Snapshot

In the realm of cryptocurrency, a Snapshot is a term that is used to refer to a point in time where a recording is made of all existing balances of a certain cryptocurrency. The purpose of Snapshot is to determine which addresses have how much cryptocurrency at that set period of time. This article will break down what Snapshot is, the reasons behind it, and examples of it in real-world context.

Understanding the Concept of Snapshot

At its core, a Snapshot is essentially a data recording mechanism. It records all parts of a blockchain at a specific point in time, which is like a photograph of the whole network. It provides an exact state of all addresses, their balances, and transactions that have occurred up till that point. This recording includes where every piece of the cryptocurrency resides, down to fractions of the cryptocurrency. Here are the basic points to remember from this section:

• A Snapshot is like a photo of the whole crypto network at one point in time.
• It records the exact state of all addresses, their balances and transactions.

Why are Snapshots Important?

Snapshots serve multiple purposes in the world of cryptocurrency. Some of the reasons include:

• Hard Forks: Snapshots are often used when a hard fork is happening. A hard fork is a split in the blockchain where the existing blockchain diverges into two paths. The Snapshot is used to decide who gets what in the new chain based on their holdings in the original chain at the time of the Snapshot.
• Airdrops: This is another common use of Snapshots. Cryptocurrency projects often give free tokens to holders of a particular coin or token. A Snapshot will decide who gets these free tokens.
• Speeding Up Transactions: Blockchains can get really big, and processing transactions can take a long time. Snapshots can help here by providing a point to roll back to quickly, which can make transactions faster.

Examples of Snapshots in the Real World

To better understand the practical application of Snapshots, let's take a look at a few examples:

• The first notable instance was when the cryptocurrency Bitcoin Cash (BCH) hard-forked from Bitcoin. A Snapshot of the Bitcoin blockchain was taken, and those who held Bitcoin at the time of the Snapshot received an equivalent amount of Bitcoin Cash.
• Another was when Stellar Lumens (XLM) performed an airdrop of 2 Billion XLM to the holders of Bitcoin. A Snapshot of all the Bitcoin addresses was recorded to determine who would get the free XLM.

In conclusion, the term Snapshot in the world of Cryptocurrency refers to a recording of the state of a blockchain at a specified period in time. It is an essential component to ensure fairness and transparency in various scenarios such as hard forks and airdrops.