What is the Blockchain and an NFT?

What is the Bockchain?

With blockchain technology, ownership of digital assets can be regulated and secured more directly and efficiently, as it offers a complete and immutable record of data. This makes all authentication processes faster, more secure and cheaper.

All data is simultaneously stored in encrypted form on different computers and servers worldwide. The data are transaction data with e.g. crypto currency units, certificates, production data and delivery data, audit log data, source code or digital values, which also include non-fungible tokens (NFTs). Each transaction is decentrally stored. Even if several computers and servers have failed, the data can be accessed reliably.

Transactions are stored in blocks. Each newly generated block relative to the block before the block. These "blocks" form a "chain" = a "blockchain". The chain continues indefinitely.

Each transaction is public but anonymous within the blockchain. It is comparable to a decentralized, open ledger. This open ledger is not stored centrally on a server, but decentralized in the blockchain network. Each network participant can keep their own book. As a result, there are many independent copies on different computers.

If you now make a transaction, e.g. a transfer of cryptocurrency, you publish it in the network. So-called miners then check whether the transaction is valid: Is there enough money in the sender's wallet to be able to transfer the amount? If this is the case, the miners look for a key code to link the not yet validated transaction to the open cash book. The miner who manages this first receives a financial reward for the computing power expended.

The miner publishes the found key in the network and the open cash books are synchronized. The transfer is now valid.

The miners organize and secure the open ledger together. It's like a multi-eye principle. Invalid transactions such as trying to send more cryptocurrency than you have from A to B will be rejected by the network, the transaction will be rejected.

What is an NFT?

NFTs, written out as non-fungible tokens, have been one of the current megatrends on the crypto market since spring 2021.

An NFT is a non-substitutable digital object as it is written on the blockchain. This can be understood as a kind of certificate of authenticity since it cannot be exchanged or changed. It also has a history that can be used to track ownership and transaction information.

NFTs are digital and can represent images, sounds or videos. Due to the blockchain technology and the associated smart contract, copyright can be proven and even license fees can be billed.