Blockchain? Crypto? Where did you say those wines come from?
Unless you’ve been hibernating for the past few years, you must have heard about blockchain and cryptocurrency. It’s popped out on mainstream media thanks to the Bitcoin craze of 2017, and every day a new “secret” cryptocurrency seems to come up with the promise of easy rewards.
However, what is cryptocurrency? And what, on heavens name, is blockchain? Simply put, blockchain is a different way to store information.
Let’s say you want to pay your electricity bill online, so you do a transfer. When you give this order to your bank, what happens is that a series of records are made on the bank’s computer —how much money you’re transferring, the date, your name, to whom you’re transferring it, and so on— and on the recipient’s computer, that is, the electrical company’s.
Moving your money depends mostly on the bank and its servers. But what if we could skip the banks? Is there a safe, decentralized way to send money from point A to point B?
Well, that’s where blockchain comes in. If you were to pay the same receipt using Blockchain, the records your bank would make on their servers and the electrical company’s, would be made instead in a number of computers. Each of them would keep track of all the transactions
So you tell your blockchain platform you want to send money to your electrical company: each member of the chain would then register the transaction, pretty much like and old accountant in a book.
Every time they reach the end of a page, the page is sealed using a special key. Sealed this way, each page of this book becomes a block that can’t be altered without having to alter every block following it, because every one of this keys’ shape depends a little bit on the shape of the former.
And here is where cryptocurrency comes into play: because it takes time and effort to “forge” that key, the member of the chain to forge it first gets a little reward in cryptocurrency.
And what on earth is cryptocurrency? Easy: an alternative coin whose value depends on several factors, mainly, the number of users. Lets stick with the example of the electrical bill and say your electrical company, creates a crypto coin for its users called ElectroBits.
You can buy ElectroBits with your money and use it to pay your bills from your app, thus skipping the bank entirely. But, why would you buy that coin when you already have a coin that pays for it? Why risk it?
Well, actually, “real-life money” is partly what will give ElectroBits its value, so the company will want its users to buy it by providing advantages as an incentive to early adopters. Maybe you get a discount from your bill if you pay with ElectroBits. But by being a part of the Blockchain, you could also forge some keys and actually make money, basically out of thin air.
Even more, if ElectroBits were to cross over and you could use it to buy your coffee and pay for your groceries, then its value would grow even more. So maybe the coins you purchased in a 1:1 value are now worth double. And you’ve made more money out of thin air.
And here is where the risk lays: how do you know where to put your money? How do you tell the difference between the asset that will pay your children’s university and the one that will bankrupt you?
The game industry offers a very interesting landscape for new users, as more and more titles are implementing blockchain as a game enhancing feature with the potential to make “real-life money” thanks to game markets which will allow assets trade.
But… If all this sounds like klingon to you, stick around for our next post where we’ll explore more of BLOCKCHAIN & CRYPTO IN GAMES!