LiveLabel - Blockchain

A utilitarian view of NFTs

With the advent of NFTs, we realized we could link real world products to the blockchain in the form of digital tokens. Each active LiveLabel serial is registered on the blockchain as an NFT and can be transferred to anyone. The NFT can be used as proof of ownership of a product. You can think of it as a digital receipt.

What are NFTs?

To understand NFTs (or "non-fungible tokens”), you must understand blockchain tokens in general. Tokens are digital assets that live on the blockchain. In the world of blockchain, there are typically two types of digital assets: cryptocurrency and tokens. Cryptocurrency is the native currency of a blockchain, such as Bitcoin or Ethereum, while tokens are new currencies built on top of existing blockchains. If you created your own coin on Ethereum, for example, that would be considered a token, rather than cryptocurrency. Your token would also have it’s own unit of value.

NFTs, however, have no single unit of value. For example, if you register a bicycle as a non-fungible token on the blockchain and also register an iPhone as another NFT, those tokens are not interchangeable with each other since they are individually unique.

A quick lesson on how blockchain works

A blockchain is a database that is shared acoss a network of computers. Once a record is added to the chain, it is very difficult to change. The network makes constant checks to ensure all copies of the database are the same.

The database

Records are grouped together into blocks and added to the chain one after another. These are the basic pieces of a blockchain:

Record

Can be any information, a serial number for example

Block

Group of records

Chain

All the blocks linked together

How a serial gets added to the blockchain

STEP 1

A serial is recorded. The record includes the details such as serial number, timestamp and activation status.

STEP 2

The record is checked by a decentalized network. The computers in the network (called “nodes”) check the details of the record to make sure it is valid.

STEP 3

The records that the network accepted are added to a block. Each block contains a unique code called a hash. It also contains the hash of the previous block.

STEP 4

The block is added to the blockchain. The hash codes connect the blocks together in a specific order.

What makes the blockchain tamper proof

Blockchain Hash

A hash code is created by a math function that takes digital information and generates a string of letters and numbers from it.

Any change to the original input will generate a new hash. If someone deleted just one period from the entire Romeo & Juliet text, it would be noticed because the hash would change.