Digital assets are distributed, not copied or transferred.A blockchain is a digital ledger or database where encrypted blocks of digital asset data are stored and chained together, forming a chronological single-source-of-truth for the data.Of course, blockchain is more complicated than a Google Doc, but the analogy is apt because it illustrates critical ideas of the technology: A significant gap to note however is that unlike Google Docs, original content and data on the blockchain cannot be modified once written, adding to its level of security. No one is locked out awaiting changes from another party, while all modifications to the document are being recorded in real-time, making changes completely transparent. This creates a decentralized distribution chain that gives everyone access to the base document at the same time. When you create a Google Doc and share it with a group of people, the document is simply distributed instead of copied or transferred. | Image: Shutterstock What Is Blockchain Technology?īlockchain, sometimes referred to as distributed ledger technology (DLT), makes the history of any digital asset unalterable and transparent through the use of a decentralized network and cryptographic hashing.Ī simple analogy for how blockchain technology operates can be compared to how a Google Docs document works.
Since there's no longer a liquidity provider it's no longer possible to buy or sell the token anymore.Blockchain is most simply defined as a decentralized, distributed ledger technology that records the provenance of a digital asset. Here is a recent example, notice how that token was provided liquidity 10 ETH and then taken away 17 ETH after a few hours.Ġx0ebcfd5ba1783aeed15eb236f11aae18e6e77aff
it's a little more complex than that but that's the basics of it. have he locked his liquidity for 5 years he cannot withdraw until then. so at that moment the developer whom hasn't locked the liquidity can just withdraw it and walk away with 5 ETH (he minted the tokens so he doesn't care about its value).
as the token gets pumped and people start trading let's say the token goes to 0.005 (or 5x initial value), due to arbitrage the pool should now move to 5 ETH to pair the value of the 1000 tokens. so let say a new project is born, the developer of the project issues 1000 tokens and pairs them 1 ETH and deposits the liquidity. In short when someone locks liquidity it means that someone cannot withdraw the liquidity either permanently (burning keys) or temporarily (giving the custody away).
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