As anticipated in the previous pages, NFTs of crypto art works are created on the Ethereum blockchain and are currently available in two standards, ERC-721 and ERC-1555, which allow respectively to certify a unique work or a series based on the same smart contract, useful in the case of limited editions and small numbered series.
However, I think it is necessary to better introduce the concept of cryptocurrencies, making a specification on Ethereum, the second most important virtual currency in terms of capitalization after Bitcoin, trying to explain its functionality.
Cryptocurrencies are virtual currencies through which financial transactions can be made thanks to a complex cryptography that allows a particular digital token to be generated, stored and traded securely and anonymously.
Initially, cryptocurrencies were not born to be considered currencies, but they have become so over time.
Satoshi Nakamoto, the man considered the inventor of Bitcoins, simply wanted to develop a peer-to-peer electronic cash system for sharing files. In the English language, peer to peer, often abbreviated as P2P, means "between peers" and describes a type of communication network in which each node communicates directly with others, without the mediation of a server.
Nakamoto, unlike all his predecessors, had managed to prove that it was possible to have a cryptocurrency, without the need for a central authority.
In practice, thanks to the peer to peer system (P2P), when the transaction has taken place it will have to be confirmed by the miners. Only miners can confirm transactions. As long as a transaction is not confirmed, it can be forged. Instead, when it is confirmed, the transaction is no longer editable and enters the historical transactions, the so-called blockchain.
When a transaction has been confirmed by a miner, each node must add it to its database.
For this work, miners are rewarded with a cryptocurrency token. This method allows the system to operate securely and consistently over time.
With cryptocurrencies, we can buy anything: books, video games, personal goods or gifts of any kind. In fact, more and more retailers are accepting digital currency as a method of payment. In the United States, for example, you can even pay for hotels, courses or medical services, and more and more businesses and services are adapting to receive and make transactions through virtual currency.
Among the many curiosities there is the one dated November 24, 2017, the day in which the first record that can be purchased in Bitcoin signed by Björk was released. The operation - reports Music Ally - was born from the collaboration between the London start-up Blockpool, engaged in the dissemination of the electronic payment technique, and the staff of the Icelandic singer-songwriter. It could not miss in the United States a TV series focused on cryptocurrencies. It's called StartUp, and the series has actors such as Martin Freeman and Adam Brody in the cast. The story revolves around a computer genius, Izzy Morales, the son of a wealthy financier embroiled in money laundering business, Nick Talman a ruthless gangster, Ronald Dacey and, finally, a corrupt FBI agent, played by Martin Freeman. Izzy will be the one to create a cryptocurrency in the garage of his house... but I'll stop right now with spoilers...
Unlike other blockchains, however, Ethereum can do so much more. It's programmable, so developers can use it to create new types of applications.
These decentralized applications (called "dapps") take advantage of the benefits of cryptocurrencies and blockchain technology. They are trusted because, once they are "uploaded" to Ethereum, they always run according to how they were programmed. They can control digital assets to create new types of financial applications. They can be decentralized, meaning no individual or legal entity controls them.
Even now, thousands of developers around the world are creating Ethereum-based applications and inventing new types, many of which are already usable:
- Cryptocurrency wallets that allow you to make instant, inexpensive payments with ETH or other assets.
- Financial applications that allow you to borrow, lend or invest digital assets.
- Decentralized markets that allow you to trade digital assets, or even make "predictions" about events in the real world.
- Games where you own the items in the game and can even earn money.