Blockchain Industry Primer

According to the research firm MarketsandMarkets, blockchain as an industry is anticipated to grow at a CAGR of 67% to an estimated $39 billion in 2025. But what exactly is blockchain technology and what benefit does blockchain protocols offer? Blockchains have the potential to completely revolutionize how data is exchanged over worldwide networks. The technology’s potential exceeds financial transactions to reach into just about every data exchange on the planet.

Blockchains are shared, immutable ledgers for recording transactions, tracking assets, and building trust. A blockchain consists of many blocks, hence the term. Inside of each block is a record of transactions for specific data, which can contain anything from cryptos to voting ballots to medical records. When one block is completed, it can no longer be updated with new data. Then, that block is added to the chain and another, new block, is formed.

Private and Public Blockchains

There are private and public blockchains. On public blockchains (Bitcoin, Ethereum, Avalanche), all the information is open source and thus publicly available. Data on public blockchains is also decentralized, which means that the data from the transactions is stored on many computers, referred to as nodes. Nodes are distributed around the globe, and there’s no specific party or authority to control the network.

In private blockchains, the number of nodes and parties that can access stored data is typically limited to a single or a few organizations, shared internally and thus not publicly available.

Asset Leveraging via Staking

In essence, asset leveraging through staking will provide security to many of the next-generation blockchains. Investors will eventually be able to participate in asset leveraging through staking by delegating tokens to pools.

The role of the validator is to participate in different tasks to further secure a blockchain network, such as ensuring transactions are not flagrant (e.g. no double-spending). Protocols like Ethereum and Avalanche accept tokens from validators as a type of ‘skin-in-the-game’ collateral. In turn, validators are rewarded in tokens for acting in line with the rules of a network, participating in network validation, and being available.

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