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BLOCKCHAIN THE BASICS R&D By Simon Hawk ESQUIRE 2021 Before Cash There Was Gold After Cash There Was Paypal. Now we have BLOCKCHAIN. If Bitcoin is digital gold. Then Ethereum is the Next generation. EBAY VS PAYPAL AS AN EXAMPLE How much would you have if you invested $10,000 in PayPal's IPO? Your eBay shares would be worth nearly $42,000 and your PayPal shares would be worth over $123,000. IPO offerings are often risky investments. There is no guarantee that a company, project or tech will be successful. We can look at case studies for basic comparisons though. https://www.fool.com/ investing/2019/11/22/if- you-invested-10000-i n-paypals-ipo-this-is- how-m.aspx THE RISE OF DIGITAL PAYMENT SYSTEMS Before Cars there were horses. Before Email there was pony express. Before Credit Cards we had cash. Now we have Blockchain. Eventually every industry takes the form of a bubble. While still a reliable means of transportation, riding horses has gone out of fashion. Crypto is the next era of money. DIGITAL CURRENCIES CREATE NEW FINANCIAL IDENTITIES Digital currency (digital money, electronic money or electronic currency) is any currency, money, or money-like asset that is primarily managed, stored or exchanged on digital computer systems, especially over the internet. Types of digital currencies include cryptocurrency, virtual currency and central bank digital currency. Digital currency may be recorded on a distributed database on the internet, a centralized electronic computer database owned by a company or bank, within digital files or even on a stored-value card.[1] Digital currencies exhibit THE CURRENT SYSTEM properties similar to traditional currencies, but generally do not have a physical form, unlike currencies with printed banknotes or minted coins. This lack of physical form allows nearly instantaneous transactions over the internet and removes the cost associated with distributing notes and coins. Usually not issued by a governmental body, virtual currencies are not considered a legal tender and they enable ownership transfer across governmental borders. Central banks around the world are experimenting THE NEW SYSTEM with so-called Central Bank Digital Currency (CBDC). But what is it and why does it matter? CBDC is a digitized version of domestic currency where the central bank issues new money equivalent to – and redeemable for – its domestic currency, often removing the equivalent amount of currency from the money supply. It could be issued using distributed ledger technology, where transactions would operate and settle on a peer-to-peer basis. CBDC can also be issued using traditional centralized technologies. THE EVOLUTION OF SYSTEMS https://www.mitre.org/publications/systems-engineering-guide/system s-engineering-guide/the-evolution-of-systems WHAT IS BLOCKCHAIN? If you have been following banking, investing, or cryptocurrency over the last ten years, you may have heard the term “blockchain,” the record-keeping technology behind the Bitcoin network. ● Blockchain is a specific type of database. ● It differs from a typical database in the way it stores information; blockchains store data in blocks that are then chained together. ● As new data comes in it is entered into a fresh block. Once the block is filled with data it is chained onto the previous block, which makes the data chained together in chronological order. ● Different types of information can be stored on a blockchain but the most common use so far has been as a ledger for transactions. ● In Bitcoin’s case, blockchain is used in a decentralized way so that no single person or group has control—rather, all users collectively retain control. ● Decentralized blockchains are immutable, which means that the data entered is irreversible. For Bitcoin, this means that transactions are permanently recorded and viewable to anyone. https://www.investopedia.com/terms/b/blockchain.asp BLOCK CHAIN & CRYPTO EXPLAINED BASIC - https://www.youtube.com/watch?v=SSo_EIwHSd4 BITCOIN DOCUMENTARY - https://www.youtube.com/watch?v=zou4I7u961M WHAT IS CRYPTO - https://www.forbes.com/advisor/investing/what-is-cryptocurrency/ HISTORY OF CRYPTO - https://www.thebalance.com/history-of-cryptocurrency-5119511 SCAMS - https://www.consumer.ftc.gov/articles/what-know-about-cryptocurrency-and-scams TAX ANALYSIS - https://www.ncsl.org/research/financial-services-and-commerce/cryptocurrency-2021-legislation.aspx 10 BEST CRYPTOS - Finance.yahoo.com/10-best-cryptocurrencies INFLATION - https://fortune.com/2021/04/29/bitcoin-inflation-hedge-debate/ Problems with current business ledgers Current business ledgers in use today are deficient in many ways. They are inefficient, costly, and subject to misuse and tampering. Lack of transparency, as well as susceptibility to corruption and fraud, lead to disputes. Having to resolve disputes and possibly reverse transactions or provide insurance for transactions is costly. These risks and uncertainties contribute to missed business opportunities. Furthermore, out-of-sync copies of business ledgers on each network participant’s own systems lead to faulty business decisions made on temporary, incorrect data. At best, the ability to make a fully informed decision is delayed while differing copies of the ledgers are reconciled. https://developer.ibm.com/technologies/blockchain/tutorials/cl-blockchain-basics -intro-bluemix-trs/ Banking is Changing Why is it changing? ● Increasing Competition. ● A Cultural Shift. ● Regulatory Compliance. ● Changing Business Models. ● Rising Expectations. ● Customer Retention. ● Outdated Mobile Experiences. ● Security Breaches. What is Cryptocurrency? Cryptocurrency is an internet-based medium of exchange which uses cryptographical functions to conduct financial transactions. Cryptocurrencies leverage blockchain technology to gain decentralization, transparency, and immutability. The most important feature of a cryptocurrency is that it is not controlled by any central authority. the decentralized nature of the blockchain makes cryptocurrencies theoretically immune to the old ways of government control and interference. Cryptocurrencies can be sent directly between two parties via the use of private and public keys. These transfers can be done with minimal processing fees, allowing users to avoid the steep fees charged by traditional financial institutions. Basically, cryptocurrencies are entries about token in decentralized consensus-databases. They are called CRYPTOcurrencies because the consensus-keeping process is secured by strong cryptography. Cryptocurrencies are built on cryptography. They are not secured by people or by trust, but by math. It is more probable that an asteroid falls on your house than that a bitcoin address is compromised. Why is called Crypto and why is it in the news? Basically, cryptocurrencies are entries about token in decentralized consensus-databases. They are called CRYPTOcurrencies because the consensus-keeping process is secured by strong cryptography. Cryptocurrencies are built on cryptography. Nowadays, you‘ll have a hard time finding a major bank, a big accounting firm, a prominent software company or a government that did not research cryptocurrencies, publish a paper about it or start a so-called blockchain-project. But beyond the noise and the press releases the overwhelming majority of people – even bankers, consultants, scientists, and developers – have very limited knowledge about cryptocurrencies. They often fail to even understand the basic concepts. There's little doubt that digital currencies have been among the most newsworthy areas of investment in the past two years. Spurred on by the incredible (and potentially manipulated) growth of bitcoin (BTC), the field of cryptocurrencies has only continued to expand. THE NEXT GENERATION OF FINANCE History is being made in the FinTech industry. Blockchain technology is in its infancy. Early adopters will reap the rewards. The key is understanding the risk. Who started this and why? Few people know, but cryptocurrencies emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency. In his announcement of Bitcoin in late 2008, Satoshi said he developed “A Peer-to-Peer Electronic Cash System.“ His goal was to invent something; many people failed to create before digital cash. The single most important part of Satoshi‘s invention was that he found a way to build a decentralized digital cash system. In the nineties, there have been many attempts to create digital money, but they all failed. After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity. Like a Peer-to-Peer network for file sharing. Decentralized networks = Decentralized finance This decision became the birth of cryptocurrency. They are the missing piece Satoshi found to realize digital cash. The reason why is a bit technical and complex, but if you get it, you‘ll know more about cryptocurrencies than most people do. So, let‘s try to make it as easy as possible to understand. A central network connects to one private source, a decentralized network relies on the computing power of a community in a transparent way. To realize digital cash you need a payment network with accounts, balances, and transaction. That‘s easy to understand. One major problem every payment network has to solve is to prevent the so-called double spending: to prevent that one entity spends the same amount twice. Usually, this is done by a