Blockchain for Beginners
Blockchain technology can be an extremely promising technology to utilize in the current day and age. Does this mean that everyone understands it? No certainly not. This is why we are here to help! This article has been created to help facilitate a higher level of knowledge among our users when it comes to blockchain technology, some basic principles and some simple processes that can help you to navigate more safely and confidently in the crypto space.
1) What is Blockchain?
Blockchain technology is not new. In fact bitcoin was finalized and began its mining cycle in 2009 by Satoshi Nakamoto. However blockchain technology and the concept of distributed computing by tying data together in blocks that formed a “chain” of sorts as its data structure has existed in academic papers from as far back as the early 1990’s. This also incorporated hash values and time stamps to help create a form of provability through blockchain technology, meaning if you can tie a certain piece of information to a specific block at a specific time and you annotate this data then you have proof of the existence of whatever it is that exists in that block at that time, indefinitely. It will always be there. Otherwise known as immutability or “data permanence”.
What blockchain does is that it creates a massively decentralized network of computers that are used as “fuel” for the chain itself. These machines aid in computational processes and help to facilitate the processing of transactional data across the blockchain and ultimately storing it as well, creating a very large number of backlogs of the same chain on each machine that is connected to it. What this then does is helps to sync all devices that exist on the chain together to maintain continuity.
Long story short, we can use blockchain to store data, process information, track information, transact with one another in a decentralized way, and much more that you cant traditionally do in multiple major fields today, such as the banking world.
2) What is DeFi?
DeFi stands for decentralized finance, which is essentially any and all blockchain technology that aims to operate in a decentralized manner whether it be through staking nodes, mining hardware, or even ownership anonymity. What this means is that you can essentially be involved with multiple projects without anyone having your information or knowing anything about you besides your wallet address. It also aims to remove any centralized power from existence making things more safe and secure from bad actors.
2) What is a token?
Tokens are created using smart contracts. These contracts contain the information required for the token to function properly. There are many different standards of tokens including ERC20, ERC710 and ERC1155 to name a few. These tokens are generated and used for a variety of reasons ranging from farming, ETF’s, staking, airdropping, incentivizing activities and much more. The use case for any token relies on the underlying project that is using it. Tokens are different than coins in the sense that each coin has its own blockchain, whereas tokens are developed and built onto specific blockchains in addition to its primary coin. An example would be $GROW tokens on the ethereum blockchain vs Ethereum existing as the primary coin itself.
3) What is an NFT?
NFT stands for Non Fungible Token. This essentially designates this type of token as a more custom, more unique version of a token than say an ERC20 token which tends to be used more as a medium of exchange such as a platforms currency or tokens for their service. An NFT is designed to be more unique and very limited in supply more often than not. ERC20 tokens represent a currency type, whereas NFT’s represent unique pieces of art, or trading cards and things similar to that, collectibles if you will.
4) What is crypto staking?
Staking in crypto is when you deposit your asset into a contract (commonly referred to as a pool) with the intent of earning whatever token is rewarded for that pool. It is a very common and useful way for token holders to get returns while holding their tokens for a period of time.
5) Yield farming / liquidity mining
Yield farming / Liquidity mining is when you go to a trading pair whether it be on uniswap, pancakeswap, or any other decentralized exchange and add liquidity to a pool. This is done by adding 1:1 equal parts of both tokens in the pair to help facilitate a larger total pool value and mitigate volatility. In doing so you earn a portion of transaction fees from transactions that run through the pair. Some projects will allow you to take your LP tokens (provided for adding liquidity to a pool) and stake them on their site to earn their projects native token.
6) What is a DEX?
DEX stands for Decentralized Exchange. Some DEX’s you may have heard of would be Uniswap and Pancakeswap. DEX’s differ from CEX’s (Centralized Exchanges) because it relies on its users to create liquidity across its pairs whereas centralized exchanges utilize their own funding and listing fees to provide liquidity in combination with an order book system and off-chain services. DEX’s give the average user the freedom to create and list their own token free of charge (excluding transaction fees and liquidity requirements) or buy and sell other tokens that have liquidity pooled on the DEX.
7) What is liquidity?
Liquidity is how much of an asset is liquid in the trading pool. For example, a Uniswap pair with $100,000 of liquidity sits at a 50% / 50% ratio of each token, this creates a somewhat stable pool that enables other users to transact through it to buy and sell either of the paired tokens. Liquidity is needed to transact at all on any pair that exists on a DEX.
Grow is a decentralized cannabis NFT game that uses existing grower networks to create farming and rewards using proprietary blockchain technology. Built for the cannabis industry by medical professionals and crypto pioneers, Grow enables you to cultivate land, redeem NFTs, and build your brand in the cannaverse using $GROW.