Blockchain is an exciting new technological innovation that holds great potential to revolutionise the way businesses and individuals operate today and into the future. In its most basic form, the blockchain automates transaction and record-keeping processes to create a public ledger that is instantly available for everyone to see. This is all done in a decentralised manner, meaning many of the traditional issues and constraints associated with centralised systems have been eliminated.
Bitcoin and other cryptocurrencies have been the earliest adopters of the blockchain; however, they only scratch the surface of the potential for this technology. Its most prominent functionalities include:
“What the internet did for communications,
| think Blockchain will do for trusted transactions.”
- IBM CEO Ginni Rometty
Timestamping and notarisation: this Defi: DeFi is short for “decentralized function allows the storage of any finance,’ an umbrella term for a variety of kind of valuable information within the financial applications in cryptocurrency blockchain, creating a permanent record. or blockchain geared toward disrupting Smart contracts: software that runs financial intermediaries. Exactly as programmed but with no Tokenisation of Assets: The tokenization possibility for downtime, censorship, of assets refers to the process of issuing fraud or third-party interference, and a blockchain token (specifically, a security can implement logic to cryptocurrency token) that digitally represents a real transactions. tradable asset.
NFT’s: Non-fungible tokens or NFTs are cryptographic assets on blockchain with unique identification codes and metadata that distinguish them from each other.
CRYPTO CURRENCIES AND CRYPTO TOKENS
A utility token is similar to a cryptocurrency but is usually created to perform a specific utility function related to a blockchain project. A utility token gains its value from the
anticipated growth of the underlying project leading to increased demand for the token.
A cryptocurrency is a digital asset designed to work as a store of value and medium of exchange that uses cryptography to secure its transactions, control the creation of additional units, and verify the transfer of assets. A cryptocurrency gains its value from broad adoption as a legitimate method of payment, its utility, or intrinsic value through limited supply. All cryptos (currencies and tokens) are stored in wallets. A wallet is simply a pairing of two uniquely generated, cryptographically linked keys that gives you access to your digital assets.
The two keys that make up each wallet are a Private (or secret/withdrawal) key and a Public (or share/deposit) key. These keys facilitate and secure each crypto transaction.
Simplistically, think of your Public key like your bank account number and your Private key as your PIN.
A hot wallet is any wallet that has been exposed to a device that has been connected to the internet, meaning that potentially your private key could be compromised if your device is not completely secure.
A cold wallet, on the other hand, has no online footprint. This can be in the form of a “paper wallet” that was generated completely offline or a hardware wallet where the private key is secured by a physical device that can only be accessed by the owner.
Wallets that are stored online by a third party, often an exchange, can be the most convenient for short-term traders looking to make quick buys/sells. This is potentially the least secure method of storage, however, as your assets are not under your personal control. Most large hacking incidents where significant funds have been stolen have occurred on exchanges.
THE CRYPTO WALLET
The Crypto Wallet is a cold/offline paper wallet provided free of charge with any purchase. The computers and printers used to create the wallets are offline and have never been online. Random number generators are also used to add another level of security around key generation. wallets are only produced while you watch so you can oversee the security around each stage of the process. Storage Accounts are held on these also and have already been secured at the Reserve Vault before being issued.
DIGITAL MONEY & DIGITAL UTILITY
The differences between cryptocurrencies and utility tokens were outlined earlier. At the time of publication, some of the top cryptos by market capitalisation were Bitcoin, Ethereum and XRP. With these examples, the "money" versus “utility” equation can be explored further. Also, we have asset-backed stable coins which can also fall in the category of traditional ‘digital money' - for example, Tether (USDT) and our own Gold Standard (AUS) and Silver Standard (AGS) bullion backed tokens.
Bitcoin (BTC) is often referred to as the “King of Crypto’, being the first and currently the most valuable coin in terms of market capitalisation. BTC has remained the reserve currency in the crypto space due to its continued dominance in market cap, media attention and liquidity for transferring between other alternative cryptos. Its supply is constrained to only 21 million units and the remaining BTC which hasn't been minted yet can only be created through a complex, laborious and expensive “mining” process, which also ensures the security of the network.
BTC is a genuine cryptocurrency as it was created to allow direct, trust-less peer-to-peer payments. However, BTC has moved away from its intended purpose of being a peer-to-peer payments network towards a 'store of value’. It is beginning to gain popularity as the go-to asset in the traditional world for an inflation hedge as companies such as Tesla and MicroStrategy add BTC to their balance sheets.
ETHEREUM & RIPPLE
Ethereum (ETH) and Ripple (XRP) differ from BTC as they are considered to be utility cryptos, rather than pure cryptocurrencies. Ethereum is an open-source, distributed computing platform and operating system featuring smart contract functionality. It allows developers to build blockchain applications using the platform. ETH is the token that operates as the “fuel” for the Ethereum engine, particularly for DeFi and NFT applications.
XRP (colloquially often just called Ripple) has utility via its ability to operate as a purpose-built fiat currency settlement and foreign exchange network. It aims to revolutionise the 40-year-old traditional banking and SWIFT payment system. XRP is the token native to the Ripple network and plays a pivotal role in providing liquidity to accommodate foreign exchange transactions.