Blockchain: what it is, its types, and the best 2022 projects
Blockchain technology is the cornerstone of the whole crypto industry. The first and most successful example of its application is the creation of Bitcoin. However, the technology has gone through many changes since then, and today, dozens of projects offer their own blockchain technology with distinct features. So as to avoid confusion, we have prepared an overview of all the prominent blockchain projects for 2022.
What is blockchain?
Blockchain is a distributed (decentralized) database that contains all information about any transactions conducted by system users. A distributed or decentralized database means that the information is stored simultaneously on different servers and cannot be managed or modified from one single center. The information itself is stored as a chain of blocks, ensuring its safety during data transmission and at the same time protecting it from hacker attacks. Any attempt to change a block will immediately cause the server where it happened to be isolated.
Advantages of blockchain technology:
- Reliability. Blockchain uses a high level of encryption, preventing most hackers from cracking it directly. Hence, attackers often conduct cyberattacks to steal wallet keys or the very assets stored in the blockchain system rather than hack into the system.
- Security. The multiplicity of copies located on different servers is a strong protection against hacker attacks. Even if the attack is successful, a comparison of information from the attacked server and the untouched ones will easily show the changes made by the hackers.
- Recordkeeping. All transactions in the blockchain are recorded, so it can be used to keep any paperwork without worrying that someone will edit the data retroactively.
Disadvantages of blockchain technology:
- Blockchain creators. Ironically, nothing prevents the creators of a particular blockchain network from introducing their own backdoors, namely, loopholes for making random changes. In most cases, creators release open-source code and invite anyone who wants to check it out. But how many users really try to do this?
- Scalability. The more popular a particular blockchain network becomes, the more transactions run through it. Not all projects can cope with the high load, resulting in slower transaction speeds.
- Uncancellable transactions. Once a transaction is made, the user cannot cancel it. For smart contracts, this is an advantage, but for a person who has changed his mind or made a mistake with the recipient, it is a drawback.
The use of blockchain technology:
- Cryptocurrencies. Today, this is the most popular way to use this technology. Almost every blockchain has its own cryptocurrency, using which the creators settle payments with people contributing to the project's development. The lack of centralization of "private" money generates a wave of speculation and financial bubbles, but some projects are quite successful, allowing their participants to make profits.
- Smart contracts. These are contracts written by a programmer and inserted into the blockchain. Smart contracts are very useful for automating a variety of processes in logistics, finance, and government activities.
- Asset trading. The creation of tokenized assets makes it possible to make the securities market accessible to everyone, not just to residents of certain countries.
- ID identification. Blockchain makes it possible to create digital twins of a person, recording his or her passport data, driver's license, property documents, and much more. This area has not reached a high level of development yet due to poor legal regulation.
The most popular blockchain projects in 2022
It is one of the most famous blockchains after Bitcoin, ranking second by capitalization ($369 billion). The platform makes it possible to create decentralized applications using smart contracts, allowing thousands of developers to use it as the basis for their apps. Blockchain works on the Proof-of-Work consensus, which makes it possible to mine and make profit. However, its founder, Vitaly Buterin, announced plans to abolish mining soon, switching to the Proof-of-Stake consensus.
The world's largest cryptocurrency exchange uses two blockchain projects simultaneously, namely, Binance Chain and Binance Smart Chain. The former provides high throughput for transactions, while the latter developed a convenient platform for creating applications based on smart contracts. As a result, developers most often create applications on Binance Smart Chain but develop them on Binance Chain. It also supports compatibility with Ethereum. It offers good protection against internal attacks, including a 51% vulnerability.
It is a platform for creating and hosting various decentralized financial applications (DeFi). The platform allows the trading of various assets at high transaction speeds. The creators strive to unite the entire cryptocurrency financial system in one blockchain.
The platform has its own AVAX token, which is used for internal payments such as transaction fees, staking fees, etc. The upper limit for AVAX token issuance is 720 million, and half of those tokens have already been created.
The company was officially launched in March 2020, with headquarters in Switzerland, aiming to develop a more user-friendly and flexible platform for creating decentralized applications. The platform provides open-source code, but unlike many PoW consensus blockchains that allow digital coins to be mined, Solana uses PoS, i. e., storage of coins on the network. Thanks to the additional innovative PoH consensus, Solana easily solves scalability problems.
Terra blockchain was created in 2018 in South Korea, allowing users to create stablecoins pegged to fiat currencies. It operates on the Tendermint Delegated-Proof-of-Stake consensus and has managed to gain wide popularity in Asian countries. In some states, such as Mongolia, stablecoins are used to pay for cab rides. LUNA is a blockchain-based internal currency with tokens allowing owners to make suggestions on improving the project.
Subscribe to our Telegram channel for the most relevant, interesting, and informative news from the crypto industry.