Читать книгу The Book about Cryptocurrency № 1 - Viacheslav Nosko - Страница 5

Matthew Chan, entrepreneur, designer, cryptocurrency enthusiast, creator of a mobile application for cryptoinvestors “MatrixPortfolio.com”, has answered this question exhaustively and succinctly.

The original article was published on Hacker Noon, its translation is on our portal https://pro-blockchain.com.

I want to convince you why blockchain is needed, why it is needed to motivate people to aim for decentralization and its benefits, and also why tokens are needed and what lies at the heart of their value. Now, when cryptocurrency market is becoming increasingly saturated, it is important for us to understand the underlying technology of digital money and the principles, since such understanding will allow you to make smart investment and separate important stuff from secondary.

In fact, blockchain borrowed a lot from game theory and motivational models. In order for the blockchain network to be valuable and / or useful, there must be participants. It will be useless if we are the only blockchain users.

Some motivation is needed to attract participants. The most common means of motivation is token reward. The more participants, the more network is decentralized.

Why could not we get along with the database? Why do projects need blockchain?

The decentralized system has several advantages over a centralized server / database:

• immutability;

• security;

• backup;

• reducing cost;

• accountability and transparency.

Immutability

When data and records are decentralized and placed in blockchain, it is almost impossible to falsify or change them. If you store data, for instance, on your personal computer, you can easily change the file before sending it to another person. And how can you be trusted in this case?

Security

Traditional servers or data are usually centralized, making them an attractive target for hack attacks. As an example, we can mention Equifax security gaps and other cyber security issues occurred lately. One server or a limited number of them can easily become victim of hackers, but decentralization with help of blockchain puts a serious obstacle on the path of intruders. The more participants and nodes are in the network, the more copies of the data exist. So, in order to change data, it is necessary to attack each individual node in the network and modify all data simultaneously. Blockchain is not only protection against theft, but virtually has no vulnerabilities. Each block in the chain contains a certain amount of data, and when this block is filled, like a USB flash drive, the data is encrypted and permanently sealed. To get entire picture, hackers need to crack not only the current block, but also each block preceding it. It is not only almost impossible technically, but also it is expensive. Thus, the incentive for criminal activity is reduced. Now I am describing the concept as a whole: different blockchains use different security measures and algorithms.

Backup

If data is distributed around the world, then you do not need to worry about the loss of one copy. Thanks to this, you can protect yourself from corporations by eliminating data falsification, server failures, etc.

Reducing cost

The decentralized nodes network that maintains the registry helps companies reduce hosting costs, security measures and maintenance. In addition, decentralization saves on IT-specialists, developers and infrastructure managers’ salaries. For example, Apple servers, in the literal sense of the word, are constantly under attack, which is why teams of specialists have to monitor those 24 hours a day, 365 days a year.

Accountability and transparency

Given the above, you can be sure that all the information recorded in blockchain is genuine. This allows you to do business in a transparent manner, freeing you from the need to trust the opposite side. You can always appeal to blockchain, letting the data and facts speak for themselves.

Are modern data infrastructures working? Sure, but they are far from being perfect. They worked as they could, because there was no blockchain technology that allows achieving significant improvements.

Well, but what gives value to tokens? Why are they in demand?

It depends on the project. 90% of all the projects do not represent anything, but we will now talk about tokens that have real benefits and are really applicable.

As I have already said, tokens are often used as a means of motivating network members: a successful network involves many participants who contribute in the cause of decentralization and protection. The more participants, the more benefits network brings. This is exactly what the case of Bitcoin is. When Satoshi introduced it to the world, Bitcoin had zero value. At that time, Satoshi himself was the only member of the network. But now, as Bitcoin is becoming widespread, people increasingly agree that a Bitcoin token is useful as currency and therefore has intrinsic value for network participants.

In general, there are several classes of tokens, and each class has its own specific value.

Currency tokens: Bitcoin, Monero, Raiblocks and other.

Utility tokens allow performing some kind of activity in the network, examples are ETH and ZRX. Ether is used in the Ethereum network to perform smart contracts.

Asset tokens are actual asset or product.

Equity tokens function as securities. They give the right to vote and the ability to participate in decision making.

The value of currency tokens, such as Bitcoin, is mainly determined by their ability to function as currency and a means of preserving cost.

The value of utility tokens is determined by the popularity and usefulness of the network: for example, the amount of data that is placed in blockchain, as well as the amount of information being processed, because there are parties who want to pay processing, validation, transfer and protection fees. These may be decentralized exchanges or companies that place logistic chain data in a block etc.

Asset tokens can be tied to the value of the real assets they represent.

Equity tokens can be assessed based on the mood of investors and the progress of the project itself. Here it is important whether they are used in commerce and whether they are accepted by the real world, which voting right their owners have, what is the potential and direction of the company’s development, etc.

What influences the price of tokens?

Now when we know what the source of the value of tokens is, it’s time to ask this question.

Different projects and tokens may have different incentives or economic models that affect the price.

If we ignore speculation, then there are certain technical factors that influence the price regardless of investor sentiment.

Demand and consumption. Probably, this is the most significant factor in the token cost, especially nowdays, when the market is purely speculative.

Popularity / benefit. This factor is connected with the answers to the questions whether there is any activity in the network and how widespread the token is.

Burnout rate. Do tokens lose value over time? How fast?

Circulation and reserves. How many tokens are in circulation? Is there an “emergency store”?

Generation of secondary tokens. (such as NEO/GAS etc).

Mining / premining. How many coins have been released and what is the release schedule? Or have they all been already mined out?