Steemit Pakistan Crypto Courses Season 1 | Cryptocurrency and Blockchain Technology | Mining and DeFi Projects

Hello everyone I hope you will be well and enjoying good health by the grace of Almighty Allah who is most merciful and gracious to everyone.

As we know that Steemit Pakistan has started crypto classes to teach the newcomers some basic concepts to perform well in the Steemit Crypto Academy. So today I am here to provide a lecture and in this lecture, I will discover these topics:

• What is CryptoCurrency and What is Blockchain Technology?
• What is Blockchain mining and how it works?
• What is DeFi and some DeFi Projects.

_{Image Made By Me By Canva}

CryptoCurrency

We know that we use currency in our daily life in order to buy different things and to pay people, but this currency is of physical standard and works with our banking financial system.

But cryptocurrency is a digital currency that is used in the world of the blockchain. It is used to serve different blockchains, as many of the blockchains have their own cryptocurrencies such as Bitcoin, Ether, Stellar, Eos...etc. These blockchains use their own cryptocurrencies to store data and to perform diffrent other transactions such as to send or recive money in the form of the cryptocurrencies.

We have already covered the topic of the Cryptocurrencies in the previus lecture by the @naqashraja1 so if you want to know more about cryptocurrencies then you can visit that lecture.

What is Blockchain Technology?

The term blockchain is a combination of two words, Block and Chain. Blockchain term can be defined as the collection of the blocks into a chain, which is publically open, secure and anyone can access this collected data.

Basically, Blockchain is a specific kind of database that is used to store data in a unique and different way as it stores data in the form of blocks and then these blocks are linked to each other with the help of cryptographic techniques. If you want to know more about the Cryptography then visit this detailed post about cryptography.

Blockchain technology was firstly introduced by Satoshi Nakamoto whose identity is still unknown, in the form of the Bitcoin Blockchain. It was introduced to make direct transactions without the involvement of any central authority. Basically, blockchain technology works on the basis of a decentralized system.

This firstly introduced blockchain technology Bitcoin was run by its own cryptocurrency named Bitcoin, which is the mother of all the cryptocurrencies, and nowadays it has become king of the world of the blockchain as almost all the cryptocurrencies follow its trend in the market ups and downs.

Working of Blockchain Technology

Blockchain technology works smoothly in a symmetry and this can be easily understood with the help of the below diagram.

₁

In the working of blockchain technology following steps are involved.

• Firstly we request a transaction that we want to perform as we do in the steem blockchain.

• Then after collecting the data from the requested transaction an immediate block is formed for the confirmation process.

• In order to confirm this transaction the block is broadcasted to all other nodes of the network where the miners are available and they solve the problems and give results.

• After the collection of the results and confirmations and the average result is obtained by which the block is confirmed and now that transaction data in the form of a block is added to the blockchain where anyone can access this data.

• Finally after these steps the transaction has been performed.

Explanation with Example

I want to explain the working of the blockchain by just a simple example of the steem transactions. We know that when we transfer our steems to any exchange we immediately do not get our steems there, and we have to wait for some moments.

It happens because the blockchain working and the transaction goes to the pool where the miners pick up the data and confirm the transaction and after the confirmations, we get our transaction completely processed and we receive our steems in our exchange wallet. But this process is too fast to count.

What is Blockchain mining and how it works?

The term blockchain mining means getting cryptocurrencies by solving cryptographic equations with the help of the computers. This process consists of validating blocks data and adding this transaction records to the blockchain.

In other simple words, Blockchain mining or cryptocurrency mining is just like a transactional process which uses computers and other cryptographic processes to solve complex functions just like the puzzles and the obtaining record data is added to the blockchain, being a public ledger this data is visible to everyone.

Methods Of Cryptocurrency Mining

There are a lot of ways to mine cryptocurrency in the blockchain but i am going to cover some most important, well-known, and profitable methods to mine cryptocurrency.

#1 - Cloud Mining:

Cloud mining is the most common and popular method to mine cryptocurrencies. It is as easy as we can say that anyone can mine cryptocurrencies without having to lift a finger. Cloud mining is a process where we pay others a specific amount of money and get their mining machines at rent. This mining machine is called a “rig”. We take these rigs from others as these are very costly and we cannot simply afford them individually.

Cloud mining has become popular because it is not costly and those people who do not have enough money to buy their own rigs , can also mine cryptocurrency by this method.

#2 - CPU Mining:

As fropm the name it is clear that in this mining CPU is used to mine cryptocurrencies. Basically, CPU mining uses processors of your devices such as your PC's processor to mine cryptocurrencies. In this mining process your CPU should be in work all the time which isa not an easy job, that is why nowadays peole are not using thsi method.

#3 - GPU Mining:

GPU mining is very popular as it is very cheap and anyone can use this method easiuly. GPU Mining Rigs use graphics cards to mine cryptocurrencies. A rig is generally consists of a processor, a motherboard, cooling fan, rig frame and a few graphics cards.

#4 - ASIC Mining:

The ming term ASICs stands for Application-Specific Integrated Circuits which are special devices that are designed for the cryptocurrency mining.

This method is of great importance as ASICs produce large amounts of cryptocurrency than the GPU and CPU mining. So it is clear that from above all of the mining methods ASICs is more beneficial.

---

---

These are some popular, and more profitable methods to mine cryptocurrency at present. So if you want to mine cryptocurrencies my dear fellow steemians you can consider these methods.

---

---

How blockchain mining works?

A miner is a specific node in the blockchain network that collects small transactions data and organizes them into a single blocks. When the transactions are made in the blockchain, all the network nodes(miners) receive these transactions and start verifying this transaction data.

After the validation, this data collected from all the miners is added to a single block. And the transaction is processed and the transaction fee of that transaction is given to the miner who makes the block firstly, which is in the form of the cryptocurrency. This is how blockchain mining works.

₂

The first step to mine a block is to hash every transaction individually taken from the pool. But before this process, the miner's node adds a transaction where they send their rewards obtained by the mining. This transaction created by the miners is known as the coinbase transaction, in which coins are created ‘out of thin air.

When each transaction is hashed, then all the hashed transactions are again hashed into a Merkle Tree. It is also known as a hash tree which is formed by hashing the transactions again and again. Then the resulting hashes are collected into pairs and hashed again. This hashing process is repeated again and again until it reached “the top of the tree” to form a hash root. Hash root is basically a single hash that represents all the previous hashes that were hashed to make it.

Now root hash and the hashes of the previous blocks and a random number called the nonce is again placed into the block's header. Then the block header is again hashed to produce an output based on these elements:

• root hash
• previous block's hash
• nonce

The output of these three elements is the block hash and it will serve as the identifier of the newly generated block which is known as the candidate block. In order to be considered valid, the block hash must start with a specific number of zeros.

The miners continue to hash the block header again and again, by emphasizing through the nonce until one in the network miner delivers a legitimate block hash. When a legitimate hash is discovered, the founder node will communicate the block to the network. And the remaining nodes will check if the hash is valid and, add the block into their data of the blockchain and proceed onward to mining the other blocks.

But sometimes it happens that two miners broadcast a valid block at the same time and the network is ended with these two same valid blocks. Miners begin to mine the following block dependent on the block they got first. The battle between these blocks will continue until the next new block is mined dependent on both of the competing blocks. The block that gets deserted is called an orphan block or a lifeless block. The miners of this block will come back to mine the winner block.

What is DeFi and some DeFi Projects.

₃

What Is Decentralized Finance (DeFi) ?

DeFi is the short name of Decentralized finance. It is a new invention and amazing addition to blockchain technology. It is a transformation of traditional and old centralized systems into Peer Peer financial systems which has been proudly introduced by the Decentralized system.

DeFi has completely revolutionized the blockchain world as it does not depend upon the central authority or any other 3rd party such as banks, brokerages, or exchanges. It provides different services such as lending assets, borrowing assets, and participation in the liquidity pool.

Some DeFi Projects

There are a lot of Defi projects which are working in the different blockchains. But I am going to give a brief overview of some of them which are given below:

• Maker
• Compound
• Synthetix
• bZx
• Uniswap

_{Image Made By Me By Canva}

Maker:

Maker is the first decentralized stablecoin that was built on Ethereum blockchain. It is a crypto lending platform. It is an easy and autonomous platform to get loans by staking our cryptocurrencies. You can stake Ethereume (ETH) to get crypto loan. It is completely permissionless and smooth which means that there is no KYC system to start. All the lendings in the Maker are performed by using smart contracts within the Ethereum blockchain. And the use of smart contracts justifies that it is a decentralized system as there is no involvement of any human. You can get an unlimited loan without any limit.

Maker has been built as a Decentralized Autonomous Organization (DAO). Although it has been made by the involvement of the team, there is the community that has all the authority. Maker DeFi Project provides its users the great opportunity to create their own vault lock-in collaterals such as Ethereum (ETH), Basic Attention Token (BAT), and much more.

Overall Maker has done a great job to provide the real demand of the Decentralized Finance (DeFi )applications. It is clear that more and more new companies are also beginning to respect the importance of Dai every day.

Compound:

Compound is an algorithmic and autonomous interest rate protocol that has been specially built for developers to introduce a lot of open financial applications. It is also a Decentralized Financial lending project. It has a unique system that allows its borrowers to take a loan and allows its lenders to provide loans by just stacking their crypto assets in the network pool.

The interest rates are paid and received by borrowers as well as by lenders are determined by the supply and the actual demand of each crypto asset within the pool. In the Compound DeFi interest is generated by every block mined. So by using Compound, a DeFi project you earn in both ways by lending or getting a loan.

Synthetix:

Synthetix is an Ethereum blockchain-based protocol that allows the issuance of Synthetix assets in the Ethereum Blockchain. Firstly it was started as a stablecoin before pivoting to DeFi. Synthetix DeFi supports synthetic products such as gold and silver.

Synthetix also supports synthetic cryptocurrencies, synthetic inverse cryptocurrencies, synthetic cryptocurrency indexes, and synthetic fiat currencies. Synthetix also allows its users to bet on different cryptocurrencies. Synthetix also offers its users to exchange their crypto assets on one screen. Synthetix works with its own token *SNX to receive fees and to reward its users.

bZx:

bZx is also based on the Ethereum blockchain. It is another DeFi project which is also a crypto lending platform that has been built specifically for traders. It is tokenized and uses smart contract system to automate the whole system. In the bZx one can lend, borrow and do margin trades without relying on third parties, so we can say it is a decentralized platform. The process of lending and borrowing with the bZx is very easy and fully facilitated and all the orders are chain-based. It has also its own cryptocurrency on which it works and its own cryptocurrency makes it more strong and reliable.

Uniswap:

Uniswap is another important and famous DeFi application based on the Ethereum blockchain. Uniswap is a decentralized crypto exchange. As from the name it is clear that it is a swap service. Uniswap is used to swap(convert) the crypto assets based on the Ethereum blockchain. The whole platform is governed by a single authority and it uses a traditional order book as we use in the traditional financial system to facilitate trading.

Uniswap is one of the best exchange platforms that allows swapping ERC-20 tokens directly from your wallet and it also allows automated transactions. It is also based on its own cryptocurrency which is a gem itself as many people made a lot of profits from its cryptocurrency. If you want to know more about Uniswap then you can go through Uniswap A Decentralized Finance Ecosystem

Conclusion

Nowadays everyone in every street talks of cryptocurrencies is going and many people are leaving their traditional businesses and adopting cryptocurrencies as their businesses and investing their money in buying crypto assets especially bitcoin.

And blockchain technology has overcome the traditional financial system as this is a decentralized system and we can send or receive our money anywhere, and at any time in the whole world without the involvement of the third party as we have to face difficulties in our traditional financial system such as in banks. Moreover we can simply send money out of the country by using blockchain technology which is far better than the traditional financial system.

Blockchain mining is getting more advanced and getting the interest of thousands of people every day as people as well as many big companies are spending their investments in buying mining gigs and establishing complete big mining pools and projects to mine cryptocurrencies. And if someone has not have enough money to buy cryptocurrencies then he can simply mine cryptocurrencies and buy them.

Everything is clear as DeFi is changing the crypto world. As it is in its early stage and has launched recently but it has revolutionized the crypto eceosystem as it facilitates crypto exchanges, crypto lending, crypto borrowing. It also has made margin trading very easy with the complete transparency without the involvement of the third parties. Another important thing about the DeFi is the smart contracts which are completely automated and fastest, that is why DeFi is decentralized.

Homework Task

1. What is a cryptocurrency and how it plays role in the blockchain?
2. What is blockchain mining and what is Mining Difficulty?
3. Discuss Challenges for crypto miners.
4. What is DeFi (Decentralized Finance) and discuss any DeFi project in detail?
5. Advantages of Decentralized Finance.
6. Conclusion.

Rules and Regulations

• It is compulsory to set 20% beneficiary to @steemit-pak, the official community account.

• Homework Task should be posted in the Steemit Pakistan Community, otherwise, it will not get any attention.

• Plagiarism is strictly prohibited. If you're found that you have copied, spun, rephrase your work you will NOT be rewarded any marks.

• Deadline: Friday Morning 9:00 am PST

• The homework Post should be a minimum of 300 words

• Use clear watermark of your username on the screenshots you use.

• Always use copyright-free images and mention the sources and give credits to the real owner.

• Use the tags correctly so that we cannot miss your publication #mohammadfaisal-psp #cryptosp #steemexclusive and #pakistan in your first four tags.

• Comment your homework post link in the comment section and share it on social media, as well as invite your friends to learn about crypto.

• Mention me somewhere in your homework post

• If you have any questions regarding the lecture, feel free to ask in the comment section, we will try our best to reply to you as soon as possible.

• Top two posts will get booming upvotes.

Here are a few great tools and sites you can make good use of while attempting the homework tasks
Grammarly
Smallseotools plagiarism checker or Duplichecker
Word count site
Formating your articles : Markdown styling formats
For Copyright-free images: Pixabay, Unsplash, Pexels
For graphics designing: Canva.com, Powerpoint, Illustrator, Photoshop...

These tools have been suggested by the Steemit Crypto Academy Professor @yohan2on

Yours Steemit Pakistan Crypto Professor
@mohammadfaisal