By: Heather Skovlund-Reibsamen
Cryptocurrency × NTFs
In recent news, Tautachrome Inc. has announced its patent attorney’s opinion on the early applicability of its KlickZie patents. The KickZie application will enable users to capture images that are invisibly marked and verified as the original. The owner of the image or video will have the ability to use, sell, and monetize their images. A simple tap on the image will allow users to communicate with the image’s author or others currently viewing the image. The patent is among many in the market of NFTs (Non-Fungible Tokens).
Understanding cryptocurrency can be a headache! It is best to research thoroughly before investing your hard-earned money into just any digital asset. Let’s start with the basics: what is cryptocurrency? Crypto, crypto currency, or cryptocurrency is a digital asset designed to work as a medium of exchange where individual coin ownership records are stored in a ledger existing in a form of computerized databases using strong cryptography to secure transaction records, control the creation of additional coins, and to verify the transfer of coin ownership. Now, cryptocurrency does not exist in a physical form, like your wallet filled with dollar bills.
Crypto Coins – Altcoins: Tokens, cryptocurrencies, and other forms of digital assets that are NOT bitcoin are known as alternative cryptocurrencies.
A few examples:
Tokens: Created and given out through an Initial Coin Offering, or ICO – much like a stock offering. Crypto tokens are a blockchain account that can provide functions other than making payments. Tokens are usually issued within a smart contract running on top of a blockchain.
- Value tokens (Bitcoins)
- Security tokens (to protect your account(s))
- Utility tokens (designated for specific uses)
What does it mean when a cryptocurrency forks?
Sometimes a cryptocurrency will ‘fork’ and yes, that does sound confusing. It can be broken down into Forks, Hard Forks, or Soft Forks. Forks can be classified as accidental or intentional. An accidental fork happens when two or more miners find a block at the same, or almost same, time. The fork is then resolved when subsequent blocks are added and one of the chains becomes longer than the alternative. The network then abandons the blocks that are not in the longer chain, then referred to as orphaned blocks.
Hard Fork: A hard fork happens if a protocol or rule is changed so that the old protocol version is no longer valid.
Soft Fork: A soft fork occurs when a protocol or rule is changed, and the old version accepts the new version; enabling it to continue working.
What exactly are NTFs?
A non-fungible token is a unit of data within a digital ledger called a blockchain. This is where each NFT can represent a unique digital item and are not interchangeable. A blockchain is a growing list of records (blocks), that are linked using cryptography. Each block has a cryptographic hash (a mathematical algorithm that maps data), a timestamp, and transaction data.
NFTs can be used to represent digital files such as audios, art, collectibles, sports, pornography, video games, and other forms of creative work. While copies can be made of these creative means, the NFTs representing the original are tracked on their underlying blockchains; therefore, providing the buyers with proof of originality and ownership.
In order to create an NFT, a file is uploaded to an NFT auction market. This creates a copy of the file recorded on the digital ledger as an NFT. This enables it to be bought with cryptocurrency and then resold. The artist can sell an NFT representing the work and still retain the copyright to the work as well as create more NFTs of the same file.
In addition, the buyer of the file does not gain exclusive access to the work or the original digital file. Unfortunately, a seller does not have to prove that they are the original artist either. There have been many cases where are was used for NFTs without the true artist’s permission.
Most Common Types of Cryptocurrency
Bitcoin: Invented in 2008 by a person or group using the name Satoshi Nakamoto. The currency began being used in 2009 when its implementation was released as open-source software. Bitcoin was the first decentralized cryptocurrency leading the way for many others in the years to come. Bitcoins were created as a reward for a process known as mining (record-keeping service done electronically). Bitcoins can be exchanged for other currencies, products, and services.
Bitcoin Cash: A spin-off or altcoin of Bitcoin that was created in 2017 eventually splitting into two cryptocurrencies – Bitcoin Cash and Bitcoin SV. Bitcoin Cash is one of the most popular types of cryptocurrency on the market and holds a block size of 8MB. To compare, Bitcoin’s block size is just a mere 1MB. This means Bitcoin Cash processes at faster speeds for its users.
Litecoin: A peer-to-peer cryptocurrency and open-source software project released under the MIT/X11 license. Litecoin is nearly identical to Bitcoin. Created by Charlie Lee to improve on Bitcoin technology, with shorter transaction times, lower fees, and more concentrated miners. In May 2017, Litecoin became the first of the top 5 cryptocurrencies to adopt Segregated Witness – a soft fork implementation change in the transaction format of Bitcoin.
Ethereum: A decentralized, open-source blockchain with smart contract functionality developed by Vitalik Buterin. Ether (ETH) is the native cryptocurrency of the Ethereum platform. It is the second-largest cryptocurrency by market capitalization. Ethereum is also the most actively used blockchain. It focuses on decentralized applications (phone apps) – almost like an app store. Ethereum looks to return control of apps to its original creators instead of the middlemen (like Apple, for instance). The token name is Ether, which is used as currency by app developers and users.
Ripple: A real-time gross settlement system, currency exchange, and remittance network created by Ripple Labs Inc. Ripple was released in 2012 upon a distributed open-source protocol that supports tokens representing fiat currency, cryptocurrency, commodities, or other units of value (frequent flier miles, for example). Ripple is geared more towards large companies and corporations than it is for individual users. Ripple is well known for its digital protocol because it allows large amounts of money in any form to be transferred.