So I understand that the crypto market is not doing good right now.
But I feel in 2023 you should learn about the blockchain technology because this is the underlying technology
behind multiple cryptocurrencies.
Dao Nfts or even some Metaverse project.
So let's understand about the different types of blockchain business model and we will understand how
these different companies are monetizing their core blockchain technology.
Now, before we understand the different types of business model in blockchain, we first have to build
a very strong foundation.
And I know some of you may have some questions in mind, like what exactly is blockchain and how does
it work?
And that's why to build a strong foundation, we will first understand about the core blockchain technology
and then we will understand all the different types of business model.
So blockchain is a technology of distributed ledger that will give control to people instead of giving
control to a single authority or an entity.
And let me simplify that.
So if you look at all the different types of bank you have in your country, those banks are maintaining
a centralized ledger.
So every time a person do a transaction, they are basically logging all of those transactions in the
centralized ledger.
And whether you visit any branch of the bank, you can see all of those transactions that you are doing.
That's a really good example of centralized ledger.
And this centralized ledger is maintained by all the different types of financial institution and bank
you have in your country.
But in blockchain, they maintain a distributed ledger that means no single entity or person or authority
is maintaining your ledger.
Your ledger is maintained by all these different types of node.
So these nodes are also known as your computer, and they are running the blockchain technology.
And every time a transaction will happen on this blockchain technology, all of these computer will
maintain the record of these transaction.
And that's why people say that blockchain is nothing but a distributed ledger.
Now, some of you might be thinking that, okay, that's fine, we understand the blockchain technology,
but what if a person who is maintaining these ledger will try to change the transaction?
Or let's say if he will try to delete the transaction, what will happen in that case?
Well, to answer that question, let's understand what makes this blockchain technology so unique.
So when we talk about blockchain, a blockchain is nothing but a chain of these data block.
And you can consider these data block as a single page in a ledger.
And all of these data block are connected to each other.
And that's why we call it as blockchain, not a blog group or a blog family.
So every time a bunch of transactions happen on the blockchain technology, they will bundle all of
those transactions in a single block and then they will add that block into this specific blockchain.
Now you might be thinking, okay, what if someone tried to change the sequence of these block in order
to.
Do some fraud or spam?
Well, if you closely look at a blockchain, the first block of this blockchain technology is known
as Genesis BLOCK.
And if we talk about Bitcoin, which is the most famous blockchain technology, this Genesis block was
created by the founder of Bitcoin, which people assume that it's it is Satoshi Nakamoto.
So every time you add a new block into this blockchain technology, this block will refer to the previous
hash.
So you can see that the previous hash is one A, four Z, and this block is referring to the previous
heads of this block.
And similarly, this block is referring to the previous hash of this block.
And the benefit of referring these previous hashes that you cannot add a random block in between.
You have to have a block that is referring to the previous hash.
And that's why you cannot change or alter the blockchain technology.
So now you have a basic understanding of a blockchain technology and why it is difficult to remove or
add a new block into the blockchain technology because this block may not have the exact same previous
hash.
Now you might be thinking perfect, We understand the blockchain, but what exactly is there inside
a single block?
And that's why let's understand what is a block in a blockchain.
So if you look at a block, block will have a block header and this block header will contain information
like block number, the previous block hash, the marker route and these timestamp or new ones.
Then they have the block body that will store all of the data in this block.
Now, if I give you a simple analogy so that you can understand about an individual block in a blockchain.
Consider this block as a truck.
So in a truck you will have the cockpit of the truck and this cockpit will have all the information
or let's say, papers related to what exactly they have inside the truck and the pickup and the drop
location of these goods.
So all the important information is there in the cockpit of the truck with the truck driver.
So the hider will have all of these important information like the block number, the previous block
hash, the Merkle root, the nonce and the timestamp and the block body will contain all of the data.
Let's see a transaction data in case of Bitcoin or maybe a smart contract in case of Ethereum.
So if you wanted to increase the data capacity of a block, in that case, you can increase the block
size, but a bigger block will have some other issues as well.
So now that you understand everything about individual block and the blockchain technology, let's understand
what makes this blockchain technology so unique.
And you have a different reason.
The number one reason is Trustless.
In blockchain, they use a distributed ledger and that's why no single entity or person is controlling
this ledger.
Every time a transaction is happening on the platform, every single node or computer is maintaining
the same ledger.
And that's why it is also trustless.
The second reason is unstoppable.
If you have deployed a blockchain technology across all of these different nodes than it is super difficult
to stop.
Even if a single computer is up and running, the blockchain technology will still work.
And that's why it is unstoppable.
Unlike a centralized cloud computing platform or database, you are maintaining the third reason is
immutable.
So every time a transaction happened in a blockchain technology, this block will group all of those
transactions together and then they will add a new block into the blockchain.
And then you cannot remove that block.
And that's why people call this as immutable, because you cannot remove a block.
And, you know, the reason that a single block will have a header and that header will contains the
previous hash, and that is why it is super difficult or I would say impossible to remove a block from
the blockchain technology.
The fourth reason is decentralized.
That obviously means no single person is controlling the blockchain technology.
Every single node around the world have the exact same ledger and that's how people are facilitating
the transaction.
The fifth reason is lower cost, and I know this may not be true in case of Bitcoin or Ethereum, but
if you look at a couple of other blockchain platforms like Solana, the transaction cost is very less.
Six times peer to peer.
That means every time you send a cryptocurrency, let's say a Bitcoin or an Ethereum to other person.
So it will take like a few second to a few minute.
Once the transaction is validated, though, cryptocurrency will reach to the wallet and that's why
it is peer to peer.
That means there is no central authority who validate the transaction.
Seventh is transparent and we already understand that the blockchain technology is a distributed ledger
and it is distributed across all of these node.
And you can also run the same blockchain technology in your node and you can look at all of the transaction
that is happening on the platform.
So you cannot remove, hide or erase a transaction and that's why it is transparent.
Eighth reason is universal banking.
So whether you live in United States or in Africa or maybe in Australia, if you have a computer that
is connected to Internet, you can simply go on the blockchain ledger and you can transfer or accept
money from anywhere you want.
So that's why blockchain provides you a universal banking.
You don't really need a bank account.
So now that you understand what exactly is a blockchain technology and how does it work?
Now let's understand the difference between Web two and Web three.
And if you're into programming or let's say you have written any code in your life, then you can easily
understand this topic.
So if you have built a mobile app or a software, then I'm sure you have heard of these three things
the front end, the back end and the storage.
So when you build a software or a mobile app, you need a front end that interact with the end user
and you can build this front end with the help of HTML, JavaScript and CSS.
Then behind the scenes there is a backend where all of these logics are written and you can build this
backend in Node.js, in Python and Java or in Ruby, and that's your backend system.
Now along with this backend, you have a database that is storing all of the information of your customer
or let's say the kind of product that they are purchasing from your mobile app or from your software.
So in a Web two app, you have three important part of front end, a backend and a storage, also known
as your database.
And you will host all these three important part on AWS or either on Google Cloud Platform, and that's
your Web two app.
Let's look at a Web three app.
Now, in a Web three app, you will still have a front end that is made up of HTML, JavaScript and
CSS, but you don't really have a backend or a storage in a Web three app.
The backend is nothing but the core blockchain technology that is your Etherium Polygon and Solana.
And then you will write a smart contract in solidity or in rust.
So if you wanted to write a smart contract in Ethereum, you will use a solidity programming language.
If you are writing a smart contract in, let's say, Solana, then you can use rust programming language
and then you need a node provider so you can get all of these different nodes from quick nodes or alchemy.
And we'll discuss about alchemy in a while.
Alchemy is a node aggregator, and then you can simply connect your front end and that's your Web three
app.
In Web three app, you need additional part.
That's your wallet.
So you can use metamask or phantom wallet in your browser, and then you can interact with this Web
three app.
So every time you do an action in this Web three app, let's say you are buying or selling nfts or digital
asset, or let's say even if you're doing a normal function, some amount will get deducted from this
Web3 wallet like Fantom or Metamask.
And that's your web three app.
Web three app doesn't have their backend or storage and they are not hosted on a cloud computing platform
like AWS or Google Cloud platform.
Their backend is nothing but the core blockchain technology that is Etherium Solana or Polygon, and
you are simply writing a smart contract.
With the help of a node provider, and then you're interacting with that specific core blockchain technology.
And every time a transaction happened on the platform, it is visible to every single user around the
world.
And that's the basic difference between a Web two app and a Web three app.
So now that you understand everything about blockchain technology in the next video, let's understand
about the different types of business model in blockchain.