Sirwin
Sirwin
Crypto Piggy Bank

A beginner's entry into the world of crypto: from Blocks to Symbiosis.

By VaKnow22 | VaKnow22/crypto | 15 Mar 2022


Hey folks, this is my first post on publish0x and as you'd expect it comes with a very early disclaimer - I know nothing about cryptocurrency - yet!

However, over the next few weeks and months I hope this will change. I hope I will be able to share with you the mistakes I made, so you don't make them. Even more, I hope to share with you some successes, but being as I don't know anything about cryptocurrency, this is unlikely, at least not for a while!

So without further ado, my first post...

Symbiosis - What is that?

To start, lets define Symbiosis - (I've done my own research, so don't quote me, who knows if I'm even reading the information correctly!). Symbiosis is, according to their website (https://symbiosis.finance/), a multi-chain AMM DEX and liquidity protocol. Easy, right? WRONG. For us non-tech-savvy folk, that is gibberish.

I'm going to need to go a few steps back first and start from the beginning!

Firstly, What is cryptocurrency?

Then, What is a blockchain?

Then, How it works?

Before FINALLY, explaining Symbiosis, (don't worry, I'll keep all of this as succinct as possible!)

What is cryptocurrency?

So, Cryptocurrency - it's not a typical currency in the same way as Pound Sterling (£) or US Dollar ($) is. This was the first thing I had to forget (although there are similarities). Those currencies are regulated by a central authority, for instance the Bank of England for the Pound Sterling. Cryptocurrencies are decentralized (without a custodial body controlling it), The most famous cryptocurrency is the Bitcoin (BTC).

So what is a cryptocurrency? Like a traditional 'fiat' currency, a cryptocurrency is also a tradable asset, but unlike conventional currency, it is a solely DIGITAL asset. Let's start with the basics of how they work. Firstly, Information regarding the cryptocurrency is held on a digital ledger. In the old days a bank would have a big old tome that they wrote down every transaction, cryptocurrencies are the same except its stored digitally. Every single transaction is added to the ledger - but instead of 'ledger', its called a Blockchain.

What is a blockchain?

Well this is the bit that confused me the most, and I'm sure confuses most others! The blockchain is the record which holds all the information of every transaction. Using the paper ledger analogy, every time a transaction is added a new 'page' is created just for that single transaction to be written on. This is known as a Block. With the paper ledger, it would be the following page. In the digital world the block is joined on to the previous block... forming a chain. The blockchain. Despite its design simplicity (the actual computer coding is NOT simple) it makes for an incredibly secure way to maintain a record of who owns what. If someone knew how to change the information on a single record (a block) to say that they owned 100 Bitcoins instead of 0.1, they would have to change the information on the block that says they own 0.1 bitcoin, and then every single subsequent block - if that wasn't hard enough, they'd also need everyone else on the network's approval to do so - it's decentralised, so everyone has access to the data, and not one institution or person controls it. It is also worth, for the time being, at our entry level, noting that each individual cryptocurrency has it's own blockchain. We'll discuss this in future posts!

How it works?

Now we have a beginner's level of understanding of what cryptocurrency is and what the block chain is, how does it work? Well, as we've alluded to, the cryptocurrency lives on the blockchain, and every transaction is recorded on a subsequent block. But who is doing this? Bankers? No, Miners! Now for me as a Welshman, a miner works in a colliery digging out coal and after his long shift he returns to the surface covered in coal dust. Again, park that thought for a while, wrong sort of miner! Ok, so what are these miners doing?

The blockchain lives on a network of nodes (computers) and each node hosts a exact copy of the blockchain. So, if a transaction is made on one node, it then relays the message to every other node on the network to validate the transaction. when every node is in agreement the transaction is added to the ledger via a new block and it is added to the blockchain. Every node then holds a copy of the updated blockchain. This validation of transactions is mining. The reward to the miner is access to new cryptocurrency that is created!

Symbiosis

So, what does this have to do with Symbiosis?

Well despite this whole post being written for the purpose of talking about Symbiosis, I'm going to keep it as light as possible - (you could easily write a whole book on the topic). As I've said, I'm learning all about cryptocurrency and there's a lot more of the basics to contemplate before fully being able to appreciate Symbiosis entirely. But having said that, knowing what I do so far, I'll have a crack at explaining what Symbiosis is for us laymens!

Symbiosis is a multi-chain AMM DEX and liquidity protocol (remember from earlier?). Now, we know what a chain is, the other stuff? Not so much.

The best way to describe Symbiosis is to look at what it sets out to achieve. We know from earlier that each cryptocurrency has it's own blockchain. So what Symbiosis is trying to do is set-up a system that connects all of the blockchain networks together in order to make trading easier. Currently, it doesn't quite do this - it connects all of the blockchains that attract enough market attention, but they do aim to eventually connect all known networks. Why does this matter? Well, it matters because we don't live in a world with just one cryptocurrency, if we did, Symbiosis wouldn't need to exist. Nor would any exchange. If you log on to any crypto-exchange you'll see hundreds of different cryptocurrencies. The problem is that if I want to exchange a token (a token is basically an asset that is logged on a block) from one blockchain to another it gets rather complicated and at times expensive. Currently, there are plenty of ways to trade between two different blockchains - you could use a Centralized Exchange (CEX) like Coinbase (which I currently use!). However, there are a few pitfalls with CEX and as a result there is an alternative: Decentralized Exchanges (DEX).

A few differences between CEX and DEX:

(To confuse matters - I mentioned above that cryptocurrencies are decentralized. This is the currency itself. The way the currency is traded can either be centralized or decentralized!)

1). CEX, like Coinbase, is an exchange that has a central pool of funds that allow the trades to flow, some people argue that the weakness of CEX is that the trading prices are based on order books which list exchange prices. In DEX the trading prices (via the AMM), allows trades to be smoother, without any major buy or sell walls (I'll explain these in a future post).

2). DEX also has no central agent or body in control of trades. So in basic terms a CEX takes control of your assets while trading, a DEX does not - the user remains in control and the trading prices are controlled by the AMM.

3). CEX are also regulated in a way that DEX aren't. If you've signed up to a CEX, like Coinbase, you'll have been asked to provide Know-Your-Customer details to prove who your are. DEX does not require this, so it allows you to remain anonymous.

4). DEX are more secure and less open to hacking. They also allow the user to have ownership of the private keys which gives them complete ownership of the crypto in their wallet.

There are a few more differences, feel free to google them! (I will also do a single post highlighting the differences between CEX and DEX later).

Decentralized Finance (DeFi) cryptocurrencies are traded on AMM or 'Automated Market Makers' via a DEX. Now to keep it simple for my sake and yours, the AMM is a protocol that uses an algorithm to determine trading prices. Back in the old days of trading the Market Maker would be the professional traders (humans) working out of some sort of company or institution (they are usually brokerage firms), their job would be to set the bids for buying and selling as well as providing the liquidity to the trading pool . This is Centralized Exchange (CEX). It means certain people have control over the markets. With AMM this process replaces the human with an algorithm, this process is what makes Decentralized Exchanges (DEX) possible.

So, in closing (well done if you got this far!), there are plenty of CEX and DEX networks, Coinbase or Binance are popular CEX, and Uniswap and PancakeSwap are popular DEX. Which leaves us with Symbiosis! Why do we need it?

Well, because Symbiosis is different, namely as it has the benefits of any DEX, and yet, is not limited to any particular tokens. It can also perform multi-chain swaps with one click, which makes a complicated process incredibly user friendly! Symbiosis is also able to swap tokens via a DEX like UniSwap if it allows for a better deal. I haven't gone into depth about the sophisticated way that it links multiple tokens - that is for when I've learnt a bit more about how crypto works - but rest assured, I will share my learning in another post! Following my trip down the rabbit hole of Symbiosis, I have been really impressed by what it sets out to do and how it does it. I will definitely be taking a closer look at using it myself. As I'm still a beginner, I'll use Coinbase predominantly for now, but as I learn more who knows?...

 

I do hope you found this useful, as I said at the top. I am a crypto novice. DO NOT make any financial decisions based on anything you've learnt from me. Also, I apologise for any inaccuracies in this post, feel free to correct me in the comments below and I'll endeavour to update the post, I just ask that you do it constructively. I'm not interested in getting roasted for taking the plunge into writing about what I do, and don't, know about cryptocurrencies. 

Finally let me know if there's any topics you'd like me to write about from a beginner's point of view. Much love, VaKnow22.

 

 

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VaKnow22
VaKnow22

I’m a beginner to the crypto world. I want to write about my crypto journey and intertwine that my passions, namely sports - ice hockey/rugby, healthcare (I’m a nurse), bluegrass banjo and a bit about where I’m from - Wales.


VaKnow22/crypto
VaKnow22/crypto

Watch as I take the first steps into the unknown world of Crypto. If nothing else, you can learn from the mistakes I will ultimately make.

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