How to effectively raise funds and give partial ownership on blockchain

In the last few years, security tokens are getting a lot of attention to the blockchain community due to its unlimited bringing in the finance sector.

In laymen terms, security tokens are just a unit or share in a distributed fund on the decentralized network. Security token represents an automated investment contract similar to traditional financial contracts. Fundamentally security tokens are different in terms of its regulatory process.

Security tokens exist on two main pillars:

  1. Investment in a fund with expected profit return
  2. Regulated by federal law that governs security

Security tokens offer a vast array of applications if a company abides by all the regulatory requirements. In this blog, we will be discussing how we utilized security tokens for property fractional ownership application for an Australian based startup.

The scope of Project

The listed property will be divided into multiple security tokens and ownership of the property will be claimed by security tokens holders. The number of security tokens against a specific property can be defined based on different features such as the area of the property or market valuation. The owners of the property (Security Tokens Holders) can sell their share of the property through the portal.

The rest of the blog talks about a proof of concept developed by blockchain experts at JTC for fractional property ownership. We use ERC-981 interface for this application and recorded transactions on Ethereum blockchain.

Step 1: Issuing Security Tokens for Property 

It starts by representing property on blockchain platform by the property owner. Any user/owner can represent his property with property address and wallet address on the platform and issue N number of security tokens against specific property. The owner can also upload specific documents and images related to the property in the portal.

In the example below, Property owner John is issuing 1 Million Security tokens against his property addressed as “630/317 Castlereagh Street Sydney, NSW 2000“.

Screenshot 2018-12-01 at 3.15.42 PM
Image 3: Security Token Holders

 

Step 2: Selling Security Tokens 

In the next step, the primary owner can distribute fractional ownership of the property to many people through security tokens. The portal allows the owner to sell any percentage of the ownership to any verified person through security tokens.

Continuing the above example, John wants to sell 50% ownership (500K Security Tokens) of the property to Marry. Through the portal, he can easily transfer 500K security tokens to Marry’s wallet.

Now John and Marry both share the 50% ownership in the property. Further, the portal allows John and Marry to sell their percentage of ownership to multiple people through the same process.

Screenshot 2018-12-01 at 3.53.51 PM
Image 6: Updated Security Token Holders

 

Since blockchain guarantee that transactions once recorded cannot be tampered with, the software we built demonstrates how it can be used to list any property and raise funds and give partial ownership on the blockchain.

If you are interested in a demo or see how we can build similar solutions for your organization, please reach out at mohit@jalantechnologies.com.

 

ERC-981: An Advanced Interface for Fractional Ownership

Unless you have been returning to the earth from a secret NASA mission, you will have heard about Bitcoin, Ethereum. The blockchain network has been dominating the technology sector for the last few years. Entrepreneurs from all around the world are trying to utilize this technology for various use cases.

Many of you have noticed that one project is using ERC-20 and at the same time another project is using ERC-721 but Why? Why doesn’t everyone use a common ERC token?

Confused with different types of Ethereum tokens? Don’t be.

What is an Ethereum token?

Before we go in further deep, let’s be clear what tokens are in the Ethereum ecosystem. Ethereum token is a packet of information of who owns that. The Ethereum token is just an entry into a smart contract and the information of the token owner is recorded into the contract.

These tokens will never be in your wallet like bitcoin instead these tokens will work as a data entry into the smart contract database.

But when we go deep into these tokens and their classifications, sometimes we see application X is using ERC-20 or application Y is using ERC-721 or ERC-223 etc.

So then what are these different Ethereum tokens ERC-20, ERC-721, etc? 

These are interfaces or let’s say a packet of information with specific commands into the smart contract. Each token type contains a set of information which is recorded in the contract database. When someone says they have “ERC-20 token” that just means they store a specific set of information into the contract and command corresponding functions.

An ERC-20 token is an interface which commands 6 basic functions. It is the first simplest interface on Ethereum ecosystem and later became the industry standard. This interface has already been employed by various projects. In fact, all of the projects in the Top 20 Ethereum Tokens are ERC-20 tokens.

The interface of ERC-20:

pragma solidity ^0.4.18;

/**
 * @title ERC20 interface
 * @dev see https://github.com/ethereum/EIPs/issues/20
 */
contract ERC20 {
  function totalSupply() public view returns (uint256);
  
  function balanceOf(address who) public view returns (uint256);
  function transfer(address to, uint256 value) public returns (bool);
 
  function allowance(address owner, address spender) public view returns (uint256);
  function transferFrom(address from, address to, uint256 value) public returns (bool);
  function approve(address spender, uint256 value) public returns (bool);
  
  event Transfer(address indexed from, address indexed to, uint256 value);
  event Approval(address indexed owner, address indexed spender, uint256 value);
}

The ERC-20 token is a fungible token standard. Now, what is a fungible token? Basically, it means all the ERC-20 tokens are the same and can be interchangeable with another ERC-20 similar to bitcoin or fiat currency. One of the most common use cases of the ERC-20 token is Initial Coin Offering (ICO).

Later in 2017, ERC-721 became famous due to the popularity of Ethereum-based collectibles game, CryptoKitties.

Like ERC-20 this is an interface: what it can do. ERC-721 defines a set of functions that the token contract can do that involve the movement, ownership, and information about non-fungible items.

The interface of ERC-721:

pragma solidity ^0.4.18;

/**
 * @title ERC721 Non-Fungible Token Standard basic interface
 * @dev see https://github.com/ethereum/EIPs/blob/master/EIPS/eip-721.md
 */
contract ERC721Basic {
  event Transfer(address indexed _from, address indexed _to, uint256 _tokenId);
  event Approval(address indexed _owner, address indexed _approved, uint256 _tokenId);
  event ApprovalForAll(address indexed _owner, address indexed _operator, bool _approved);  

  function balanceOf(address _owner) public view returns (uint256 _balance);
  function ownerOf(uint256 _tokenId) public view returns (address _owner);
  function exists(uint256 _tokenId) public view returns (bool _exists);
  
  function approve(address _to, uint256 _tokenId) public;
  function getApproved(uint256 _tokenId) public view returns (address _operator);
  
  function setApprovalForAll(address _operator, bool _approved) public;
  function isApprovedForAll(address _owner, address _operator) public view returns (bool);

  function transferFrom(address _from, address _to, uint256 _tokenId) public;
  function safeTransferFrom(address _from, address _to, uint256 _tokenId) public;  
  function safeTransferFrom(address _from, address _to, uint256 _tokenId, bytes _data) public;
}

ERC-721 tokens are the non-fungible type tokens which mean each token is unique and non-interchangeable with another token. For example – In real estate, each property is unique and can’t be substituted with another property. We can use ERC-721 tokens to represent those properties and their owners. We have already developed a POC solution using the ERC-721 token for title registration in the real estate sector.

These current Ethereum tokens while useful leave out key aspects of information needed to enable tokenized trade of real-world assets on distributed ledger technology. For example in the case of issuing multiple tokens for a digital asset or fractional ownership of an asset can’t be represented by ERC-20 or ERC-721 interfaces due to their own limitations.

Here comes the ERC-981 interface for fractional ownership of an asset.

What is ERC-981 token? 

An ERC-981 token is also an interface like ERC-20 or ERC-721 which allows splitting ownership of any digital asset. It’s a mixture of ERC-20 and ERC-721 tokens and this interface allow the owner of a fungible ERC-20 to exchange specific units with non-fungible ERC 721 tokens as long as the seller and buyer agree on a value assignment mechanism for each asset.

For example – A football league can issue multiple tokens for each team and anyone can buy these tokens and have fractional ownership of the team. Here each team will be represented as ERC-721 non-fungible asset with multiple ERC-20 tokens.

The interface of ERC-981:

pragma solidity ^0.4.19;

contract ERC {
    // Events
    event Transfer(address indexed _from, address indexed _to, uint256 _tokenId);

    // Methods
    function divide(uint256 , address[] _owners, uint256[] amounts, string[] types, string[] metadata, bytes[] sigs) public payable;
    function merge(uint256[] _tokenIds, uint256 amount, string type, string metadata, bytes[] sigs) public payable;
    function transfer(address _to, uint256 _tokenId, bytes[] sigs) public payable;
    
    function balanceOf(address _owner) public view returns (uint256 _balance);
    function owners() public view returns (address[] _owners);
    function ownerOf(uint256 _tokenId) public view returns (address owner);
    function getToken(uint256 _tokenId) public view returns (address _owner, uint256 _amount, string _type, string _metadata);
    function totalTokens(address _owner) public view returns (uint256 _totalTokens);
    function tokenOfOwnerByIndex(address _owner, uint256 _index) public view returns (uint256 _tokenId);
    
    // identity hash
    function getIdentity(address _owner) public view returns (bytes32 _key);
    
    // OPTIONAL
    function name() public view returns (string _name);
    function symbol() public view returns (string _symbol);
    function decimals() public view returns (uint8 _decimals);
    
    function tokenMetadata(uint256 _tokenId) public view returns (string infoUrl);
}

This interface can be used in various application such as property fractional ownerships, crowdfunding or alternative option of ICO for money raising.

Based on this interface, we have developed a basic model for fundraising for real estate properties. It will enable issuers to reach more investors and reduce the cost by eliminating third-party integration. In the next blog, I will explain how we utilized ERC-981 interface as a security token.

In case you are a company looking to solve inefficiencies in your business, write to me at mohit@jalantechnologies.com to learn how we can help. Stay Tuned!

How Cryptocurrency Relates to the Real Estate Industry

Cryptocurrencies like Bitcoin, Litecoin and Ethereum have been slowly changing the face of finance for some time now. Until recently, however, those transformations had largely flown under the radar.

Until the recent explosion in the price of cryptocurrencies brought flood new investors to the marketplace, the world of Bitcoin, Litecoin and other alternative forms of payment was largely restricted to a small army of tech enthusiasts. Some of those early adopters were programmers, drawn by the potential of the blockchain. Others were attracted to the anonymity of cryptocurrency transactions, while still others found the concept behind these unique forms of payment were a good fit for their libertarian philosophies.

No matter what the attraction, those early adopters saw something many others had missed. And while the earliest cryptocurrency transactions were small – one of the earliest uses of Bitcoin was the purchase of a pizza, other, larger, purchases soon followed.

By the time the first run-up in Bitcoin prices was complete, all kinds of consumer products, from electronics to automobiles, had been made in Bitcoin, Litecoin and other virtual forms of payment. It was only a matter of time, therefore, until the first house was bought with virtual cash instead of U.S. dollars. So what is the future of cryptocurrency, and what impact will it have on the real estate industry?

What Are the Most Important Cryptocurrencies in the Modern Real Estate Market?

Already several houses, including luxury properties in the United Kingdom and a million dollar home in the United States, have been purchased using cryptocurrencies, and many more houses will follow suit. Modern sellers know that they need to keep their options open, and they understand that young buyers are increasingly looking to cryptocurrency as not only a store of value but a way to diversify their holdings into real estate.

And while many types of cryptocurrency could conceivably be used for real estate purchases, long-established entries like Bitcoin and Litecoin are almost sure to lead the way. These virtual currencies have been around much longer than their newer rivals, and they have proven themselves in all kinds of market conditions. That makes Bitcoin and Litecoin good choices for real estate investors and home buyers alike.

The Future of Cryptocurrency for Real Estate Purchases

While the future of Bitcoin and other cryptocurrencies is still being written, there is reason to believe that real estate transactions will continue to be conducted in this new form of payment. After putting off home buying for a number of years, many members of the millennial generation are now settling down, starting families and buying homes. Those young buyers are much more comfortable with cryptocurrencies than their parents, and that bodes well for the future of real estate transactions on the blockchain.

A lot will depend, of course, on the price stability of Bitcoin, Litecoin and their newer rivals. Up to now, the volatility of the cryptocurrency market has kept many investors, and many real estate buyers, on the sidelines. If some expert predictions come true and the market settles down, that could open a new wave of real estate transactions fueled by cryptocurrencies.

The growing number of so-called Bitcoin millionaires also bodes well for the future of blockchain enabled real estate purchases. Those Bitcoin profits may look great on paper, but investors are smart enough to know that keeping all their eggs in one basket is generally a bad idea.

Already many of those Bitcoin millionaires are choosing real estate as a way to diversify their holdings and reduce their future risk. Some of those early Bitcoin and Litecoin adopters are using their virtual stashes to purchase their own homes, while others are branching out into rental properties and other types of real estate investments. If their experiences prove to be positive ones, it could open the floodgates for other investors, and pave the way for a new wave of real estate speculation.

Buying a House with Cryptocurrency – Exploring the Pros and Cons

With so much interest in cryptocurrency and real estate, there are sure to be lots of people looking at buying a home this way. So what are the pros and cons of purchasing a home with cryptocurrency, and what can buyers expect when they enter this new market?

There are a number of potential advantages to buying a home with Bitcoin, Litecoin and other forms of cryptocurrency, including:

  •   The chance to diversify – Buying real estate is a great way for those with cryptocurrency profits to diversify their holdings.
  •   Locked in profits – For those who have held Bitcoin for some time, buying a house can be an excellent way to lock in profits.
  •   More negotiating power – Cash buyers always have an edge in real estate transactions, and the fact that the cash is virtual does not change that equation.

Of course there are some potential drawbacks to buying a home with cryptocurrency. Here are some of the roadblocks potential Bitcoin buyers might encounter.

  •   Limited availability – While the number of cryptocurrency real estate transactions is on the rise, the number of sellers accepting this unique form of payment is still relatively small
  •   Missing out on future appreciation – If the past is any indication, cryptocurrencies like Bitcoin and Litecoin could appreciate far faster than houses and apartment buildings. Buyers who turn their virtual coins into real estate could miss out on the future appreciation of the asset.
  •   Tax implications – The laws governing cryptocurrency and blockchain transactions are quite complicated, and real estate buyers will need to be prepared for that. Buyers should seek out a CPA or tax expert with a deep understanding of the cryptocurrency market and the tax implications.

Selling a House for Cryptocurrency – Advantages and Drawbacks

The advantages and drawbacks of selling a home for cryptocurrency are similar, but the risks are a bit different. Here are some of the potential benefits of selling real estate on the cryptocurrency market.

  •   Potential for appreciation – If you sell your home for dollars, you have a pretty good idea how much the account will be worth. With cryptocurrency, however, your account could grow much faster, giving you a big boost in the future. Ed in
  •   A wider audience – The more buyers interested in a piece of real estate, the better. Opening up the sale to cryptocurrency buyers could help your home sell faster and for more money.

There are some potential pitfalls to selling your home for virtual currency. Here are some drawbacks to consider.

  •   A complicated tax situation – the same tax complications exist on the seller side of the ledger. If you sell your real estate for cryptocurrency, you will need to deal with a complicated tax situation.
  •   Potential losses – The cryptocurrency market has been extremely volatile, and if you sell at the wrong time, you could lock in losses or limit your profit potential.
  •   The difficulties of storing your virtual cash – If you do not already have an account on one of the Bitcoin or Litecoin exchanges, you will need to create one, or make arrangements for another type of storage. This can be complicated, and if you make a mistake, you could lose access to your stash of virtual coins.

Blockchain Technology and the Future of Real Estate

Whether you buy your next home with Bitcoin or just sit on the sidelines, one thing is already quite apparent – blockchain is changing the face of the real estate market, and those changes will only accelerate in the future. The inherent security and transparency of blockchain transactions has a transformative power, one not seen since the creation of personal property.

Blockchain transactions, for instance, have the power to transform how real estate ownership is authenticated. Once completed, a blockchain transaction is there forever, and that could simplify real estate titles and make purchases more secure.

The adoption of Bitcoin, Litecoin and other cryptocurrencies by governments should speed its acceptance in real estate transactions. This transformation is already underway, and as governments get more comfortable with blockchain technology, adoption rates could rise even further.

It is also important to note that blockchain technology is here to stay, no matter what ultimately happens to Bitcoin, Litecoin and other cryptocurrencies. While blockchain technology makes cryptocurrency transactions possible, it is larger than any one virtual coin. That bodes well for the real estate market – for buyers and sellers alike.

Source: Redfin

Top 6 areas in real estate being re-imagined with smart contracts on blockchain

Real estate is the largest global asset class with a market value of around $200 Trillion. And it is very difficult for any new technology to break into, especially with all that money on the stack. But the trend is shifting and it is only a matter of time before blockchain infiltrates the real estate market. Due to the endless offering of the blockchain, it can be game changer tech in the real estate sector. A blockchain is incorruptible decentralized ledger system that records information in a chain of blocks on a distributed network. For real estate, the blockchain has the potential to stir things up and change the way we do business.

Smart Contracts: In laymen term, Smart contract can be compared with vending machine concept where we pay money and machine provide whatever we want without any human interference. Similarly, smart contracts provide a simplified automated process which helps you exchange a valuable asset in a more transparent way. Blockchain facilitates the representation of real estate asset in a digital token for any transactions.

Major Use Cases of Smart Contracts in Real Estate Sector

♦ Property Title Transfer, Search and Insurance: The current procedure for buying or selling a house is a nightmare. Imagine you want to buy a laptop from an unknown person and he says here is your laptop and give me my money. But what if he is not the owner of the laptop, maybe he stole or borrowed the laptop. Is he trustworthy? Maybe it’s best to ask a friend for reference and contact an agent to secure the deal and pays some money to him also.

The escrow period during real estate transactions involves countless middlemen- realtors, title companies, title insurance company, brokers, notary, and banks. Within this process information processing is ambiguous and secrets are kept deliberately to increase middle-man cut cost. In other hands, the insurance industry doesn’t need to exist and making more than $18 Billion a year.

Using blockchain technology, we can’t fix all the problems but it will make this process more efficient and transparent. Blockchain eliminates the involvement of middlemen and automates real estate transaction. In the same way, blockchain also records the ownership of title on the public, secure digital ledger and eliminates title claim fraud.

Some parts of the world are already exploring blockchain to digitalize property transfer. Sweden’s Lantmäteriet becomes the first government agency to conduct property sales on the blockchain. Similarly, Propy recorded the 1st real estate deal on Blockchain and velox.RE successfully completed first permission less real estate property transaction on bitcoin blockchain with Cook County. Ubitquity is also using blockchain technology for the storage and search of titles.

♦ Rental Services: One of the major industry rental markets still cries for a transparent transaction, safety, and security. Due to unpredictability and less transparency in rental agreements, renting experience became painful. According to one of the surveys among tenants, more than 55% of renters are confused about their rental agreement. However, blockchain technology makes it possible for everyone to create a smart contract, e-sign the agreements that obligate both sides to follow the terms set in the smart contract.

In fact, a company called Rentberry is already using a decentralized platform to create smart contracts and make it impossible for fraud to undermine the rental procedure.

♦ Real Estate Investing: Typically, the investment process in real estate move around S&P which causes funds to reach liquidity for a given time period. Smart contracts would not only automate the process but also bring more efficient management process. Representation of real estate asset as token followed by the creation of trade market these tokens can increase the liquidity of these assets by minimizing frictions in trade. Blockchain will facilitate an easy exchange of shares between investors. It would give more opportunities for existing investors to get out if and when they want to and new investors to get in.

Atlant and Brickblock have launched their decentralized platform for trading in real estate assets using proprietary tokens.

♦ Fractional Ownership: Fractional ownership takes the logic of tokenization of asset to a step further. In most blockchain network, tokens are divisible. Therefore, even if a token is the digital representation of an indivisible physical asset, the digital representation of ownership can be divided into multiple parts and sold to different owners.

In fact, a few companies called PropertyShare and SmartRE is allowing investors to buy fractions of residential or commercial properties. Similarly, Meridio is also planning to launch a similar kind of service on the Ethereum network in the USA.

♦ Global Real Estate Marketplace: In the US almost every individual uses multiple listing services (MLS) to buy property. The MLS originated in the late 1800s when real estate agents would congregate to exchange information about the properties they were trying to sell. Current MLS networks include more than 800 local databases. These databases are accessible to licensed agents or realtors in exchange of fees. Each region has their own database and agents have to pay fees for the individual database they want to access.

Blockchain network provides benefits to create open communication channels between the real estate networks in a more secure environment that is entirely owned and controlled by its valued participants. It will eliminate existant of different regional databases and will be more cost-effective for agents to retrieve information. Imbrex and Rex have developed a blockchain based listing platform and already listed more than 3000 properties on the blockchain.

♦ Mortgage Crowdfunding: Mortgage industry system hasn’t changed much from the procedures used by Ancient Egyptian. It still follows the paper-based recording of transactions and a lengthy and tedious process for application approval.

A decentralized and distributed ledger system, the blockchain provide a platform to simply and automated the transfer of and access to information between different channels. Blockchain startup like Homeland takes a more global approach to help their users to crowdfund their mortgage loans without relying on banks.

Conclusive Thoughts:

The use cases that I’ve presented are few proposals that smart contracts can offer. But before that, a lot of pieces will need to fall into place for successful implementation of the blockchain. Anyway, due to the limitless offering, real estate professionals will continue to thrive in the era of the blockchain.

In case you are working in this industry and we missed to add your reference, please drop in a comment. In case you are a company in real estate looking to solve inefficiencies in your business, write to me at mohit@jalantechnologies.com to learn how we can help.

Blockchain Basics

Blockchain and Bitcoin are 2 different things:

Bitcoin is first decentralized digital currency, proposed by ‘Satoshi Nakamoto’ in year 2009. Bitcoin uses peer-to-peer technology to operate with no central authority or banks. Managing transactions and issuing of bitcoins is carried out collectively by the network, where as
Blockchain is the technology that enables moving digital coins or assets from one individual to another individual.

What is Blockchain?

A Blockchain is a decentralized, distributed and public digital ledger used to record transactions across many computers so that the record cannot be altered. A blockchain database is managed using peer-to-peer network and distributed time stamping server.

blockchain

blockchain_working

Block: Block holds the transaction data. Each block contains hash of previous block. This has the effect of creating a chain of blocks from first to current block.
block

Each network has its own defined block time, for ex in Bitcoin network time needed to generate and add a new block to chain is 10 minutes.

If anyone tries to tamper any block then it will change it’s hash value, and all the blocks following it are not valid.

Hash is also not enough because after tampering if all the blocks (blocks following the tamper block) are re-processed then chain will be valid again. So to stop this blockchain has concept of Proof Of Work.

Features of Blockchain:

  1. Distributed Ledger: Distributed ledger technology is a digital system in which transaction and their details are recorded in multiple places at the same time.
    Unlike traditional databases, distributed ledgers have no central data store or administration functionality.
    distributed_ledger
  2. Peer-to-Peer network:  Peer to peer network is one in which two or more PCs shares files and access to devices. It maintain consistency of distributed ledger. There is no centralized database copy.
    p2p_network
  3. Proof of Work(PoW): This is the most popular algorithm being used by currencies such as Bitcoin and Ethereum.In Proof of Work, in order for an actor to be elected as a leader and choose next block to be added to blockchain they have to find a solution to a particular mathematical problem.These actors are also known as miners. It is very hard to find a solution for given problem. Whenever a new block is mined, that miner gets rewarded with some currencies. Other nodes verify the validity of block by checking that hash of the block is less than a preset number (Every network has a global block difficulty, every block must have hash below this target).
    proof-of-work


Miners: Blockchain data is maintained at various nodes known as miners. Miners work is to use his resources to validate the block containing transactions and add it to chain.

Type of Blockchain:

  1. Public Blockchain: Public blockchain has no access restrictions. Ledgers are visible to everyone and anyone can verify and add a block of transactions to blockchain. For eg: Go Ethereum and bitcoin blockchain.
  2. Private Blockchain: Private blockchain is permissioned. One cannot join it unless invited by the network administrators. Only the invited people are allowed to verify and add blocks to chain, but everyone is allowed to view the ledger records.
  3. Consortium Blockchain: It is said to be semi-decentralized. Only group of organizations are allowed to verify and add blocks to chain, ledger can be open or restricted to group of peoples.
    blockchain_types

Blockchain use cases:

  1. Banking:
    Issues with current banking system:
    -> High transaction fees
    -> Double spending
    -> Frauds and account hacking
    -> Financial crisis and crashes How blockchain solve these issues:
    -> Decentralized System
    -> Public Ledgers
    -> Verification of every individual transaction
    -> Low or no transaction fees
  1. Payment & Transfers:
    -> Secure
    -> No transaction fees
    -> No bank account needed
    -> Anonymity is maintained
  2. Healthcare: Use to store details of patients, this ensures that anyone who have access to blockchain can access the details of patients. This is highly secure, no one can access the details without knowing the persons public key and cannot make any changes.
  3. Law enforcement: Blockchain is highly secure way to maintain the details of crimes and criminals.
  4. Voting: Election requires authentication of voters identity, secure record keeping, tracking & counting votes without voter fraud, voters can vote from any place which will increase voter turnout.
  5. Real Estateblockchain_usecases

 

What is Genesis Block?

The Genesis block is the first block in the chain, the Genesis file is a JSON file that defines the characteristics of that initial block and subsequently the rest of the blockchain.

Configuration:

{
“nonce”: “0x3”,
“timestamp”: “0x0”,
“parentHash”: “0x00000000000000000000000000000000000000000000000000000”,
“extraData”: “0x0”,
“gasLimit”: “0x4c4b40”,
“difficulty”: “0x400”,
“mixHash”: “0x00000000000000000000000000000000000000000000000000000”,
“coinbase”: “0x000000000000000000000000000000000”,
“alloc”: {
}
}

-> extraData: Extra 32 bit memory that you can use to pass any message.
-> difficulty: how difficult it would be to mine a specific block as part of that blockchain.
-> coinbase: coinbase is a address to which coins have to be send after the block has successfully been mined.
-> parentHash: Hash code of a parent block. As genesis block is the first block of the chain so it will be set to 0.
-> mixHash: It is a key value which will be kept same for your blockchain.
-> nonce: nonce is a key value that is computed by all miners
-> gasLimit: Limit of resource that one can spend to mining a block
-> alloc: Alloc defines the list of pre filled wallets

Combination of nonce and mixHash is known as Proof-of-work.

You need to get a specific hash value with a combination of nonce and mixHash which is less than the set value for a block, how this value is defined has a certain mathematical logic associated with that.

Basically we need to identify the value of nonce, once you add it to mixHash the value should be equivalent or lesser than the mathematical value set for that block. This is where resource gets invested, the value of nonce is something which you get by trial and error method.