Blockchain Development Course in Gujranwala

Blockchain Development Course in Gujranwala

Table of Content

What is Blockchain Technology?

Immutable and distributed are two fundamental blockchain properties. The immutability of the ledger means you can always trust it to be accurate. Distributed architecture protects the blockchain from network attacks.

Block store each and every transaction or record on the ledger. For example, blocks on the Bitcoin blockchain consist of an average of more than 500 Bitcoin transactions.

A block contains information that depends on and links to the information in a previous block and, over time, forms a chain of transactions. Hence the word blockchain.

Types of Blockchains

Here we will see 4 types of blockchain technology.

1. Public Blockchains

Public blockchains are open, decentralized networks of computers accessible to anyone wanting to request or validate a transaction (check for accuracy). Those (miners) who validate transactions receive rewards.

Public blockchains use proof-of-work or proof-of-stake consensus mechanisms (discussed later). Two common examples of public blockchains include the Bitcoin and Ethereum (ETH) blockchains.

2. Private Blockchains

Private blockchains are not open, they have access restrictions. People who want to join require permission from the system administrator. They are typically governed by one entity, meaning they’re centralized. For example, Hyperledger is a private, authorized blockchain.

3. Hybrid Blockchains or Consortiums

Consortiums are a combination of public and private blockchains and contain centralized and decentralized features. For example, Energy Web Foundation, Dragonchain, and R3.

Take note: There isn’t a 100 percent consensus on whether these are different terms. Some make a distinction between the two, while others consider them the same thing.

4. Sidechains

A sidechain is a blockchain running parallel to the main chain. It allows users to move digital assets between two different blockchains and improves scalability and efficiency. An example of a sidechain is the Liquid Network.

History of Blockchain

Blockchain isn’t just a database, it’s a new technology stack with ‘digital trust’ that is revolutionizing the way we exchange value and information across the internet, by taking out the ‘gatekeepers’ from the process. For a complete and more detailed deep dive check out our article: A Concise History of Blockchain Technology

Blockchain history goes back farther than you might imagine, but we’ve condensed it by answering four critical questions:

When and Who Invented Blockchain?

The first blockchain-like protocol was proposed by cryptographer David Chaum in 1982. Later in 1991, Stuart Haber and W. Scott Stornetta wrote about their work on Consortiums.

But it was Satoshi Nakamoto (presumed pseudonym for a person or group of people) who invented and implemented the first blockchain network after deploying the world’s first digital currency, Bitcoin.

Blockchain Development Gujranwala

Cryptography is a deep and fascinating discipline with a history that goes back further than blockchain. For a richer understanding of  how cryptography helps blockchain technology, check out: Why Cryptography Makes Blockchain Unstoppable

Who Owns Blockchain Technology?

Because blockchain technology is the technology behind the blockchain, it cannot be owned. It’s like the internet. But anyone can use the technology to run and own their own blockchains.

Founder of Bitcoin?

Satoshi Nakamoto.

First Sender and Receiver of Bitcoin Transaction?

Nakamoto sent ten bitcoins to Hal Finney, who built the first reusable proof-of-work system in 2004.

How does Public Blockchain work?

Blockchain Development Course in Gujranwala

The Benefits of Blockchains Over Traditional Finance?

1 Trustless:

The blockchain is immutable and automates trusted transactions between counterparties. The people, who do not need to know each other. Transactions are only executed when programmed conditions are met by both parties.

2. Unstoppable:

Once the conditions programmed into a blockchain protocol are met, an initiated transaction cannot be undone, changed, or stopped. It’s going to execute and nothing – no bank, government, or third party – can stop it.

3. Immutable:

Records on a blockchain cannot be changed or tampered with – Bitcoin has never been hacked. A new block of transactions is only added after a complex mathematical problem is solved and verified by a consensus mechanism. Each new block has a unique cryptographic key resulting from the previous block’s information and key being added into a formula.

4. Decentralized:

No single entity maintains the network. Unlike centralized banks, consensus takes decisions on the blockchain. Decentralization is essential because it ensures people can easily access and build on the platform. There are multiple points of failure.

5. Lower Cost:

In the traditional finance system, you pay third parties like banks to process transactions. The blockchain eliminates these intermediaries and reduces fees, with some systems returning fees to miners and holders.

6. Peer-to-Peer:

Cryptocurrencies like Bitcoin, let you send money directly to anyone, anywhere in the world, without an intermediary like a bank charging transaction or handling fees.

7. Transparent:

Public blockchains are open-source software, so anyone can access them to view transactions and their source code. They can even use the code to build new applications and suggest improvements to the code. Suggestions are accepted or rejected via consensus.

8. Universal Banking:

2 billion people globally do not have a bank account. Because anyone can access the blockchain to store money, it’s a great way to bank the unbanked and protect against theft that can happen due to holding cash in physical locations.

The Disadvantages of Blockchains?

Public open source blockchains are not without their hazards and challenges. Here is a list of the top concerns:

1. Environmental Impact

Blockchain networks like Bitcoin use a lot of electricity to validate transactions, leading to environmental concerns. For example, Bitcoin consumes more electricity than a small, medium-sized European country, and Bitcoin mining is threatening China’s climate change goals.

However, many would argue that Bitcoin is held to higher environmental standards than anyone and anything. This may be true, especially if you consider that the blockchain and Bitcoin are an alternative to the traditional finance system that uses much more electricity and has a much larger environmental impact.

A study by Galaxy Digital suggests Bitcoin energy consumption is less than half that of the traditional banking system. If anything, you could argue that Bitcoin is a step in the right direction for the environment.

No one is saying that making strides to lowering the carbon footprint shouldn’t be on the agenda (this is already happening with some mining farms shifting to renewable energy sources like solar panels and the El Salvadoran President calling for a plan to use geothermal energy (volcanoes) to mine Bitcoin).

But it’s crucial to maintain a balanced view when viewing the cost, environmental impact, and blockchain benefits.

2. Personal Responsibility

One of blockchains and cryptocurrencies’ most significant advantages is also its biggest weakness. When you invest in public open-source blockchains by mining or buying cryptocurrencies and store it in your cryptocurrency wallet (your wallet is like your bank account, except only you can access it and have the passwords), only you control your money.

You are your own bank— and this is great! But if you lose your seed phrases – the list of words that give you access to recover your wallets – there is no recourse (compared to banks where you can reset your password). You will lose your money forever.

Unsurprisingly, a large portion of Bitcoin remains permanently lost. According to some estimates, 20% or 3.7 million of the currently minted Bitcoin is probably lost forever.

3. Growing Pains

Even though public blockchains remain more efficient than traditional banking systems. Decentralization comes at the cost of scalability. Trying to grow blockchain networks to global capacity, in turn, is the root cause of speed inefficiencies. It’s why, as we saw, Bitcoin and Ethereum can only process a maximum of seven and 30 transactions, respectively, compared to Visa’s 24,000.

Luckily, building solutions to improve scalability and the speed of transactions. For example, the lightning network allows transactions to happen off the Bitcoin blockchain to speed up transactions. Ethereum team is developing many innovative Layer 2 (L2) solutions. The reason is to improve scalability and speed including rollups, zero-knowledge proofs, and side chains.

4. False Narratives

Undoubtedly, some cryptocurrencies are used in unlawful activity. The most famous example is Silk Road: people do money laundering and buy drugs on the platform using Bitcoin.

However, this is no different from the illegal activity that constantly happens when people use other currencies like the Dollar.

This false narrative is that cryptocurrencies are only or mainly used for illicit activities. The only delays their inevitable adoption, which can hugely benefit everyone, including the financial system.

Promising Blockchain Use Cases and Killer Applications

For an even more in-depth discussion of the most interesting and disruptive blockchain use cases as of 2021 check our guide: Disruptive Blockchain Technology Use Cases 2021

Cryptocurrencies

The ‘killer app’ of blockchains today is internet money. Cryptocurrencies let you transfer value faster and cheaper across borders without a bank. Besides Bitcoin and Ethereum, other digital currency examples include Polkadot (DOT), NEO, Cardano (ADA), Tether (USDT), Binance Coin (BNB), and Litecoin (LTC).

Smart Contracts

These blockchain applications are contracts that automatically execute without an intermediary once conditions written into the computer code are met.

Decentralized Banking: The use of blockchain technology is also proliferating in banking. For example, many banks like Barclays, Canadian Imperial Bank, and UBS are interested in how blockchain can make their back-office settlement systems more efficient.

Video Games/Art

You may have heard Crypto Kitties—a game launched on the Ethereum blockchain. One of the virtual pets in the game was sold for over $100,000.

Peer-to-peer Energy Trading: People buy or sell energy directly without an intermediary.

Supply chain and logistics tracking

Blockchain is being used to track precious metals’ origins and foods. For example, Walmart and IBM worked together to create a food traceability system based on open-source ledger technology, making it easier to trace contaminated food.

Healthcare process optimization

Blockchain can speed up the time required to pay health insurance payments to patients and store and securely share medical data and records.

Real estate processing platform

Property ownership records can be securely stored and verified on the blockchain. These records cannot be tampered with, so you can trust they’re accurate and more easily verify property ownership.

NFT marketplaces

These are marketplaces that allow you to buy nonfungible tokens (NFTs): digital tokens of things like paintings and clothing.

Music royalties tracking

Blockchain can trace music streams and immediately pay those who contributed to a song.

Anti-money laundering tracking system

Authorities can more easily track the original source of money because every transaction on the blockchain is recorded and leaves behind a tamper-proof trail.

Personal identity security

Traditional systems for storing identities are insecure and fragmented. Blockchain provides a unified, immutable, and interoperable infrastructure so you can store and manage records securely and efficiently.

New insurance distribution methods

For example, peer-to-peer insurance, parametric insurance, and microinsurance.

Automated Advertising Campaigns

Advertisers can use smart contracts to automate advertising campaigns, e.g., an audience is only shown an ad when specific criteria are met.

How to Invest in Blockchain Technology

With blockchain offering some promising use cases, helping many companies become more efficient, and attracting big companies like Amazon and Tesla, it can be an attractive investment.

But there are risks: It’s a new technology, and many projects will not pan out. So, invest only what you can afford to lose, do your own research to determine if the project (or initial coin offering) is worth investing in, and decide what level of exposure you want.

For example, you can get more exposure by investing in cryptocurrencies directly instead of an exchange-traded fund (ETF).

That being said, here are a variety of ways you can invest in the blockchain depending on your goals and risk tolerance:

1.Buy shares in companies using blockchain 

(e.g., Visa, Walmart, and Siemens) on traditional stock exchanges like the NYSE. You can buy shares by using an online broker such as Vanguard and Betterment (U.S.).

Invest in companies with Bitcoin on their balance sheet, e.g., Square, WeWork, MicroStrategy, and Tesla. Again, use an online broker to buy shares.

Buy cryptocurrencies like Bitcoin or Ethereum directly on Centralized Finance (CeFi) or Decentralized (DeFi) exchanges. Centralized exchanges were the norm in the crypto world until decentralized exchanges arrived. With centralized exchanges, you don’t have your own private keys, and the exchange is the custodian for storing your funds. Decentralized exchanges are peer-to-peer, and there’s no intermediary. Examples of CeFi exchanges include Binance, Kraken, Bittrex, Bitfinex, Luno, and Coinbase. Examples of DeFi exchanges include Uniswap, Compound, KyberSwap, Airswap, IDEX, SushiSwap, Balancer, and Totle.

Invest in crypto exchange-traded funds (ETFs). ETFs are a basket of securities that track an asset or index you can buy or sell on an exchange throughout the day. For example, many traditional ETFs will include bonds, currencies, commodities, and stocks and track the S&P 500 Index. In the crypto space, you get a variety of ETFs you can invest in, such as a Bitcoin ETF that tracks the price of Bitcoin. Each ETF will differ depending on who issues it. Companies that offer ETFs include Grayscale, Galaxy Digital, and Gemini.

Invest in crypto mining companies such as Riot, Hive, and Marathon. Many mining companies let investors participate indirectly by offering equity in their companies. To invest in Riot, use an American-based online broker like Robinhood. To invest in Hive and Marathon, use a Canadian-based broker like Questrade, TD Direct Investing, or BMO InvestorLine.

Buy crypto hardware and mine cryptocurrency yourself. While Bitcoin mining requires a large capital outlay, there are other tokens you can mine for a reasonably low barrier to entry. For example, Helium miners cost roughly $500 and mint HNT using the ‘proof of coverage’ consensus protocol to verify new blocks. Get started with cryptocurrency mining by reading our short guide on Bitcoin mining.

Invest in mining pools. An alternative to mining cryptocurrency yourself is to join a mining pool. Mining pools pool together the computational power of others on the network to improve the chances of mining a block. The rewards for all blocks mined are shared among miners in the pool. Slush Pool is a popular mining pool.

Blockchain Companies to Invest in 2022

If you’re looking to get started with crypto investing, we’ve created a comprehensive step-by-step guide you can follow to get started here: How To Invest in Cryptocurrencies: The Ultimate Beginners Guide

Here is a comprehensive list of public blockchain companies to invest in. We have segmented them based on these categories: banking, supply chain, health care, energy, insurance, travel, real estate, exchanges, and mining.

These public companies are either using blockchain, have cryptocurrency on their balance sheets, allow you to trade cryptocurrency or are mining cryptocurrency.

*Technically, Binance is not a public company, but you can invest in it by purchasing their own digital currency (BNB). You can use their currency to pay for transaction and trading fees on the exchange. This is also true for DeFi exchanges like Uniswap, 1inch, and PancakeSwap.

Traditional Finance and Blockchain Investment Strategies

In some ways, the process of investing in shares and cryptocurrencies is the same. First, you can buy cryptocurrencies on exchanges like you can buy shares through an online broker.

Second, you are also able to apply traditional investment principles to investing in cryptocurrencies and the blockchain. For example, you can invest the same amount of money into Bitcoin each month regardless of price (dollar-cost averaging) to remove any emotion out of the investment process.

But there are also investment strategies that are unique to the blockchain and cryptocurrencies, like yield farming.

Read on to learn about ten common traditional finance and blockchain investment strategies you can use when investing in public blockchain companies and cryptocurrencies.

Overview of 10 Major Investment Strategies

1. Growth Investing:

Investors look for companies that demonstrate above-average growth. Investors using this strategy will often still invest in shares even if they seem expensive. To narrow down your search, focus on industries currently doing well or have historically performed. With the blockchain technology market expected to grow in size, there are bound to be several companies with strong growth potential.

2.Value Investing:

Investors look for undervalued companies, e.g., their price doesn’t fully reflect their value. Successful value investing often requires that you hold your shares for the long term.

3. Dividend Growth Investing:

Investors invest in companies that have a history of paying out dividends. You can look at a company’s financial statements to see if they pay out dividends. Look for a yield of between 2-6%.

4. Indexing:

This is more of a cautious and passive investment strategy, but indexed investors often outperform more active investors. These investors typically invest in an index fund. An index fund consists of pooled funds from investors, is managed by a fund manager, and automatically invests in the companies of a specific index like the S&P 500 to effectively track against the index’s performance. It is different from an ETF in that you can only buy or sell index funds at the end of the day and not throughout. An example of a cryptocurrency index fund is the Bitwise 10 Crypto Index Fund (BITW).

5. Day Trading:

Day trading is a more active and aggressive short-term trading strategy. Investors frequently trade throughout the day to capitalize on small market movements to make a profit. Day traders will use technical analysis to develop trade ideas around how the market will move. Day trading cryptocurrency is equally lucrative and risky due to highly volatile assets.

6. Algorithmic Trading:

Also known as automatic trading, this investment strategy involves using computer programs to execute trades based on pre-programmed instructions such as price, time, etc. A large portion of the American market consists of algorithmic trading. AlgoTrader is an automated trading program you can use for Bitcoin trading.

7. Contrarian Investing: 

Contrarian investors purposely go against the market sentiment. They buy when people are selling and sell when people are buying. By following the Bitcoin Fear and Greed Index, you can get a good idea of the prevailing sentiment in the Bitcoin market and then do the opposite: buy when people are fearful and sell when they’re greedy (see Fear & Greed Index below).

8. Arbitrage:

This strategy involves taking advantage of price differences of the same asset between markets. You buy the asset in one market and then sell it for a higher price in another. Because cryptocurrencies like Bitcoin often differ in price between countries, there are great opportunities to profit from this strategy. In a nutshell, traders will buy cryptocurrency on an overseas exchange (for a lower price) and then transfer it to a local exchange and sell it for a higher price. As Business Tech reports, you can make 2-4% per trade using the right investment platform. Just make sure you follow local exchange control laws because there are usually limits to how much local currency you can move beyond the borders.

9.Yield Farming:

This blockchain-specific investment strategy involves lending your cryptocurrency to someone else via smart contracts. The lender pays you a fee for your services. Yield farmers often move their cryptocurrency between different lending platforms to maximize returns. A few yield farming platforms include Compound Finance, Aave, and MarketDAO. Learn more about DeFi yield farming.

10.Diversification:

Spread your risk and invest in different assets and companies to limit your overall downside. While exposing you to more opportunities to make money. Diversification is more than just an investment strategy; it’s a smart way to invest that most financial experts and brokers encourage. This strategy works well for traditional finance and cryptocurrency. In traditional markets, you can spread risk across bonds, money markets, and shares— and even diversify your share portfolio by investing across industries. For cryptocurrencies and blockchain, you can invest in different public blockchain companies and also cryptocurrencies with different use cases like Bitcoin (payments), Ethereum (smart contracts), Monero (privacy), and XRP (cross border payments). If you really want to prioritize diversification, you should invest across traditional and crypto markets, and rebalance your portfolio as needed.