Blockchain, smart contracts and cryptocurrencies
If you don’t already have cryptoassets in your investment portfolio, you’re missing out on a great opportunity. Of those who don’t come to your door twice. So, read this article to the end to understand how disruptive the technology behind this great innovation is.
Understanding the blockchain
You may have already heard the term blockchain, but if you haven’t, you can be sure that in the coming years it will be present in our daily lives, especially in the field of technology.
Translated from English as “blockchain”, the concept of a blockchain emerged in 2008 in the document known as the bitcoin white paper, which explains in detail the proposal for an electronic currency that is built through a reliable and decentralized network, which does not allow the duplication of expenses and which can be carried out peer-to-peer (from person to person, without the intermediation of an institution) at any time and in any place in the world, all that is required is access to the internet. Bitcoin is the pioneer and the best known, but there are several assets with similar characteristics. These digital assets are called cryptocurrencies.
The great revolution behind the whole bitcoin system is in fact the blockchain, because it is this technology that makes the network reliable. But don’t worry. In this article you will understand how it works, as well as the possibilities for using this technology that goes far beyond cryptocurrencies.
Think of a public accounting book, where the entire history of transactions is recorded and everyone can access it whenever they want. A large database. In this book, data such as the amount of money transacted, who sent it, who received it, when the transaction took place and where in the book it is located, are recorded using cryptography, i.e. anonymously.
These transactions are stored within a block, and each new block that is generated carries all the information from the previous block plus its own information, thus forming a chain of blocks.
As you can see in the image, each block generates a so-called “hash”. The hash is basically a code of letters and numbers that represents the information stored in the blockchain. As if it were a unique “digital pillar”. Understanding that each hash contains all the previous hashes, any changed information generates a new hash, and if it doesn’t match the entire network, it becomes invalid.
This is exactly how Kanna’s ballast works. Each sheet contains the date, time and coordinates of the impacted space. This process involves 4 stakeholders: the buying party, the selling party, the miner/validator and the local community, which is in charge of verifying and guaranteeing the real impact of the land.
That’s why this system provides transparency and immutability. After all, in order to make any change, it is necessary for more than 50% of the network (thousands of people spread all over the world) to validate the veracity of the information. This is called the consensus of the blockchain network and is carried out by the operators belonging to this network.
The explanation of the blockchain that has just been given includes aspects related to currencies as an integral part of the information that is generated on a blockchain. But this system allows for other types of information, not necessarily just financial transactions. In addition to cryptocurrencies, blockchain technology can also be used for document validation, intellectual property, public transparency, medical records, diplomas, real estate records, etc. We can see that the possibilities for using technology are promising, can’t we?
The smart contracts revolution
And from this universe of technology and blockchain, so-called smart contracts have emerged. They are contracts that can be executed by themselves, formalizing negotiations between two or more parties without depending on the intermediation of a third party. Then rules, conditions and consequences can be established and blockchain helps this type of software to verify and record this information, providing reliability for all those involved.
In addition to transparency, another advantage of smart contracts is the saving of costs and time related to commercial transactions and the efficiency of processes. Another factor that is not taken into account would be possible human error.
Understanding how smart contracts work is vital to guaranteeing Kanna’s reliability and operation.
Technology is a tool that has definitely improved our lives. However, as with any other Hebrew, you have to be careful. Studying and understanding its operation is essential for security and success in this type of transaction. For example, the code that makes up the contract must be perfect, with no mistakes or errors. Otherwise, it will become vulnerable.
So always investigate the projects, companies and people involved. There are many people – like us – who value transparency and information, but unfortunately we can’t say that it’s everyone.
How to invest in cryptocurrencies
Now that you have understood how all the revolutionary technology behind bitcoin, Kanna coin and other cryptocurrencies works, you may be wondering what the first steps would be to start investing.
The golden tip is: study first. There are more than 11,000 assets in the cryptocurrency market and, obviously, there are good and bad projects. It doesn’t make sense to choose where to invest your money because of a name, a promise or a pretty website. It is necessary to understand the foundations of this project, and then to speculate.
Look for ideas that you identify with, projects in which you create the solution that the proposal brings. Don’t forget: well-founded projects have a lot of added value and, regardless of the price at the moment, their value tends to grow over the long term. Don’t neglect fundamentalist analysis.
So make sure you consult our white paper before investing in the project.
There are several ways to get exposure to the cryptocurrency market. You can trade them on an exchange, accept them as payment or do a P2P deal, i.e. directly with another person who wants to sell. The latter can also be done through a DEX (decentralized exchange).
In 2018, the CVM (Brazilian Securities Commission) allowed Brazilian funds to make indirect investments in cryptocurrencies abroad by buying derivatives or shares in other funds. In 2021, the first fund was launched on the Brazilian stock exchange, allowing investors “not qualified” by the CVM – and those with less purchasing power – to also have this opportunity. Therefore, it is also possible to expose yourself to this type of asset in a more traditional way.
Speaking of “traditional investments”…
It is well known that the banking system is responsible for most of the payments made in the world economy. Even this system is also responsible for issuing new currencies, technically, through the control exercised by its state economic bodies.
The result of the lack of control and planning is a disproportionate inflation and a gradual loss of purchasing power over the years. To give you an idea, the 2021 minimum wage has had the lowest purchasing power since 2005. A study carried out by mathematician José Dutra Vieira Sobrinho for Invest News shows that the real has lost 84% of its purchasing power over the last 26 years, since the start of the real plan.
As a result, the effects of inflation are not the same for the entire population and food costs end up weighing much more heavily on the lower-income classes, who need to spend most – or all – of what they earn on food. And everyone knows the effect this causes: those at the top go up and those at the bottom go down.
According to an article published in El País, studies and experts claim that segregation is increasing in correlation with the growing inequalities caused by the current economic model.
Y sabiendo que ̶e̶s̶t̶á̶ ̶t̶u̶d̶o̶ ̶e̶r̶a̶d̶o̶ el modelo económico actual no es eficiente, mucho menos la educación financiera de la población, the proposal of cryptocurrencies is precisely to subvert the issuer of the currency, without being controlled by an inefficient regulatory body. Thus creating a valuable monetary system, giving the power to decide value to people in the famous and simple model of supply and demand.
The purse is not a coin
The motto of the crypto community is: if you don’t have custody of your assets, they’re not yours. But what do you mean? The most important thing to understand about this digital currency universe is that the idea behind this whole financial system, initiated by bitcoin, is mainly the protection of your capital, which is only properly protected when it is under your custody. Technically, we shouldn’t trust the big companies and stock exchange corridors, as they are susceptible to problems, regulations and a whole host of attacks. Therefore, most enthusiasts of this market will not recommend the aforementioned traditional investment model in the form of funds and derivatives.
The recommendation would also be to leave it in an exchange. Piénselo: if there is a problem with your clients’ money, banks and funds can – or at least should – reimburse you for commissions and monthly expenses. That’s the idea. The exchanges, on the other hand, do not charge any custody fees and their income comes exclusively from their trading commissions. In other words, there is no guarantee or protection, regardless of the size and reliability of the company. The exchange is not a card.
What to do then? Basically, what the community advocates is that you can use exchanges to trade your cryptocurrencies, but if your goal is to maintain (term for keeping an asset for the long term) the best thing is to have a cryptocurrency portfolio.
Having custody of your assets
Known as monitors and of various types, digital monitors are responsible for storing security keys. There are two types of key: public ones, which are like a kind of address for sending and receiving, and private ones, which are similar to the password of a strongbox and should not be shown to anyone – including because the market is very digital, it is recommended that this password is not accessible online.
When you transfer money, the transaction is recorded on the blockchain and it is precisely through the blockchain that you can access, consult and control your assets.
Now that you have understood how the world of cryptocurrencies and even the much-mentioned blockchain works, I bet you have been surprised by the growth potential of this market due to its revolution and technology.
Our project was born out of this potential. Consult Kanna’s White Book to understand how we can make a difference by generating social impact. If you have any questions, please contact us and we will explain. And the next step is to invest. 🙂
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