What are Blockchain Protocols & How Do They Work?

Blockchain protocols allow for the recording of transactions in a trustless, distributed, peer-to-peer manner using a public ledger without the need for any central authorities. 

Blockchains have changed how the world organizes capital, data, and assets and will continue to have implications across several industries, including financial services, real estate, supply chains, etc. 

The blockchain concept had existed before Bitcoin came to public light in 2008, but Bitcoin is the first significant example of a blockchain that everyone now knows. 

Bitcoin arose to solve the fundamental problem of lack of trust in value transfer methods and peer-to-peer payments over the Internet without double-spending, meaning without spending the same set of values twice, since digital information can typically be copied. 

The public ledger that is blockchain maintains a continuously growing list of transactions and data chained and stored within blocks that are cryptographically secured from tampering or change by any parties using the network, making it immutable. 

Additionally, because it is a distributed, public ledger, all parties using the network can see the past history of transactions, and the transactions can never be removed. The ledger becomes a shared and synchronized database across all parties, allowing all transactions to be publicly witnessed and transparent via a block explorer

How Do Blockchain Protocols Work?

The blockchain is run by a network of nodes, or distributed networks of computers. These independent nodes verify the accuracy of transactions, maintain updated versions of the ledger, and record new transaction data on the public ledger. 

The ledger is built as a linked chain of blocks. Each block contains a number of transactions validated as legitimate by the network during a specific time span and then recorded in the ledger. 

Each block also includes the cryptographic hash of the prior block in the blockchain linking one block into a chain of blocks, which provides integrity of the previous block all the way back to the genesis block of the blockchain. 

The benefit of blockchain is that it allows for distributed control instead of only functioning as a distributed database where data is still controlled by one entity. This allows different parties, people, and institutions that may not necessarily trust what the other is saying is legitimate to share information without requiring a central administrator (like a governing body or central bank) to verify the information alone. 

Instead, the blockchain depends on its unique consensus mechanism, whereby nodes validate and record transaction data to reach a consensus that determines the final output of data into the ledger. 

This prevents a single, non-trustworthy player or small majority from maliciously deciding to change the record of the ledger. For Bitcoin, this would require a majority to obtain 51% control of the hash rate for the Bitcoin network, which is almost impossible to do.

As new transactions are added to the blockchain, the prior transactions become more difficult to manipulate. With 13,000+ live Bitcoin nodes today on the network, it becomes almost impossible for a bad actor or hacker to remove past blocks from the chain or publish fraudulent data to the ledger. 

Different Types of Blockchains

While the above details the Bitcoin blockchain, there are several types of blockchains with their own style of reaching consensus, governance, and other factors. 

Ethereum is a platform for decentralized blockchain projects such as dApps, decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and smart contracts. 

NFTs are blockchain-based tokens that each represent a unique asset such as a piece of digital content, media, art, or other tokenized asset and verify its ownership and authenticity. NFTs are designed to be cryptographically verifiable, unique or scarce, and easily transferable.  

Any developer and project in the world can use the Ethereum public blockchain in a permissionless manner to launch their own tokens, including NFTs, as long as it adheres to the specifications of the Ethereum network. 

Today, the Ethereum network regularly facilitates the flow of tens of billions of dollars of value, with over $150B USD of value currently locked in smart contracts on its network as of Q4 2021 to facilitate decentralized asset exchange such as involving lending, insurance, and payments. 

Ethereum network Total Value Locked in DeFi, Source: https://defillama.com/chain/Ethereum 

Due to the adoption of DeFi and NFTs, Ethereum has recently become so widely used that using the Ethereum network has become cost-prohibitive for many users today due to high transaction fees and congestion on the network. 

NFT Trade Volume 2021, Source: The Block

Thus, many participants have explored other Layer-1 blockchain platforms that offer similar decentralized applications like Ethereum, with lower transaction fees and varying decentralization and security profiles.

Other Layer-1 blockchain protocols involve blockchains with varying performance and utility to target niche or enterprise sectors, such as Avalanche, Flow, Solana, and Terra, and have also innovated with new consensus algorithms, blockchain architectures, and execution environments. 

As alternatives for specialized tasks, certain purpose-built niche blockchains have arisen, such as high-performance blockchains for creating NFTs such as Flow, blockchains for making supply chains more efficient, or others to help move and store different types of information at a higher throughput than on major public blockchains such as Bitcoin.

Unlike the general-purpose blockchain of Ethereum, Flow is built to efficiently scale for billions of people interacting with NFTs such as in-game items. Flow was created by Dapper Labs, the team behind NBA Top Shots and CryptoKitties. 

Flow improves upon Ethereum specifically for the use case of NFTs to create fast, proof of stake-powered consensus without the sharding in ETH 2.0, near instant finality without reducing decentralization, in contrast to Ethereum’s 12-60 second time-to-finality, and is scalable for the large demands of a growing blockchain gaming industry while being inexpensive to use. 

Solana is another high-performance public blockchain created to track transactions in a specific sequence, optimizing scalability over decentralization, and enabling scalable apps and NFTs for developers and users, with extremely low transaction fees and high throughput.

Final Thoughts: Blockchain Use Cases

Blockchain as a technology can be used for any use case, enterprise or otherwise, that deals with the transfer of data or value in some form. 

It has the potential to revolutionize the financial services industry due to removing the need for intermediaries such as payment processors. Any industry that involves agreements, which is almost every business in the modern economy, can benefit from the use case of smart contracts, which are agreements denoted in code. 

Elections, voting, and governance, in general, are another use case of blockchain that can become more transparent and easier to participate in for all parties. 

Rights to intellectual, physical, or creative digital property is another use case that blockchain makes easy to authenticate and transfer as tokenized assets, in the example of NFTs. 

Due to the decentralized, trustless, and immutable nature of blockchain technology can create several innovations and impact many industries that will continue to change the organization and transfer of data and assets.  

While Bitcoin was the original blockchain that came to public light, Ethereum and other more niche and specific blockchains are where the majority of modern-day development is happening. 

Perceptual Hashing For NFT Verification

In providing accurate NFT verification services, neither humans nor computers are sufficient. However, using a technology called perceptual hashing, mountainous digital files can be reduced to perceivable attributes such as shapes, patterns, and colors that can easily be compared by both humans and computers.

By combining perceptual hashing with human verification, NFT verification services can easily and accurately identify forgeries. 

NFTs are an exciting application of blockchain technology and smart contracts that have attracted substantial attention from creatives and markets alike. However, as with anything of value, scammers will attempt to fool unsuspecting buyers into shelling out large sums of money for a forgery. 

This is where an ingenious technology called perceptual hashing becomes valuable. However, perceptual hashing alone isn’t enough to automate the job of verifying the authenticity of NFTs. In order to provide valuable NFT verification services, we need a combination of computer and human perception.

The following guide explores how a technique known as percentual hashing is used by NFT verification services to flag potential forgeries and bring them to the attention of humans.

What Makes NFTs valuable?

First, let’s take a moment to explain what it is we’re trying to protect in simple terms. 

NFT stands for “non-fungible token.” 

“Fungible” means, essentially, interchangeable. Take fiat currencies, for example. Every U.S. dollar is worth the same amount as every other U.S. dollar. U.S. dollars are fungible. All currencies are fungible, including cryptocurrencies. If you loan someone a $1 bill or 1 ETH, they can pay you back with any other $1 bill or 1 ETH. 

NFT’s are not interchangeable as each one is unique. 

A token is something that represents something else. For example, an arcade token represents a quarter. However, while the token has value to the holder, they can’t spend it at a convenience store. 

They first have to convert the token back into a fungible quarter. 

So an NFT is a crypto token that stands in place for a non-fungible asset.

How Do NFTs Track Asset Ownership?

Like currencies, NFTs have a value. However, as we explained, unlike currencies, NFTs are not interchangeable. Each NFT is, in essence, a contract that spells out who owns a particular digital token. The token represents the underlying asset. They can be tied to a physical object or they can represent a digital asset such as an image.

Let’s use cars as an example of how NFTs work. When a particular model of car is built, every car with the same features has the same price (in theory). However, as soon as you buy one of those cars, its value diverges from the value of all the other cars on the lot. They might be similar, but they’re not interchangeable. 

When you buy a car, you get a title. The title is obviously not the vehicle itself, it’s essentially a token denoting ownership of that specific vehicle. Each vehicle has its own unique vehicle identification number (VIN). A database of VINs matches titles to owners. You need that VIN so you can search the database of titles (tokens) for that specific car to see who owns it. 

When you sell the car, the title needs to be signed over to the new owner. The same is true with NFTs. When you sell an NFT, the change in ownership is immutably recorded on the blockchain.

NFTs can represent any type of unique asset. 

Digitally Verifying the Authenticity of NFTs

There’s a huge challenge with digital NFTs. Like cars, NFTs can cost tens or hundreds of thousands of dollars and more. Unlike cars, however, digital files can be copied an infinite number of times. The image itself doesn’t have an identification number on it. And if it did, that would easily be copied too. 

Without some way to verify the authenticity of a digital image, its value would be nil. 

Any serious collector of physical artworks needs a way to verify that a particular painting is not a forgery. For this, they hire a professional service that specializes in identifying forgeries. Likewise, serious NFT collectors also need a way to verify the authenticity of an NFT.

A scammer can easily create an account on an NFT marketplace using the same or similar name as the original artist, then make a copy of the image and list it as a new NFT. 

How can the potential buyer be sure that the NFT is authentic?

Comparing Original and Counterfeit NFTs

Theoretically, you could compare the NFT to a database of original NFTs. However, that would be a monumental task. For starters, you need to store a copy of every NFT for comparison. Then you would need to check every single bit and byte to make sure they match. 

But what if the nefarious seller changes the NFT ever so slightly by making it a tiny bit darker or lighter or smaller or larger or framed or cropped. In these cases, comparing the image to files in a database would be useless as they won’t match. A computer would fail miserably in identifying even a slightly changed copy. 

A person would be able to match the two images quite easily through human perception. The problem is, however, that it would take a human being eons to go through every NFT for comparison. 

Perceptual hashing for verification of NFTs

How do we solve this problem? By using a technique known as perceptual hashing.

Hashing simply refers to the process of recalculating something to reduce it to a particular set of basic properties and get rid of unnecessary data. 

A good example of this is private and public wallet keys. The private key is hundreds of characters long. The public key is a shorter version of the private key created through a complicated algorithm. (It’s near impossible to reverse the process and generate a private key from a public key. This intensive task would require the theoretical power of quantum computers, which don’t exist to the degree of sophistication needed to crack a blockchain.) 

Perceptual hashing is the process of using an algorithm to convert an image into a set of easily perceivable attributes — such as shapes, patterns, and colors — that can easily be compared. 

Human vs. Computer Perception

Perceptual hashing is a powerful tool for comparing images. In order to verify the authenticity of NFTs, however, we need the cooperation of humans and computers. The computer can easily compare highly similar images using perceptual hashing. However, if the image is sufficiently modified, the computer can only identify similarities between features in the original and the copy. It can’t make the call, so to speak.

If a computer using perceptual hashing determines that two images are identical it can flag the latter copy as a forgery without human intervention. If the computer sees no similarities between the two files, it can verify that an image is unique without human intervention. 

However, if the computer sees some similarities between two images, but can’t verify that one is a copy of the other, it can flag them as being similar. A human being can then very quickly look at the two files and verify whether they are unique or if one is a slightly revised knockoff of the other.

Various NFT Verification Schemes

Stock photography services have been using perceptual hashing to identify copies and near copies of their assets for many years. Google Images, for example, uses perceptual hashing to help users find copies and variants of an image on the internet. 

Perceptual hashing is also being used by services like YouTube to detect unlicensed use of videos and music. However, NFT collectors need more assurance than a Google search.

Being such a nascent technology, NFT authentication services are still in their infancy and a wide variety of proposals are being tested. For example: 

  • Pastel is a first-of-its-kind blockchain that uses perceptual hashing as part of its proprietary technology to find near-duplicate NFTs. Pastel’s Sense Protocol utilizes deep learning models using Tensorflow with Keras Applications to turn each NFT into an “NFT fingerprint vector” of over 10,000 numbers. Then, it determines a correlation between that fingerprint and all other NFT fingerprints on Pastel, other NFT marketplaces like OpenSea, and open databases like Google. Its relative rareness score is between 0% (the NFT is identical to another already registered NFT) to 100% (the NFT is completely unique). Pastel’s algorithms can be bolted onto any NFT marketplace. 
  • Mintable NFT marketplace offers reverse image searches for its own offerings using perceptual hashing.
  • Blockchains such as Stellar use various trust-building mechanisms. 
  • Adobe allows artists to embed the creator’s wallet address and social media information into their NFTs. 
  • And Twitter helps owners of popular NFTs (such as Bored Apes) verify that they are, indeed, the rightful owner.
  • Another NFT marketplace, Rarible, hand curates all artists and NFTs before they can be listed on the site.

Although it’s still early in the game, NFT collectors are already spending hundreds of thousands and even millions of dollars on NFTs. So there’s a fast-growing need for third-party NFT verification services. With such a demand, supply is sure to increase quickly.

Final Thoughts: NFT Verification as a Service

As you might imagine, NFT verification services are invaluable to serious buyers and sellers. 

However, the concept of NFT verification services is still in its infancy. As such, a variety of new schemes are being developed and implemented. 

No matter which of these developing schemes proves to be useful and becomes widely adopted, one thing is for certain: computer algorithms alone to compare NFT images is insufficient, so far. 

By combining perceptual hashing and human verification, we can provide a high level of trust for legitimate NFTs and easily weed out forgeries. 

The Most Common NFT Scams (And How to Avoid Them)

In August 2021, a prominent NFT collector called Pranksy paid more than $336,000 for a fake Banksy NFT. 

Pranksy first learned about the artwork from a member of his Discord channel. The auction was also advertised on Banksy’s official page. 

About an hour after placing his offer, the seller of the NFT was accepted by the seller. But Banksy’s spokesperson told BBC that Banksy wasn’t involved in the creation of any NFT. 

Pranksy had been scammed. 

As it turned out, Banksy’s site was hacked and the fraudulent NFT auction was advertised, creating the perfect storm for a collector aptly named “Pranksy” to get scammed. 

Oddly enough, the hacker returned all the money to Pranksy except for the gas fees of roughly $6,700, only after Pranksy revealed who had shared the auction in the Discord and followed him on Twitter, likely spooking the scammer with fear of inevitable consequences. 

However, not everybody has been or will be as lucky as Pranksy when it comes to NFT scammers. Some scammers use technologically sophisticated techniques to exploit security gaps, as happened in the Banksy-Pranksy case, while others aim to gain trust to obtain wallet holders’ private keys. 

As the cryptocurrency and NFT ecosystem grows in sophistication, so do the potential avenues for scammers and hackers. 

The following guide explores the most common NFT scams and how to avoid them. 

Artist Impersonation

A vulnerability of the NFT space is that anyone can mint anything as an NFT. One trick fraudsters use is to mint the artworks of reputable artists without their consent and list them for sale on identically branded pages. 

This scam can easily occur on NFT marketplaces where no artist verification is necessary, and in rare cases, imposters manage to verify themselves as the artists whose works they steal. Scammers are always on the lookout for loopholes. So, even on sites with a verification process, they might detect a way to verify, especially if the process is not hard to pass.

One such case happened to illustrator Derek Laufman whose work was sold on the Rarible platform by a verified seller. Laufman learned about the issue when his fans informed him on social media, but only after one fan had already bought the forgery.

Fake Customer Support

Scammers can manipulate you by gaining your trust in online communities. They can easily use fake names, invent phony social channels, and pretend to be the employees of a company.

For those veterans in the cryptocurrency ecosystem, a scammer pretending to be an employee on Telegram or Discord is just another day in the office. However, it might not be as easy for the influx of new art collectors navigating these new channels for the first time, 

In August 2021, Jeff Nicholas joined a discord channel to find a solution to a royalties problem he encountered on the NFT marketplace OpenSea. He was invited by a member named “Pascal | OpenSea” to another discord channel called “OpenSea Support Server.” Nicholas didn’t suspect anything. The fake customer support suggested Nicholas share his screen to solve the issue at one point. The screenshot he shared included the QR code synced to the seed phrase of his crypto wallet. Shortly after, around 150 ETH had been stolen from the wallet.

Another victim of this type of fraud was Sohrob Farudi, who lost around 250 ETH worth of NFTs after scammers had deceived him to be the founders of the Bored Ape Yacht Club.

Phishing Emails and Offers

One of the oldest devices of tricksters is sending emails or posts with malicious links aiming to steal your data. This ruse can cheat even the more crypto-savvy among us. In June 2021, famous NFT artist Fvckvender, tweeted about a fraud, which caused him to lose around $4M. After opening a .scr file sent him via DM on Twitter with a virus, his Metamask wallet was hacked.

Another type of this scam is sending emails with fake offers on your OpenSea NFTs. They come with an OpenSea impersonation and try to bait you into clicking the links, following the steps, and ultimately sharing the private keys of your wallet. 

They may also try to scare you with security issues on your OpenSea account to trick you into clicking the embedded link.

Replica and Fake Stores

Replica stores are nearly exact copies of the legitimate NFT stores and marketplaces, using the same logos, similar website layouts, and list the same NFTs as the original stores.

For example, there may be an OpinSea.io as a replica for OpenSea.io or a nftygatwey for a Nifty Gateway.

Some fake NFT marketplaces don’t copy the NFTs of the well-known NFT stores, they seem to be selling unique NFTs that don’t actually exist. For example, you could end up buying a fake BAYC with attributes that don’t exist or simply spending ETH on an NFT that never ends up in your wallet. 

Further, these marketplaces could also take personal data like credit card information.

Scam Airdrops and Giveaways

Scammers are always coming up with new phishing tactics. For example, the announcement bot of the Fractal discord channel was hacked. Fractal is a new NFT gaming marketplace founded by Twitch co-founder Justin Kan.

The hacker posted an airdrop announcement on the official channel, and 373 Discord members followed the fake link in the message. Around $150,000 worth of Solana (SOL) was stolen.

Another way fraudsters exploit airdrops is by sending them to public wallet addresses. When wallet owners interact with them, such as listing them for sale or moving them to another wallet, security gaps may arise. 

For instance, if you see a suspicious new NFT in your wallet, don’t be so eager to list it for sale– by “approving” the sale in your wallet, you may actually be signing a transaction to spend all of your ETH, or transfer your NFTs, or whatever the maliciously programmed contract intends. 

Recently, the OpenSea team announced that they fixed an NFT phishing attempt via malicious airdrops that could have resulted in emptying the victims’ wallets.

Rug Pulls

Sometimes, the NFT project itself is fake; shortly after it’s launched and backed by the investors, the founders dump their NFT holdings and disappear. This is called rug pull. 

For example, a scammer promised his fans to mint 8,000 randomized 3D artwork but instead delivered 20 emojis and ran away with 1,000 SOL. Another well-known rug pull case is Evolved Apes NFT collection, whose creator disappeared with $2.7M. 

This type of scam is widespread in the NFT world. It’s estimated that $30M got lost due to rug pulls during September/October 2021 NFT drops. 

Final Thoughts: How to Avoid NFT Scams

Safety starts with doing your due diligence. Orient yourself around the legitimate NFT stores and marketplaces like OpenSea, Nifty Gateway, and SuperRare– and follow their corporate communication accounts. 

But, keep in mind that many fraudulent acts can also occur on these sites; OpenSea may be the largest NFT marketplace, but since anyone can create and sell NFTs here, the risk remains. 

This doesn’t mean unverified collections are not necessarily illegitimate, but you’ll likely be safer purchasing from verified accounts. 

Don’t forget even if the artists and collections are verified, there can still be fraud. You must do in-depth research before investing in an NFT project.

Word of mouth goes a long way, but it’s not a foolproof system.

Be part of the watchdog crusade against scam projects; when you observe suspicious activity, you can report it here on OpenSea.   

Be very careful about how you use your crypto wallets. Only sign on those websites which you trust.

When you move NFTs from one wallet to another, always check if the pasted address is exactly the same as the copied one, as some malware can copy and paste a scammer’s address before you send. 

Use two-factor authentication (2FA) to log into wallets, exchanges, and NFT stores to add another layer of protection against hackers and phishers. 

Frauds may happen in every social and community channel. Be careful whom you deal with. Question every link, think multiple times before clicking. 

As the Fractal team shared in an article after the recent airdrop scam, “there’s no undo button in crypto.”

And most importantly, never ever share your private key with anyone. No customer support agent anywhere will ever ask you for your private key, and if they do, you should refuse and use a different service that takes their customer’s funds more seriously. 

A Guide to Purpose-Built Blockchains

As blockchains exploded in adoption and use cases over the last decade, the number of challenges blockchains face has increased to meet the divergent and growing applications of the technology across various industries.

As cryptocurrencies and token offerings expand to more use cases and specific functions, their underlying infrastructure must specialize in creating a better developer and user experience. Programmatically different blockchains are being deployed for specific use cases, such as shipping, supply chains, financial infrastructure, and NFTs. 

Bitcoin and Ethereum are the original “catch-all” general-purpose blockchains; their purpose is to be the public blockchain network for all types of activity for all network participants. However, as adoption and usage have soared, catering to the network activity for the masses hasn’t been without problems.

While blockchain thus far has been most famous for its role in the rise of digital currencies, there is plenty of non-cryptocurrency uses for the technology. Purpose-built blockchains may make trade-offs with the core blockchain trilemma factors of centralization, security, and scalability to meet different industries’ needs with greater efficiency.

Challenges with Catch-All Blockchains

Most of the major public blockchains, like Ethereum, tend to face immense challenges with filling niche needs.

The first significant challenge in question is that of speed and throughput. Compared to Visa’s 65,000 transaction per second (tps) throughput, Bitcoin can only process 7 transactions per second, while Ethereum can do about 15-25 tps. Both are more decentralized than Visa, and permissionless, but specific use-cases might not need these advantages. 

Both the BTC and ETH networks have become busier than ever, especially with the NFT activity in 2021, and more adoption is on the horizon. As a result, the cost of sending a transaction has skyrocketed, regardless of what’s being sent. 

In Aug. 2021, Eth gas fees reached as high as $30 on average for a simple transaction, with smart contract transaction fees like for using dApps and NFTs being much higher, often in the range of $100-200 or more, which is a trend that had been increasing throughout 2021. 

“Catch-all” blockchains are like highways that don’t always differentiate the types of traffic to the extent that niche purpose blockchains can. Blockchain networks like Bitcoin and Ethereum are too slow and too expensive for the vast majority of smaller-scale, everyday transactions. 

Ethereum’s architecture isn’t customizable, but it does allow for a large array of different use cases including data recording data, supply chain management, insurance, tokenization of assets, and more. Moreover, Bitcoin and Ethereum were built with the principles of pseudonymity, censorship resistance, and transparency in mind.

This poses issues for some industries. For example, legacy regulated capital markets and financial services often have regulatory needs for identity, compliance, confidentiality, governance, and settlement, which aren’t fulfilled by Bitcoin’s and Ethereum’s functionality. 

What are Purpose-Built Blockchains?

These issues have led to blockchain projects building distributed ledgers that target specific use cases. 

Blockchains are diversifying to become more specialized to specific tasks and. For example, they can enable higher throughput activities, faster settlement time, and less fees. These three features can make supply chains more efficient, help move and store different types of information, or capture a higher volume of transactions than major public blockchains today. 

Specific purpose blockchains can be built solely around the efficient and cost-effective exchange of tokens, execution of smart contracts, or other enterprise functions.

With purpose-built blockchains, large-scale complex applications can solve their unique problems without compromising or bending to problems inherited by catch-all blockchain architecture.

Examples of Purpose-Built Blockchains

Acala is a DeFi-focused blockchain that builds a set of financial primitives including the ACA stablecoin, a DEX with unified liquidity provisioning, and staking derivatives. Acala aims to become a parachain on the Polkadot network and is fully EVM-compatible, meaning Ethereum developers can migrate their smart contracts without significant changes to the code. 

Acala is essentially a niche blockchain optimized for use case of DeFi, created with the goal of reducing public network congestion and creating a more efficient and robust ecosystem.

Solana is a high-performance public base-layer blockchain created to track historical events (using proof-of-history) and transactions in a specific sequence, optimizing scalability over decentralization, and enabling scalable apps for developers and users, with low transaction fees and high throughput.

Algorand created a highly scalable, low fee network, decentralized digital currency, and smart contract platform specifically for the financial services industry to use. 

Flow is dedicated to serving NFTs at a much more efficient scale than Ethereum.

Enterprise blockchains can be used to streamline business processes at scale and serve the needs of corporations in a permissioned and centralized manner. For the corporate use case, ledger data visibility can be restricted to a select group of people. 

A nation-state creating and using its own blockchain for central bank digital currencies is another example of a purpose-built blockchain with different parameters of centralization, security, and visibility of transactions.

Ant Group launched AntChain, its own in-house productivity blockchain platform, that it claims offers an “all-in-one workstation that reduces the deployment time of the company’s blockchain-based solutions by as much as 90 percent.” Today, AntChain handles over 100M digital assets on its blockchains daily, and affiliate AliPay handles 1B transactions per day.

Final Thoughts: 

Blockchain technology is expected to expand global GDP by nearly $1.8 trillion in the next decade. The technology of purpose-built blockchains can be used for specific and optimized use cases to serve large-scale and complex applications while meeting both the growing needs of enterprise and consumers. 

Without any updates to the core networks, catch-all blockchains would continue to experience immense challenges if they were used for every niche need: think more cars and trucks funneling into a bustling highway. 

Purpose-built blockchains solve for speed, throughput, and other architectural limitations to meet the global needs of varied industries, spanning public, private, and enterprise needs. 

How to Use MetaMask

MetaMask was built and launched in 2016 by ConsenSys, a largely Ethereum-focused blockchain development studio as a means to interact with Ethereum blockchain. 

The wallet itself is non-custodial, meaning that the owner (you) doesn’t have to relinquish possession of their private keys to a third party. However, this comes with great responsibility, as we’ll get into below. 

Launched as a software cryptocurrency wallet, MetaMask makes it possible for users to store and manage their private and public keys, broadcast transactions to the network, send and receive Ethereum and Ethereum-based tokens, connect to decentralized exchanges, and buy and sell NFTs. 

MetaMask also aggregates multiple decentralized exchanges in a feature called MetaMask Swaps, where users can access the best exchange rate for ETH-based tokens at a service fee of 0.875% of the transaction amount. 

As of August 2021, the MetaMask browser extension has roughly 10.5 million monthly active users, many of which are using the wallet to interact with the burgeoning DeFi and NFT ecosystems. 

So, how do you get started with MetaMask?

It’s simpler than you might think, let’s get started.

Step 1: Understand

Before blasting off Ethereum to different addresses, it’s important to understand MetaMask is a non-custodial wallet. 

This means that keeping your wallet account password, private keys, and Secret Recovery Phrase safe is your responsibility. The probability of human error with these sorts of wallets is fairly high, so go into your non-custodial wallet adventures understanding that it’s likely that you may be the most probable point-of-failure, and do everything in your power to prevent that. 

Metamask provides a Secret Recovery Phrase of twelve words when you first make a wallet. Write this down and store it in a secure place offline–definitely not a Google Doc named “MetaMask Secret Recovery Phrase” or “Crypto passwords.” Don’t share this phrase with anyone. If you lose your phrase, you won’t be able to access your wallet and your cryptocurrency and tokens will be unrecoverable. 

MetaMask is also a software application, meaning it’s almost always connected to the Internet and comes with the ever-so-slight vulnerabilities that a hardware wallet like a Ledger Nano S typically doesn’t. 

Most people use something like MetaMask to utilize a small(er) percentage of their total cryptocurrency holdings to interact with the various dApps in the Ethereum ecosystem, not as a primary holding account.  

Step 2: Download

Download the official MetaMask browser extension at https://metamask.io/. It is compatible with Chrome, Firefox, Brave, and Edge. 

Your browser will ask you to add the extension– allow it. 

MetaMask also has an iOS and Android app.

Step 3: Create Your Account

Next comes the typical account sign-up stuff– create your password and write down your recovery seed phrase. (see Step 1).  

Step 4: Make Sure You Wrote Your Seed Phrases Correctly

Don’t let one typo or misplaced word be the reason you can’t recover your account! 

Step 5: Send ETH to address

Click on the “Buy” option to pull up a few options to deposit ETH into the wallet. Scroll all the way down, and you’ll see the “Directly Deposit Ether” option, which will give you your wallet’s public key. 

Copy and paste your public key to the platform you plan on sending ETH from, select the amount of Ethereum to send, and click send. You’ll be able to monitor the transaction in EtherScan.

Step 8: Connect MetaMask to the dApp or Platform

Now, your MetaMask is ready to rock and roll– just find the dApp or site you want to interact with. Let’s say we want to connect our MetaMask to our OpenSea to buy our first NFT. 

On the account section in OpenSea, you’ll see a “Connect your wallet” section with a list of wallets that includes MetaMask. 

Click MetaMask, which will pull up a request from the MetaMask browser extension that asks you whether you want to connect with the site. 

Step 9: Sign the Signature

If you’re 100% certain you’re on a legitimate site and not some knock-off spam site (let’s say there is an “OponSee.io” or “0penSea.io” scammy clone replicate, which would likely be a malicious attempt to get you to sign over your MetaMask access.)

As you interact with the OpenSea ecosystem, you will be presented with multiple requests to sign a transaction with your MetaMask account.

Suppose we want to buy an NFT from The Heart Project. We find one we like, click “buy”, and view the subtotal. Upon clicking “confirm checkout”, our MetaMask extension would open up with the estimated gas fee for the transaction and price of the NFT. 

We now have one final chance to reject or confirm the transaction. 

Let’s say gas fees and transaction price looks good to us and we want to buy the NFT. We click confirm, and the transaction should go through, leading you to a “your purchase is processing” page, which shows the transaction hash number that can be traced to Etherscan.

Once the transaction finishes processing, your NFT will appear in your OpenSea profile. The NFT token itself, however, is held in your MetaMask wallet. 

Final Thoughts: Welcome to MetaMask

So, there you have it– how to use MetaMask from scratch and buy your first NFT on OpenSea. 

For now, MetaMask is one of the leading NFT wallets, and familiarizing yourself with it will make your NFT exploration process much more straightforward.

Since all ERC-20 and ETH-based tokens are compatible with MetaMask, you can utilize the wallet for a wide variety of Ethereum storage and interaction related purposes. Note that if you’re looking to interact with another blockchain ecosystem, such as the Solana ecosystem, MetaMask won’t work; you’ll need a different wallet (for example, Plasma for Solana.)