Blockchain Basics
If you're new to Blockchain, this is a great place to start. In this section, we'll walk you through the most general concepts regarding Blockchain technology. If you wish to know more about cobogo's use for both Fans and Creators, please go to the linked sections.
Table of Contents
1. What is Blockchain?
Blockchain is a technology that features a continuous list of blocks of information on a live network of computers. Each block contains a number of transactions that when filled, are closed and linked to the previously filled block, with other computers checking them using special algorithms.
The most important aspect about Blockchain is that they are decentralized, which means that no computer or agent can modify the log of events stored in the chain. That is, it doesn't rely on a single authority, but on a diverse group of smaller players.
All of that ensures Blockchain's security and makes it the most suitable technology for financial applications
2. What are cryptocurrencies?
Cryptocurrencies are digital assets that operate on decentralized blockchain networks. Like other currencies, they can be used as means to buy services and goods on the internet, but with the advantage of security, privacy, speed and low cost.
There are thousands of different cryptocurrencies on the market, and people can invest on them as any other asset. However, doing that can be risky, so it is recommended to do some fair amount of research to fully understand how each system works.
3. What is a Decentralized Market?
Saying something is a Decentralized Market means that the technology allows the people in it to trade directly with each other instead of relying on a centralized authority like a bank, or any other type of middlemen. People only need to be connected to a node that will transfer the data needed, and don't have to know or trust the people they are trading with.
A Decentralized Market is a good example of peer-to-peer network.
4. What is a Centralized Market?
In Centralized Markets, all orders are led by a central exchange point without an authority or competitive validator. This means that every buy order goes to the exchange, where they are matched with a sell order.
Centralized marketplaces often have higher fees, lack transparency, while also having greater security risks because the network relies on a single point which increases the chances of failure or hacking.
5. What is Ethereum?
Ethereum is a network of cryptocurrencies launched in 2015, that has been adopted by numerous projects from all over the world.
The most distinctive features of the Ethereum network is its “Proof of Stake” (PoS) consensus algorithm and its ability to host “smart contracts”. It is also the largest network that hosts dapps, and it is where most developer activity happens in the crypto space.
6. What are Smart Contracts?
Smart Contracts are basically self-executable programs that run once predetermined conditions are met, used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss.
For that, they are not directly controlled by a user and are published to run independently of the network and those who program it, making them more reliable. They are also open to scrutiny by anyone who wants to access the public network, which aligns with the transparent nature of Blockchain.
In addition, individuals can interact with the smart contract by submitting transactions that will trigger some events in the contract.
7. What is Gas?
Gas is the fee required to do the amount of computational work to validate a transaction in the network. This work is done by the nodes that dedicate their computational power to maintain the network, and in return, are paid a feed for all transactions.
This fee is calculated in terms of ETH.
8. What is a dApp?
Dapps are short for Decentralized Applications and it refers to software applications built from Smart Contracts on decentralized networks such as Ethereum, but with an interface that allows users to interact with it.
They are different from regular apps because they don't have a private connection to centralized servers, which offers more transparency over how its backend works.
9. How can I buy and sell Crypto?
You can buy and sell crypto in two ways: using Decentralized Exchanges (DEXs) or using Centralized Exchanges (CEXs).
DEXs are decentralized markets, and for that, they are not under the control of any company. However, they are more difficult to use because they require users to know how to safely store and protect their digital assets. Examples of DEXs are Uniswap, PancakeSwap and Sushiswap.
CEXs are centralized markets, and usually are more user-friendly, since it comes with typical account features like recovering lost passwords. Examples of CEXs are Binance and Coinbase.
10. What is a Wallet?
A Wallet is a software that holds cryptocurrencies by storing your Private Keys which are used in cooperation with the appropriate Public Keys.
Private Keys are a large, randomly-generated number with hundreds of digits, and although anyone can deposit crypto into an address, they can only be withdrawn from that address with the corresponding keys.
Wallets allow us to access our cryptocurrencies with passwords or Key Phrases, without having to memorize the Private Keys. However, it is safer to have the Private Keys written down in a secure location, just in case.
You can use a Cold Wallet, that is, a Wallet that is not connected to the internet, or Hot Wallet, which is connected. Wallets can also be divided into desktop, hardware, web and paper wallets.
11. What is DeFi?
DeFi is short for Decentralized Finance and it refers to the open financial products and services that provide an alternative to those offered by centralized institutions such as commercial banks, credit unions and insurance funds.
DeFi offers faster, cheaper, and more flexible ways of borrowing, lending and trading assets, without the restrictions imposed by centralized institutions.
The services offered in DeFi are typically accessed using dApps, that are built decentralized protocols.
12. What is Staking?
Staking refers to the process of blocking your funds in a secure Smart Contract in order to benefit the network, and be rewarded in return. The "rewards" accrued can be thought as the interest that accumulates over time on the blocked funds.
Staking using the cobogo means that Fans are depositing the CBG tokens in a smart contract of the respective Creator the Fan wants to sustainably fund. By doing that both the Fan and the Creator get rewarded with CBG Tokens.
13. What is a Pool?
A Staking Pool is a Smart Contract where stakeholders deposit their tokens in order to generate rewards. They allow people to make passive income with predictable and frequent staking rewards.
Specifically, Staking Pools allow users to combine their resources in order to increase their chances of earning rewards, and for that, the rewards are split among the many participants of the pool. These rewards are typically estimated and expressed in APY (Annual Percentage Yield).
In cobogo, Patrons can stake their CBG tokens on a YouTube Creator's pool, and both Patron and Creator get the rewards, in a 50%/50% split.
14. What are NFTs?
A NFT, or Non-Fungible Token, is a type of token that can't be divided into smaller sections unlike most coins. They represent ownership of unique digital assets on the blockchain, and are vastly used by artist, who can now distribute their work and be paid in full with little or no involvement from middlemen.
15. What are Tokenomics?
Tokenomics concerns the monetary policy that a project has to create for its currency, and that includes the distribution and issuance of a token, how these will affect the price of the token in the future, how changes to the model can be enacted at a later date, and more
This process is usually developed before the token is released and tweaked over time.
16. What is Layer 2 (L2)?
Layer 2 refers to a secondary framework built on top of the Ethereum blockchain. It is mostly used to solve the transaction speed and scaling difficulties faced by the Ethereum Mainnet.
There are currently multiple Layer 2 solutions. In cobogo, we use Polygon, which is lower in cost while still maintaining high security standards and Ethereum compatibility.
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