The virtual world looks much like the real world now. There are gardens, streets, art galleries, cafes, skyscrapers and dog parks in a 3D system. In addition, the entire system is decentralised; you can vote (which will carry a weight proportional to your investment) on the rules that will govern your world. Four years ago, parcels of land in the city were sold for as low as $17. By 2021, the prices were in six figures. Welcome to the ‘metaverse’ of Decentraland, available on the Ethereum blockchain.
Have you ever fancied collecting era-defining artworks, a Monet or a Pollock? Now, for as little as $1, you can earn fractional ownership of highly sought-after digital artworks like the legendary Shiba Inu ‘doge’ meme (valued at around $175 million), or the modern absurdist pieces like ‘The Last Shawarma’ (valuation of six figures), which recreates ‘The Last Supper’ with characters from Marvel’s Avengers series.
All of these are just the tip of the iceberg. There is a digital assets revolution going on—from decentralised finance (DeFi) to non-fungible tokens (NFTs) and the evolving concept of the metaverse—and its proponents say it will remake the world as we know it.
The anatomy of cryptocurrencies
It all started in October 2008, with the release of the first cryptocurrency, Bitcoin, which was 3,000 lines of C++ code compiled by a programmer called Satoshi Nakamoto (most likely a pseudonym, and could be a group of people). In Nakamoto’s peer-to-peer currency paper that introduced Bitcoin to the world, a specific kind of decentralised ledger technology (DLT), called blockchain, was also introduced.
Imagine a system with no centralised authority where ledgers—records of accounts and transactions used by banks—are distributed among all the participants in that financial system. In blockchain, the ledgers are updated in blocks of entries—each of them time-stamped—linked to all of the previous entries. All entries are immutable—they cannot be amended under any circumstance. All the participant nodes in the system will maintain a continuously updated ledger. There are numerous versions of blockchains. They can be public and permissionless (like Bitcoin), or private and permissioned (which can be regulated in various degrees).
This decentralised concept offers both opportunities and challenges. How could a system work among a group of participants—there could be bad apples—if they were given the option of pseudonymity? Who will update the ledger? How will we reach a uniform version of truth?
Bitcoin solved a lot of the long-standing issues with…
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