Chapter 5 : Sector analysis
Breaking down the digital assets space
Crypto assets remain subject to criticisms such as the ability of different blockchains , however , the growing range of app
Isabell Moessler , head of distribution EMEA at 21Shares , purposes such as tokens for in-app purchases , a means of r exercise governance rights to name but a few .”
Interoperability enables blockchain protocols to communicate with each-other , allowing users to share data between networks that perform different functions . At present , the ability to send data between blockchain ‘ Layers ’ and to outside chains is not yet available . Polkadot uses a sharded parachain – or network of smaller blockchains – to facilitate interoperability , while cosmos uses crosschain certificates to carry out Inter-Blockchain Communication ( IBC ).
Smart contracts are pre-agreed transactions that are self-executed when the terms of an agreement – which are set out in lines of code within the contract – are met . Pioneered by American computer scientist Nick Szabo in 1994 , smart contracts allow ‘ trustless ’ exchanges to occur without mediation by a third party . Since going live in 2015 , the ethereum network is considered a fundamental building block for smart contracts and other DeFi applications , with contracts written in one of at least five programming languages , broken down into bytecode and deployed on the blockchain . Tezos , tron and algorand ’ s blockchains are also popular routes within smart contracts .
Blockchain ’ s role is often discussed as a secure and more trustworthy skeleton for financial services . At present , crypto assets tied to blockchains offer exchange activities , automated trading and lending . At present , uniswap is the largest decentralised exchange by trading volume . Based on the ethereum blockchain , it allows users to trade crypto assets without intermediaries and relies on an automated market maker mechanism . Elsewhere , aave facilitates crypto lending while FTX is an exchange offering derivatives , futures , options , leveraged tokens and over-the-counter trading .
Crypto networks involved in payments often have a native coin that allows users of their blockchain to carry out peer-to-peer transactions with privacy and at low cost . Bitcoin cash , for instance , is an electronic cash system aiming to become a global system of fast payments and micro fees with high capacity . Bitcoin cash blocks are thirty-twotimes the size of bitcoin ’ s , enabling BCH transactions to cost less than a penny while occurring at a rate of 200 transactions per second . Ripple and its XRP coin and stellar and it lumen coin also operate as payment solutions .