Blockchain Technology

Dive into Blockchain Technology

We’re in an unprecedented shift to a new infrastructure - Blockchain

The internet revolutionised the transfer of information. Blockchain is an even more disruptive technology as it is revolutionising the transportation of value.

• 2.5T digital asset market size (USD). Blockchain and Digital Assets are integral to the digitalization of capital markets by enabling lower costs, increased transparency and unprecedented efficiency. This fundamentally changes operations, assets and products and might replace the traditional financial industry completely.

• 59B total value locked (USD). Decentralized Finance (DeFi) is the re-creation of the financial industry purely on Blockchain based software and data (Smart Contracts and Oracles). The flexibility and efficiency of tokenization is impacting all industries from entertainment over gaming to the financial industry.

• 50B connected devices globally. Spanning smart phones, other personal devices, home sensors, automobiles and the Internet of Things (IoT) connected several dedicated Blockchains enabling broad use cases and new innovations. Enabling decentralized architectures and business models.

The invention of the Bitcoin network caused an cambrian explosion similar to the Dot-com phase in the year 2000. It triggered the development of other blockchain networks like Ethereum and the development of the unregulated decentralized finance (DeFi) space. To be able to server as a global ledger for securities and regulated digital assets the Blockchain networks and their applications need to evolve further. BridgeTower is focusing on Proof-of-Stake networks serving a crucial role in the regulated global digital industry.

Blockchain networks are normal computer networks which need Software and Hardware to successful run. In a decentralized model the networks need to find a way to pay and incentive the hardware operators to provide their services. Bitcoin Core was the first to introduce the concept of incentivising the operator with newly minted coins through Proof-of-Work (PoW) or mining.

For every new block produced, new tokens are generated. This is a simple inflation based economic model. In the Bitcoin Core model, the miner who found the newest block will receive all new minted bitcoins, which requires huge amount of processing power as miners race to be the first to solve a math puzzle. This energy-intensive process, leaving large carbon footprints and trouble scaling to accommodate vast number of transactions, has called for alternatives, the most popular of which is Proof of State (PoS).

In order to participate in securing the PoS Blockchain and to be rewarded for generating new blocks, operators are required to put up a collateral “stake”. The amount of collateral is important as two metrics are commonly used to determine who is allowed to validate the next batch of transactions (1) a pseudo-random lottery and (2) the “stake weight” itself. If operators perform the process reliably and honestly, they are rewarded according to the amount of risk (stake) that they have on the line. The capital requirements are offering unique investment opportunities

Unlike the PoW model, where the only hardware operator is receiving a commission, most PoS models incentivises the hardware operators (validators) and staking participants (delegations).

Blockchain Network is a Global Business Yet Not a Company

Blockchain is an even more disruptive technology, than the internet, as it is revolutionising the transportation of value. Ever Blockchain network is a platform representing his own ecosystem where digital values can be represented and transferred in different formats. To participate in the economic activities of these platforms a so called “utility token” are required. The same utility token is used to pay and incentive the hardware operators of the network. The utility tokens to pay the hardware operators are newly generated utility tokens and are repressing an inflation mechanism. As most Blockchain networks have a decentralized nature which are only supported by non-profit foundations, investors can only participate in the growth of the Blockchain network by buying the utility tokens. In addition investors need to lock their tokens, the so called “staking” to participate in the newly generated tokens (staking rewards) and not lose against the inflation.