Today we have
H: Hard fork, Hashing, HODL, Hash Rate 🤓
I: ICO, IEO 🤩
and
J: Well, we are short of jargons and terms with "J", read till the end to know what’s in store.🤑🤑
If you’ve read yesterday’s digest, you know what a fork in a blockchain is. Time to dig deeper.🤔
Do you know how BCH started? It was forked from Bitcoin in 2017
When fundamental changes are made in a blockchain, it can result in a hard fork, leading to the formation of a separate chain with different rules which are no longer backward compatible with earlier blocks.
It results in the validation of blocks and transactions that were previously invalid, or vice-versa. It’s a permanent divergence because the nodes in the new iteration can’t communicate and reach a consensus with the nodes of the previous version.
Ethereum vs Ethereum Classic
After a blockchain forks, any wallet that had the original cryptocurrency will have equal amounts on both networks.
Suppose you had 5 BTC before fork, you’ll have 5 BTC on both the networks post the fork
The concepts in web3 can sound intimidating, but if understood correctly are easy to comprehend and just amazing use of logic!
You’d agree, hashing is a common term we hear when discussing tech!
It’s the process of transforming an input of any size into a corresponding fingerprint of fixed-length. It’s the backbone of blockchain tech, that allows data & transactions to be verified and stored in a secure way
SHA-256 is the Bitcoin hash algorithm
How well and fast you can generate these hashes matter!
Let's understand hash rate 👇👇
Hash rate is a measure of the total combined computational power used by a proof-of-work cryptocurrency network to process transactions in a blockchain
Simply put, it’s a measure of how fast a cryptocurrency miner's machines can complete these computations
Before any new transactional data can be added to the next block in the chain, miners must compete using their machines to guess a number. Essentially, miners try to produce a hash that is lower than or equal to the numeric value of the target hash, by changing a single value called nonce.
Every time the nonce is changed, a completely new hash is created.
For example:
Hash for testnet is: 9afbce9f2416520733bacb370315d32b6b2c43d6097576df1c1222859d91eecc
Changing one letter festnet gives a completely different hash:
5ee4470f8d81b3e461aa776cdcfc156ea1c6d389edd7e8e2bdff5c11161a6ebb
But why does hash rate even matter?🤔🤔
Its an important metric for assessing the strength and security of a blockchain network. The higher the hashrate, the harder it becomes for malicious agents to disrupt the network.
‼️A fall in hashrate makes the network more vulnerable!‼️
Time for some jargons
HODL- Hold On for Dear Life
The term actually started as a typo on an old forum, Bitcointalk.org , where a user explained that he was HODLING his bitcoin as the price dropped. The misspelling quickly caught on and is still used today.
Well, that was some good math right there.
Let’s talk about the crowdfunding models in this space, shall we?
We have IPO's in traditional web2 companies, what about web3?
In web3, we have ICO - Initial Coin Offering and IEO - Initial Exchange Offering
A company seeking to raise capital to create a new coin, app, or service uses an ICO (selling tokens to the public) to raise funds.
Interested investors can buy into an initial coin offering to receive a new cryptocurrency token issued by the company.
What value will you get out of it?🤔👇
This token can have some utility related to the product or service the company is offering , but doesn't guarantee any equity in the company‼️
2017 was the year of Initial Coin Offering, where project were funded on the basis of white papers.
ICOs are (almost) completely unregulated, so DYOR(Do Your Own Research) before investing in them‼️
Back then ICO was a hassle-free mode of fundraising & hence gained popularity. The spike in adoption of ICOs came as a quick money-making opportunity for not only startups and investors but also spammers
Hackers continued robbing investors in the name of lucrative investments until 2019, that's when IEO's came into picture.
IEO = selling tokens to raise capital with increased regulation.
Its similar to ICO, but unlike an ICO, an IEO is managed by an existing cryptocurrency exchange.
IEO's take care of the entire launch and promotion of the funding process. They come with many advantages: more trust, exchange takes care of the whole KYC and AML process and ofc legal protection
Do you think IEO is the concrete future of Blockchain based Crowdfunding economy👇👇
There are other blockchain funding models like DAICOs and ETOs out there.
If you’d like to know more on this, let me know in the comments. Will share a post covering these models and their impact on your business!
Hmm, a lot is happening in web3 space. What about the creator economy ?
Today platforms like Instagram and YouTube are used by creators as a medium to monetise their skills, however these platforms exert artistic control on their content.
Web3 is all about ownership and we have Social tokens to the rescue.
It's a cryptocurrency any community, a brand or an influencer can use to monetize themselves beyond the typical means!
Social tokens help eliminate this barrier and help foster a new principle of ownership in the digital economy!
They’re more than just marketing tokens. They can be creator tokens or community tokens.
👉Personal tokens are created by entrepreneurs, influencers and artists to exchange forms of labour
👉Community tokens are created as a means to gain access to a community
Something like a memeber card but a decentralised one!
No, Social tokens are fungible. Just like BTC and ETH, each token has the same value as the other
Why would someone create social tokens?
Let's see👇👇
👉Since these are blockchain based tokens, the brands can ensure only genuine fans and consumers are part of the experience they create!
👉Say you want to create a club of loyal followers to whom you can directly offer relevant content and offers. This is exactly what such a token can achieve. Content creators and brands can launch their own social token and share it with their most loyal followers. And the benefits are bi-directional
Token owners get a pre-defined level of ownership in this new ecosystem that they gain access to. Over time, the value of these tokens can increase as per the demand that the ecosystem is able to generate.💯
Social tokens have immense potential to redefine the way companies can generate targeted business opportunities.
Social tokens are enabling us to build a decentralized and secure ecosystem that caters to only the genuine customers/fans resulting in long-term growth prospects
If you're a community/creator using social tokens, would love to know your experience and thoughts on social tokens.
That’s a wrap for today!
Stay tuned for more on the new vocabulary of the web for next 30 days.💯
It’s like a free crash course on the jargons and terminologies in Web3.
As ever, thank you for subscribing and reading. It matters. It’s a big deal to me.
And, remember, half-true compliments and feedbacks are always welcome at:
laisha.wadh [at] gmail [dot] com
WAGMI 🚀🚀