Blockchain & Infrastructure

Native Blockchain Assets

Native blockchain assets are tokens that are inherent to a specific blockchain network. They serve as the primary means of transaction within their respective blockchain systems. For instance, BTC on the Bitcoin network, ETH on the Ethereum network, and ADA on the Cardano network are examples of native blockchain assets.

These tokens are often used to incentivize network participation and maintain the network's security and integrity.

Consensus and Security

Consensus mechanisms are the core of blockchain technology, ensuring all network participants agree on the state of the distributed ledger. Tokens in this context often play a role in securing the network through mechanisms such as Proof of Work (PoW) or Proof of Stake (PoS). In PoS, for example, token holders can 'stake' their tokens to validate transactions and earn rewards, incentivizing good behavior and contributing to the network's security.

Gas Fees

An important role of the native assets is paying gas fees. In networks like Ethereum, 'gas' refers to the computational effort required to execute transactions or smart contracts. Gas fees, paid in the network's native token (e.g., Ether), compensate miners or validators for their computational work. These fees act as an anti-spam measure and incentivize validators and miners to engage in the consensus.

Why is Infrastructure Important

Blockchain infrastructure is vital because it enables the building of entire ecosystems on top of one solution or algorithm. For developers, infrastructure provides tremendous possibilities for building on top of the work of other teams, further expanding the applications, and accelerating the growth of the industry.

Users on the other hand benefit from these new applications as they become more accessible and intuitive

Practical Applications of Blockchain

Blockchains and their infrastructure assets find uses in numerous practical applications. At a fundamental level, they provide a decentralized and secure method for transferring value, as in the case of Bitcoin. But beyond that, they enable a variety of more complex use cases.

1. Decentralized finance (DeFi) - an attempt of creating a similar financial system that we know from traditional finance. DeFi services include numerous decentralized exchanges (DEXs), lending services, stablecoins, and much more.
2. Entertainment - gaming and content platforms may utilize blockchain for proof of ownership and monetization models. Many metaverse and NFT projects focus on this market field.
3. Social networks - based on censorship-resistant blockchains, decentralized social networks seem like an intuitive step to balance the centralization tendency of big tech companies.
4. Healthcare and pharmaceuticals - by providing a tamper-proof, time-stamped record of clinical trial and other medical data, blockchain can enhance the integrity and auditability of the whole sector.
5. Supply chain management - blockchain can bring transparency and verifiability into supply chain tracking, increasing security from manufacture to the point of sale.

The Components of Blockchain Infrastructure

Apart from the main blockchain operation, there also exists a plethora of supporting infrastructure components that ensure the usability of the system and provide important underlying data.

Below are just some of the examples of services that play a significant role in how we interact with blockchain. Usually, these components run in the background without us noticing them, but in their absence, the whole system would be very hard to use for the common user.

Often these infrastructure services have their own tokens, which may act as economic incentives, governance right, and so on.

Wallets

wallets are digital interfaces that allow users to manage and control their crypto assets. They provide users with private and public keys that interact with blockchain networks to send, receive, or monitor the balance of their tokens.

Wallets can be physical devices (hardware wallets), software applications (desktop/mobile wallets), or web-based solutions. Some wallets also allow interaction with dApps, thus enhancing functionality beyond mere asset management.

Oracles

Oracles are third-party services that provide smart contracts with external information, which they can't access in a blockchain's isolated environment. They play a crucial role in the functioning of various DeFi applications, insurance contracts, prediction markets, and more.

For example, a DeFi smart contract might need the current price of a crypto asset, which an oracle can provide. Oracles can be centralized or decentralized and often have their own tokens for incentivizing accurate data provision and ensuring data integrity.

Scaling Solutions

Scaling solutions are technologies designed to improve the speed and throughput of blockchain networks. They are crucial in ensuring that networks can support a growing number of transactions and users.

Examples of scaling solutions include layer-2 technologies like Arbitrum, or ZkSync, which take some workload off of the Ethereum mainnet and transfer it to the second layer. Transactions are then processed in bundles, rather than individually

Sharding, another type of scaling solution, divides a blockchain network into smaller parts (shards) to process transactions faster. Some scaling solutions have their own tokens, which are used to incentivize network participation and secure the system.

Exchanges

Cryptocurrency exchanges are platforms where users can buy, sell, and trade different cryptocurrencies. They play an integral role in the crypto ecosystem, providing liquidity, price discovery, and a venue for investment.

There are two main types of exchanges:

• Centralized exchanges (CEXs), which are operated by a centralized company
• Decentralized exchanges (DEXs), run on blockchain technology and allow peer-to-peer trading without intermediaries.

Some exchanges have their own tokens, which users can use for various benefits like reduced trading fees or participation in platform governance.

Developer Tools

Developer tools in the context of blockchain include a wide range of software and frameworks designed to facilitate the development of applications on top of blockchain networks. They can range from simple libraries and APIs to complex development environments and testing frameworks.

Some examples include Truffle Suite for Ethereum, Hardhat, and Substrate for Polkadot. These tools help to lower the barrier of entry for developers in the blockchain space and accelerate the development of new applications and solutions. Some developer tools are tied to tokens, which can provide various benefits such as access to premium features, or serve as a means of governance within the development community.