It’s not a secret that DeFi is here to drop the financial bombshell in 2022 and transform our traditional systems. We all know stories of people experiencing gains of 6,000%+ overnight. But you should know that apart from the lucrative opportunities the crypto market offers, the industry provides something much more: financial freedom, safety, and transparency.
Instead of relying on banks, central authorities and corrupt governments, DeFi allows users to take complete control of their funds, transactions, purchases, and data. No need to put your trust in dodgy middlemen anymore! All you need is blockchain technologies, smart contracts and cryptocurrencies!
Just like any peer-to-peer architecture, no single person in the crypto space controls the data transferred - eliminating the risks of failure and fraud. Think of torrents to understand the process better: multiple copies are spread across multiple users, allowing individuals to interact with the file of their interest directly. Similarly, blockchain technology spreads data and acts as a distributed structure to secure data.
Blockchain Programming | The Basics
To ensure user safety, blockchain architectures rely on the implementation of cryptographic hashing and coding. While we won’t complicate things with technicalities, it’s vital to understand that thanks to hashing, the blockchain cannot be reversed or mutilated. Via a hashing algorithm, the input data is transformed into an output or hash, with each block of data having an assigned and original identifier. The process continues by combining different transactions and previous blocks into a string of data. If supposedly one tried to alter the data included, the whole chain would crash and become invalid. This is how blockchain technologies ensure safety.
To guarantee the efficiency of the whole process, coding is required. Some of the most popular blockchain programming languages are C++, Javascript, Python and Solidity. Though C++ is the oldest on the list, we have to admit it’s evergreen and helps ensure prompt services to facilitate cryptocurrency transactions. No wonder why it’s often used in cryptos like Bitcoin, Litecoin, and Stellar. Javascript is another popular option used to create interactive web pages and enhance the communications between different nodes. Perhaps one of the most favoured among programmers is Python, with a similar syntax to English and ideal for web-based applications. It is perfect for performing mathematical actions and processing complex data. Smart contacts for Hyperledger are written with Python, for example. Last but not least, let’s talk about Solidity - a high-level programming language created by the Ethereum team specifically for decentralised apps (dApps) on the Ethereum platform.
Blockchain Technology & User Safety
As we can see, decentralisation is crucial… but also vulnerable. To ensure that a user won’t download a copy of the blockchain and alter data with another user, different algorithms come in place, such as Proof of Work (PoW). PoW has its cons compared to other newer algorithms but ensures 100% efficiency.
While understanding the complexities of the whole process is not needed, we have to mention that in terms of crypto trading, PoW is a vital mechanism used to validate transactions and create new tokens.
Why Is This Important for Cryptocurrency Traders?
Blockchain technology is expected to affect different sectors worldwide and become more mainstream. Thus, it is always good to know its basics. While we often associate coding, algorithms and encryption with the IT sector, the truth is that such innovations are the core of cryptocurrency investing.
No, you won’t be required to solve complex mathematical puzzles or create decentralised applications if you simply want to trade Bitcoin, for example. But still, knowing the fundamentals of what keeps your transactions, crypto wallet and data secure is recommended. Furthermore, it’s essential to know how to choose reputable brokers and online platforms to avoid falling victim to crypto crime.
In the end, the world of DeFi keeps changing at a rapid pace, enhanced by the latest innovations and regulations in the cryptocurrency and blockchain technologies sector. Cryptocurrency investing might not necessarily make you wealthy; in fact, you can lose more than you invest.
Yet, it can help you achieve much more:
- Stability: Being among the best investments of the century, cryptos are a great addition to your portfolio. From Bitcoin to Dogecoin and Monero, you can pick any asset to match your financial goals.
- Freedom: Cryptocurrency trading gives you the freedom to buy, sell or speculate on crypto prices from the comfort of your home or even on the go.
- Transparency: The nature of cryptocurrency is here to ensure transparency and data safety at all times. The risks of altering data are minimum.
- Decentralisation: Moving away from central authorities, the crypto space allows you to connect with like-minded people and forget about censorship and exorbitant fees.
Are you ready to join the fascinating world of DeFi, blockchain technologies and cryptocurrency trading? We thought so!
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