How to invest in blockchain technology. A visual guide

Many talk about blockchain, which is the database technology that underlies virtual currencies, but few actually know what it is, how it works, and how, above all, to invest in this promising technology.

First of all, here is Visual's introductory infographic

The use of Blockchain technology has some advantages: one of them is decentralization, which means that no single user or manager has control over all the data. To understand why this is important, consider a traditional database where users store their data on a central server. The server is ultimately controlled by a single entity with the authority to modify or delete the data.

In the event that this authority is compromised, database users can be at risk. A blockchain, on the other hand, is distributed among many participants in a peer-to-peer network. This means that all users play a role in verifying the integrity of the database, as well as verifying new additions.

Furthermore, blockchains are designed with an add-only structure. This means that users can only A) search and retrieve data from the blockchain; and B) add more data to the blockchain. Nobody can delete them without violating the structure of the Blockchain

A blockchain is made up of "blocks" that contain three elements.

First, there is the data itself . In the case of Bitcoin, this includes all information relevant to a given transaction such as date and quantity. The second is the hash of the block , a unique value that identifies the block and its contents. For Bitcoin, a hash takes the form of a 64-digit hexadecimal number, although this may be different for other blockchains. The third and final element is the hash of the previous block , and it is what contributes to the “chain” part of the blockchain. This feature makes it nearly impossible for someone to tamper with blockchain data, as their copy of the chain would conflict with all other users.

Let's see now how you can invest in the Blockchain:

1. Digital asset mining: Digital asset mining consists of companies that process transactions on blockchain ledgers, including Bitcoin. Transaction processing is known as “mining” because participants can receive cryptocurrency as compensation. From a transaction standpoint, cryptominers are relatively straightforward compared to other businesses. This is essentially a very costly processing activity from an energy point of view.
2. Blockchain hardware: the mining hardware is built by ad hoc companies that assemble the equipment related to the blockchain. This includes graphics processing units (GPUs), which are used in computing applications such as rendering and animation. GPUs weren't originally intended for blockchain use (and have been around for much longer), but their fast processing speeds make them suitable for mining. Today, cryptominers are switching to Application-Specific Integrated Circuit (ASIC) chips designed exclusively for cryptomining. The use of these chips is essential to maximize the hash rate and profitability, i.e. efficiency in general.
3. Blockchain Transactions: The category of blockchain transactions includes companies that operate digital asset trading platforms. The segment is evolving rapidly as new and existing companies enter the space.
4. Companies that develop blockchain applications: This segment is the largest of the four and includes any software or service that uses blockchain. In many cases, blockchain can be used to enhance our existing industries. For example, IBM Food Trust, a blockchain designed to create a more efficient and sustainable food supply chain. The Blockchain can also be used for more ambitious projects, such as creating a metaverse. While still largely conceptual, a metaverse is a digital world that is accessed via virtual reality. In it, people would be able to work, play, socialize and consume the media.

Currently, it is also possible to invest in these interesting technologies through more sophisticated financial instruments, such as ETFs.

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The article How to invest in blockchain technology. A visual guide comes from ScenariEconomici.it .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/come-investire-nella-tecnologia-blockchain-una-guida-visuale/ on Mon, 22 Nov 2021 07:00:26 +0000.