Michael D. Moberly, Principal, Founder kpstrat and ‘Business Intangible Asset Blog – Business Intangible Asset Strategies and Risk Mitigator
Preferably, readers may recognize this post (and others @ Business Intangible Asset Blog) represent reliable perspectives – contexts for recognizing, comparing, and contrasting the relevance, contributory roles, and value adds of business things intangible relative to present day + on-the-horizon transactions involving NFT’s, wherein various types, contexts, and applications of non-fungible tokens are in play, i.e., identified, held, leveraged, and perhaps offered for sale, a transaction negotiated, subsequently purchased.
Explanation of Blockchain…
A blockchain is a ‘distributed’ database that is shared among the nodes (connections, intersections, meeting points, etc.) of a network.
A blockchain, similar-to-a-database, stores, (catalogs, banks, etc.) information and data in digital formats.
Blockchains are perhaps best recognized for their role in cryptocurrency systems, ala Bitcoin, et al, wherein ‘non-fungible tokens’ are maintained through a secure and ‘decentralized’ record of each (Bitcoin) transaction.
A particularly innovative aspect of ‘blockchain’ is that it provides (good, better, best) assurance of the fidelity, i.e., a reliable, authentic, accurate, dependable, chronological and ‘time stamped’ record of digital data inputs and transactions.
Preferably, these block chain features generate trust (among players + participants of-to transactions in which NFT’s are in play) absent a presumed need for involving a third party to serve as an intermediary, overseer, or agent.
A key difference between a conventional (computer) database and a blockchain distributed database, is how the digital data is structured, e.g., a blockchain collects information-data (chronologically) in groups, ala blocks, wherein the blocks hold sets of information.
- the blocks have certain storage capacities and, when a block is filled, it is closed, and links to a previously filled block, thereby forming chains of data, ala a blockchain.
- as new (digital) data – information is received, same is compiled – stored in a new (fresh) block, and when that block reaches it storage capacity, it is ‘linked – chained’ in chronological order, onto newly formed blocks, which also will be added to the chain, as capacity is reached.
Typically, computer databases’ structure inputs (of data) into various types of tables, etc. Whereas a blockchain, structures inputs of digital data into chunks or blocks which are ‘chained’ together chronologically and cryptographically, i.e., encoded, encrypted.
Therefore, a ‘blockchain’ represents a unique type of a database, in that it differs substantially from typical (conventional computer) databases in terms of (a.) how various types of data-information is stored in ‘blocks and blockchains’ and (b.) how same serve as reliable ‘ledgers’ of-to-for transactions.
The distinctive manner which ‘block chains’ structure – compile – store data, creates an irreversible and chronological timeline of the (a.) inputs, and (b.) contents stored, e.g.,
- when a ‘block’ reaches it storage capacity, the contents are essentially sealed – set in stone and become a part of the timeline.
- a precise ‘time stamp’ attaches to each block in a chain, with additional ‘time stamps’ attaching as necessary.
With respect to Bitcoin, blockchains are ‘decentralized and immutable’ (absolute, unchallengeable, unassailable, etc.) which translates as the data entered is (a.) irreversible, and (b.) no single person or group has control, rather, (c.) all (Bitcoin blockchain) users collectively retain control, e.g., transactions are permanently recorded and viewable to anyone.
Perspective for this post was gleaned from…
- How do you tax NFTs? States are in a quandary’ by Jennifer A. Kingston, Axios Cities
- NFTs, Explainedby Mitchell Clark, Verge, Aug 18, 2021
- Tax Notes, Jeff Cook, Madeleine Smith and Harley Duncan of KPMG
- Route Fifty, which reports on state and local government issues
- Lawrence Zlatkin, at the crypto exchange Coinbase, sited in Politico
- Rakesh Sharma, Doretha Clemon, Pete Rathburn, Investopedia, February 26, 2022
- Adam Hayes, Jefreda R. Brown, and Suzanne Kvilhaug, Investopedia, March 5, 2022
The ‘Business Intangible Asset Blog’ is experientially-researched, written, and produced by Michael D. Moberly, to provide perspectives, insights, and additional and sometimes alternative perspectives to readers, ala business leaders, management teams, boards, and investors, etc., to aid in identifying, distinguishing, assessing, valuing, safeguarding, and lucratively – competitively utilizing -applying their ‘mission essential’ intangible assets.
Readers are-encouraged to review and comment on this, and other posts wherein arrays of issues related to business things intangible are authentically and practically conveyed.