Introduction To Blockchain & Cryptocurrencies E-Book

Gurvy Kavei

• Herausgeber: GRIN Verlag
• Kategorie: Fachliteratur
• Sprache: Englisch

Veröffentlichungsjahr: 2022

Beschreibung

Document from the year 2022 in the subject Economics - Finance, grade: A, , language: English, abstract: The world gets more and more digitized every day. People buy things on the internet, trade stocks online and work in a digital world. Overly the industrial revolution 4.0 determines our work life and free time. In many places, robots steered by artificial intelligence are replacing human labour. With the ongoing technological progress, it is hard to find a single modern organization not embracing artificial intelligence because it often saves time and money and is more accurate. Today, blockchain technology has become almost an insurmountable bedrock for business process automation, product enhancement, analytic speed, and accuracy. But why has blockchain taken on such a pivotal role? How does cryptocurrency trade work? What should you know about artificial intelligence, Fintech, crypto mining, exchanges, and trading? This book explains the most important theories to understand the digitized world and its opportunities. It points out a variety of entrepreneurial options. Furthermore, it illustrates where adaptation is happening in the world and how anyone can navigate this crusade of wealth creation in a regulation-compliant manner to avoid criminalization and stereotyping. “Introduction to Blockchain & Cryptocurrencies” is intended for people who want to enter and explore this world for the first time. It is also for people starting a career in trading, mining, and financial investments, but more on the side of digital currencies. This book is for you if you are generally an entrepreneur interested in diversifying your business portfolio. If you are a policymaker and a regulator in the financial sector, this book will undoubtedly open your eyes to a few things we usually tend to take for granted. If you are a trainer interested in augmenting your training in the field of trading, mining, entrepreneurship, policy formulation, and simply appreciating global trends in the ecology of crypto and blockchain, then be assured that this book will be of interest to you.

Leseprobe

INTRODUCTION TO BLOCKCHAIN & CRYPTOCURRENCIES

A HANDBOOK FOR BEGINNERS

Imprint

Copyright (c) 2022 GRIN Publishing GmbH

All rights reserved

The present work has been carefully prepared. Nevertheless, authors and publishers do not incur liability for the correctness of information, notes, links and advice.

Cover image: freepik.com

Acknowledgements

The author wishes to thank those below for their contribution to this book:

Profesor Gabriel Kabanda

For a sterling input on content editorials

Dr Victor Udemenzue Unyebukue

For a thorough content review input

FOREWORD

This book takes you through an illustrative somersault of the industrial revolutions, starting with the first through to the fourth. Open socio-economic opportunities and drawbacks from these industrial revolutions are laid bare open for both individual and corporate citizens. A salient feature of the later industrial revolution is the advent of Blockchain technology which forms the crux of this book. No matter where you are in the world, you cannot avoid this technology today. The book teaches you what it is. It further generously provides you with tools to harness some of the Blockchain applications, thereby bringing you to a club of global citizens in more than 140 at the forefront of digital transformation for our new world order. The start of this crusade was slow. Structurally, there were challenges of limited scalability, slow speed of transactions, high-energy usage, underdevelopment of its Blockchain ecology, lack of commensurate talent, and uncertainty of leadership for adoption. All these challenges combine to restrict its acceptance in some countries across the globe. However, the demand for Blockchain and its applications have become the holy- grail of digital transformation, and no single person, corporation, or country seems able to stand against it. This is because of the increased number of cryptocurrencies, an upsurge in the FinTech revolution worldwide, and a warming up of many countries towards its benefits.

Blockchain is the operating system to several artificial Intelligence (AI) and digital applications, just as petrol is to several automotive engines worldwide. In the same way, petrol can run a grass-mowing machine, a forklift in a warehouse, or a commercial vehicle on a public road; so is Blockchain for numerous cryptocurrencies with different purposes. You will realise in this book, and beyond that, the association between Blockchain technology and cryptocurrencies is of existential nexus. On the Blockchain, technology emerges more than 3000 digital tokens used in gaming consoles, financial transactions, transactional agreements, digital certifications, identity validation, polling management, and the list is endless. Except for decentralised financing (DeFi), the author will tell you that most of these Blockchain operations do take place through organised systems of exchanges.

You may liken exchanges to Banks in a financial plan.  Details are in the pudding – some (exchanges) are centralised. Some are decentralised. Some are regulated, and others are not.

In your early navigation of the book, you will sooner realise the chief purpose for which it was written: To bring millions of financially marginalised ordinary people into the trendy opulence, available only to those grappling with crypto trading, crypto mining - even decentralised exchanges (DeFi), albeit to an elementary level. The author generously exposes the reader to the three aspects of trading; the emotional side, the market of trading, and the personal technical analytics and art of performing an actual trade. With the illustrative techniques the book avails, I bet you cannot go through it without opening a personal trading account if you have not traded before.

Be assured that the author is not only there to throw you to the deep baits of Blockchain and cryptocurrencies navigational skills without adhering to some regulatory requirements – where applicable.  To that end, a chapter entirely dedicated to regulation and compliance issues provides advice to individuals, corporations, and governments on the benefits derived from a thoughtful win-win regulatory approach. With such an approach, argues the author, brings sanity to the industry, at times viewed with a pinch of illegalities. Regulation of cryptocurrencies provides many benefits to many countries, such as an additional source of revenue through taxation, financial inclusion for those on the margins of the mainstream economy, reduction of youth unemployment, and improvement in cross-border payments. It appears such benefits are more likely to increase and spread with an increase in the momentum for mass adoption, driven by corporations (fund managers, exchange and payment agencies, retail banks, and even central banks). On the government side, ambivalence and reluctance seem to overly define their present mood, though this is likely to fade out over the future horizons.

Finally, a critical feature of this book is the FinTech Chapter that unravels how money has changed form and shape over the years and dynamic permutations of how cash is handled over space and time. On this particular topic, the book acknowledges the disruptive nature of technology concerning our conduct towards money. It posits that between now and 2030, 86% of worldwide GDP growth will be generated from large cities of developed economies where Fintech’s are concentrated while emerging economies will be posing a challenge in toppling that establishment. In closing, Dr Kavei admits that history has granted us a lucrative chance through Blockchain technology and entrepreneurship spinoffs. He looks forward to a new and evolving breed of thinkers, researchers, practitioners, and policymakers bent on bringing in unique views, ideas, and experiences to contribute to the growth of the Blockchain and wishes us luck with further exploration of business opportunities in the 4th Industrial revolution.

Professor Anicia Peters

Pro-Vice-Chancellor: Research Innovation and Development – University of Namibia

Chairperson: Namibia 4th Industrial Revolution Presidential Task Force

Contents

How this Book is structured

Book overview

Welcome to INTRODUCTION TO BLOCKCHAIN & CRYPTOCURRENCIES: A HANDBOOK FOR BEGINNERS

INTRODUCTION TO BLOCKCHAIN & CRYPTOCURRENCIES: A HANDBOOK FOR BEGINNERS—is this your area of interest?

Getting around this Book

Margin icons

Chapter 1

The 4th Industrial Revolution and Artificial Intelligence

Introduction

The History & Anatomy of Industrial Revolutions

Challenges & Opportunities with the 4th Industrial Revolution

Chapter summary

Chapter 2

The Blockchain Technology

Introduction

What is Blockchain & How Does it Work

Blockchain Applications & Its Challenges

Chapter summary

Chapter 3

Crypto Currencies

Introduction

The Crypto Market

Crypto Transactions

Chapter summary

Chapter 4

Exchanges

Introduction

Crypto Exchanges – What they Do

Crypto Exchanges – Their Nature

Crypto Exchanges – Who is Who?

Chapter summary

Chapter 5

Crypto Mining

Introduction

The anatomy of Crypto Mining

Challenges & Opportunities in Crypto Mining

Chapter summary

Chapter 6

Crypto Trading

Introduction

Yourself as a Trader

The Tradable Market

The Technical Part of Trading

Chapter summary

Chapter 7

Blockchain & Cryptocurrencies in the Legal Space

Introduction

The Case for Legislation

What to Legislate

A Global Outlook on Crypto Legislation

Challenges & Opportunities in Legislating Cryptocurrencies

Chapter summary

Chapter 8

Geography & Latest Trend in Adaption of Blockchain & Cryptocurrencies

Introduction

The spectrum of Crypto Adaption at Personal Level

Outlook of Cryptocurrency Adaptation at Corporate Level

Outlook of Cryptocurrency Adaptation at Public Level

Chapter summary

Chapter 9

Fintech and innovation in the financial space

Introduction

Some Areas of FinTech Application

The Role of Fintech in Modern Economies

Key Regional and Global Players in the FinTech Sector

Chapter summary

Chapter 10

Blockchain - and Crypto-based Business Opportunities

Introduction

Blockchain-based Enterprises

The Primary Industry of the Blockchain

The Tertiary Industry of the Blockchain

Chapter summary

Bibliography

How this Book is structured

The book overview

The book overview gives you a general introduction. Information contained in the book overview will help you determine:

•If the book is suitable for you

•What you would need to know

•What you can expect from the book

•How this book fits into your learning objectives as a whole

•How much time you will need to invest in fulfilling your understanding

The overview also guides on:

•Study skills

•Where to get help

•Possible reviews and assessments

•Illustrations & Icons

•Chapters

We strongly recommend that you read the overview carefully before going into details of the book.

The book content

The book is broken down into Chapters. Each Chapter comprises:

•An introduction to the Chapter content

•Chapter objectives

•Some prescribed readings for a Chapter

•Some additional readings for a Chapter

•The core content of the Chapter with a variety of learning activities

•References

•Self-assessment activities (if any)

•The Chapter’s keywords or concepts

•A Chapter summary 

Resources

For those interested in learning more on this subject, we provide you with a list of additional resources within a Chapter of the book, these may be books, articles, or websites. Please note that these resources are optional rather than prescribed readings.

Your comments

After completing INTRODUCTION TO BLOCKCHAIN & CRYPTOCURRENCIES, we would appreciate it if you would take a few moments to give us your feedback on any aspect of the book. Your feedback might include comments on:

•Content and structure

•Reading materials and resources

•Activities

•Some Feedbacks

•Duration/Length

•Resources

Your constructive feedback will help us to improve and enhance future editions of this book.

Book overview

Welcome to INTRODUCTION TO BLOCKCHAIN & CRYPTOCURRENCIES: A HANDBOOK FOR BEGINNERS

Premised on the foundations of the fourth industrial revolution, this book provides the reader with basic and simplified exposure to concepts such as artificial intelligence, disruptive Blockchain technology, and various phases of industrial revolutions. For those of you interested in a more pragmatic approach, the book gives you elementary tools to navigate the art and practice of crypto mining, exchanges, trading, FinTech, and some controversies around regulation of cryptocurrencies. Furthermore, the book points out a variety of entrepreneurial options for those seeking to pursue their dreams in cryptocurrencies and the blockchain technology.

INTRODUCTION TO BLOCKCHAIN & CRYPTOCURRENCIES: A HANDBOOK FOR BEGINNERS—is this your area of interest?

Introduction to Blockchain & Cryptocurrencies is intended for people who want to enter and explore the world of cryptocurrencies and blockchain technology for the first time. It is also for those in the middle of their early career in trading, mining, and financial investments, but more on the side of digital currencies. This book is for you if you are generally an entrepreneur interested in diversifying your business portfolio. If you are a policymaker and a regulator in the financial sector, this book will undoubtedly open your eyes to a few things we usually tend to take for granted. If you are a trainer interested in augmenting your training in the field of trading, mining, entrepreneurship, policy formulation, and simply appreciating global trends in the ecology of crypto and blockchain, then be assured that you are at home already.

You do not need to have prior knowledge of the subject to navigate this book. Every aspect begins with basic concepts to spiral you towards some comfort level in understanding cryptocurrencies and blockchain technology.

Getting around this Book

Margin icons

While working through this book, you will notice the frequent use of margin icons. These icons serve to “signpost” a particular piece of text, a new task, or change in activity; they have been included to help you find your way around this book.

A complete icon set is shown below. I suggest that you familiarise yourself with the icons and their meaning before you get started. However, if you are already familiar, that is a bonus for you.

Chapter 1

 The 4th Industrial Revolution and Artificial Intelligence

Introduction

Have you ever imagined and taken a ride in a self-driven car? Have you ever taken a flight on an auto-piloted aeroplane? Have you ever had a live video call or chat with a relative from overseas on your cell phone or computer? Have you ever had a neuro-technological enhancement of your body organs such as hands, limp, eyes, or even hearing? Have you ever undergone or heard about genetic modifications to determine whether you want a baby boy or baby girl? Have you ever heard of safely storing your genomes for more than 200 years to have a child of your choice after you have long disappeared from the earth? Do you have a blockchain-based digital financial account where you can make transactions (pay and receive payments) without the need for bank involvement? If one answer is at least a yes to these questions, it indicates that you are already part of the fourth industrial revolution. If your answer is No to all these questions, then the chances are that you live a life that has not yet arrived in what we call the fourth industrial revolution of today. If your answer to all the above questions is yes, then the chances are that you are a fourth industrial revolutionary or champion.

In this Chapter, the aim is to make you understand what 4thIR is, a step further. You should distinguish it from other preceding industrial revolutions and identify its opportunities for application in interface with various artificial intelligence facets. Most importantly, you must apply AI approaches in solving problems in the private, public, civil society and individual spheres and educating other newcomers to the 4IR space.

In so doing, the chapter will tell which textbooks and materials to read, give you historical perspectives of other industrial revolutions before this one, provide you with some activities to stimulate your mind in terms of the meaning and application of 4th IR in today’s world. At the end of the chapte, you will receive a chapter summary.

The History & Anatomy of Industrial Revolutions

Suppose we are already at a fourth Industrial Revolution. In that case, this presupposes we have already gone through the first, second, and third revolutions. It further implies that there should be a clear-cut timeline when each of these revolutions started and ended. Unfortunately, this is not the case. Individuals, various geographical societies, companies, and countries experience and undergo these revolutions in a non-sequential manner, at different times, and with different experiences, let alone other impacts. That is, while we are talking of the fourth Industrial Revolution here and today, someone elsewhere in a different time zone and location could still be some years before entering the 4IR era. Even though you are reading this Chapter on the 4IR, it might be the beginning of your third or second Industrial revolution, depending on experience and where you are.

So do not be overcarried by the mere excitement of the word fourth Industrial Revolution when you are not there yet. The remaining part of this Chapter commits to clarify the various industrial revolution further.

The 1st Industrial Revolution (MECHANISATION: 1760 – 1830)

An industrial revolution can be simply defined as a significant transformation or turnaround in the primary means of economic production or structure. The 1st Industrial revolution was characterised by a shift from an agrarian and handicraft economy to one dominated by industry and machinery. Handy tools like cutting tools say the disappearance of and replacement of stones with knives, axes, and sharpened objects like spears and even wood saws. At the same time, animal power for transportation was replaced by a new form of energy, such as the emergence of the steam engine or coal-powered machines. Examples can include:

A change from feudal food processing to one where machines are used to process food is one example. This covered a revolution from the use of drought animal power to plough crop fields to a modern time where machinery (tractors) has now overtaken the role of animal power. Another transformation is harvesting or processing of food using hands and sticks to pound grain off their stocks to one where modern equipment (tractors) are now used to carry the task. Furthermore, food storage has transformed from feudal open silos to modern containerized ones with cold storage for lasting preservation.

The fact that countries are different in many ways almost prescribes how they can adopt or adapt to opportunities and challenges offered by an industrial revolution. This explains why some countries have experienced dating back before the first industrial revolution while others are the pioneers of the fourth industrial revolution at the same time.

The 2nd Industrial Revolution (POWERING: 1831 – 1969)

The accelerated invention of machinery towards the end of the 1st Industrial revolution gave birth to the combustion engine. Using the engine, a new source of energy – electricity, was created. At the same time, there was a strong demand for differently shaped forms of steel in industries around the world. The capacity for the chemical industry too gave rise to synthetic fibres, fertilizers, paints, and other by-products. Furthermore, the mechanization of the second industrial revolution saw the emergence of the telephone, the aeroplane by the Wright Brothers, automobiles coming from large-scale industrial parks of that time.

It is also worth noting that as Industrialization was evolving – all the way from the 1st IR to the present, money has been evolving in different forms and shapes since 1600BC when the first coin was minted by King Alyattes in Lydia, now Turkey. As industrialization evolved, the shapes and forms of coins improved and increased along with the increase in trade around the globe.

As stated earlier above, for different contextual reasons, countries are most likely to be having heterogeneous experiences of and different timelines of entry and exit to the 2nd Industrial Revolution.

The 3rd Industrial Revolution (ICT: 1970 – 2015)

After the significant revolution in powering humankind with electricity as a new form of energy in the Second Industrial Revolution came a second wave of alternative energy generation from nuclear, accompanied by electronics and machinery automation with robotics. This marks the era of computers and a significant advance in communication technology.  As such, the 3rd IR is associated with a mass arrival of automated home devices and gadgets used to perform an endless litany of tasks hitherto done with bare human hands. Examples of the revolution include shifts from telegram to cellphones, steam-powered machinery to solar-powered aeroplanes, from manually-operated music devices such as guitars to electronic keyboards, and the list goes on.

The following illustrates some of these transformations during the 3rd IR:

3rd Industrial Revolution

Modern

phones

smartphones

guitars

Electric guitars

fabrics

Smart factories

There are many components or aspects of transformations during the 3rd IR. Poignant, however, are the shifts in the means of electricity generations from a variety of sources spanning from non-renewables to renewables such as hydro, nuclear, thermal, solar, wind, tidal, and others. Along these comes a significant advancement in communication, including, but not limited to, shifts from the phone bell to a cellphone. With the aid of improvement in electronics, many manually-operated musical instruments also disruptively changed from acoustic guitars to digital ones.

On the financial front, like the shifts in energy form, money changed from coins to papers to credit cards to electronic records as mostly known in today’s world. Along with globalization, the shifting fronts of currencies have become the most significant enabler in international trade.

The 4th Industrial Revolution (DIGITALIZATION: 1971 – Present)

The 4th IR is rooted in several components of the 3rd IR. However, the critical distinguishing aspect of the 4th IR lies in the ability to integrate those means of production through the use of digital technology. It aims at creating a virtual world of controlling the world around us using the abundantly available Big Data stored in digital platforms. In other words, while there was a remarkable emergence of electronics during the 3rd IR, the 4th IR focuses on harnessing the power of data, information, communication, and energy to remotely or virtually operate and control modern world means of production.

A prominent feature of the 4th IR is its ability to disrupt technologies instead of progression. That is, based on new blockchain technology, artificial intelligence with the power to mimic and even improve human performance has taken centre stage in transforming economic, political, and social systems in ways not predictable based on past experiences and knowledge. For example, the skills we have accumulated over the years in driving automobiles will almost certainly become obsolete as more future vehicles will become self-driven – needing lesser and lesser manual intervention from us. We will then need to acquire new skills that place us in better and different roles we play with new-age vehicles. In this way, our comfort zone of acquired skills and knowledge will indeed become disrupted by the new technological advances – leaving us guessing what else we can do better going forward. With the advent of fifth-generation connectivity (5G), doctors need not be physically present in a theatre to operate but perform the same task virtually using artificial intelligence.

The same can be said about our approach to money. In the 4th IR, money has become more and more digital, virtual, and less controllable by a central authority. This leaves central governments, financial institutions, and private users with more challenges of handling, regulating, and controlling modern digital currencies – cryptocurrencies as they have come to be known. With such artificial intelligence, accountants are less needed in today’s financial space. Lawyers are lesser and lesser needed as smart contracts are becoming the order of the day. No one knows precisely the magnitude of disruption the 4th IR will bring along, but one thing is certain – there will be 360 degrees of transformation in almost everything we have known for centuries.

4th Industrial Revolution

Future

cars

autonomous cars

internet

blockchain

money

bitcoin

In the future, today’s human-driven cars will shift to self-drive assisted by the power of digital connectivity, creating a virtual world. The Internet has enabled the world to become a village with fast connectivity through the designated central authority of search engines and social platforms like Google, Facebook, etc. However, the centrality of the internet will now become decentralized, democratic, and more openly linked across the world. Bitcoin and other crypto currencies will replace fiat currencies controlled by central authorities - ushering in a new world of self-regulated people’s currencies.

The extent to which countries, corporations, and individuals adopt future technological and digital operations as a new way of life will mostly depend on their willingness and preparedness to change – mainly on the speed of adoption. As you read this manual, some countries have led in forging futuristic digital culture in almost all aspects of life, from money (crypto) to autonomous cars. Unfortunately for other countries, these transformations into the new digital future are possing a heavy burden of uncertainty – not knowing how to deal and handle the disruptive lifestyle, which has almost become a permanent feature of the end. Such disruptive incapacitation of individuals, corporations, and governments will land several challenges and opportunities, as pointed out in the next section.

A summary of the four Industrial Revolutions can be illustrated by the diagram below.