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Chapter4 Blockchain Technology

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12 views17 pages

Chapter4 Blockchain Technology

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clashing fury
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Cryptocurrency : Bitcoin and Token 41_Introduction As we all know, money represents the value of other things. The purpose of money is to facilitate exchange; it ions people to acquire what they need to live. Before money was invented, people traded goods for other goods by tetering. Historically, gold, shells, wheat, and salt have been used as 2 medium of exchange and to represent value. For something to be able to represent value for a long time, its users must continue to believe that a medium of exchange is indeed valuable and that this value will persist for a long time in order to continue to benefit them. As a result of its convenience and practicality, paper money has gained so much popularity that it has become the primary means by «which goods and services are bought and sold around the world. Fat money : + Fist is 3 money with no intrinsic value but made legal tender by a government order. Historically, money was backed by tangible goods like silver and gold, but fiat money is dependent on the creditworthiness of the government that issues it. 2 + Fiat money, which was introduced as a replacement for representational money and commodity money, has a value based on supply and demand. Silver and other precious metals are used to make commodity money, ‘whereas representational money is a claim on a redeemable commodity. How Does Fiat Money Work? + Fat curency is not backed by any physical commodity, but rather by the trust of its holders and the authority of a government declaration. Paper money serves as a medium of storage fer purchasing power and an altemative to the barter system, It enables people to purchase goods and services as they require without having to trade product for product, as was the case with barter trade, + People cen make plens and create specialized economic activities with ease because of its ability to store purchasing power. A mobile phone assembly company, for exemple, can purchase new equipment, hire and pay employees, and expand into new markets. + The value of fiat money is determined by how a nation’s economy performs, how the government governs itself, and the influence of these variables on interest rates. A country undergoing political unrest is likely to have a weaker currency and higher conimodity prices, making it difficult for citizens to purchase the goods they require. + Afat currency performs successfully when the public has adequate faith in its potential to serve as a buying power storage medium. It must also be supported by the full credit of the government that issues a decree and prints it 5 legal money for financial transactions. Advantages and Disadvantages of Fiat Currency * The most fundamental attribute of fiat money, as opposed to commadity-based money such as gold, copper, and siner, is its value stability. Fiat money beceme popular in the twentieth century as governments and banks sought to shield their economies from the economic cycle's recurrent collapses. ‘Scanned with CamScanner ot Blockchain Technology (SPPU) 4:2 Coypoeurensy Bic andr, Because of the normal business cycle and recurrent recessions, commodity-based currencies were volatile. cen, * banks have the abilty,to_jssue and hold paper [Link], providing them more influence over the mons supply, interest rates, and liquidity. For example, the Federal Reserve's control over money SUPPIY and dem, helped it to keep the 2008 Global Financial Crisis from wreaking havoc on the US financial system ang ‘ew economy, 7 y tigating recessions, the global financial gg controls the money supply, it Was unable, dis restricted in production, tj, + Although flat money is seen as a more stable currency capable of mi demonstrated otherwise, Despite the fact that the Federal Reserve c prevent the crisis from occurring. Critics of fiat money believe that because go! more stable currency than fiat money, which has an infinite supply. 4.1.1” Evolution of Currency Following time line shows the evolution of currency. poe fap crfoed. 4.1.2 Foundation and History of Blockchain 1977 1980 1982 1985 190i |. [Link] Mane-Tiee, Gana lip cue _Parosa “Holman asymmatie was proposed gyzantium encryption consistency V7 curroncy was, shed heir encryption lovely he wasintroticed — (ECC) algorithm with proposed | P paper naw algortn —comectness and distibuted algerinm ‘sigh fault | Z ditocionsin RSAis oldala | compuing —propssed toleranco,!s | |S eryptograpty.. proposed synchronization —grvered IS ‘proposed 2001 ‘mdistrbuted, substantive The NSA P networks phase released” SHA-256 7 whieh is the : ‘nal hash | niin < a . Bank NESS Bi an Recover Fig. 4.4.5 apeence in centralised and decentralised finance cecentralized finance (DeFi) offers us all the same financial tools and opportunities as traditional finance (like ‘pying goods or lending money to payback) without any intermediaries like banks or brokerage firms as they are replaced by biockchain and smart contracts. Using Defi app, you will be able to lend or borrow crypto from peers, trode crypto assets without any centralized entity, earn high interest end more. Jn this guide, we will mainly focus enhow to use DeFi protocols to make a safe profit on USDC. @0¢ (Central Bank Digital Currency) ‘Central Bank Digital Currency (CBDC) (also called digital fiat currency or digital base money) is a digital currency issued by a central bank, rather than by a commercial bank. GOCVS Cryptocurrency * [2 Distal 7 eoptcainen j 1._| Centralized Decentralized |.2. [Requires verification Partial anonymity 3. | Not transparent Transparent 4. _ | Regulated by central banks No regulatory authority to control cryptocurrency | 5. | Robust laws for transactions in all states | Only a few states have stringent laws for crypto transactions 45 Crypto Wallets : Metamask, Coinbase, Binance 451 MetaMask MeteMask is a web browser add-on that allows anyone to run Ethereum DApps without running a full Ethereum ‘ode. A full node installation of Ethereum consumes a lot of disk space and time. Metemask is therefore the too! that removes this hectic installation overload. Initially, Metamask was only available for Google Chrome, but now 'tsavailable for Firefox and other popular web browsers ee ‘Scanned with CamScanner WH Blockchain Technology (SPPU) 4-14 cot rome can be added from the Chrome Web Store oF the metamaskio website Th, ‘+The MetaMask add-on for Ch = rovides a user interface for interacting with the blockchain. Users can connect to the mi, the blockchain. ‘or create their own private network to run OAPPS °° avaSeript APL for Ethereum OAPPS) installed oy with Ethereumm nodes IOC OF TEMAS, ope cts web3 js into each page t0 access the Ethereum blockchain local system. After adding Metamax, nts, access Ethereum DApps, ang users to manage their dats MetaMask extension P' Ethereum network or “testnet” ith Ethereum DApps, you need web3is U © Normally, to interact wit ies used to intera your local system, Web3js isa collection of libri HTTP or IPC connections. However, MetaMask inje itgelf This approach eliminates the overhead of installing web3js on you! teers can operate the Ethereum blockehain as usual Users