Blockchain technology is made up of a chain of blocks that contain information. These chains are intended to create an unalterable digital record of movements that are also recorded and available to the public. It is known as a peer-to-peer network, where each user can transact without the need for a third party to facilitate transactions. It records the operations of digital assets known as:
- Security tokens
- Cryptocurrencies
- NFTs
What happens when a block is completed?
These blocks of transactions reach a limit where they must be sealed or validated; this process is called data mining. Data mining on the Blockchain is the process where algorithmic calculations are performed to gather new transactions into a new block. This development is part of machine learning and consists of discovering patterns in large amounts of data and classifying them appropriately. It can be done on independent servers or with cloud mining companies, both of which have an infrastructure to carry out the process and receive economic rewards for whoever manages to achieve results, that is, whoever manages to seal the block. These sealed and validated blocks are stored on the chain.
There are several types of networks to operate; the network is usually chosen according to the type of asset that you want to trade within it. To define which Blockchain network is better, you must first define what type of movement you want to make with this technology.
Movements and transactions that can be made on Blockchain
You can make various kinds of transactions or movements that can be validated and encrypted for greater security. The most common are payment tracking controls, order registration and tracking, production chain details, asset transfer and ownership and instruction tracking, among others. Literally, any process that requires authentication and is open to the public can be done on Blockchain networks.
Types of networks according to the trading asset
Different networks have been developed to date, and certain types of registries tend to specialize in them. Each one has unique capabilities and characteristics that allow it to adapt to different needs.
Probably the most popular network is Bitcoin. In it, the movements of their native currency “Bitcoin” are usually recorded to account for and transfer value in the form of cryptocurrency. This network works as an all-purpose replacement for government-issued currencies and has become popular for its anonymity and privacy relative to traditional currencies.
Another well-known network is Ethereum, which in addition to having its native currency, is also often used for the operation of smart contracts. This network also allows the implementation of cryptocurrencies other than the native ones. Some of the most recognized are Uniswap and Decentraland. Ethereum works as an operating system for Blockchain-based applications and resources.
A newer network is Avalanche, which supports executable code in the form of smart contracts with much lower fees and higher speed than the previous two examples. This network shapes different projects using smart contracts, decentralized finance, NFTs, video game platforms, etc. Its main advantages are its compatibility with Ethereum and other Blockchains, which allows content to be exported at high speed with very low rates.
AVAX, its abbreviation, has superior processing speed. While Bitcoin takes 10 minutes to create a block and Ethereum takes 20 seconds, Avalanche takes 1-2 seconds. The latter means lower costs in transfer validation.
Now, despite the fact that each network is specialized in one type of asset, movements can be made between different Blockchains. For example, smart contracts can be traded between Avalanche and Bitcoin users.
How to move assets between Blockchain?
Thanks to the interoperability of Avalanche, assets between the various Blockchain networks that exist can be done with lower levels of friction. This process is called Multi Chain, where cryptocurrencies can be exchanged for tokens anchored through smart contracts without leaving the Blockchain networks.
However, for networks that are not compatible, for example, Bitcoin with AVAX or ETH, assets can be exchanged through a process called Cross-Chain swaps through electronic wallets, where the assets leave one network to enter another. Each wallet has software that represents a “bridge” between both points of the transaction, where the necessary conditions for the exchange and unlocking of the transferred asset are validated.
If you want to migrate some type of information to these platforms, you should check which network your target audience or your work group is on, so you can make the process more efficient and reduce costs.
Find more information about Blockchain and its benefits on our blog at www.brets.io!