What Is Blockchain?
A blockchain is a chain made of blocks… but what does that mean exactly? Well, a block of data is akin to a collection of physical records. Every block in a blockchain is composed of a specific amount of bytes of data that come from participants on a network. When several blocks are linked together chronologically via special proofs they make a blockchain. Thus, at a very high level, a blockchain becomes a digital ledger which records information.
The Peer-to-Peer Network
What makes blockchains unique to any other type of database, is that they are maintained by a peer-to-peer network of computers (nodes and mining machines) which are distributed around the world, or amongst a group of individuals. Every node runs the same protocol for maintaining security and operability on the network by verifying if a transaction is valid or not. Nodes are also responsible for keeping an updated copy of the blockchain, which all together, makes a blockchain decentralized, permanent, and safe from outside influences that wish to alter information, or prohibit the use of the technology.
Since every transaction on a blockchain is a verifiable, decentralized record, blockchains are incredibly difficult to tamper with. In order to alter the records of a blockchain, one would have to commit what is known as a 51% attack on the network. But, in general, this would require tremendous amounts of electrical power and computational resources, all of which would be better spent participating in the network.
How Did Blockchain Technology Become So Popular?
The most popular and most robust blockchain is the Bitcoin blockchain, which was created by Satoshi Nakamoto in 2009. There are a few key characteristics that make the Bitcoin blockchain such a revolutionary, dominant technology, with the most important being Proof-of-Work.
When nodes announce verified transactions to the network, computers that create blocks (mining machines) send these transactions through a hashing function and output a unique hash. This requires lots of computing power, and is a delicate process as just one character in a hash can result in a drastically different outcome. But if you’re able to provide a hash that matches certain conditions of the network’s protocol (which is randomized), your block can then be published to the blockchain. This process is known as Proof-of-Work.
Once a candidate block is confirmed the rest of the network, nodes and mining machines, update their blockchains to include the new block. This is to make sure every participant on the network holds the same data and can therefore verify future transactions appropriately. Also, the miner who “finds” a block is rewarded with Bitcoin as an incentive to keep mining.
There is another consensus protocol aside from Proof-of-Work that’s called Proof-of-Stake. PoS is more centralized, but uses the same process. The difference between the two is PoS is more malleable and outcomes can be determined by the stakers.
Another way to imagine NFTs on a blockchain is if you were to physically write down transactions on a piece of paper. Although you may have some transactions that appear to be the same because of items or total values, the physical writing and placement of the writing on the transaction record would make every entry unique. Your physical writing would be the NFT and the paper you’re recording it on would be the blockchain. The only difference is that with a blockchain, the information recorded is publicly verified before it is added to the ledger.
Are Blockchains Useful Outside Cryptocurrencies?
Blockchain technology doesn’t have to be unique to the crypto/finance industry. There are potentially ways to adapt such technology for use in healthcare, the world-wide-web (Web3), music platforms, and so much more. However, for the time being, the most prominent application is for financially focused projects such as NFTs, Ethereum and Bitcoin.
This is largely due to the fact that blockchains require tons of computing power distributed among a network of computers around the world. In order for data to be recorded on a blockchain, it needs to be verified and added to a block before it can be added to the network which takes time. Afterwards, the data can be retrieved and searched for at any point, it cannot however be changed or corrupted.
How Does Fayre Use Blockchain Technology?
As alluded to, other crypto projects outside of Bitcoin also use Proof-of-Work to publish immutable data to a blockchain. Fayre uses Ethereum’s blockchain and Polygon’s sidechain (a parallel blockchain to Ethereum’s) to create NFTs. Every NFT created with Fayre will be written as an entry on either the Ethereum or Polygon blockchain.
But this is only possible because Ethereum’s blockchain is programmable. It can host NFTs while maintaining a Proof-of-Work structure, whereas Bitcoin’s blockchain can only accept transactional data. The result of minting on Ethereum is just like our physical writing example, and so each NFT becomes a unique and original treat. The cool part is that each Fayre NFT is 100% verifiable thanks to blockchain technology.