Hello everyone, and welcome back to the crypto roundup, your one stop shop for all things crypto related. Today I’m going to be writing about Ampleforth, an interesting ERC-20 token. I’ll be explaining this currency as if I’m speaking to your Grandma, so I’m going to need to go slowly through this. I’m going to have to firstly explain blockchain, then cryptocurrency, then I’ll go on to the history of Ampleforth. If you are an experienced cryptocurrency user, go right to the 3rd section of this article. Hope you guys enjoy!
What is blockchain?
Blockchain is an interesting system that I’m actually quite new to myself. Blockchain is all about money, but then again, what isn’t? To put it simply, a blockchain is a record of all purchases in a database. It is perhaps the most secure method of storing purchases, because NO-ONE owns it. In the case of Bitcoin or Ampleforth, they are DECENTRALISED BLOCKCHAINS. They are split up between everyone who holds a cryptocurrency token, so this means no-one can actually change the records or anything like a government does.
Let’s try and explain this for your gran. Picture this, you have many cube shaped blocks. Let’s say 10. You could keep them all unchained and by themselves. This would most likely compromise the system and also remove the chronological aspect. So, you can think of it as being open to attack from 6 sides, so very easy to be compromised. If we go and grab these “blocks” and push them all together to form a “chain”, we get a block chain, a secure database of payments. This adds a chronological order as we can simply trace the line, and it most importantly secures those blocks, as they can now be attacked by 4 sides only, but not from front to back, meaning the data cannot be stolen. That’s basically how a blockchain works.
What is a Cryptocurrency?
So if we are remembering our blockchain, a cryptocurrency could be explained as something carrying information within the blockchain from one area to another. It’s a virtual currency which isn’t tangible, and is basically impossible to counterfeit. The only way to obtain a cryptocurrency is to buy it, earn it or mine it. You cannot steal any (unless you know their wallet code). Now most currencies operate within the blockchain (like Ampleforth), whereas some operate above the blockchain (like Lightning Bitcoin) and some operate without a blockchain at all (like Hashgraph). We will focus on Blockchain using ones for now. An important aspect of a cryptocurrency is the lack of government or society control. No-one can own the blockchain. One bad thing about this is that a lot of dark web transactions take place through a currency like Bitcoin as it is traceless.
If we are talking purely about Ampleforth to your grandma, it’s a currency that kind of moves through pores in the cubes of the block, carrying information. We need these currencies in order to make the blockchain work. That’s why cryptocurrencies have value: because they keep the blockchain alive.
What is Ampleforth?
So here we are at the main topic. All cryptocurrencies are different, and this one is quite different. Ampleforth is designed to ALWAYS stay at roughly $1. However, it does this in an interesting way. Where most currencies would simply value or devalue their currencies higher or lower to create an artificial price range, Ampleforth fluctuates supply in order to keep the currency at $1. So grandma, Ampleforth is a cryptocurrency on a blockchain that is stimulated to stay at roughly a dollar. In other words, it’s just like owning a dollar bill. Except for one crucial thing: market share. Let’s pretend that dollar bills are worth one unit of Ampleforth. If there are 1,000 dollar bills in America and you own 1, you then own 1/1000 of the monetary supply or 0.1%. However, if overnight, each dollar bill becomes worth half a bill, Ampleforth would change the monetary supply by x2. In other words, you wake up with $2 instead of $1, but the $2 is worth the same as how much the $1 was. Simple eh? This stimulation of the market forces Ampleforth to stay at roughly $1.
Another key feature of Ampleforth is the use of it within purchases. So, for example, Bitcoin is a very difficult currency because it fluctuates so much. If I were to say to you, “I’ll pay you 1 BTC for 300 hours of work”, that would be $23,000ish today. But after those 300 hours of work, it might now be worth $0.1. So now you only get 10 cents in order to work for 300 hours. Ampleforth can be used in CONTRACTS. Because it’s artificially stimulated at $1, there is no way that your contract value can be changed. In other words, back to the scenario above. I’m now going to pay you 23,000 Ampleforth after 300 hours of work. After your 300 hours of work, Ampleforth is theoretically the same price, so you still get your $23,000. Works well.
The last very interesting feature of Ampleforth is that they do not want to be a Stablecoin. A stablecoin is ALWAYS the same price, no matter what. Ampleforth doesn’t want this. Why? Well, here’s an analogy for grandma again. So stablecoins always are tied to either government or banks. But Ampleforth says that those two parties never work well, so they steer clear. This means that it’s always decentralised and no-one has any control.
Well that’s Ampleforth’s main features explained then. As a little conclusion, Ampleforth is a currency that runs on a blockchain set artificially to $1. This is so it can be used in contracts. It is not owned by anyone and it also is completely decentralised. This means that we can set up contracts without inflation or deflation taking place.
I hope you guys enjoyed this article.
I’d like to thank all parties involved in running the contest, and I’d like to wish all of my contenders good luck. Once again, thank you to Publish0x, Ampleforth and any other companies who helped run this contest.
