct cost for connecting to the ecosystem and delivering all the individual responsibilities of the organization on the ecosystem. At the same time, enterprises must also focus on resource considerations alongside required funds for operations and governance. The detailed identification and review of all these factors are crucial for setting up your desired blockchain ecosystem in 2021.

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Components in Blockchain Ecosystem

Generally, the topic of blockchain ecosystems in 2021 takes the limelight to different models for collaboration. However, one of the most critical aspects in understanding blockchain ecosystems refers to their components. So, what are the components you can find in an emerging blockchain ecosystem? The answer to this question will obviously take you to the different participants in the ecosystem.

Each participant has a specific role in the ecosystem with contributions of data and resources needed by other participants. Furthermore, the identification of blockchain ecosystem components and the ways in which they interact with each other is essential for planning the development of the ecosystem.

Here are some of the notable components you need in blockchain ecosystems, along with their roles in the ecosystem –

Leaders

The leader in a blockchain ecosystem definition would refer to the organization which visualizes the ecosystem and its business value. The leaders in blockchain ecosystems are generally the creators of the project and primary beneficiaries of the work in ecosystems.

Core Group

Core group is also one of the notable additions among components of blockchain ecosystems. It represents a group of active or leading organizations responsible for controlling, streamlining, and optimizing operational activities. The core group could also refer to organizations actively involved in the management of the ecosystem.

Active Participants

The active participants in the blockchain ecosystem refer to the collection of primary participants in the network who are responsible for contributing and governing workflow and data.

Users

Users in blockchain ecosystems are the participants obtaining benefits from the network with the ability for accessing their own data. However, users do not get any responsibilities in the active management of the network.

Third-Party Service Providers

The final addition among blockchain ecosystem components would include third-party service providers. They are actually the third parties that offer services to the network. The services could include IT support, infrastructure, or application support services along with many other services, especially with a fee.

It is also important to note that all the participants in the ecosystem must take on one of these roles. On the other hand, some participants could also take on the roles of multiple components in the ecosystem for specific cases. You can dive deeper into details of the components in a blockchain ecosystem in the second edition of this article.

Governance for Blockchain Ecosystems

Presently, many international standards development organizations and developer communities are working on the definition of standards for blockchain ecosystems. The three variants of standards under development presently include generic standards, blockchain-specific standards, and industry-specific standards.

It is important to note that all the parties in ecosystems work for the common objectives of blockchain standardization. Governance for blockchain ecosystems has to bring stakeholders from different levels on one platform while addressing the needs of scalability, interoperability, and adoption.

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Bottom Line

On a final note, you can clearly notice the significance of a blockchain ecosystem in 2021 for enterprises and blockchain technology in general. The future of blockchain depends a lot on the adoption of its use cases across different industries alongside enabling its use in a collaborative approach. As the number of organizations in the blockchain network continues to increase, they would need to interact with each other.

By capitalizing on the value of collaboration, blockchain ecosystems could empower all participants with access to information and value. Subsequently, it is also important to consider the feasibility of different types of ecosystem models for distinct use cases and requirements. If you want to learn more about blockchain ecosystems, enroll in the blockchain courses and start extending your knowledge now!

The post Blockchain Ecosystem Explained appeared first on 101 Blockchains.

Mintable vs Nifty Gateway vs OpenSea vs Rarible Comparison

Diego Geroni — Mon, 02 Aug 2021 07:54:49 +0000

Confused to differentiate Mintable, Nifty Gateway, OpenSea, and Rarible? This detailed comparison of Mintable vs Nifty Gateway vs OpenSea vs Rarible will clear all your doubts. Let’s dive in!

The early part of 2021 witnessed profound and stark growth in the popularity of non-fungible tokens or NFTs. non-fungible tokens transformed the approaches for proving ownership of digital goods. As of now, the most expensive NFT sale fetched a humongous $69 million. The popularity of NFTs is also evident in the fact that NFTs had almost 20,000 to 40,000 unique buyers in any 30-day period between March 1 and May 31, 2021.

The popularity of NFTs is the foremost reason for discussing a Mintable vs Nifty Gateway vs OpenSea vs Rarible comparison. NFTs are gaining popularity, and users need some platforms for buying, selling, and trading NFTs, which are evident in these choices. The following discussion provides an overview of each tool followed by a comparison between them on different factors.

Understanding Top NFT Trading Platforms

When you want to start with NFT trading, you need a marketplace for buying and selling NFTs. The different marketplaces available online presently have unique benefits and focus on specific use cases. The most preferred NFT trading marketplaces in the present times include Mintable, Nifty Gateway, OpenSea, and Rarible. Before we find out the best alternative among these four choices, let us take a look at an overview of these platforms.

Mintable

Mintable is basically a platform tailored for creation, distribution, purchasing, selling, and digital trading assets on the blockchain by using non-fungible tokens of NFTs. The Ethereum blockchain enables developers to leverage smart contracts and serves as the foundation of Mintable. Mintable is actually a collection of smart contracts operating together alongside enabling regular users to the creation of digital items on the blockchain without having any previous knowledge of programming or coding.

Mintable allows users to transform digital content into NFTs residing on the blockchain. The digital content could include books, images, videos, musical tracks, or even complex digital files. Users can just enter the details for describing their item and use the Ethereum blockchain for taking their digital item to the masses. Users could browse the Mintable marketplace for making bids and purchasing digital items. The items reside on the blockchain and go into your wallet when you purchase them.

Ethereum blockchain helps in recording all the transactions, thereby offering undisputable proof of ownership. At the same time, it also ensures that the seller gets their due credit for the sold item. All the items on Mintable include a preview image illustration which helps in recognizing them easily in your wallet. Certain digital items on Mintable could include private files, accessible only to the owners.

In addition, Mintable also enables content creators to monetization of their digital brand without any initial crypto investments. Mintable allows the sale of digital content in the form of NFTs. The content creator’s imagination plays a crucial role in the integration of NFTs in their workflow.

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Nifty Gateway

The second entry in the Mintable vs Nifty Gateway vs OpenSea vs Rarible comparison, i.e., Nifty Gateway, is actually an exclusive NFT platform. Nifty Gateway brings an exclusive combination of crypto technology and digital collectibles alongside artworks for creating a rich marketplace of high-value assets that can be traded. As a result, it can deliver promising chances of improved investment potential for digital assets. Nifty Gateway allows users to buy and sell non-fungible tokens or NFTs, otherwise referred to as Nifties.

The non-fungible token is actually a digital token recorded on a ledger, terms as the blockchain. NFTs bear promising similarities to cryptocurrencies in terms of documentation of the transactions. At the same time, Nifty Gateway enables the transformation of different types of assets such as art, games, and music into NFTs.

Presently, Nifty Gateway serves as an exclusive marketplace for music and art under the supervision of the Nifty team. The team enables the best musicians and artists to create NFTs for selling on Nifty Gateway. Users who have an NFT could use Metamask for uploading it to the Omnibus Wallet of Nifty Gateway. Nifty Gateway allows NFT deposits in the Omnibus Wallet. Furthermore, you can also apply on the Nifty Gateway website to become an NFT creator and selling your artwork.

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OpenSea

The next addition in the Mintable vs Nifty Gateway vs OpenSea vs Rarible discussion would bring OpenSea to the table. It serves as a prolific decentralized P2P marketplace that can support purchases, sales, and trade of rare digital goods. The rare digital goods could include art, gaming artifacts, and collectibles developed on NFT technology and operating on Ethereum blockchain.

As a matter of fact, OpenSea claims that it is the largest marketplace for digital goods. The claim of OpenSea appears valid to a certain extent with the broad assortment of items available on OpenSea. You could find more than 200 categories of items with the most reasonable pricing for new items.

The OpenSea platform allows users for digital trading art, sports NFTs, decentralized domain names, digital collectibles, utility NFTs, virtual worlds, and trading cards. Most important of all, OpenSea is the preferred platform in the case of many renowned NFT projects such as Gods Unchained, Cryptopunks, Cryptokitties, and others.

Interestingly, OpenSea allows any individual to trade NFTs on a global scale without taking custody of items in its marketplace. On the contrary, OpenSea leverages a smart contract for trading, and users could store their assets in their desired wallets. The interesting highlight about OpenSea refers to the fact that it takes only 2.5% of the purchase price of NFTs.

Rarible

The final player in the Mintable vs Nifty Gateway vs OpenSea vs Rarible comparison, i.e., Rarible, is also one of the credible competitors among NFT marketplaces. Rarible works as a decentralized NFT marketplace as well as a minting platform. It enables digital artists with capabilities for creation and sale of tokenized artwork. Rarible is the most recent addition among the other entries in this comparison, as it arrived in early 2020. The striking feature of Rarible is the facility for adding different types of additional content such as hidden messages and high-resolution files in their artwork.

In addition, Rarible also allows content creators to configure smart contracts for the collection of royalties on their artwork in the future. From a more technical perspective, you can define Rarible as a DAO or Decentralized Autonomous Organization. The DAO enables users to create and selling ERC-20, ERC-1155, and ERC-721 tokens with utmost safety while ensuring the security of the Ethereum environment.

Rarible brings the perfect blend of NFT technology and a DAO marketplace. Furthermore, Rarible was also the first to introduce a governance token like RARI in the world of NFTs. The RARI token offers the privileges for submitting and voting on proposals such as platform rules and fees management.

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Differences between Mintable, Nifty Gateway, OpenSea and Rarible

Now that you know about the four top preferences among NFT marketplaces in the present times, it is reasonable to reflect on their differences. The Mintable vs Nifty Gateway vs OpenSea vs Rarible comparison would take various factors into account for a clear definition of the differences. Here is an outline of the differences between the four NFT marketplaces in various categories.

The Platform

The first point of comparison between Mintable, Nifty Gateway, OpenSea, and Rarible refers to the company information. Mintable stands out as the odd pick in this case as it is a Singapore-based venture. The other three players are US-based. In terms of the date of launch, Rarible exhibits a rare case by being the latest addition. While Mintable and Nifty Gateway were launched in 2018, OpenSea was one year earlier and had arrived in 2017. Rarible arrived in early 2020, although it had been launched in 2017.

Audience

The audience for the NFT marketplaces also serves as a crucial factor in the Mintable vs Nifty Gateway vs OpenSea vs Rarible comparison. The audience of Mintable comprises any individual searching for a platform for digital trading items and earning crypto. Nifty Gateway is suitable for people seeking an online platform to create their own collection of high-quality, limited-edition NFTs.

If you want a marketplace for trading blockchain-based digital assets by leveraging a smart contract, you can go for OpenSea. Rarible is the right pick for you if you want a creator-focused NFT marketplace for the creation, sales, and collection of digital items secured in blockchain.

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Training Support

Training support is one of the significant aspects in defining the differences between NFT marketplaces. The features of an NFT marketplace would be futile if users don’t know how to use them. Therefore, the facility of training support for users in getting started with an NFT platform and understanding the basic processes and tasks is highly crucial for finding efficient choices.

All four platforms offer the facility of documentation as training support. On the other hand, Nifty Gateway and Rarible also include the facility of live online training. You wouldn’t get these advantages with Mintable and OpenSea. It is also important to note that Mintable, Nifty Gateway, OpenSea, and Rarible do not offer the facility of in-person and webinar-based training.

Technology Integrations

The final aspect in the Mintable vs Nifty Gateway vs OpenSea vs Rarible comparison would focus on the flexibility of technology integrations. When you are adopting an NFT platform, you must be worried about the possibilities of using the functionalities of other tools. Mintable offers support for integration with,

Ethereum
Metamask
Rainbow Wallet
Unstoppable Domains
Trust Wallet

Nifty Gateway offer integrations with Ethereum and Metamask only. On the other hand, Rarible also supports integrations with Coinbase Wallet, WalletConnect, MyEtherWallet, Torus, and Fortmatic alongside Ethereum and Metamask.

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However, OpenSea is obviously the biggest shark when it comes to technology integrations as it provides support for integration with various other tools. OpenSea provides the flexibility for integration with the following tools,

Ethereum
Metamask
Arkane
Authereum
Coinbase Wallet
Mintbase
Dapper
Fortmatic
Portis
Bitski
Opera Touch
Kaikas
WalletConnect
Torus
WalletLink
Unstoppable Domains

Mintable vs Nifty Gateway vs OpenSea vs Rarible – Comparison Table

You could get an abridged version of the Mintable vs Nifty Gateway vs OpenSea vs Rarible comparison in the following difference table.

Please include attribution to 101blockchains.com with this graphic.

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Final Verdict

The detailed overview of the Mintable vs Nifty Gateway vs OpenSea vs Rarible comparison leads to many interesting observations. First of all, we came to know that Rarible is the latest addition to the NFT platforms. At the same time, the discussion also shed light on the facility of training support for using the platforms.

While all the platforms offer official documentation as training resources, Nifty Gateway and Rarible go a step further with the facility of live online training. However, the support for technology integrations served as a decisive factor in comparison between the four NFT platforms. OpenSea offers support for integration for a maximum number of tools at 16, while Mintable supports integration with 5 tools and Nifty Gateway with 2.

Finally, the difference between the four platforms on the basis of the audience helps in finding the ideal choice. The audience section in Mintable vs Nifty Gateway vs OpenSea vs Rarible comparison shows that each platform serves specific purposes. So, you could choose the ideal NFT platform which could fit perfectly with the requirements in your desired use case. Learn more about NFT trading platforms and how to use them to your advantage right now!

The post Mintable vs Nifty Gateway vs OpenSea vs Rarible Comparison appeared first on 101 Blockchains.

Frequently Asked Questions for EIP-1559

Diego Geroni — Thu, 22 Jul 2021 06:42:35 +0000

In this article, we will discuss the top frequently asked questions for EIP-1559.

Ethereum is one of the revolutionary platforms which completely changed the conventional approaches of using blockchain. It has introduced the concept of EIPs or Ethereum Improvement Proposals for enabling the addition of new features and processes. Recently, the discussion around EIP 1559 has gained profound attention as it is ready to become a part of the London Hard Fork of Ethereum in July 2021.

Introductory guides on EIP 1559 could offer promising insights on the need for EIPs and a basic overview of EIP 1559. However, EIP-1559 FAQs are the most crucial instrument for understanding the new EIP specification comprehensively. The following discussion covers some of the notable frequently asked questions about EIP 1559.

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FAQs about EIP 1559

The definition and working of EIP 1559 showcase an adequate impression of its functionalities for the evolving Ethereum landscape. On the other hand, it is reasonable to encounter many doubts from the perspective of users, token holders, and miners. Let us take a look at the top frequently asked questions for EIP-1559 as follows.

1. What is EIP-1559?

One of the first and most obvious entries among EIP 1559 questions draws attention towards its definition. It is actually a proposal for introducing radical transformation in the Ethereum fee market with some key changes. First of all, the EIP-1559 introduces a replacement for the existing gas limit. Now, the EIP-1559 introduces two different values, such as the long-term average target and the hard per-block cap.

The long-term average target is similar to the existing gas limit, while the hard per-block cap amounts to two times the existing gas limit. The definition in the EIP-1559 FAQ also brings attention to the base fee. Transactions have to pay the base fee, and it is burned with adjustment on a block-by-block basis for ensuring a value that enables sustaining the average block gas usage similar to a level resembling the existing gas limit.

Know more about EIP-1559 here

2. What are the benefits of EIP-1559?

The importance of EIP-1559 benefits in discussions on frequently asked questions for EIP-1559 is unquestionable. EIP-1559 presents many prolific reasons for considering its value for the Ethereum landscape in general. The first benefit of EIP-1559 is evident in the better overall experience of using Ethereum through the new transaction fee mechanism. As a result, the adoption of Ethereum could increase at a margin.

The process of burning the base fee in EIP-1559 ensures the internalization of a part of the revenue generated by miners. Therefore, the new EIP variant showcases adequate promises for transforming Ether into a productive asset. The benefits of EIP-1559 in EIP 1559 questions also focus on the reduction of the inflation rate for Ether. Subsequently, ETH could become more appealing as a store of wealth and grow its target market.

Also Read: 4 Common Myths About Ethereum’s EIP 1559 Upgrade

3. Can EIP-1559 reduce the price of gas?

It is also important to reflect on the impact of EIP-1559 on gas prices on the Ethereum network in the EIP-1559 FAQ. Although many assumptions paint EIP-1559 as a favorable intervention for reducing gas prices, the primary intent of the Ethereum Improvement Proposal is completely different. The higher predictability of the base fee with EIP-1559 could lead to lower gas prices.

However, the reduction depends on assuming predictability due to lesser instances of users making unreasonably higher payments for gas. In the case of EIP-1559, the base fee will improve or depreciate by 12.5% following the instance of blocks reaching over 50% capacity.

4. Is it reasonable to use a second price as an alternative?

Many people have pointed out to possibilities of using second price or kth-price auctions for dealing with inefficiencies in first-price auction systems. Kth-price auctions imply that every individual has to pay a gas price similar to the lowest gas price included in the block. Now, the efficiency of such types of auctions becomes clearly evident from the perspective of conventional economic analysis.

However, frequently asked questions for EIP-1559 also focus on the setbacks with kth-price auctions. The kth-price auction system presents a vulnerability to collusion, thereby implying the improbable chances of using it as a replacement for the existing auction mechanism for pricing transaction fees in Ethereum.

5. What is the impact of EIP-1559 on user experience for configuring transaction fees?

The central assumption with EIP-1559 focuses on tailoring fees in accordance to block demand with better transparency to users. Some of the wallets, such as Metamask, could offer better estimates without having to depend on external price prediction mechanisms. The role of the protocol in managing the base fee contributes profoundly to the user experience while setting transaction fees.

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6. What about user experience in network congestion?

The concerns of network congestion also serve as an important topic in EIP 1559 questions. In the time of higher network congestion, the base fee shifts by 12.5% in the extent of demand, surpassing the ideal gas limit per block until the reduction in the demand. Users could get a better impression of congestion in the network from the extent of the base fee. Therefore, users could choose to pay the premium price during high network congestion. On the other hand, users could also opt for a lower transaction fee and wait for a reduction in network demand.

7. Can tips lead to bidding wars?

EIP-1559 FAQ entries also point out concerns arising from tips. Wallets could simplify the selection of tips through observation of tips that have been accepted previously on the chain. The wallets could increase the tip for a transaction sent by them which has not been accepted quickly. In the case of higher network congestion, tips can lead to bidding wars by detecting congestion. Wallets could then provide options to users for setting priority for their transactions.

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Final Words

The frequently asked questions for EIP-1559 can provide insights beyond the basic understanding of the Ethereum Improvement Proposal. The specification gives new opportunities for transforming the existing mechanism for determining transaction fees on Ethereum. The detailed resolution of FAQs regarding EIP-1559 could clarify any doubts which you might come across while understanding EIP-1559.

Most important of all, FAQs give a chance for understanding the unique functionalities and responses of the Ethereum network in certain scenarios. If you want to learn more about EIP-1559 and other related concepts, then it is reasonable to dive further into answers for more FAQs now!

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Central Bank Digital Currency on Corda – An Ultimate Guide

101 Blockchains — Wed, 21 Jul 2021 08:06:48 +0000

Central bank digital currencies (CBDC) is a tangible use case for distributed ledgers, already being implemented and explored by many of the largest nations. COVID-19 has accelerated the shift to a digital first mindset. Our increased time at home and online has brought into focus the efficiency potential and opportunities presented by digital and programmable money, as cash use has continued to decline.

Distributed ledger technology is one of the key technologies being evaluated by global central banks to pave the way for the next phase of the digital economy and to accommodate the needs of the modern financial world.

CBDCs present a way for banks and traditional financial services providers to achieve true digitalization. The rise in fintech and open banking has driven greater collaboration and competition across financial services. CBDCs extend the safest form of money available to banks, businesses and the public – central bank money – via new digital rails to further increase the potential for innovation.

As per a report by Coindesk, as many as 80% of central banks are considering a central bank digital currency while 40% are already in a proof-of-concept stage including China, Japan, Australia, and Singapore.

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What are CBDCs?

A CBDC is a digital payment instrument and store of value issued by, and as a liability of, a central bank or monetary authority. The main difference between a CBDC and other digital currencies is that it is denominated in the national unit of account of the central bank’s country or currency zone. CBDC, issued on distributed ledger and digital asset management infrastructure like Corda allows the digital financial system to stay in sync, with the appropriate identity, transaction privacy, resilience and governance controls required.

In other words, contrary to the existing process of printing money, CBDCs are a way of issuing digital tokens that represent fiat currency and provide a payment instrument for retail and wholesale banking. Just like money, CBDCs would be supplied, regulated and controlled by the central bank, making them very different from other cryptocurrencies, or even stablecoins.

Must Read: Advantages Of Central Bank Digital Currencies (CBDCs)

CBDCs and R3’s Corda

The Corda blockchain platform is one of the few being used extensively by global central banks, financial market infrastructure providers, and commercial banks for the exploration and implementation of CBDC projects.

Corda and R3’s ecosystem of global banks provide a ready-made network to integrate programmable money that can interoperate with currencies across different central banks’ networks. This allows central banks to tap into the global market and provide new services to both financial institutions and/or the general public. Compared to other blockchain networks, Corda enables much faster transaction processing, provides regulators the ability to trace transactions, and also preserves privacy by facilitating transactions in a point to point manner.

To know more about Central Bank Digital Currency on Corda, check out the detailed graphic here-

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Mentioned below are some other factors why Corda’s core design is suitable for building CBDCs and regulated financial markets:

1. Data privacy

Being a permissioned blockchain with a peer-to-peer architecture, Corda ensures transactional data is only shared among concerned parties on a need-to-know basis – rather than distributing it over the whole network. Therefore, it allows control over data privacy while maintaining the necessary transparency and trust between counterparties.

2. Strong identity model

Corda’s identity model ensures that participants are represented as legal entities and managed consistently. Therefore, the intrinsic characteristics of Corda make it a perfect fit for CBDC implementations as a robust approach to identity brings trust and security to the network.

3. Scalability

The peer-to-peer architecture, scalable consensus model, workflows that can run in parallel, and other enterprise grade optimizations ensure that Corda can achieve unparalleled scalability. For example transaction validation is completed by notaries, and multiple notaries can be added to a network to increase throughput and reduce latency.

In addition to its core features, R3 has invested development work in the CBDC space,

launching its Digital Currency Sandbox following a year-long working group with over 140 central banks, FMIs, commercial banks, and service providers. The working group output provided reference models for retail and wholesale CBDCs, and a CBDC taxonomy to drive standardization in the way the ecosystem talks about CBDC. These learnings are now translated into the sandbox which enables central banks, commercial banks, exchanges, payment providers, and more to dive deep into the technology supporting a CBDC and develop strategies and applications for engaging alongside an emerging ‘ready-made payments ecosystem’.

Along with the rest of the sandbox ecosystem, users can simulate the issuance of a digital currency with demos and documentation. Participants will also learn how each transaction works on Corda, the only Distributed Ledger Technology (DLT) platform built specifically for highly regulated industries.

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Types of CBDCs

1. Retail CBDC

Retail CBDCs, or general purpose CBDC issued to the general public represent the harder of the primary use cases for CBDC with many open conceptual questions about their potential design and implementation. While no production use cases yet exist, central banks are committing increasing resources to these projects. Central banks’ motivations include promoting financial inclusion, facilitating monetary policy, enabling participation in a tokenized financial ecosystem, fostering competition, providing a cash alternative, or generally modernizing payments.

A prominent example of Retail CBDC on Corda is the project by Riksbank. Riksbank identified the opportunity to provide the ‘e-Krona’ and started exploring the possibility of issuing a CBDC, using blockchain technology. On April 15, 2021, the Swedish bank governor revealed the target of having an operational digital currency in five years.

The project has already run in a testing environment where users were allowed to hold e-kronor for performing financial activities such as deposits, withdrawals, and making payments through a mobile app. Other possibilities are the use of smartwatches and other smart wearables for making payments using e-kronor.

2. Wholesale CDBCs

Wholesale CBDCs are primarily used to establish a seamless digital payment ecosystem between banks. Using wholesale CBDCs, banks can protect themselves from the build-up of credit risk through a real-time settlement process controlled by code. The transfers happening between banks in this scenario are “atomic” with the transfer of value represented by the exchange of tokenized CBDCs between parties made directly and without intermediaries.

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As a result, there are a number of wholesale CBDC projects that have explored R3’s distributed ledger technology. A few of them are mentioned below:

Project Jasper

The Bank of Canada started exploring the possibility of a Central bank Digital Currency which led to the initiation of project Jasper on R3’s Corda DLT platform. The project was released in three phases to understand its usefulness in the interbank settlement process and was marked as one of the most successful initiatives by the Bank of Canada.

From March of 2016 to June of 2016, the first phase of project Jasper was carried out. Phase 1 was focused on the storing and transferring of central bank-issued digital receipts on a distributed ledger providing security and auditability.

Phase 2 started in May of 2017 where the project was built on R3’s Corda introducing a liquidity savings mechanism for frictionless settlement between the banks.

Finally, phase 3 was initiated in October of 2017 after recognizing the powers of a DLT-based CBDC system along with the liquidity savings mechanism as well as atomic “Delivery vs Payment” transactions. This phase marked the development of a proof of concept for the project.

Project Ubin

The Monetary Authority of Singapore (MAS) was not far behind in exploring the powers of distributed ledger for their financial ecosystem. The MAS initiated project Ubin in two phases.

Phase 1 was started in November 2016 which was successful in creating an efficient digital payment structure for interbank settlement using the digital representation of the Singapore dollar.

Phase 2 of Ubin started in June 2017 to explore different DLT platforms including R3’s Corda for the primary purpose of implementing a decentralized real-time gross settlement (RTGS) system along with Liquidity savings mechanisms.

Project Inthanon-Lionrock

Started in March of 2017, LionRock on Corda explored the possibility of building an interbank settlement system including securities issuance, lifecycle, and delivery-vs-payment.

The project is a joint initiative by the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BOT) to explore the possibility of CBDCs.

More recently, notable projects using Corda and partnering with R3 also include Project Helvetia run by the BIS Innovation Hub, SIX Group AG, and the Swiss National Bank and Project Jura.

Also Check: Top 10 Corda Use Cases You Should Know About

Benefits of CBDCs

In general, CBDCs have the following benefits:

Transactions can be peer to peer, allowing for individual participants to custody their own money or assets, or hold accounts direct with central banks
The underlying technology of blockchain ensures global integrity of the system in which CBDC exists
Overall system risk has the potential to be greatly reduced with CBDCs
Increased availability and accessibility due to the possibility of using mobile devices for digital transfer of value
Cross-border payments using CBDCs can be completed in seconds and at a very low transaction fee as compared to the existing system
They allow more control over money supply and new tools for the implementation of monetary policy
Efficient tax control and tracking of payments is another benefit.

Specific to R3’s Corda, building CBDCs have numerous benefits aligned with the Corda features as listed below:

Corda facilitates unparalleled data privacy which becomes a crucial factor for digital settlements
Strong identity management on Corda allows a streamlined payment ecosystem in the digital space
The scalability offered by Corda is a perfect fit for CBDC applications.
Transactions and settlements are deterministic and validated by notaries rather than using a probabilistic approach.

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Top 5 DeFi Wallets for 2022

Diego Geroni — Mon, 12 Jul 2021 07:27:20 +0000

DeFi protocols have been making a lot of news in the domain of blockchain now. DeFi has enabled the development of a completely new breed of financial products which simplify financial services for everyone. However, one of the most important requirements for using DeFi protocols refers to a DeFi wallet. DeFi allows you to become your own bank without depending on intermediaries.

Wallets are essential for providing secure, accessible, and intuitive interfaces for interacting with DeFi products. In recent years, DeFi wallets and asset management tools have redefined the ways investors and users accessed financial technology. As the world gears up for embracing an innovative approach for transforming the financial services sector, let us find out more information about the top DeFi wallets you can find now.

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Understanding Decentralized Finance Wallet

The first concern in any discussion about decentralized finance wallets is an overview of the tools. However, you need to understand what exactly it is before you start looking for the tools. Wallets are important requirements for participating in the DeFi ecosystem as they offer significant functionalities of usability and security.

The security of your assets on DeFi is invaluable, and at the same time, you must ensure a simple user experience. DeFi wallets help you in storing your assets securely, even when they are disconnected from the internet. Additionally, you would also need online wallets that can help you interact with DeFi protocols easily alongside exchanging crypto-assets flexibly.

The next important factor that comes to mind which thinking of a decentralized finance wallet refers to its traits. Some of the crucial traits which distinguish a decentralized finance wallet are as follows,

Key-based

The most important trait in decentralized finance wallets refers to their unique key pair. The key pair indicates a profound difference from the centralized wallets. Users have to take responsibility for safeguarding their private keys, generally offered in the form of a 12-word seed phrase.

Non-custodial

The wallets enable users to send and receive funds with the assurance that they would be the only ones accessing funds.

Accessibility

From a virtual perspective, all the non-custodial wallets could easily manage a complete suite of assets. Particularly, Ethereum-based DeFi wallets could enable users to deposit ETH alongside stablecoins such as Dai, ERC721 tokens such as Axies, and ERC20 tokens such as KNC.

Compatibility

It is possible to access all decentralized wallets by connecting a web3 wallet. Now, mobile wallets have started integration of dApps browsers for easier connection with DeFi applications without leaving the app.

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Top Picks for Decentralized Wallets

With the different features of decentralized wallets presenting cognizable benefits for users, it is inevitable to find out an ideal pick that fits all the criteria. However, choosing the best DeFi wallet 2022 can be a tough job when you don’t have a clear impression of the top choices. The following entries in the domain of decentralized wallets could help you make the right choice for your DeFi journey.

1. Metamask

Metamask is basically a web browser extension that could also serve the role of a DeFi wallet. It offers a flexible gateway for easier access to DeFi by leveraging any specific internet browser. Unlike other DeFi wallets, users could install Metamask on the web browser of their computers.

Metamask is also accessible on phone, although you may need a bigger screen for ease of opening multiple windows. It will also help you move seamlessly from one tab to another in the course of adding other DeFi apps. You can use Metamask by using a simple mouse and keyboard on your computer. Additionally, the easily legible screen size doubles up the points for user experience.

Metamask offers support for the ERC20 standard tokens of Ethereum alongside Binance Smart Chain BEP-20 tokens. In addition, Metamask also offers support for trading on layer 2 solutions such as Polygon (previously referred to as Matic). As a result, you can clearly notice the benefit of versatility with this unique wallet for DeFi.

The seamless integration with the majority of DeFi apps and protocols by using Metamask DeFi wallet also plays a crucial role in its popularity. In addition, almost all walkthroughs and how-to guides on major DeFi platforms use Metamask as the reference for explaining tasks. Therefore, it can be a perfect fit for beginners as well as experienced players in the DeFi ecosystem.

With so many plausible benefits, it is quite difficult to notice that Metamask also features certain risks. Metamask makes you more vulnerable to different types of hacking attacks. Some of the common types of hacks that can affect Metamask users include malware, phishing websites, and malicious smart contracts.

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2. Eidoo

The next entry which might qualify as the best DeFi wallet 2022 is Eidoo. It is a multifunctional crypto wallet with a non-custodial nature and opportunity to access a wide assortment of DeFi platforms. Eidoo offers support for ERC721 and ERC20 tokens alongside allowing users to store cryptocurrencies such as Litecoin and Bitcoin. Interestingly, Eidoo also fulfills the promise of being a multicurrency wallet as it supports more than 1000 tokens.

The most important trait of a decentralized wallet actually focuses on its capability for enabling users to grow their ROI. How? They allow users to implement liquidity and yield farming strategies. Eidoo serves the same purpose for crypto investors and traders. In addition, Eidoo also supports many other functions such as,

Allow users to leverage the internal decentralized exchange built in Eidoo for exchanging tokens without any effort.
The in-build NFT manager in Eidoo helps users in purchasing, holding, and trading non-fungible tokens. In addition, it also enables users with skills for easy viewing and management of digital artwork, crypto-collectibles, and other digital assets.
Users could also find Eidoo as the best DeFi wallet due to eidooCARD. It is basically a VISA-based debit card that helps users in spending their cryptocurrency in different online or physical stores all over the world. It also allows users to withdraw fiat currency as well as obtain 10% cashback on eligible purchases.

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3. Coinbase Wallet

It is practically impossible to ignore the name of Coinbase Wallet in the list of decentralized finance wallets. It is a non-custodial web3 wallet from the house of the biggest centralized exchange, Coinbase. The wallet supports a wide assortment of cryptocurrencies and provides better ease of use, especially for beginners. Users could just enter the username of an individual for sending funds without having to type a long hexadecimal code.

In addition, Coinbase Wallet also allows users to transfer assets from their accounts on Coinbase.com. Keep in mind that the Coinbase Wallet is different from the wallet that users generally use for interacting with Coinbase. The native wallet for Coinbase app and website is suitable for purchases, sales, and on-ramps.

On the other hand, Coinbase Wallet is suitable for helping users experience the value of DeFi. It enables users to interact with different DeFi apps and exchanges without the centralized control of Coinbase. The achievements of Coinbase Wallet as a top DeFi wallet also include the proven assurance of security. It leverages features such as biometric security or a six-digit PIN for safeguarding your assets in the wallet.

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4. Trezor

Trezor is also one of the top picks when it comes to the best DeFi wallet 2022. It is actually a cold storage wallet, available in two different models. The first model, Trezor One, presents better affordability, while the second model, Trezor Model T, comes in the higher-end pricing. Users could access top-notch security features in both wallets for online storage of their crypto assets.

You have to enter a PIN for gaining access. In addition, the order of the keypad constantly changes with each use for countering keyloggers. Users could find better ease of use with the Model T touch screen to input the PIN. Furthermore, Model T also offers better adaptability with the constantly growing DeFi ecosystem.

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5. Argent

The final addition among the top DeFi wallets in the present times obviously draws attention to Argent. It presents a radically improved crypto wallet for freedom from paper backups, free transactions, and simple addresses. The mission of Argent basically focuses on offering the benefits of the decentralized finance landscape. Argent is a unique decentralized wallet with a mobile-first approach in the DeFi landscape.

It has the power of meta-transactions which help in relieving the burden of transaction fees. Most important of all, Argent allows users to leverage the functionalities of popular DeFi products that users could benefit from. The social recovery functionality with ‘Guardians’ feature in Argent ensures that users are not locked out of their wallets.

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Bottom Line

The choice of the best DeFi wallet 2022 could be a tough one considering the different alternatives which are available presently. However, the most important thing that can help you find the ideal pick is a clear impression of requirements. Make sure that you have a plan for your journey in the DeFi ecosystem, the objectives you want to achieve, and the resources you need. Subsequently, you could also focus on the essential traits of decentralized wallets as a reliable factor for choosing the best. You can learn more about decentralized finance and wallets in detail before you decide to use a decentralized wallet now.

The post Top 5 DeFi Wallets for 2022 appeared first on 101 Blockchains.

Best Asset Management Tools for DeFi

Diego Geroni — Thu, 08 Jul 2021 10:06:43 +0000

Decentralized finance has come up as one of the interesting interventions for the world of finance in recent times. It has completely changed the way people interact with financial services with a vision for enabling financial inclusion for all. Most recently, the applications of decentralized finance or DeFi in asset management have gained the attention of many renowned financial media outlets.

As a result, the interest in finding out the best DeFi asset management tools has also grown profoundly. However, the rapid progress of the DeFi ecosystem has also spurred many asset management tools. Therefore, it could be quite difficult to round up the top options among DeFi asset management tools. The following discussion offers you an overview of the top DeFi asset management tools.

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Why Do You Need DeFi Asset Management Tools?

The number of projects based on DeFi protocols has increased in recent times with innovative financial products. The different tools for tracking, managing, and hedging exposure through a collection of different DeFi projects are definitely commendable. They have proven successful for different projects in the fields of lending, derivatives, and decentralized exchanges. With the benefits of trustless environments, composability or interoperability, and transparency, decentralized asset management tools can transform the traditional implications of asset management.

Before diving into the details of asset management tools for DeFi, it is important to understand their essential traits. Here are some of the mandatory aspects which you should include in asset management products.

Composability

Renowned asset management projects offer the facility for connecting to a wide assortment of DeFi projects, thereby enabling a seamless DeFi experience.

Pseudo-anonymity

The asset management products for DeFi are able to connect by leveraging a wallet address. Users have the option of sharing their identity if they want to or else remain anonymous.

Non-custodial

The best DeFi asset management tools do not imply revoking ownership of underlying assets. The assets continue to reside in the wallet in use.

Global accessibility

The most important characteristic of DeFi asset management tools is the scope for flexible accessibility, irrespective of tax bracket or location.

Automation

The continuously increasing count of asset management tools features automation. As a result, they can enable collateralization, liquidation, and rebalances seamlessly without the need for user interaction.

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Top DeFi Asset Management Tools

The first thing that comes to mind when thinking about DeFi asset management tools refers to digital wallets. In addition, the applications focused on managing crypto-asset portfolios are also one of the top entries which come to mind when thinking of asset management tools. However, these solutions have some critical setbacks. You don’t need to worry about these pitfalls as you could opt for the following asset management tools for DeFi.

1. Set Protocol

One of the first entries among DeFi asset management tools would refer to the leading asset management solution, Set Protocol. It helps users in leveraging contemporary trading strategies through buying ERC20 tokens, referred to as sets. The platform features an aggregation of different automated trading strategies in a detailed list.

The detailed list has the capabilities for rebalancing in accordance with various technical indicators and trends such as Relative Strength Indexes and Moving Averages. The option of ‘set and forget’ in this protocol provides convenience for users as the sets could go through automatic rebalancing in accordance with their target strategy. As a result, passive investors get the opportunity to capitalize on markets trends without actively participating in trades.

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2. Zerion

The next top addition among decentralized asset management tools would obviously bring Zerion to your attention. Zerion offers a unified dashboard for faster tracking of an asset’s position throughout different DeFi products. Interestingly, Zerion has quickly acquired the reputation of being one of the sleekest solutions for asset management. The dashboard offers crucial features that establish the credibility of tracking features in Zerion.

Users could leverage the dashboard for accessing the features for saving, exchanging, investing, and borrowing with some of the notable products in the DeFi landscape. The efficiency of Zerion is clearly evident in the facility of support for different web3 wallets and its non-custodial nature. As a result, users don’t have to deposit their assets in the platform as Zerion tracks only the asset’s position in a wallet.

3. DeFi Saver

The name of DeFi Saver is also one of the additions among best DeFi asset management tools. Investors could explore the benefits of automated asset management services with DeFi Saver. The platform allows investors to ensure ideal regulation of their asset position on the basis of a predefined ratio. DeFi Saver could carry out functions of sales and purchases for maintaining the desired ratio in event of market movement and increased leverage.

The most striking highlight of DeFi Saver points out the facility for integration of different wallets, protocols, and exchanges. DeFi Saver supports wallets such as Coinbase, Trezor, and ImToken. The supported exchanges on DeFi Saver include Uniswap, Kyber, and 0x.

Interestingly, it also supports some of the notable DeFi protocols such as Compound, Aave, and Maker. DeFi Saver is unique when compared to other DeFi asset management tools, which facilitate the connection of human asset managers through a decentralized fashion. On the contrary, DeFi Saver represents a new breed of decentralized asset management tools featuring complete automation.

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4. Gnosis

Many DeFi asset management tools are not capable of catering to team-based asset management. Gnosis fills the void by serving as an asset management platform tailored particularly for individuals aspiring for management of crypto assets in the form of a team. Additionally, Gnosis also includes support for individual investors.

Gnosis is one of the top asset management tools for DeFi as it offers diverse functionalities to users. It enables storing, investing, and trading of crypto assets alongside supporting flexible access to a wide range of DeFi apps. Apart from the asset management functionalities, Gnosis also supports business-oriented users through services such as payroll management.

5. dHEDGE

Another notable addition among top DeFi asset management tools is dHEDGE. It is actually a decentralized asset management protocol featuring integration with Synthetix. The platform allows investors to connect seamlessly with asset managers. As per the claims of dHEDGE, it can connect investors with some of the top investment managers of the world via the Ethereum blockchain.

The protocol and connected platforms focus on transparency as a promising benefit associated with decentralized asset management. Investors could easily access the track records of asset managers with exceptional transparency before putting their capital in dHEDGE.

Most important of all, users could view the performance of an asset manager through the dHEDGE platform leaderboard. Furthermore, it also includes a ‘Performance Mining’ feature that offers rewards to users investing in profitable pools on the platform. The holders of DHT tokens are responsible for addressing governance concerns in dHEDGE.

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6. Yearn.finance

The search for top DeFi asset management tools could also take you to Yearn.finance. It is one of the most commonly preferred suites for decentralized finance products. The notable product in Yearn.finance portfolio for asset management refers to Vaults that helps investors for investing their capital.

Subsequently, the capital goes into investments through different unique strategies tailored for offering maximum yield from the asset deposits. At the same time, the strategies are also designed to reduce the concerns of risk in asset management. The foremost advantage of Vaults is the freedom from transaction costs involved in individual trading, facilitated through pooling the assets of investors.

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Alternative for Asset Management DeFi Tools

With so many prolific alternatives among decentralized asset management tools, there is a limited chance that you would look for alternatives. On the contrary, the management of assets could be quite overwhelming even with the use of a special DeFi asset management tool. In this case, you should choose crypto index protocols as the alternative. Crypto index protocols do not need any particular asset management. The tools are helpful for collecting and storing top crypto assets in smart contracts with promises of returns without interventions.

Bottom Line

The understanding of different entries among the best DeFi asset management tools has provided a clear impression of their potential. You can go through basic guides and an overview of asset management on DeFi for building your foundational knowledge of DeFi asset management. As a result, you can find the best pointers to search for the ideal DeFi asset management tools according to your requirements.

At the end of the day, the choice of a DeFi asset management tool depends a lot on your requirements and preferences. You can choose real asset managers through decentralized platforms or opt for completely automated tools. Learn more about DeFi asset management right now!

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Are Blockchain and AI a Perfect Combination?

Gwyneth Iredale — Tue, 29 Jun 2021 11:33:43 +0000

Can Blockchain and AI work together? Does Blockchain and AI make a perfect combination? Let’s dive in to find the answer to these questions.

Blockchain technology is undoubtedly one of the simplest and ingenious ways in which the methods for transferring information have changed. It offers an open network in which participants could transfer information or money with complete safety, transparency, and immutability.

Over the years, blockchain had been overshadowed by the popularity of cryptocurrency. However, it has recently found prominent recognition and, most important of all, blockchain has the potential of integrating with other technologies. So, can blockchain and AI work together?

There is no doubt that AI and blockchain are significant technologies for empowering the modern wave of digital transformation. The convergence of these technologies could lead to the foundation of new business models. For example, autonomous agents can be programmed for receiving and sending money by utilizing blockchain. So, is blockchain AI convergence truly worth the hype? Let us find out the answer in the following discussion.

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Understanding the Link between Blockchain and AI

Blockchain has always found places in discussions about payments with respect to cryptocurrencies. However, the non-financial use cases of blockchain in digital identity management and supply chain management have highlighted more about its potential. So, the scope for combining blockchain and AI emerged subsequently as different use cases of blockchain started gaining attention. Before finding how they are linked to each other, let us understand the terms.

Blockchain is a distributed digital ledger shared across peers in the network. The peers or nodes agree on transactions that you have to add to the blockchain network. The transactions on the network are stored on blocks that have unique hash values alongside time stamps for verifying integrity. The connection of blocks to each other in the form of a chain gives the reason for the term ‘blockchain’. The chain of connected peer-to-peer networks is practically immutable and offers the desired security from data modification.

Artificial intelligence is the ability to the simulation of human intelligence through the use of machines. The blockchain artificial intelligence equation largely depends on the capabilities of AI for enabling technological solutions with cognitive traits. The primary goal of artificial intelligence focuses on reducing human errors while ensuring faster operations. Therefore, you can clearly notice how both AI and blockchain aim to make processes faster. Using both of them together definitely presents some interesting prospects for expanding the applications of blockchain across diverse sectors.

Trends for Blockchain and AI Combo

The blend of artificial intelligence and blockchain could introduce radical innovations in the future. A detailed understanding of existing trends associated with the blockchain and AI relationship could help in identifying the reasons for considering the combo. According to the International Data Corporation, global expenses on AI increased to almost $57.6 billion by 2020. Interestingly, around 51% of businesses leveraged the AI and blockchain combination. Existing trends of applying AI in the blockchain would improve blockchain by introducing the following functionalities,

Data protection
Smart computing power
Data monetization
Creation of diverse data sets

Blockchain could also provide a better platform for understanding AI. It can help in tracing the decision-making processes in machine learning. Blockchain could help in accurate documentation of each data and variable involved in the decision-making of AI algorithms. Furthermore, blockchain AI convergence is also favorable on the grounds of assured improvements in blockchain efficiency. For example, Artificial Intelligence could help in automating various aspects of blockchain management, such as audit trail monitoring.

Differences between AI and Blockchain

Well, the existing state of affairs around the blockchain and AI combination definitely shows that it is reasonable to start looking for AI-empowered blockchain solutions. However, it is also important to find out the differences between AI and blockchain to know whether they would be the right fit.

The foremost aspect which differentiates AI and blockchain refers to centralization. AI is essentially a centralized technology, while decentralization is the essence of blockchain.
The next crucial difference between Artificial Intelligence is transparency. While blockchain is easy to understand and presents better opportunities to start off, Artificial Intelligence has many complex algorithms and concepts.

It is inevitable to wonder whether these differences can serve as challenges in the adoption of AI-powered blockchain solutions. As a matter of fact, the benefits of combining these two powerful technology trends can overshadow these differences.

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Advantages of Combining AI with Blockchain

It is clear that two different technologies have unique traits when working independently. However, combining the best of both for the larger good is perfectly evident in a blockchain and AI combo. Here are some of the notable advantages of combining AI with blockchain.

Encryption Advantages

AI and blockchain could provide a substantial boost for improvements in encryption. First of all, AI has formidable potential with respect to security. Recent developments in AI have been focused on developing algorithms capable of working with data in an encrypted state. This is obviously a security risk while blockchain security algorithms can make a supportive intervention with information stored in encrypted form.

Blockchain AI applications could offer the benefit of storing highly sensitive personal data. With the ideal and smart processing approaches, the data could help in unlocking convenience and value. For example, smart healthcare systems could ensure precise healthcare routines by scanning medical records with assured security.

Ease of Blockchain Management

The benefit of better management is an obvious reason for which it is important to consider AI and blockchain combinations. We have always had fast computers, although without any clue what to do until provided with specific instructions. Therefore, utilizing blockchain on computers could imply the need for large amounts of processing power.

Hashing algorithms for mining blocks follow a brute force approach by trying different combinations of characters for finding the suitable alternative for verifying a specific transaction. So, it is clearly visible that dealing with blockchain definitely takes a lot of processing power to carry out each process. Now, the blockchain and AI combination could work as a reliable solution for addressing this issue.

AI can help in making a shift away from the brute force approach, thereby managing tasks with intelligent and reasonable approaches. AI algorithms are tailored for learning with every interaction within seconds that a human expert would take many years to learn.

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Tracking, Understanding, and Explaining AI Decisions

Blockchain is popular for its decentralization and transparency. Therefore, it gives the perfect instrument for peeling the layers of complex AI algorithms to understand their decision-making processes. The decisions by AIs could be difficult for humans to understand. However, there are situations where AI-based decisions will have to be brought to audit, primarily for verifying accuracy. The most prominent example of Walmart shows that it inputs almost one month of transactional data throughout the stores in its AI systems, making decisions regarding stocking or location of products.

The blockchain and AI combination can work perfectly in this case with the advantages of the datapoint-to-datapoint approach for documenting decisions. As a result, it also presents prolific opportunities for improving the credibility of AI. The growing trust of people in AI could lead to new strides in transparency and insights into the minds of robots.

Top Blockchain AI Use Cases

The benefits of blockchain, when used in combination with AI, have a tough advantage over the conflicts between them. However, any concept appears good on paper. In theory, it is possible to conjure up strategic plans and models for AI-based blockchain solutions. However, are there any practical applications of blockchain and AI put together? An overview of some of the real examples of AI-powered blockchain solutions could help you understand the value of combining both.

1. Botchain

One of the notable blockchain AI projects in recent times, Botchain, provides the ideal nurturing ground for expanding and connecting AI-bots and software. The network aims to create its own ecosystem, and it offers identity validation, universal registration, compliance capabilities, and bot audit. Subsequently, Botchain could offer critical systems for any individual using AI-powered solutions and the developers.

2. Matrix AI

Another top name among the renowned applications of blockchain and Artificial Intelligence used together is Matrix AI. Matrix AI is capable of leveraging AI-powered technologies, for example, natural processing language, for offering blockchain functionalities. The features of the Matrix AI project include AI-based cybersecurity, dynamic delegation network, auto-coding intelligent contracts, adaptive blockchain parameters, and others.

The striking highlight of the tool is the AI-powered secure virtual machine which can help in identifying possible loopholes. It also offers detection of malicious intentions alongside maintaining resilience in event of high-intensity attacks through generative adversarial networks.

3. SingularityNET

SingularityNET is also another promising example of using blockchain and AI together. It is actually a full-stack AI solution based on a decentralized protocol. Apparently, it is one of the first and only decentralized platforms to have enabled support for operations and management of AI at scale.

The SingularityNET platform serves as the core infrastructure for enabling communication and transaction between AI services. So, what is the most appealing value advantage of SingularityNET? It can help users in leveraging a worldwide network of AI agents, algorithms, and services.

4. Numerai

It is also important to turn our attention towards Numerai as one of the top blockchain AI projects. It is an AI-based cryptocurrency project with a critical data science problem. Numerai is actually a tournament in which users have to develop models by using the predefined R and Python scripts.

The tournament renews every Saturday, and new tournament data is also released. Users have to solve the problem and submit it by Monday for earning rewards in the form of Numerai tokens.

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Challenges to the Adoption of AI-based Blockchain Solutions

While blockchain and Artificial Intelligence definitely make a good pair, there are many obstacles in their way. Let us find out some of them.

Artificial intelligence and blockchain are just considered buzzwords for technological fluency. An enterprise needs to have a commitment to selecting or developing an AI-powered enterprise blockchain solution for better success with adoption.
Change to resistance is evident as many business leaders could introduce machine learning easily. However, the same is not applicable to the blockchain. In the case of combining AI with blockchain, potential modern-day solutions could become fuzzier.
Strong investments in improving the computing capabilities of AI-based blockchain solutions are also a critical challenge for the AI-blockchain combo. It is important to sustain your confidence in the potential of combining both together.

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Final Words

The capabilities of Artificial Intelligence can offer promising advantages for different sectors. The interesting factor is that both the innovative technologies have a lot to offer for improving each other. For example, blockchain helps in improving Artificial Intelligence algorithm traceability, and Artificial Intelligence could improve transaction speed and resource effectiveness of blockchain applications.

However, it is also essential to look out for the differences between AI and blockchain. On the other hand, the challenges for combining both also play a major role in defining their future together. Learn more about blockchain and the ways in which AI serves as its ideal companion.

The post Are Blockchain and AI a Perfect Combination? appeared first on 101 Blockchains.

Blockchain Security Algorithms Used to Protect the Blockchain Security

Diego Geroni — Sun, 20 Jun 2021 08:52:53 +0000

With the increasing adoption of blockchain technology, security concerns with the blockchain are also increasing. Thus, the interest of individuals in understanding blockchain security algorithms is also growing simultaneously. If you are also aspiring to learn more about which algorithms are used in blockchain for security, you have reached the right place.

Blockchain is quite a complicated concept in technology, especially with its various advantages dictating its popularity. It offers the assurance of a highly secure, distributed, and transparent exchange of information or money between two parties. However, many people have doubts regarding the ways in which blockchain ensures security for all participants.

This is where you need to look at algorithms used for blockchain security. Blockchain depends on cryptography and consensus mechanisms along with other algorithms for establishing strong security. The following discussion takes you into an outline of the top algorithms in blockchain used for security.

List of Top Blockchain Security Algorithms

Blockchain is actually a distributed structure that allows data storage in a digital ledger. The digital ledger documents all the groups of valid transactions into blocks and arranges them in a sequential chain. New blocks of transactions are added to the blockchain through hashing in cryptography. So, what is cryptography, and why is it important for blockchain security? We’ll learn about cryptography algorithms in the next section along with the other blockchain security algorithms. Let’s dive in!

1. Cryptography Algorithms

Blockchain is a constantly growing collection of records, and new blocks are added to the list continuously. As the network grows bigger, it will be difficult to ensure that all the information on the blockchain is secure from any unwanted threats. Cryptography is one of the fundamental requirements in the blockchain.

It offers the platform for tailoring protocols and techniques to avoid third-party interference in accessing and procuring information regarding data in private messages over the course of a communication process. The objective of a cryptography algorithm prevents any third party from eavesdropping on private communications over a blockchain network. Before reflecting further on cryptography algorithms for blockchain security, let us take a brief overview of the origins of cryptography.

Cryptography can be traced back to ancient times when a cipher was used for transmitting messages. With a specific system for creating coded messages and deciphering them, cryptography was popular in ancient Egypt as well as the Roman Empire. However, the most modern origins of cryptography algorithms refer to the Vigenere cipher of the 16^th century. The most popular example of the use of cryptography refers to the case of the Enigma Machine used by Germans.

It was used during World War 2 and had the capability to generate ciphertexts that could not be decrypted through analysis of letter frequency. Over the years, many new cryptography algorithms, such as the Advanced Encryption Standard algorithm, presented applications for different use cases. Now, it is reasonable to wonder about the type of blockchain algorithm you have for cryptography.

The two most common types of algorithms used for security on blockchain include digital signatures and hashing.

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Digital Signatures

Digital signatures are the perfect examples of an asymmetric-key cryptography algorithm. Generally, blockchain transactions require digital signatures, mostly as a private key. When a user enters their private key for a specific transaction, it can encrypt the transaction. The recipient could decrypt the transaction by using the public key provided by the sender.

Digital signatures are popular algorithms for blockchain security as they involve the association of a key pair through cryptography. The advantage of digital signatures as an algorithm for safeguarding security on the blockchain is the additional layer of security. Since users must also transmit the key along with the transaction, the key needs an additional layer for security.

Hashing

It is important to note that blockchains depend considerably on hashing as a cryptographic algorithm. Hashing can help in the conversion of almost any type of data into a character string. Apart from ensuring the value of security through encryption, hashing also offers a highly efficient store of data.

It is reasonable to wonder about the effectiveness of cryptographic hashing algorithms as the best feature for security on the blockchain. However, the traits of hashing algorithms can showcase more of their effectiveness. Here are some of the traits of hashing algorithms that showcase their efficiency in safeguarding blockchain security.

The same input always generates the same output with a hashing algorithm. Irrespective of the frequency of passing data through the hashing algorithm, it can always create the same hash consistently with the same characters in the string.
Any changes in the input could produce completely different outputs with hashing algorithms. The slightest modification of changing the case of a specific character in a data set could result in a completely different hash.
Hashing algorithms do not allow the opportunity to calculate or deducing the input on the basis of output. It is important to note that there is absolutely no way for reversing the hashing process to view the original data set.
Finally, hashing algorithms present a unique advantage for blockchain security with faster speed. The process for hash creation should be fast while avoiding the intensive use of computing resources.

Hashing is undoubtedly the best algorithm used in blockchain. The demand for cryptographic hashing algorithms is quite high across various blockchain applications. The common cryptographic hashing algorithm refers to the SHA256 algorithm, capable of generating a 32-byte hash. However, new, faster, and lighter hashing algorithms are emerging with promising implications for various use cases.

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2. Peer-to-Peer Network Protocols

Now that you know about the essential blockchain algorithms for cryptography let us take a look at other alternatives. The peer-to-peer network algorithms are great choices for large corporations. In the case of large organizations, single, centralized devices store massive volumes of personal data or users.

Therefore, it clearly shows a single point of failure in the event of any security threat, mismanagement, or loss of data. Blockchain resolves the problem of a single point of failure, thereby contributing profoundly to security. The structure of blockchain empowers nodes in the blockchain system for verifying the authenticity of transactions rather than a third party.

The peer-to-peer network algorithm is not exactly the answer to “Which algorithm is popularly used for security in blockchain?” as it is basically an operating model for blockchain networks. Each node in the blockchain network receives information about transactions between clients. A peer-to-peer network algorithm ensures that each node can verify the credibility of transactions before their documentation as blocks on the network.

The algorithm also implies a review of past transactions of the sender to identify concerns of double-spending. Peer-to-peer network algorithms can accept agreement protocols from miners and reach agreements on the order and sum of different transactions. After verification, a transaction is spread throughout the blockchain in the form of a block. So, the peer-to-peer network algorithm takes away the need for depending on any central authority, thereby offering expanded scope for security.

3. Zero-Knowledge Proofs

Another notable example of a blockchain algorithm employed for security on blockchain networks refers to Zero-Knowledge Proofs (ZKPs). Zero-knowledge proof actually serves as a consensual decision-making process and allows one party to confirm the authenticity of information to another party. The efficiency of ZKP algorithms largely focuses on the fact that the ‘prover’ doesn’t have to disclose any information.

ZKP delivers better security by making the perfect use of cryptographic techniques to ensure that the prover doesn’t have to disclose information about the transaction. On the other hand, the other party can know that the information in possession of the prover is true. As a result, ZKP algorithms can safeguard the decentralized nature of blockchain while preventing any disclosures about the transaction.

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4. Consensus Algorithms

Blockchain allocates power to the network participants. The majority of network participants have to reach an agreement on a specific transaction before adding it to a block. In this case, consensus algorithms offer the functionality of reaching an agreement of a specific data value throughout distributed systems and processes.

Consensus algorithms are the most commonly preferred algorithms for blockchain security. They help different participants on the blockchain network in arriving at a consensus or common agreement regarding the existing data state in the ledger. At the same time, consensus algorithms also help in deriving agreements for trusting unknown peers in distributed computing environments.

Consensus algorithms are an integral part of blockchain networks as they help in maintaining the integrity and security of distributed computing systems. Let us find out more about the different types of consensus algorithms and how they support security on the blockchain.

Proof of Work Consensus Algorithm

Proof of Work (PoW) is the creation of a cryptographic hash. Generally, it requires blockchain validators to take data from the block header as inputs. Then, the blockchain validators could run the input through a cryptographic hash function continuously. Validators ensure hashing of slight changes in input data through the inclusion of an arbitrary number, referred to as a nonce.

The nonce is added with all iterations of running the input data through a cryptographic hash function. PoW algorithm used in blockchain requires higher processing power for determining the addition of data in the next block. Therefore, you may need specialized computers such as ASICs for computing complex mathematical problems required in PoW systems.

Proof of Stake Consensus Algorithm

The Proof of Stake or PoS algorithm emerged as an alternative for PoW. Therefore, it is reasonable to find similar objectives of PoS and PoW. However, both the consensus algorithms have certain fundamental differences and features, especially related to the validation for new blocks on the blockchain network.

The Proof of Stake algorithm features a mechanism that enables the validation of blocks according to a stake of network participants. Rather than running hash functions, PoS algorithms for blockchain security involve staking resources in the form of tokens or digital currency.

Subsequently, it involves the random selection of validators for all blocks from the stakeholders. The amount of computational power allocated to the stakeholders helps in determining the validators. Interestingly, every PoS system could ensure different ways for implementation of the algorithm.

However, it basically involves a random selection process focused on a node’s allocation and the allocation for determining the commitment of parties in ensuring transaction. Ethereum blockchain utilizes the PoS algorithm for achieving better scalability and limited electricity usage.

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Delegated Proof-of-Stake Consensus Algorithm

The Delegated Proof of Stake or DPoS consensus algorithm leverages the concept of a voting system. In a DPoS system, delegates vote for desired validators for supporting the consensus state of new blocks. The validators also take care of validating transactions alongside the maintenance of the blockchain network.

At the same time, the delegates also receive incentives in the form of transaction fees. The DPoS blockchain algorithm is basically a democratized version of the PoS consensus algorithm. It can provide the advantages of managing higher transaction volume alongside faster confirmation times.

Proof of Elapsed Time Consensus Algorithm

The Proof of Elapsed Time or PoET consensus algorithm had been tailored for solving challenges of random leader selection. As a part of the Software Guard Extensions or SGX programming reference manual, PoET has found applications across different private blockchains. It relies on the use of a randomized timer system rather than depending on mining hardware. Every participating node must wait for a specific time period, chosen randomly, and finishing the time could help in earning a new block and validating it.

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Bottom Line

On a final note, it is quite difficult to find out the best algorithms for blockchain security. Algorithms are tailored to solve specific problems by taking certain inputs into account. Cryptography algorithms such as digital signatures and hashing help in safeguarding information from third parties. Consensus algorithms help in ensuring the integrity of participants and transactions on a blockchain network.

So, it is quite difficult to round up on a specific choice of algorithm to safeguard security on the blockchain. The other notable algorithms that come to attention when speaking of security on blockchain include zero-knowledge proofs and peer-to-peer network algorithms. While blockchain is inherently secure, immutable, and transparent, algorithms are essential for ensuring all these traits!

The post Blockchain Security Algorithms Used to Protect the Blockchain Security appeared first on 101 Blockchains.

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Top 10 Questions You Should Know Before Enrolling for a Blockchain Certification

Questions You Must Know Before Pursuing a Blockchain Certification

1. What are the general prerequisites to enroll for a blockchain certification?

2. How will a blockchain certification help in elevating my professional career?

3. What is the validity of a blockchain certification?

4. How will the blockchain certification enhance my CV?

5. Does the blockchain certification create value for multiple job roles?

6. Does the certification program include the related training program?

7. How much time will I get to complete the certification?

8. Will I get expert support for my queries after enrolling in the blockchain certification?

9. What is the average salary of a certified blockchain professional?

10. Is it good to go for a blockchain certification while I’m a fresher?

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2. What are the benefits of EIP-1559?

3. Can EIP-1559 reduce the price of gas?

4. Is it reasonable to use a second price as an alternative?

5. What is the impact of EIP-1559 on user experience for configuring transaction fees?

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7. Can tips lead to bidding wars?

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