ethereum blockchain

Mastering Blockchain: Unlocking the Power of Cryptocurrencies and Smart Contracts

by Lorne Lantz and Daniel Cawrey  · 8 Dec 2020  · 434pp  · 77,974 words

make Bitcoin a fully decentralized entity. This is because the creator is no longer a part of the system, unlike in the case of Ethereum and other blockchains, which tend to follow the direction of their creators and effective leaders. It is perhaps no coincidence that around the time of the

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but can be expensive. For the budget-conscious, Meetup.com is a great source to find local cryptocurrency events. Using the search terms bitcoin, ethereum, or blockchain will usually turn up some local meetups, most of them featuring speakers talking about current events, best practices, or interesting technical topics. Summary The basics

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to send the funds on each blockchain to different addresses that they controlled. As seen in Figure 3-8, if a user has 10 ETH in Address A, they will generate Address B on the new Ethereum blockchain, and generate Address C on the Ethereum Classic blockchain. On the Ethereum blockchain they will then move 10 ETH

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to Address B, and on the Ethereum Classic blockchain they’ll move the 10 ETH to Address C. After the funds are distributed

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balance of funds on each blockchain will be different. Figure 3-8. Protecting against replay attacks on Ethereum (ETH) and Ethereum Classic (ETC) Exchanges that had the resources and expertise to protect against replay attacks were not affected. However, some individuals did lose funds due to the vulnerability. The Ethereum blockchain implemented replay protection in

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November 2016 through Ethereum Improvement Proposal 155 (EIP155), which was included in something called the Spurious Dragon hard fork. Summary Altcoins and altchains are fascinating

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such as this highlighted the need for a more reliable platform for crypto fundraising. Over time, as Ethereum matured, its smart contract platform coupled with the ability to create tokens on top of the Ethereum blockchain made it an ideal automated fundraising apparatus for jump-starting various cryptocurrency projects. Decentralized Autonomous Organizations In

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an effort to further the ethos of decentralization in the Ethereum ecosystem, the concept of a decentralized autonomous organization (DAO) was proposed

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code itself, because it was stored immutably on the blockchain. The only way to rectify the situation was to deploy a new contract and move the remaining funds over—a cumbersome and painful process. This event led to the Ethereum Foundation forking the Ethereum blockchain, in order to undo the damage. It created two

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distinct versions of Ethereum: the original blockchain with the stolen funds still credited to the attacker, known as Ethereum Classic, and a forked version that retracted said funds, which continued

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to be known as Ethereum. This hard fork moved the stolen funds

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to a recovery address so their rightful owners could reclaim them. The fork meant changing the Ethereum blockchain so that The DAO hack had effectively never happened, violating the principle of immutability. This was a controversial decision that was resisted by some members

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still exists today, but its developer community is small and not as robust as Ethereum’s. Other Ethereum forks The DAO hack warmed up the cryptocurrency community to the idea of forks. In addition to creating Ethereum Classic, the Ethereum blockchain has been forked several other times to compensate for vulnerabilities and other changes in

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code. The Ethereum project understands the need to experiment, and when upgrades that are deemed important for the entire

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the Swiss entity transferred those funds to the Ethereum Foundation, which has been the key provider of funding for the aforementioned development efforts. The Enterprise Ethereum Alliance Announced in early 2017, the Enterprise Ethereum Alliance (EEA) aims to band together corporate entities interested in deployment of Ethereum blockchain solutions. Members of the EEA include IBM

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and Microsoft, which supports running Ethereum blockchain services on top of Azure. One of the main

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goals of the EEA is finding blockchain-specific use cases in corporate business environments. Many large organizations are wary

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of the cryptocurrency aspect of blockchains because of compliance and other regulatory concerns. A good

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invests in startups, builds developer tools, and offers blockchain education for the Ethereum network. The organization focuses on the development of dapps. Its offerings include the Truffle Suite, a framework that makes Ethereum development easier, and Gitcoin, a GitHub-inspired bug bounty tool for the Ethereum blockchain. ConsenSys also has a mission to create consumer

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-friendly tools within the Ethereum ecosystem. One of the most well-known of these is MetaMask, a browser

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-based Ethereum wallet that makes using decentralized applications easier. ConsenSys also funds projects that

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721, ERC-223, ERC-777, and ERC-1400. The variety enables developers to create different types of functional cryptocurrencies on top of the Ethereum blockchain. Note An exhaustive list of Ethereum token standards is available on GitHub. Some of the tokens listed are currently functional, whereas others are merely proposed ideas. Thanks to

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Ethereum’s nature, new types of cryptocurrencies on the Ethereum blockchain may provide real-world benefits. ERC-846, which provides for shared ownership of a token, is a good example of a

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real-world use case. Is a Token Necessary? One existential question developers should ask when developing blockchain-based solutions is: Is a token

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digitally scarce item that cannot be copied or tampered with. The most famous example of this in the blockchain world is CryptoKitties, virtual cats that are connected to ERC-721 tokens on the Ethereum blockchain. Figure 5-1 shows CryptoKitty #1270015. Figure 5-1. The unique attributes of the CryptoKitty with the

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#32 and enter the CryptoKitty ID, which is 1270015. From there it is possible to see the unique attributes for this CryptoKitty stored on the Ethereum blockchain, as shown in Figure 5-2. Figure 5-2. Calling the read function getKitty from the main CryptoKitties smart contract responds with data stored in

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Uniswap smart contracts can be viewed publicly, so potential users can audit the code before using the DEX. All Uniswap transactions are recorded on the Ethereum blockchain, which is also publicly viewable. Control The backend runs on infrastructure the exchange and its hosting provider control. The exchange can make changes to the

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the chain. Figure 7-7 shows part of the Uniswap V1 Exchange Template smart contract, viewable on the blockchain. Figure 7-7. One of Uniswap’s smart contracts, publicly viewable on the Ethereum blockchain Token listing When the makers of a token want a centralized exchange to list their token, there is often

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Same as previous. a Wei is the smallest denomination of ether. 1 ether = 1,000,000,000,000,000,000 wei. When interacting with the Ethereum blockchain, numbers are in terms of wei. Exchange rate On a centralized exchange, the exchange rate in a market trade is set to a price that

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shift in how financial services are provided, and this fluid situation leads to attackers constantly searching for exploits to profit from. Privacy Public blockchains like Bitcoin and Ethereum are not great when it comes to privacy. When thinking about decentralizing finance and the web, information security must be carefully considered. To

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example of this. Tether Originally launched on the Omni protocol built on top of Bitcoin, discussed in Chapter 3, Tether (USDT) now reaches across several blockchains, including Ethereum, TRON, EOS, Liquid, and Algorand. Tether is nominally pegged to the US dollar and is by far the largest stablecoin in the cryptocurrency ecosystem

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July 25, 2017, the SEC released a report on the findings of its investigation into the ICO of The DAO, a project running on the Ethereum blockchain. As detailed in Chapter 4, The DAO was a smart contract–based decentralized autonomous organization created to raise money from cryptocurrency investors. A voting mechanism

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everyone on the network agrees were on the longest chain. At each fork, the new “longest chain” must contain all these checkpoints. Ethereum-Based Privacy Implementations Public blockchains and cryptocurrency networks don’t make good implementations for businesses. This is because many organizations need to keep control of their information for

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competitive reasons, compliance, or other factors. However, blockchain technology potentially has many uses if the privacy concerns can be worked out. One option some enterprises have pursued is to fork the Ethereum blockchain and create a custom implementation including the privacy features they require. Nightfall Nightfall is

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an implementation of Ethereum by the accounting firm EY. It adds privacy features to the network’s smart contract technology

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implementations, including a C++ implementation called Iroha and Sawtooth, which is multilanguage. Hyperledger Fabric offers support for smart contracts, transactions, and consensus, similar to Ethereum. Many enterprise blockchain projects, including those by IBM and Oracle, are based on this framework. Corda Developed by the consortium R3, Corda focuses on institutions seeking privacy

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4. Design for the Boston Fed test—in Hyperledger, “chaincode” is a smart contract JPMorgan Investment bank JPMorgan has developed Quorum as its own blockchain based on Ethereum. It has also created its own stablecoin, JPC Coin. The cryptocurrency will be used as a method of making cross-border payments, which can

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particular game or ecosystem. The concept of items connected to a digital asset to signify uniqueness is gaining popularity, thanks in part to the Ethereum-based CryptoKitties. Blockchain technology can also be used to combat cheating. On-chain chess, illustrated in Figure 9-6, is a project conducted by the Technical University

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programmable resources.” With vetted validators and specific resource types, Libra’s smart contracts will likely be more limited in scope than those of open blockchains such as Ethereum. Novi Facebook itself will develop its own wallet, known as Novi, to facilitate transactions. The impact of the Novi wallet could be large

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authentic O’Reilly book—but we realized that storing the serial number of each copy of Mastering Blockchain on the Ethereum blockchain would be extremely expensive. (The cost of storing data on Ethereum is high due to the blockchain’s scaling bottleneck, which this chapter already covered.) So instead, we decided to tokenize 50 limited

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edition copies. The only way someone can own one of these tokenized copies is by signing an Ethereum transaction

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of Crypto Laundering identification services, Private Keys IDEX decentralized exchange, Decentralized Exchange Contracts illiquidity, signs of, Counterparty Risk infinite recursion, Forking Ethereum and the creation of Ethereum Classic information on blockchain industry, Information Infura, Interacting with Code initial coin offerings (ICOs), Mastercoin and Smart Contracts, Tokenize Everything, Initial Coin Offerings-Whitepaperas example

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of Bitcoin proof-of-history, Alternative methods proof-of-stake, Proof-of-Stake-Proof-of-StakeByzantine fault-tolerant algorithm, HotStuff, Borrowing from Existing Blockchains Casper algorithm in Ethereum 2.0, Ethereum Scaling proof-of-stake velocity, More Altcoin Experiments proof-of-storage, Alternative methods proof-of-work, Block Generation, Proof-of-Work-Confirmationsbit

The Infinite Machine: How an Army of Crypto-Hackers Is Building the Next Internet With Ethereum

by Camila Russo  · 13 Jul 2020  · 349pp  · 102,827 words

to put data and money back under users’ control, instead of in the coffers and computer servers of centralized entities. For them, blockchain technology (and Bitcoin and Ethereum) would wrest power from the big corporations that control tech and finance and put it into the hands of the people. Of course

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Bitcoin, “Bitcoin” is the name of both the blockchain and of the cryptocurrency itself (uppercase “B” is used for the network, lowercase “b” is used for the cryptocurrency), while ether is the coin that runs on the Ethereum blockchain. There will be some blockchains that don’t even have their own corresponding cryptocurrency

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, and there is no one, single blockchain. Each chain will have its own unique characteristics, which is why the term “on the

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met with skepticism and criticized by the Bitcoin community. He decided Primecoin would be a good fit for his project. It was a smaller blockchain, with fewer political conflicts, where Ethereum could be a larger part of the community. For about two weeks in late November he only worked on the

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who were excited about the project and wanted to work with him. By early December it became clear there was enough interest to make Ethereum its own separate blockchain, instead of an overlay of Primecoin. Vitalik’s vision was much too big to be constrained by another chain. He was thinking

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set in a computer program and executed with as little human involvement as possible. Because the organization would be built on top of a public blockchain like Ethereum, decision making and flow of funds would be fully transparent, uncensorable, and immutable. Bitcoin, Stan argued, “can be viewed as an unmanned company,”

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use the internet as an analogy, email was to the internet what Bitcoin, the cryptocurrency, was to blockchain technology. He finally got that Bitcoin was both the cryptocurrency and the underlying blockchain and that Ethereum wasn’t like email. It wasn’t an application. Instead, it was intended to be a base

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in pricing of IPO securities?” Ken’s email to the bank read. Confidentially, there is a very interesting deal (called Ethereum.org) that I am looking at in the Bitcoin, cryptocurrency and blockchain world. I think the founders would benefit from understanding how public securities are priced. . . . Their investment model is

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couple dozen people who got together in bars or coworking spaces to talk about what they would be able to build in this new blockchain platform and to listen to Ethereum team members, who traveled all around the world to explain the project to the new fans. The crowdsale was the

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would create ether according to the amount raised in the sale when the first block in the Ethereum blockchain was mined. There was a second pool of ether that would be issued for the cofounders and other early team members, which would be 9

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piles of electricity are somehow the only ones who should be allowed to gain from crypto seignorage revenue.” The sale documents said that once the Ethereum blockchain launched and the premined ether was issued, miners would generate new ether initially at an annual rate of 26 percent of the amount of ether

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been thinking the same thing as they sent their bitcoin into what seemed like the dark void of the Ethereum sale. It’s hard to say exactly how many, but the blockchain shows more than 6,600 transactions going into EthSuisse’s Bitcoin address. The total number of people who participated

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machine. Want to get a few ready for when they finally launch.” “Why? What do they do?” “Remember when I told you the Ethereum blockchain, same as Bitcoin, relies on computers to confirm transactions? Well, this would be one of the computers helping in that process. It will receive ether

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company list and contacted their CTO or engineers. The goal was to get a call or meeting where the ConsenSys team could explain what blockchain technology and Ethereum are. Hopefully, there would be a second meeting and they could take it forward from there. Whenever they had downtime, conversations generally gravitated

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a while longer. He went to sleep that night feeling giddy and opened his laptop as soon as he woke up the next day. The Ethereum blockchain was still going. Ken Seiff hadn’t been keeping up with the project’s development. He wasn’t in any of the different group chats

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to keep providing the foundation’s explanations to regulators on how this “genesis” ether was created, how they would use it, and even how the Ethereum blockchain works and what the difference between premined and mined ether is, until regulators were satisfied. The day she received the letter resulting in the EF

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for it together and called their project Augur. It would be one of the first decentralized applications built on Ethereum. These so-called dapps, which would later proliferate, are programs that use blockchain technology to reduce the inefficiencies of centralization and/or to avoid third-party censorship. But they started out

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worth 1 US dollar. The difference with BitShares was that rather than having a single asset as collateral it would use multiple cryptocurrencies on the Ethereum blockchain to be more decentralized and stable. The system would be managed by a Decentralized Autonomous Organization, or DAO, called Maker. As mentioned earlier, Dan

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Bitcoin’s about 6,000, and was processing about 25,000 transactions a day, or about 10 percent of transactions in the Bitcoin blockchain. The growing activity on Ethereum and the recovering broader cryptocurrency market pushed the price of ether higher. It got back to more than $1 in January 2016,

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get matched up and pay, the whole process would be done through a lock placed on each item. The lock would be connected to the Ethereum blockchain and all transactions would be automated with smart contracts. This was at a time when not even digital wallets, the most basic interface for

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lock on the bike and set a safety deposit amount and a rental price. Her neighbor would pay that deposit through a transaction to the Ethereum blockchain (without having to pay Slock.it) using his smartphone, and the payment would open the lock. The deposit would be locked in the network

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until the user returned the bike. He would then send another transaction to the Ethereum blockchain and get the deposit back minus the price for the rental, while the money for the rental would be sent to the bike owner. In

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, and formalizing and automating governance rules.2 The DAO code is written in the Solidity programming language and is meant to be deployed on the Ethereum blockchain. After the code is launched, ether is sent to the DAO’s smart contract address; the code creates tokens in proportion to the ether

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my internet is offline! Can someone take over?” “Let me try!” Griff said. While Alex frantically called his internet service provider, Griff connected to the Ethereum blockchain, but he had to wait until he was in sync with the latest block. “I see we have an internet issue in your neighborhood!” a

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for block number 1,920,000 to hit. That’s when the hard fork would be implemented, unless most miners opted out. The blockchain monitor showed the Ethereum chain chugging along, with a new block added every few seconds. It looked like a long and narrow Lego tower was being built

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few months. The Maker team supported the hard fork when there weren’t other better options left, and continued to build its project on the Ethereum blockchain, but Rune was conflicted. He was attracted to cryptocurrencies because of his deeply rooted libertarian beliefs. He loved the lack of centralized control that

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to code, and the use cases weren’t so obvious anymore. Suddenly, after the reality check of the hard fork, Ethereum didn’t feel like a magical, happy revolution. More and more, blockchain technology just seemed like some boring tool for businesses. “Like, fuck, where does this thing actually work? Like,

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people who wrote them—and those who tried to break them for nefarious or hubristic reasons. But Ethereum had repelled those attacks, which led many to conclude that it had become stronger than ever. The Ethereum blockchain had been tested repeatedly. Developers behind it were up for the challenge and came out victorious

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. Not only that, but people were actually building on top of the platform. By the end of 2016, Ethereum dapps had more than doubled from the previous

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entrepreneur and Shark Tank star in South Africa. He was planning to raise as much as $33 million in an ICO for a blockchain-powered identity system. The Enterprise Ethereum Alliance said it was almost tripling in size to eighty-six members, just one month after launching with thirty. Samsung, Merck, and

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they should create a specific token with that purpose. They decided to create a platform-specific token called BNT so that, over time, many blockchains, not just Ethereum, could use the Bancor network. Whether it was ether or BNT, they needed a lot of it, and they didn’t have it.

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also focused on research to reduce what he saw as another kind of waste: the amount of energy spent in keeping proof-of-work blockchains like Bitcoin and Ethereum secure. There have been different estimates to quantify exactly how much energy the Bitcoin network consumes, but one often-cited report, a

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underground developers and central bankers for a better financial system. In 2014 he grew more interested in the promise of a general-purpose smart contract blockchain with Ethereum. He met Vitalik at a hackathon in Toronto, and by April Charles Hoskinson had offered him a contract job with the foundation. As

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, and state channels are so far the best-known ones. Of those, sharding is the only one that’s meant to be built into the Ethereum blockchain itself, or what’s known as a “Layer 1 solution,” while the others are “Layer 2 solutions,” which are built on top of the

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to understate the complexity of this upgrade. This proof-of-stake chain with greater capacity to scale was planned to be an entirely new blockchain, known as Ethereum 2.0, separate from the old proof-of-work chain. There would be multiple steps involved for ether and dapps in the old

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computer. It couldn’t even handle ICOs. “Isn’t it a huge issue that recent ICOs are basically a DDoS on the entire Ethereum network?” Ladislav Stejskal, who was building a blockchain company, wrote in a June 17 post on Reddit. Basically, the recent Bancor and BAT ICOs made the entire

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they’d make collectible cats. They would call them CryptoKitties, and the first version would be built at the Ethereum hackathon in Waterloo. Behind what seemed like a frivolous game was serious blockchain innovation. Rather than just link an image to a regular ERC20 token, the same standard that was used

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better serve the project, Ming had to be out. Once more Vitalik had shown that his loyalty lay with Ethereum. It had arguably been the best year yet for the second-biggest blockchain. It had become the dominant platform for startups to fundraise through crypto, disrupting the traditional venture capital model

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are finally going from experiments and tests to real, live applications.” Vitalik posted news on Ethereum’s scaling efforts on the same day. “With the Ethereum blockchain reaching 1 million transactions per day, and both Ethereum and other blockchain projects frequently reaching their full transaction capacity, the need for scaling progress is becoming more and

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app for Apple devices and started seeing some traction. Then, inevitably, they learned about ICOs. They decided Munchee should be “on the blockchain” and have an Ethereum-based digital token to use within an ecosystem of diners and restaurants. In early October 2017 they announced a plan to raise $15 million

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settle one employee suit, according to a Reuters article, while the other cases were dropped.7 EOS was far from the only new blockchain wanting to be the “Ethereum killer.” Many smart contract platforms were popping up, claiming to have more advanced technology that allowed for hundreds and sometimes even thousands

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is the case as Polkadot isn’t a smart contract platform, but a protocol to connect all the different blockchains and make them interoperable. Still, as Vitalik gets all the credit for Ethereum even though Gavin feels he was the technical mind behind its initial implementation, it probably wouldn’t be

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are “centralized piles of trash.” Responding to a tweet by Tron founder Justin Sun, where he listed the reasons why his blockchain was better than Ethereum, Vitalik joked that Sun had copied Ethereum’s white paper. [Reason number] 8. Better white paper writing capability (Ctrl+C + Ctrl+V much higher efficiency than

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transactions taking a cut. Instead, all the services traditionally offered by banks and brokers, from lending to trading and betting, are being built on the Ethereum blockchain. While there are varying degrees of centralization, these platforms tend to be peer-to-peer apps that increase users’ control of their funds and their

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50 percent of miners colluding or spamming the network, third parties can’t censor or stop transactions, either. Because these apps run on the public Ethereum blockchain, it means the flow of funds is transparent and anyone can take the open source code and inspect it. They can even fork a project

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-create the more complex aspects of finance, like loans and derivatives, in a decentralized way. The “Web 3” vision, where Ethereum would be the world computer running a new blockchain-based version of the internet, was far from realized, but the largest smart contracts platform was making strides in the important

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Jamie Dimon labeled Bitcoin a “fraud,” the US bank launched its own cryptocurrency created on Quorum, an enterprise-focused version of Ethereum. Microsoft and Amazon use Ethereum for their blockchain-as-a-service platforms, which aims to help users implement distributed ledger technology. Accounting firm EY built tools to allow companies to

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privately create, trade, and destroy tokens on top of Ethereum, in a project called Nightfall. By the time New York blockchain week came around in mid-2019, there were no Lambos or Aston Martins, no parties at strip clubs making headlines

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Unlikely Evangelist: Fidelity CEO Abigail Johnson,” Wall Street Journal, May 23, 2017, https://www.wsj.com/articles/fidelity-ceo-bringing-blockchain-to-the-masses-harder-than-it-seemed-1495548000. 6. tokens on Ethereum: “Blockchain Venture Capital,” CoinDesk, May 16, 2014, updated November 14, 2018, https://www.coindesk.com/bitcoin-venture-capital. 25: The

Mastering Blockchain, Second Edition

by Imran Bashir  · 28 Mar 2018

Ricardian contracts Smart contract templates Oracles Smart Oracles Deploying smart contracts on a blockchain The DAO Summary Ethereum 101 Introduction The yellow paper Useful mathematical symbols Ethereum blockchain Ethereum – bird's eye view The Ethereum network Mainnet Testnet Private net Components of the Ethereum ecosystem Keys and addresses Accounts Types of accounts Transactions and messages Contract

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contracts, Oracles, and the theoretical aspects of smart contracts are presented in this chapter. Chapter 10, Ethereum 101, introduces the design and architecture of the Ethereum blockchain in detail. It covers various technical concepts related to the Ethereum blockchain that explains the underlying principles, features, and components of this platform in depth. Chapter 11, Further

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. This category is also referred to as the fully decentralized or permissionless type of consensus mechanism. This type is well used in the Bitcoin and Ethereum blockchain in the form of a PoW mechanism. BFT-based is a more traditional approach based on rounds of votes. This class of consensus is also

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benefits of performing such an attack on the network. This idea was first introduced by Peercoin, and it is going to be used in the Ethereum blockchain version called Serenity. Another important concept in PoS is coin age, which is a criterion derived from the amount of time and number of coins

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as discussed earlier. It can be full disintermediation or partial disintermediation. The third question asks developers to determine which blockchain is suitable for a particular application. It can be Bitcoin blockchain, Ethereum blockchain, or any other blockchain that is deemed fit for the specific application. Finally, a fundamental question that needs to be addressed is

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fully automated and contain artificially-intelligent logic. DOs, on the other hand, lack this feature and rely on human input to execute business logic. The Ethereum blockchain led the way with the initial introduction of DAOs. In a DAO, the code is considered the governing entity rather than people or paper contracts

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in Ether currency (ETH) was siphoned out of the project and into a child DAO created by hackers. A hard fork was required on the Ethereum blockchain to reverse the impact of the hack and initiate the recovery of the funds. This incident opened up the debate on the security, quality, and

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ride sharing and users to be incentivized by proof of movement, and they can earn Zooz coins. Many other DApps have been built on the Ethereum blockchain and are showcased at http://dapps.ethercasts.com/. Platforms for decentralization Today, there are many platforms available for decentralization. In fact, the fundamental feature of

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few weeks' time. Another example is Filecoin which raised more than 250 million USD. The process of creating a new token has been standardized on Ethereum blockchain thus making it relatively easy to launch an ICO and issue new tokens in exchange of Ether, Bitcoin or some other cryptocurrency. This standard is

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against this hard fork and some miners who decided to keep mining on the original chain resulted in the creation of Ethereum Classic. This chain is the original, non-forked Ethereum blockchain where the code is still the law. This attack highlights the dangers of not formally and thoroughly testing smart contracts.

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cases of if, otherwise Now in the next and upcoming sections, we will introduce Ethereum blockchain and its core elements. Ethereum blockchain Ethereum, just like any other blockchain, can be visualized as a transaction-based state machine. This definition is mentioned in the Ethereum yellow paper written by Dr. Gavin Wood. The core idea is that in

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transaction hash: 0xc63dce6747e1640abd63ee63027c3352aed8cdb92b6a02ae25225666e171009e Details regarding this transaction can be visualized from the block explorer at https://etherscan.io/, as shown in the following screenshot: Etherscan Ethereum blockchain block explorer Note the transaction hash (TxHash) at the top, later in the next chapter, and we will use this hash to see that how

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blocks and other relevant metrics is available at https://etherscan.io. This can be used to explore the Ethereum blockchain. Testnet Testnet is also called Ropsten and is the widely used test network for the Ethereum blockchain. This test blockchain is used to test smart contracts and DApps before being deployed to the production live

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to set up private nets will be discussed in Chapter 12, Ethereum Development Environment. Components of the Ethereum ecosystem The Ethereum blockchain stack consists of various components. At the core, there is the Ethereum blockchain running on the peer-to-peer Ethereum network. Secondly, there's an Ethereum client (usually Geth) that runs on the nodes and connects

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. We will also discuss relevant technical concepts related to a high-level element within that section. Keys and addresses Keys and addresses are used in Ethereum blockchain mainly to represent ownership and transfer of Ether. Keys are used in pairs of private and public type. The private key is generated randomly and

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shown here: Private key: b51928c22782e97cca95c490eb958b06fab7a70b9512c38c36974f47b954ffc4 Public key: 3aa5b8eefd12bdc2d26f1ae348e5f383480877bda6f9e1a47f6a4afb35cf998ab847f1e3948b1173622dafc6b4ac198c97b18fe1d79f90c9093ab2ff9ad99260 Address: 0x77b4b5699827c5c49f73bd16fd5ce3d828c36f32 Accounts Accounts are one of the main building blocks of the Ethereum blockchain. Ethereum, being a transaction driven state machine, the state is created or updated as a result of the interaction between accounts and transaction execution. Operations performed

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DAO hack (described later in this chapter), a hard fork was proposed in order to mitigate the issue; therefore, there are now two Ethereum blockchains: one is called Ethereum Classic, and its currency is represented by ETC, whereas the hard-forked version is ETH, which continues to grow and on which active development

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currency reward for the computational effort they spend to secure the network by verifying and with validation transactions and blocks. Ether is used within the Ethereum blockchain to pay for the execution of contracts on the EVM. Ether is used to purchase gas as crypto fuel, which is required to perform computation

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on the Ethereum blockchain. The denomination table is shown as follows: Unit Alternative name Wei value Number of Weis Wei Wei 1 Wei 1 KWei Babbage 1^3 Wei

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, such as a network or filesystem. This results in increased security, deterministic execution and allows untrusted code (anyone can run code) to be run on Ethereum blockchain. As discussed earlier, EVM is a stack-based architecture. EVM is big-endian by design, and it uses 256-bit wide words. This word size

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in Chapter 13, Development Tools and Frameworks and Chapter 14, Introducing Web3. There are also various contracts that are available in the precompiled format in Ethereum blockchain to support different functions. These contracts, known as precompiled contracts or native contracts are described in the following subsections. These are not strictly smart contracts

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the EVM opcodes in the future. Summary This chapter started with a discussion on the history of Ethereum, the motivation behind Ethereum development, and Ethereum clients. Then, you were introduced to the core concepts of the Ethereum blockchain, such as state machine model, world and machine state, accounts, and types of accounts. Moreover, a

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and client software APIs (Web3) Supporting protocols First, we will introduce programming languages which are used to develop smart contracts on the Ethereum blockchain. Programming languages Code for smart contracts in Ethereum is written in a high-level language such as Serpent, LLL, Solidity, or Viper and is converted into the bytecode that

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RECOVERABLE. Type password: Repeat password: 26-11-30 2:18:55 UTC c8c92a910cfbce2e655c88d37a89b6657d1498fb APIs, tools, and DApps Web3 JavaScript API provides an interface to the Ethereum blockchain via JavaScript. It provides an object called web3 which contains other objects that expose different methods to support interaction with the

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the common tool of choice, as such this chapter will use Geth for the examples. There are various ways to do development for Ethereum blockchain. We will see all the mainstream options in this chapter. The topics that we will cover in this chapter are listed here: Test networks How

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setup, we also saw that how the geth command-line tool can be used to perform various functions and how we can interact with the Ethereum blockchain. We also saw how Mist can be used to deploy contracts and send transactions. In the next chapter, we will see that what tools, programming

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rest of the elements such as prerequisites (Node) will also be discussed briefly. Languages Smart contracts can be programmed in a variety of languages for Ethereum blockchain. There are five languages that can be used in order to write contracts: Mutan: This is a Go-style language, which was deprecated in early

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. It acts as an interface between EVM level bytecode and high level smart contract program code. To interact with a smart contract deployed on the Ethereum blockchain, external programs require ABI and address of the smart contract. solc is a very powerful command and further options can be explored using -- help flag

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the following screenshot you can view transaction, blocks, and addresses in detail on the frontend: Ganache, A personal Ethereum blockchain Ganache can be downloaded from http://truffleframework.com/ganache/. MetaMask MetaMask allows interaction with Ethereum blockchain via Firefox and Chrome browsers. It injects a web3 object within the running websites' JavaScript context which allows

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with an automated testing framework using Mocha and Chai. It also makes it easier to deploy the contracts to any private net, public, or testnet Ethereum blockchain. Also, asset pipeline is provided, which makes it easier for all JavaScript files to be processed, making them ready for use by a browser. Installation

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: $ git clone https://github.com/ConsenSys/truffle.git We will use Truffle later in Chapter 14, Introducing Web3 to test and deploy smart contracts on Ethereum blockchain. Contract development and deployment There are various steps that need to be taken in order to develop and deploy the contracts. Broadly, these can be

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are JavaScript and Node based. In the next chapter we will explore the topic of Web3, a JavaScript API which is used to communicate with Ethereum blockchain using JavaScript. Introducing Web3 In this chapter, we will explore Web3 API. Also, we will see detailed examples on how smart contracts are written, tested

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, and deployed to the Ethereum blockchain. We will use various tools such as Remix IDE and Ganache to develop and test smart contracts. We will also look at the methods to

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return value: " + txn); } This example demonstrates how the Web3 library can be used to interact with the contracts on the Ethereum blockchain. Development frameworks There are various development frameworks now available for Ethereum. As seen in the examples discussed earlier, it can be quite time-consuming to deploy the contracts via the manual

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via a secure mechanism. Oraclize can request data from external data sources, which can be fed into Oraclize, which can then be sent down to Ethereum blockchain. The answer comes with a TLSNotary proof ensuring the integrity and authenticity of the message. TLSNotary proofs are used to provide a cryptographic proof of

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network called Bamboo, RSK MainNet which is a beta currently. It is available at http://www.rsk.co/. Quorum This is a blockchain solution built by enhancing the existing Ethereum blockchain. There are several enhancements such as transaction privacy and a new consensus mechanism that has been introduced in Quorum. Quorum has introduced

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peers. Furthermore, permissions at node level is governed by smart contracts. It also provides a higher level of performance compared to public Ethereum blockchains. Several components make up the Quorum blockchain ecosystem. These are listed in the following subsections. Transaction manager This component enables access to encrypted transaction data. It also manages local

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execution respectively. A similar concept, but quite different in a few aspects, has been proposed before in the form of HydraChain, which is based on Ethereum blockchain and allows the creation of permissioned distributed ledgers. Quorum is available for download at https://github.com/jpmorganchase/quorum. Tezos Tezos is a generic self

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roles to different entities on the network Interface: This provides various command-line tools and RPC interfaces to enable interaction with the backend blockchain network The key difference between Ethereum blockchain and eris:db is that eris:db makes use of a Practical Byzantine Fault-Tolerance (PBFT) algorithm, which is implemented as a

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. In the following section, a practical example is provided on how to build a simple IoT device and connect it to the Ethereum blockchain. This IoT device is connected to the Ethereum blockchain and is used to open a door (in this case the door lock is represented by an LED) when the appropriate

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it in production, but it demonstrates how an IoT device can be connected, controlled, and responded to in response to certain events on an Ethereum blockchain. IoT blockchain experiment This example makes use of a Raspberry Pi device which is a Single Board Computer (SBC). The Raspberry Pi is a SBC developed as

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Model B In the following section, an example will be discussed where a Raspberry Pi will be used as an IoT device connected to the Ethereum blockchain and will act in response to a smart contract invocation. First, the Raspberry Pi needs to be set up. This can be done by using

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automate the entire vehicle insurance industry. Several start-ups such as Dynamis have proposed smart contract-based peer-to-peer insurance platforms that run on Ethereum blockchain. This is initially proposed to be used for unemployment insurance and does not require underwriters in the model. It is available at http://dynamisapp.com

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and Sawtooth Lake. Qtum This project is based on the idea of combining capabilities of Bitcoin and Ethereum blockchains. Qtum makes use of the Bitcoin code base but uses Ethereum's EVM for smart contract execution. Ethereum smart contracts can run using Bitcoin's UTXO (unspent transactions) model. It is available at https://

Mastering Ethereum: Building Smart Contracts and DApps

by Andreas M. Antonopoulos and Gavin Wood Ph. D.  · 23 Dec 2018  · 960pp  · 125,049 words

values. For example, the private keys and corresponding public keys and addresses are all real. The sample transactions, contracts, blocks, and blockchain references have all been introduced to the actual Ethereum blockchain and are part of the public ledger, so you can review them. Using Code Examples This book is here to help

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). Contract creation transaction A special transaction, with the “zero address” as the recipient, that is used to register a contract and record it on the Ethereum blockchain (see “zero address”). DAO Decentralized Autonomous Organization. A company or other organization that operates without hierarchical management. Also may refer to a contract named “The

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alternative chain, or a temporal divergence in two potential block paths during mining. Frontier The initial test development stage of Ethereum, which lasted from July 2015 to March 2016. Ganache A personal Ethereum blockchain that you can use to run tests, execute commands, and inspect state while controlling how the chain operates. Gas

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language in a Solidity program. Solidity’s support for inline assembly makes it easier to write certain operations. Spurious Dragon A hard fork of the Ethereum blockchain, which occurred at block #2,675,000 to address more denial-of-service attack vectors and clear state (see also “Tangerine Whistle”). Also, a

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used along with Web3 and Whisper to build DApps. Szabo A denomination of ether. 1012 szabo = 1 ether. Tangerine Whistle A hard fork of the Ethereum blockchain, which occurred at block #2,463,000 to change the gas calculation for certain I/O-intensive operations and to clear the accumulated state from

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the low gas cost of those operations. Testnet Short for “test network,” a network used to simulate the behavior of the main Ethereum network. Transaction Data committed to the Ethereum Blockchain signed by an originating account, targeting a specific address. The transaction contains metadata such as the gas limit for that transaction. Truffle

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some ways, this serves the same purpose as the data storage model of Random Access Memory (RAM) used by most general-purpose computers. Ethereum has memory that stores both code and data, and it uses the Ethereum blockchain to track how this memory changes over time. Like a general-purpose stored-program computer

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owned and managed applications, to applications built on decentralized protocols. In later chapters we’ll explore the Ethereum web3.js JavaScript library, which bridges JavaScript applications that run in your browser with the Ethereum blockchain. The web3.js library also includes an interface to a P2P storage network called Swarm and a P2P

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fixed. But in the meantime, innovation is the driving principle. You’d better keep up, because no one will slow down for you. Why Learn Ethereum? Blockchains have a very steep learning curve, as they combine multiple disciplines into one domain: programming, information security, cryptography, economics, distributed systems, peer-to-peer networks

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the main network. The other choices are public testnets, any Ethereum node of your choice, or nodes running private blockchains on your own computer (localhost): Main Ethereum Network The main public Ethereum blockchain. Real ETH, real value, and real consequences. Ropsten Test Network Ethereum public test blockchain and network. ETH on this network has no value. Kovan

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Test Network Ethereum public test blockchain and network using the Aura consensus protocol

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that it operates as if it were a global, single-instance computer, running everywhere. Each node on the Ethereum network runs a local copy of the EVM to validate contract execution, while the Ethereum blockchain records the changing state of this world computer as it processes transactions and smart contracts. We’ll discuss

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not have a private key. Instead, it is owned (and controlled) by the logic of its smart contract code: the software program recorded on the Ethereum blockchain at the contract account’s creation and executed by the EVM. Contracts have addresses, just like EOAs. Contracts can also send and receive ether, just

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Solidity instead of programming directly in EVM bytecode? Me too! Creating the Contract on the Blockchain So, we have a contract. We’ve compiled it into bytecode. Now, we need to “register” the contract on the Ethereum blockchain. We will be using the Ropsten testnet to test our contract, so that’s the

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a special transaction whose destination is the address 0x0000000000000000000000000000000000000000, also known as the zero address. The zero address is a special address that tells the Ethereum blockchain that you want to register a contract. Fortunately, the Remix IDE will handle all of that for you and send the transaction to MetaMask. First

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can take a long time, so it’s recommended that you work on a fast internet connection. Syncing the Ethereum blockchain is very input/output (I/O) intensive. It is best to have a solid-state drive (SSD). If you have a mechanical hard disk drive

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way” and that will take far too long (weeks). The next sections explains the challenge with the initial synchronization of Ethereum’s blockchain. The First Synchronization of Ethereum-Based Blockchains Normally, when syncing an Ethereum blockchain, your client will download and validate every block and every transaction since the very start — i.e., from the genesis

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Choose how to configure any optional parameters to suit your needs, then start Geth or Parity to sync the chain. Then wait… Tip Syncing the Ethereum blockchain will take anywhere from half a day on a very fast system with lots of RAM, to several days on a slower system. The JSON

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by Geth. To run Parity in this mode, use the --geth switch: $ parity --geth Remote Ethereum Clients Remote clients offer a subset of the functionality of a full client. They do not store the full Ethereum blockchain, so they are faster to set up and require far less data storage. These clients typically

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functionality. Other remote clients are full-blown DApp browsers. Remote clients commonly offer some of the functions of a full-node Ethereum client without synchronizing a local copy of the Ethereum blockchain by connecting to a full node being run elsewhere, e.g., by you locally on your machine or on a web

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. Unlike other browser wallets, MetaMask injects a web3 instance into the browser JavaScript context, acting as an RPC client that connects to a variety of Ethereum blockchains (mainnet, Ropsten testnet, Kovan testnet, local RPC node, etc.). The ability to inject a web3 instance and act as a gateway to external RPC

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speaking, the wallet holds only keys. The ether or other tokens are recorded on the Ethereum blockchain. Users control the tokens on the network by signing transactions with the keys in their wallets. In a sense, an Ethereum wallet is a keychain. Having said that, given that the keys held by the wallet

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we will see in Chapter 6. Chapter 6. Transactions Transactions are signed messages originated by an externally owned account, transmitted by the Ethereum network, and recorded on the Ethereum blockchain. This basic definition conceals a lot of surprising and fascinating details. Another way to look at transactions is that they are the only

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be confirmed, but there is nothing in the protocol that prohibits free transactions. You can find several examples of such transactions successfully included on the Ethereum blockchain. The web3 interface offers a gasPrice suggestion, by calculating a median price across several blocks (we can use the truffle console or any JavaScript web3

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code or USB flash drive. Transmit the signed transaction (back) to an online device for broadcast on the Ethereum blockchain, e.g., via QR code or USB flash drive. Figure 6-7. Offline signing of Ethereum transactions Depending on the level of security you need, your “offline signing” computer can have varying degrees

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too much detail, valid transactions will eventually be included in a block of transactions and, thus, recorded in the Ethereum blockchain. Once mined into a block, transactions also modify the state of the Ethereum singleton, either by modifying the balance of an account (in the case of a simple payment) or by invoking

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robust and secure. Conclusions Transactions are the starting point of every activity in the Ethereum system. Transactions are the “inputs” that cause the Ethereum Virtual Machine to evaluate contracts, update balances, and more generally modify the state of the Ethereum blockchain. Next, we will work with smart contracts in a lot more detail and

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smart contract is the same for everyone who runs it, given the context of the transaction that initiated its execution and the state of the Ethereum blockchain at the moment of execution. EVM context Smart contracts operate with a very limited execution context. They can access their own state, the context

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.sol:Faucet ======= Binary: 6060604052341561000f57600080fd5b60cf8061001d6000396000f300606060405260043610603e5 763ffffffff7c01000000000000000000000000000000000000000000000000000000006000350416 632e1a7d4d81146040575b005b3415604a57600080fd5b603e60043567016345785d8a00008111156 06357600080fd5b73ffffffffffffffffffffffffffffffffffffffff331681156108fc0282604051 600060405180830381858888f19350505050151560a057600080fd5b505600a165627a7a723058203 556d79355f2da19e773a9551e95f1ca7457f2b5fbbf4eacf7748ab59d2532130029 The result that solc produces is a hex-serialized binary that can be submitted to the Ethereum blockchain. The Ethereum Contract ABI In computer software, an application binary interface is an interface between two program modules; often, between the operating system and user programs

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owner, the attacker then drained the wallets of all their ether. Entropy Illusion All transactions on the Ethereum blockchain are deterministic state transition operations. This means that every transaction modifies the global state of the Ethereum ecosystem in a calculable way, with no uncertainty. This has the fundamental implication that there is no

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it is the only way you can raise money fast and you need to pretend it’s not a public securities offering. Tokens on Ethereum Blockchain tokens existed before Ethereum. In some ways, the first blockchain currency, Bitcoin, is a token itself. Many token platforms were also developed on Bitcoin and other cryptocurrencies before

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book’s repository. Auction DApp: Backend Smart Contracts Our Auction DApp example is supported by two smart contracts that we need to deploy on an Ethereum blockchain in order to support the application: AuctionRepository and DeedRepository. Let’s start by looking at DeedRepository, shown in Example 12-1. This contract is

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) approveAndTransfer(address _from, address _to, address _deedRepositoryAddress, uint256 _deedId) cancelAuction(uint _auctionId) finalizeAuction(uint _auctionId) bidOnAuction(uint _auctionId) You can deploy these contracts to the Ethereum blockchain of your choice (e.g., Ropsten) using truffle in the book’s repository: $ cd code/auction_dapp/backend $ truffle init $ truffle compile $ truffle migrate --network

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names in the browser while resolving those names to IP addresses or other identifiers behind the scenes. On the Ethereum blockchain, the Ethereum Naming System (ENS) solves the same problem, but in a decentralized manner. For example, the Ethereum Foundation donation address is 0xfB6916095ca1df60 bB79Ce92cE3Ea74c37c5d359; in a wallet that supports ENS, it’s simply

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involve it, practically speaking, but everything else will involve a state update computed by the EVM. At a high level, the EVM running on the Ethereum blockchain can be thought of as a global decentralized computer containing millions of executable objects, each with its own permanent data store. The EVM is a

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the following sections, we will look at gas and examine how it works in detail. Gas Gas is Ethereum’s unit for measuring the computational and storage resources required to perform actions on the Ethereum blockchain. In contrast to Bitcoin, whose transaction fees only take into account the size of a transaction in

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kilobytes, Ethereum must account for every computational step performed by transactions and smart contract code execution. Each operation performed

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Accounting Considerations The relative gas costs of the various operations that can be performed by the EVM have been carefully chosen to best protect the Ethereum blockchain from attack. You can see a detailed table of gas costs for different EVM opcodes in Table C-1. More computationally intensive operations cost

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PoS consensus algorithm. It is still under active research and development and is not implemented on the Ethereum blockchain at the time of publication of this book. Casper is being developed in two competing “flavors”: Casper FFG: “The Friendly Finality Gadget” Casper CBC: “The

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number of people in the ecosystem disagreed with this change, believing immutability should be a fundamental principle of the Ethereum blockchain without exception; they elected to continue the original chain under the moniker of Ethereum Classic. While the split itself was initially ideological, the two chains have since evolved into separate entities. The

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be called “airdrops.” Here’s a brief rundown of some of the more notable forks that have occurred: Expanse was the first fork of the Ethereum blockchain to gain traction. It was announced via the Bitcoin Talk forum on September 7, 2015. The actual fork occurred a week later on September 14

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1.0.0-beta.xx: http://bit.ly/2CT33p0 web3.py web3.py is a Python library for interacting with the Ethereum blockchain, maintained by the Ethereum Foundation. GitHub: https://github.com/ethereum/web3.py PyPi: https://pypi.python.org/pypi/web3/4.0.0b9 Documentation: https://web3py.readthedocs.io/ EthereumJS EthereumJS is

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structure BIPs (see Bitcoin improvement proposals) Bitcoinas token, Tokens on Ethereum development culture, Ethereum’s Development Culture Ethereum blockchain compared to Bitcoin blockchain, Ethereum: A General-Purpose Blockchain Ethereum compared to, Compared to Bitcoin Ethereum definition compared to, Ethereum Clients limitations of, The Birth of Ethereum Bitcoin Core, Components of a Blockchain Bitcoin improvement proposals (BIPs), Quick GlossaryHierarchical Deterministic Wallets (BIP-32

Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts

by David Gerard  · 23 Jul 2017  · 309pp  · 54,839 words

Attack of the 50 Foot Blockchain Attack of the 50 Foot Blockchain Bitcoin, Blockchain, Ethereum and Smart Contracts David Gerard Copyright © 2017 David Gerard. All rights reserved. No part of this book may be reproduced or transmitted in any

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the hack, the bank block and the second bubble Chapter 9: Altcoins Litecoin Dogecoin Ethereum Buterin’s quantum quest ICOs: magic beans and bubble machines Chapter 10: Smart contracts, stupid humans Dr. Strangelove, but on the blockchain So who wants smart contracts, anyway? Legal code is not computer code The oracle

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problem: garbage in, garbage out Immutability: make your mistakes unfixable Immutability: the enemy of good software engineering Ethereum smart contracts in practice The DAO: the steadfast iron will

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of unstoppable code Chapter 11: Business bafflegab, but on the Blockchain What can Blockchain do for me? But all these companies are using Blockchain now! Blockchains won’t clean up your data for you Six

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to the present day, with some of the important stories, the other cryptocurrencies it spawned – particularly Ethereum – and smart contracts and the attempts to apply blockchains to business. There’s also a case study on blockchains in the music industry. I go into technical detail where it’s relevant, though what’s more

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: in which early investors are paid using money from later ones. These are so attractive to crypto fans that when Ethereum took blockchains and added “smart contracts” (programs that run on the blockchain), the first thing people did was write automatic “honest” Ponzis. High-yield investment programmes: a variety of Ponzi scheme.

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by any such tawdry profession as actual accountants; they were going to use “Ledger Labs Inc., a top blockchain forensics and technology firm,” which happens to be run by Vitalik Buterin, creator of Ethereum (of which more later).266 They later admitted this audit had never happened.267 Bitfinex then posted an

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Jeffrey Wilcke and others. Its key innovation is that you can run smart contracts on a blockchain: programs that are triggered to run automatically in a given circumstance. If Bitcoin is like an Excel spreadsheet, then Ethereum is like a spreadsheet with macros. This new idea was interesting enough to quickly make

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in the uncle will usually stay around until they finally make it into a block. The existence of a single canonical blockchain is frequently questionable, but somehow it all muddles forth. Ethereum has a current maximum of about 14 transactions per second300 (Bitcoin’s is 7 TPS). As at mid-2017 it

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occasionally boggle at people treating it as much more of a finished product than they do.303 Ethereum advocates talk up corporate adoption by Microsoft and other companies – it’s a popular choice of platform for business blockchain trials, and its smart contract functionality is reused by a lot of other

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blockchain software – but this is adoption of the software to run separate in-house blockchains, not adoption of the public Ethereum chain and currency. Buterin’s quantum quest Before

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Ethereum, Vitalik Buterin put considerable effort in 2013 into trying to convince investors

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new phrase for “buy our premined altcoin” is “ICO” (“Initial Coin Offering” or “Initial Crowdfunding Offering”). These are typically tokens running on top of the Ethereum blockchain, usually in a smart contract written to the standard ERC-20 interface.308 There’s no mining involved – you create a smart contract that manages

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the funded enterprise even in theory. The ideas themselves are as bad as the worst dot-com IPOs. Digix, the first token crowdsale on the Ethereum blockchain itself, is a cryptocurrency backed by gold;309 Golem offers a “decentralized” (buzzword alert!) market in computing, like Amazon Web Services except you can

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transaction fees blocking all smaller transaction fees for several hours. Some exchanges had to stop trading ETH because they couldn’t get transactions onto the Ethereum blockchain.324 History doesn’t repeat, but it does rhyme. One of the most famous share offerings from the South Sea Bubble of 1719-1720 was

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of the Ether”343 For decades, smart contracts were just an interesting hypothetical. When blockchains came along, smart contract advocates were very interested in the blockchain’s immutability. There were some smart contract experiments on Bitcoin, but Ethereum was pretty much the first practical platform for writing and running computer programs on a

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blockchain. Humans are bad at tasks requiring perfection. But when programming errors have drastic consequences,

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can’t understand why it blew up in your face. – brockchainbrockshize, /r/ethereum354 Not content with their existing sales of Internet fairy gold, some Ethereum developers at German blockchain startup Slock.it came up with an even more complicated scheme: The DAO – a Decentralized Autonomous Organization, with “The” as part of the

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in their rational self-interest.359 This didn’t happen, oddly enough.) Ethereum Foundation principals discussed options including a soft fork or a hard fork of the code or even of the blockchain itself, or a rollback of the blockchain. The community wrangled with the philosophical issues: the whole point of smart

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.361) The DAO was shut down soon after, and on 20 July the Ethereum Foundation – several of whose principals were curators of The DAO362 and/or heavily invested in it – changed how the actual code of Ethereum interpreted their blockchain (the “immutable” ledger) so as to wind back the hack and take

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back their money. The blockchain was “immutable,” so they changed how it was interpreted. The “impossible” bailout had happened. This

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illustrated the final major problem with smart contracts: CODE IS LAW until the whales are in danger of losing money. Ethereum promptly split into two separate blockchains, each with its own

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currency – Ethereum (ETH), the wound-back version, supported by the Ethereum Foundation, and Ethereum Classic (ETC), the original code and blockchain – because all this was too greedy even for crypto fans to put

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up with. Both blockchains and currencies operate today. Well done, all. Apologists note

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and no digital record will enforce land use for you. Supply chain provenance is a perennial proposal. Provenance, Inc. proposes putting tuna catches on the Ethereum blockchain. They claim to offer supply chain transparency to all participants, and this will reveal illegal overfishing or fishing that involves human rights abuses. The data

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companies. Industry consortia, standards groups and so on are well-tested models. Blockchains do not offer a better way to do this. An August 2015 blog post from Vitalik Buterin discusses “public”, “consortium” and “private” blockchains. Bitcoin and Ethereum are “public” blockchains.377 This comment chain on the post concisely summarises the innovations the

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private blockchain brings: Andrey Zamovskiy: Let’s just admit that blockchain is simply a new type of replication algorithm for a database cluster. That

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(e.g., Git) with no need for the sillier aspects of blockchain-style decentralisation. The examples remain instructive, particularly in comparison to Bitcoin or Ethereum: Accenture: Accenture offer the one thing customers who actually have money want from a blockchain: centralised administration and a way to edit the ledger when necessary. You

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might think that this is literally the opposite of the standard blockchain value proposition since the invention of

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Heap found herself free of previous deals, and so released her new song “Tiny Human” as the test case for Mycelia,407 running on the Ethereum blockchain. Her motivation was to cut through the tangle of bad deals and obscure rights the record industry offered. “Its success will come from the adoption

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. What I’ve yet to see anyone mention is how well it did in practice. Total sales of “Tiny Human” through Ujo Music on the Ethereum blockchain were … $133.20. Not $133,200 – but one hundred and thirty-three dollars and twenty cents: 222 sales at 60 cents each.410 It

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411 It didn’t help that buying it was almost impossible even for a blockchain advocate,412 let alone an ordinary human music fan. You went to the page, clicked “Download”, followed the instructions to create an Ethereum wallet, and went off to a Bitcoin exchange to buy bitcoins then exchange

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filmmakers and TV producers to fund their content and then distribute it. This involves a native ICO-style cryptocurrency token called SNGLS (running on the Ethereum blockchain), with funding and revenues administered by a smart contract called CODE.429 This is the poison pill: it runs on their token, and they control

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for their unregistered security430 went out the door a bit early: User has carefully reviewed the code of the Smart Contract System located on the Ethereum blockchain at the addresses set forth under [correct cite] and fully understands and accepts the functions implemented therein; The closest they have to a technologist

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continue to be clogged and barely usable for real purchases, licit or illicit. I’d have thought Ethereum would keep stumbling along, with no real application being found for smart contracts. I’d have forecast “Blockchain” slowly falling out of favour as a business buzzword as the returns failed to manifest. I

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DAO. Dapp: a “distributed application,” a fancy name for a smart contract in Ethereum. Darknet: sites only available via Tor, where you can buy illegal goods and services using a cryptocurrency. Distributed ledger technology: a euphemism for blockchain. DRM: Digital Rights Management, an entertainment industry term for “that song I just

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bought and downloaded won’t play.” Music industry blockchain applications frequently involve a version of it, whether by name or not. Ethereum: a cryptocurrency whose value proposition is smart contracts. Arguably the first popular smart contract platform. Exchange: A site to

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including Christian Reitwiessner, creator of Solidity. [342] Christian Reitwiessner. “Security Alert – Solidity – Variables can be overwritten in storage”. Ethereum Blog, 1 November 2016. [343] King of the Ether: “An Ethereum contract, living on the blockchain, that will make you a King or Queen, might grant you riches, and will immortalize your name.” (archive

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actually applied the recommended best-practice of testing the callstack directly.” [348] Peter Vessenes. “Ethereum Contracts Are Going To Be Candy For Hackers”. Blockchain, Bitcoin and Business (blog), 18 May 2016. [349] Martin Holst Swende. “Ethereum contract security: An Ethereum Roulette”. 14 August 2015. [350] Ethererik. “GovernMental’s 1100 ETH jackpot payout is stuck

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because it uses too much gas”. Reddit /r/ethereum, 26 April 2016. [351] “Post-Mortem

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Mark, Vlad Zamfir, Emin Gün Sirer. “A Call for a Temporary Moratorium on The DAO”. Hacking, Distributed (blog), 27 May 2016. [357] Peter Vessenes. “More Ethereum Attacks: Race-To-Empty is the Real Deal”. Blockchain, Bitcoin and Business (blog), 9 June 2016. [358] Stephen Tual. “No DAO funds at risk following the

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Ethereum smart contract ‘recursive call’ bug discovery”. blog.slock.it, 12 June 2016. (archive) [359] Stephen Tual. “Why the DAO robber could very well return

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Things connecting the world”, presumably visible to your new Zeiss-Ikon eyeballs. “Someone asked me what Ethereum was… My response: ‘Imagine giving the Internet a dose of Viagra and increasing the dose each day’… The Blockchain Age is here!” I know of one case where a non-technical manager inadvertently sent this

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are that it uses as references Zero Hedge and Breitbart News. [377] Vitalik Buterin. “On Public and Private Blockchains”. Ethereum Blog, 7 August 2015. [378] Izabella Kaminska. “Exposing the ‘If we call it a blockchain, perhaps it won’t be deemed a cartel?’ tactic”. FT Alphaville (blog), Financial Times, 11 May 2015. [

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SingularDTV, September 2016. (archive) [431] “The SingularDTV (S-DTV) CODE Summary Overview: For a Blockchain Film & Television Entertainment Studio & Distribution Portal, with a Smart Contract Rights Management Platform”. SingularDTV, 22 July 2016. (archive) [432] Zach LeBeau. “An Ethereum Journey to Decentralize All Things: From the DAO to the CODE (Centrally Organized Distributed

The Truth Machine: The Blockchain and the Future of Everything

by Paul Vigna and Michael J. Casey  · 27 Feb 2018  · 348pp  · 97,277 words

, or backups, that can keep the network running if one node is compromised. A more radical solution is to embrace open, “permissionless” blockchains like Bitcoin and Ethereum, where there’s no central authority keeping track of who’s using the network. And in that case, the entire security paradigm—the question

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how the U.S. health care system manages medical records is broken. That’s why initiatives like MedRec, an open-source program based on the Ethereum blockchain that was created by MIT Media Lab students Ariel Eckblaw, Asaph Azaria, and Thiago Yieira, are filled with such potential. The idea, one that

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that dictates how all computers everywhere exchange value with each other. Will it be Bitcoin, Ethereum, or something else entirely, perhaps a protocol that allows computers with digital assets on any one of these competing blockchains to trade directly with each other without going through a third party? Such is the

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platform that has, arguably, attracted as much interest as Bitcoin is Ethereum, a project conceived by Russian-born Canadian whiz kid Vitalik Buterin. One of the first proverbial “big ideas” to come out of Bitcoin was that a blockchain network could be used to transfer more than just currency without an

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DAO tokens expired. The question was: should they? After a few modest coding changes failed, they settled on a drastic fix: Ethereum’s core developers “hard-forked” the Ethereum blockchain, implementing a backward-incompatible software update that invalidated all of the attacker’s transactions from a certain date forward. It was a

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radical move. To many in the cryptocurrency community, it threw into question Ethereum’s all-important claim to immutability. If a group of

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-violently exercising their right to secede. More than a year later, Ethereum Classic is still around, though it trades at a small fraction of Ethereum’s value, which means The DAO attacker’s funds—whose movements on the public Ethereum blockchain have been closely watched—are of lower value than if they’d

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aims to shift resource-heavy transactions and smart-contract executions into a secure “off-chain” environment that reduces the burden on the Ethereum blockchain. If it works, it could make Ethereum ready for true, enterprise-level usage. Against this explosion of ideas, all fed by a multi-billion-dollar rush of money into

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is that with this open-source, ad hoc, global process of competing ideas and innovations, solutions are being discovered. Perhaps the established blockchains such as Bitcoin and Ethereum will learn from the upstarts’ improvements and absorb them into their models. Or perhaps they have too much at stake to change and

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twenty-seven years and was now selling his advisory business to build his own blockchain-based service. One millennial, a staffer at Morgan Stanley, waited patiently to talk with Lubin—he hoped to make the jump into Ethereum, to build his own decentralized application, to find his own riches. We asked

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reward them and their backers for the entrepreneurial risk of building it. The idea has been around for a while. The Ethereum Foundation’s $18.4 million fund-raise was handled this way; other early blockchain projects did the same. But it took a new tool, developed by a team of

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Ethereum developers led by Berlin-based Fabian Vogelsteller, to make the concept take off in the second half of 2016: an easy-

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for both the ICO and post-ICO trading. The tokens did not need their own blockchain and mining community to maintain them. Instead, ERC20 tokens traded on top of Ethereum. They were generated by an Ethereum-validated smart contract that kept track of the issuance and exchanges by token holders. These

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tokens, like bitcoin and all cryptocurrencies, still needed the immutable ledger of a blockchain truth machine to maintain their provable status as

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non-replicable digital assets. But because of the ERC-20 solution, they didn’t need to develop their own blockchain with all the independent computing power that would require. Instead, Ethereum’s existing computing network would do the validation for them. This low-cost solution to the double-spending challenge launched

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society,” using the truth machine to put a value on honesty sounds appealing. Already, the blockchain startup Augur is exploring these ideas. The firm has built a decentralized, cryptocurrency-based prediction market on top of Ethereum, where players place bets on an outcome of some event or other, the result of

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for the industry. Other members include Foxconn, Cisco, BNY Mellon, and a slew of blockchain-based startups, such as supply-chain provider Skuchain and Ethereum research lab ConsenSys. The group’s Web site touts “Blockchain IoT for Business” with the promise of “Powering the Fourth Industrial Revolution together.” IOTA’s controversial

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agree to the terms of use. That means that some of the large-scale processing challenges of Bitcoin and Ethereum can be avoided and thus that the high transaction power of a blockchain could be harnessed without requiring the implementation of the Lightning Network and other “off-chain” scaling solutions currently

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of the energy sources and materials in production—will hinge on the transparency and information flows that blockchain systems allow. The principal challenge remains scaling. Open-to-all, permissionless blockchains such as Bitcoin’s and Ethereum’s simply aren’t ready for the prime time of global trade. If all of the

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world’s supply chains were to pass their transactions through a permissionless blockchain, there would need to be a gargantuan increase

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version of the ledger once certain thresholds of acceptance were demonstrated across the network. These private, closed, permissioned blockchains didn’t attract the same enthusiasm among developers as all those wild Ethereum ideas to disintermediate the world or as the token issuers whose ICOs were drawing in eight- or nine-figure

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added from multiple locations around the world? The same possibility for success and failure could arise in the blockchain and distributed ledger battles, Ito says. Permissionless systems like those of Bitcoin and Ethereum inherently facilitate more creativity and innovation, because it’s just understood that no authorizing company or group of

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because its programming language is quite limiting, which is why the more versatile Ethereum and other Bitcoin successors have attracted much of the work in this field. But conceptually, Colored Coins—whose founders have since formed a blockchain startup called Chromaway that has a contract to register land titles in Sweden—

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and two of the leading infrastructure developers for bitcoin and Ethereum: Blockstack for the former and the think tank ConsenSys for the latter. The sweeping goal, according to Yorke Rhodes, a key blockchain strategist at Microsoft, is “an open source, self-sovereign, blockchain-based identity system that allows people, products, apps, and

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there seems to be a meeting of minds around how this tech could fix that aspect of the creative content industry. An Ethereum-based service called adChain is creating a blockchain-based audit trail of data used in the ad industry while a consortium of media heavyweights that includes Comcast, Disney, NBCUniversal

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lab ConsenSys, to register “Tiny Human,” the song she wrote in dedication to her baby daughter, on the Ethereum blockchain. For 60 cents, people could download the song and know that their funds would be automatically divvied up by smart contracts and delivered directly

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this metadata—not for the core registry components, at least. That’s because the current scalability limits on public, permissionless blockchains such as Bitcoin or Ethereum are especially acute for this kind of data. There’s enough of it to fill bitcoin’s 1MB block limit for decades to come,

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control the bulk of the network’s computing power. A great deal of work needs to be done to scale the technology for Bitcoin, Ethereum, and other blockchain protocols in a way that lives up to the decentralization imperative. But as we’ve sought to emphasize, Bitcoin and the

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to decentralizing the economy and re-empowering individuals is very different from Bitcoin’s and Ethereum’s. Rather than having every single transaction or smart contract instruction processed by the entire network of a single blockchain, ECSA has a bottom-up approach to decentralization. ECSA has a toolkit of programs

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economic spaces” in which their communities can issue and trade cryptotokens in support of collaboration and cooperation. Unlike Ethereum, their transactions won’t need to be validated by a high-powered global blockchain network. Yet by allowing for trading and interaction across communities without the intermediation of a trusted third party,

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Gravity purports to be able to build, from this bottom-up starting point, an interoperable, decentralized global economy. If it works, ECSA’s approach might not only help resolve Bitcoin’s and Ethereum

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will gravitate to friendlier jurisdictions. A case in point can be found in Zug, Switzerland, nicknamed “Crypto Valley,” where Ethereum developers and a host of new smart-contract, cryptocurrency, and blockchain outfits have set up shop. One reason they’ve done so is because Swiss law makes it easier to set

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reason to work out the human element to this technological development stems from that key limitation of the early blockchains that we’ve discussed repeatedly: their scalability. As currently designed, Bitcoin and Ethereum are inherently complex and expensive to run, with all those computers having to engage in the same act

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or smart contract. Although their respective consensus mechanisms, incentive models, and protocol designs result in different computational efficiencies and inefficiencies, Bitcoin and Ethereum, and most other permissionless, public blockchains, inevitably chew up computing and energy resources as their networks grow. The good news, again, is that a great deal of thought

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. If we assume that one or more of these can one day surpass Bitcoin and Ethereum’s adoption rate and at least match Bitcoin’s proven economic security—or, alternatively, that those two established blockchains end up incorporating their ideas—this process of invention is a source of great hope.

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scaling-agreement-at-consensus-2017-133521fe9a77. When Buterin released his white paper in December 2013: Vitalik Buterin, “Ethereum White Paper: A Next Generation Smart Contract & Decentralized Application Platform,” http://www.the-blockchain.com/docs/Ethereum_white_paper-a_next_generation_smart_contract_and_decentralized_application_platform-vitalik-buterin.pdf. “You’re just

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as likely to find a web developer…”: “An Ode to the Ethereum Community,” Steemit, October 2016, https://steemit.com/ethereum/@owaisted/an-ode-to-the-ethereum-community. After launching Ethereum at the

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is much larger. For the 2015 estimate, see: “State of the Commons,” https://stateof.creativecommons.org/2015/. An Ethereum-based service called adChain: Robert Hof, “How MetaX Plans to Use Blockchain to Stop Ad Fraud,” Forbes, March 21, 2017, https://www.forbes.com/sites/roberthof/2017/03/21/how-metax-

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and security SHA-256 hashing algorithm and trust Bitcoin Cash (BCH) Bitcoin Core Bitfinex BitFury BitLand BitLicense regulation Bitmain BitPesa black-hat hackers blockchain agnostic blockchain and blockchain technologies censorship resistance and Cypherpunk community definition and use of the term distributed trust protocol and double-spending problem and energy sector and financial

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driving consensus and supply chains talent pool tokens and trust as truth machine See also Bitcoin; distributed ledger technology; Ethereum; permissioned (private) blockchains; permissionless blockchains Blockchain Capital blockchain-distributed ledger. See also double-spending Blockchain Health Blockchain.info blockchain labs block.one Blockstream Bloq Blue Apron Bosch Brave New Brave Software Inc. Basic Attention token Breitman, Arthur

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(ETC) Ethereum Enterprise Alliance Ethereum Foundation Ethereum Meetup Fabric Factom “fake news” Fibonacci Filecoin financial crisis of 2008 financial inclusion financial sector and central bank fiat digital currency and Hyperledger and permissionless systems and private blockchains and reform See also monetary and banking systems Forde, Brian forks Fourth Industrial Revolution and energy

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Council Global Synchronization Log Gnosis GoBitcoin.io God Protocol Goldman Sachs Golem Google Google, Amazon, Facebook, Apple (GAFA) governance and Bitcoin and blockchain technology and citizenship and Ethereum and ICANN and re-decentralization of the Internet and regulation and trust Grid Singularity Grigg, Ian Gün Sirer, Emin Harari, Yuval Noah Hardin,

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and identity and permissioned systems and registries and ride-sharing and tokens See also Ethereum organized crime Pacioli, Luca Pantera Capital Parity Wallet peer-to-peer commerce and economy Pentland, Alex “Sandy” Perkins Coie permissioned (private) blockchains advantages of challenges of and cryptocurrency-less systems definition of and finance sector open

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-source development of scalability of and security and supply chains permissionless blockchains Bitcoin and Cypherpunks Ethereum financial sector and identity information mobile money systems and scalability and trusted computing Pink Army Cooperative Plasma Polkadot Polychain Capital Poon, Joseph practical

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byzantine fault tolerance (PBFT) pre-mining pre-selling private blockchains. See permissioned (private) blockchains Procivis proof-of-stake algorithm proof of work prosumers Protocol Labs

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World

by Don Tapscott and Alex Tapscott  · 9 May 2016  · 515pp  · 126,820 words

(former Executive Architect for Industry Innovation and Business Development, IBM) Vitalik Buterin, Founder, Ethereum Patrick Byrne, CEO, Overstock Bruce Cahan, Visiting Scholar, Stanford Engineering; Stanford Sustainable Banking Initiative James Carlyle, Chief Engineer, MD, R3 CEV Nicolas Cary, Cofounder, Blockchain Ltd. Toni Lane Casserly, CEO, CoinTelegraph Christian Catalini, Assistant Professor, MIT Sloan School

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President, The Internet Society Brett Stapper, Founder and CEO, Falcon Global Capital LLC Elizabeth Stark, Visiting Fellow, Yale Law School Jutta Steiner, Ethereum/Provenance Melanie Swan, Founder, Institute for Blockchain Studies Nick Szabo, GWU Law Ashley Taylor, Conensys Systems Simon Taylor, VP Entrepreneurial Partnerships, Barclays David Thomson, Founder, Artlery Michelle Tinsley, Director

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in addition to her other full-time jobs at the Tapscott Group. Special thanks to Dino Mark Angaritis, the CEO of blockchain company Smartwallet; Joseph Lubin, CEO of the Ethereum development studio Consensus Systems; and Carlos Moreira of fast-growing security company WISeKey—who each spent considerable time with us brainstorming ideas

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that meet her criteria. Because the network creates a record of the transaction on the blockchain, a positive user review improves their respective reputations and establishes their identities—now without an intermediary. Says Vitalik Buterin, founder of the Ethereum blockchain: “Whereas most technologies tend to automate workers on the periphery doing menial tasks

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, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work

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preceding block to be valid. The protocols also include a method for reclaiming disk space so that all nodes can efficiently store the full blockchain. Finally, the blockchain is public. Anyone can see transactions taking place. No one can hide a transaction, and that makes bitcoin more traceable than cash. Satoshi

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itself. Let the network reach consensus algorithmically on what happened and record it cryptographically on the blockchain. The mechanism for reaching consensus is critical. “Consensus is a social process,” blogged Vitalik Buterin, pioneer of the Ethereum blockchain. “Human beings are fairly good at engaging in consensus . . . without any help from algorithms.” He

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trillion. That’s a lot of work!”8 You may hear about other consensus mechanisms. The first version of the Ethereum blockchain—Frontier—also uses proof of work, but the developers of Ethereum 1.1 expect to replace it with a proof of stake mechanism. Proof of stake requires miners to invest in

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and hang on to some store of value (i.e., the native token of the blockchain such as Peercoin, NXT, etc.). They

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the moment of its coinage. For a bitcoin to be valid, it must reference its own history as well as the history of the blockchain. Therefore, the blockchain must be preserved in its entirety. So important are the processes of mining—assembling a block of transactions, spending some resource, solving the

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strategy for losing value. The longest chain represents the greatest amount of work and therefore participants choose it as the canonical state of the blockchain. In contrast, Ethereum chose owners of coin as its economic set. Ripple and Stellar chose the social network. The paradox of these consensus schemes is that by

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account required, no proof of citizenship required, no birth certificate required, no home address required, no stable local currency required to use the blockchain technologies. The blockchain drastically lowers the cost of transmitting such funds as remittances. It significantly lowers the barrier to having a bank account, obtaining credit, and investing

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raise funds “on the blockchain” by issuing tokens, or cryptosecurities, of some value in the company. They can represent equity, bonds, or, in the case of Augur, market-maker seats on the platform, granting owners the right to decide which prediction markets the company will open. Ethereum was an even greater

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success than Augur, funding the development of a whole new blockchain through a crowd sale of its native token, ether. Today Ethereum is the second-longest and fastest-growing public blockchain. The average investment in the Augur crowdfunding was $750, but one can easily imagine minimum subscriptions of a

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was a big day for a global group of coders, investors, entrepreneurs, and corporate strategists who think that Ethereum is the next big thing—not just for business, but possibly for civilization. Ethereum, the blockchain platform eighteen months in the making, went live. We witnessed the launch firsthand in the Brooklyn office of

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Consensus Systems (ConsenSys), one of the first Ethereum software development companies. Around 11:45 a.m., there were high fives

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all around as the Ethereum network created its “genesis block,” after which a

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apps. Flash-forward a couple of years and the analogy is clear: Linus Torvalds is to Linux what Vitalik Buterin is to Ethereum. When discussing the rise of blockchain and Ethereum technology, Joseph Lubin, ConsenSys’s cofounder, said, “It became clear to me that instead of people wasting their time walking down

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just to build a great company but to solve important problems in the world. He deadpans that the company is a “blockchain venture production studio, building decentralized applications, mostly on Ethereum.” Pretty low-key. But, if implemented, the applications that ConsenSys is building would shake the windows and rattle the walls

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and adapt based on these expectations.” Dare we coin the neologism blockcom, a company formed and functioning on blockchain technologies? That’s the goal, to run as much of ConsenSys as possible on Ethereum, from governance and day-to-day operations to project management, software development and testing, hiring and outsourcing, compensation

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, and funding. The blockchain also enables reputation systems where members can rate one another’s performance as collaborators, thereby

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ll be transaction histories, proven track records of individuals and enterprises, ranked perhaps by reputation score. Get the picture? Said Vitalik Buterin, founder of the Ethereum blockchain, “Blockchains will drop search costs, causing a kind of decomposition that allows you to have markets of entities that are horizontally segregated and vertically segregated. That

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Jensen and William Meckling. They argued that entities are nothing more than a collection of contracts and relationships.17 Today, some erudite blockchain thinkers have picked up on this view. Ethereum inventor Vitalik Buterin argues that corporate agents (i.e., executives) could use corporate assets only for certain purposes approved by, say

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distributed. Just as the blockchain protocol is distributed, a distributed application or DApp runs across many computing devices rather than on a single server. This is because all the computing resources that are running a blockchain constitute a computer. Blockchain developer Gavin Wood makes this point describing the Ethereum blockchain as a platform for processing

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. “There is only one Ethereum computer in the world,” he said. “It’s also multiuser—anyone who ever uses

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it is automatically signed in.” Because Ethereum is distributed and built to the highest standards of cryptosecurity, “all code, processing,

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interested in agents that can do transactions, acquire resources, make payments, or otherwise produce value on behalf of their creator. Vitalik Buterin, who created the Ethereum blockchain, has theorized about these agents and developed a taxonomy to describe their evolution. At one end are single-function agents like viruses that go about

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He said, “People still have to want to do it, to take the risk of doing it.”31 So get ready for blockchain Airbnb, blockchain Uber, blockchain Lyft, blockchain Task Rabbit, and blockchain everything wherever there is an opportunity for real sharing and for value creation to work together in a cooperative way and receive

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to geeks and other business builders for problem solving, innovating, and creation of new business value. Blockchains and blockchain-based software repositories will fuel such activity. Companies can now use powerful new programming languages like the Ethereum blockchain with built-in payment systems. An excerpt from a conversation on Hacker News: “Imagine how cool

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currency overall. By recording each transaction at every node and then sharing that record with every other node on the network (i.e., the blockchain), the blockchain ensures that we can verify the transaction quickly and seamlessly across the peer-to-peer network. We can conduct transactions of value—in this

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, land titles, voter ID, business registration, status of tax payments, employment number, school transcripts, etc.) that currently exist in multiple databases into a single blockchain, blockchain-enabled networks could deliver integrated services without going through any central processing. Not only could this model protect privacy, it could enhance it by allowing

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confirmation “could easily be part of the MOOC infrastructure.” Swan has been working on how to do MOOC accreditation and tackle student debt on the blockchain. The blockchain provides three elements toward this goal: (1) a trustable proof of truth mechanism, an oracle, to confirm that the students who signed up

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in place of bitcoin as incentive to participate. Litecoin is a popular altcoin with a block time of 2.5 minutes, and Ripple and Ethereum are entirely reengineered blockchain platforms that have latency of seconds, not minutes. A sixth dimension is behavioral change in a deeper sense than Netiquette. Today, many people

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the purpose of consensus algorithms is to distribute the right to decide what the state of the blockchain is to a decentralized set of users. To the mind of Vitalik Buterin, the visionary behind Ethereum, there are only three securely decentralized sets of users, and each set corresponds to a set of

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titles used to describe twenty-one-year-old Vitalik Buterin, the Russian-born Canadian founder of Ethereum. (Prolific founder, that is.) Ask his legion of followers about Ethereum, and they’ll tell you it’s a “blockchain-based, arbitrary-state, Turing-complete scripting platform.”1 It has attracted IBM, Samsung, UBS, Microsoft,

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and the Chinese auto giant Wanxiang, and an army of the smartest software developers in the world, all of whom think that Ethereum may be the “planetary scale computer

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t let it go.” He was only seventeen years old. Buterin created Ethereum as an open source project when he realized that blockchains could go far beyond currency and that programmers needed a more flexible platform than the bitcoin blockchain provided. Ethereum enables radical openness and radical privacy on the network. He views these

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not as a contradiction but as “a sort of Hegelian synthesis,” a dialectic between the two that results in “volunteered transparency.” Ethereum, like so many technologies throughout history, could

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of labor every day to be allowed to survive and have a decent life.”5 However, when it comes to blockchain, he’s not convinced that massive job losses are inevitable. Ethereum could create new opportunities for value creation and entrepreneurship. “Whereas most technologies tend to automate workers on the periphery doing

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menial tasks, blockchains automate away the center,” he said. “Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job

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that industry complies with policies and effectively monitors and enforces compliance. Governments that abuse the public trust can also be scrutinized and held accountable. Blockchain Implications: The Blockchain Alliance is a partnership between law enforcement, NGOs, trade organizations, and the private sector and is the first true advocacy network to form

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market-arm/. 27. Interview with Jesse McWaters, August 13, 2015. 28. Interview with Austin Hill, July 22, 2015. 29. https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains/. 30. Interview with Chris Larsen, July 27, 2015. 31. Interview with Adam Ludwin, August 26, 2015. 32. Interview with Blythe Masters

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keeps going and doesn’t go back in time or incur any other glitch.’” From “The Value of Blockchain Technology, Part I,” https://blog.ethereum.org/2015/04/13/visions-part-1-the-value-of-blockchain-technology/. 6. www.youtube.com/watch?v=K2fhwMKk2Eg. 7. http://variety.com/2015/digital/news/netflix-bandwidth

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and peril of, 24–26 rational exuberance for, 8–10 seven design principles. See Design principles Blockchain Alliance, 303–4 Blockchain cooperatives, 134–35 Blockchain IPOs, 82–84, 127, 180, 181 Blockchain judiciary, 220–21 Blockchain makers, 138–39 Blockchain voting, 215–17 Blockcom, 90, 127 Blocking Web sites, 244–45 Blockstream, 28, 38, 65

Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy

by George Gilder  · 16 Jul 2018  · 332pp  · 93,672 words

1930, though the audience at Asilomar had advance notice of the significance of Buterin’s work. Buterin succinctly described his company, Ethereum, launched in July 2015, as a “blockchain app platform.” The blockchain is an open, distributed, unhackable ledger devised in 2008 by the unknown person (or perhaps group) known as “Satoshi Nakamoto

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” to support his cryptocurrency, bitcoin. Buterin’s meteoric rise was such that soon after the Asilomar conference the central bank of Singapore announced that it was moving forward with an Ethereum

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and Russia, are investigating its potential as a new foundation for money transactions and smart contracts. But Buterin’s vision for the blockchain has long been broader than cryptocurrency. Ethereum’s contribution, its co-founder Joe Lubin predicts, will be an Internet without “a single powerful entity that controls the system or

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probability comprises the subject of communications, information codes, encryption, and decryption that is the heart of bitcoin, blockchain, and Ethereum. At Asilomar, Buterin might have offered incisive recommendations for how to control the machine through the blockchain. But Tegmark does not mention him in Life 3.0. Larry Page, Elon Musk, and the

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direction. They are actually in jeopardy, not from an all-powerful artificial intelligence, but from a distributed, peer-to-peer revolution supporting human intelligence—the blockchain and new crypto-efflorescence. Buterin and his allies are dedicated to restoring data to its originators and incorporating it horizontally and interoperatively across the cryptocosm

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, “I was a bitcoin maximalist in 2013 and I am a bitcoin maximalist today.” A bitcoin maximalist bars all other blockchains. Enter Wright’s nemesis, Vitalik Buterin, the founder of the Ethereum blockchain. It is a platform explicitly designed for smart contracts, token issues, investment vehicles, and autonomous corporations. In late May 2018

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means, and learned Mandarin as a child at home in a few months. Wright claims to have invented the blockchain himself, while Buterin gives credit to Nick Szabo for inspiring much of the Ethereum platform and Solidity language. Wright can be an intellectual bully, scorching opponents with his invective, while Buterin coolly

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smart contracts. To implement this plan, he devised a new programming language called Solidity, a new currency called ether, and a new blockchain, more flexible and capacious, called Ethereum. Each of these steps was fraught with inventions. The Solidity language would be Turing-complete, which meant it could express any set of

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The world is full of white papers and intricate concepts and ambitious claims. Now competing with Ethereum are such highly touted and well-funded ventures as NEO in China, Dan Larimer’s EOS (derived from the social blockchain Steemit and the distributed exchange BitShares), and Cardano, crafted by the sophisticated BitShares and

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Ethereum veteran Charles Hoskinson. The amazing thing about Ethereum is not its claims or technology but the almost flawless execution by its callow founder

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of Internet technology today, from Google to Apple, is its broken security model, and Ethereum is not immune to the problem. In 2017, it survived a possibly life-threatening crisis when one of the projects using its blockchain, the Distributed Autonomous Corporation, was hacked for some $150 million worth of ether. (

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Two breakdowns involving Ethereum-related “wallets” followed). Under Buterin’s sure-footed leadership, much of the damage was contained, but

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reversing the offending transactions, resulting in a “hard fork” and the rise of a rival chain called Ethereum Classic, led by the former Ethereum coder Hoskinson. This incident was not the result of flaws in the Ethereum blockchain itself, but that didn’t matter. As the ruler of the chain, Buterin could not escape

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the need to intervene. Proponents of Ethereum Classic contend that this arbitrary action undermined the immutability of the database and the principle of decentralization

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that is the heart of the blockchain. Ethereum Classic has not yet had much influence. Hoskinson has gone on to form Cardano

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, attempting a blockchain that redresses all the flaws of bitcoin through rigorous functional software. Saifedean Ammous, the author of

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The Bitcoin Standard, contends: “The fact that Ethereum could be rolled back means that all blockchains smaller than Bitcoin’s are essentially centralized databases under the control of their operators.”5 The key difference between the bitcoin and Ethereum blockchains is that bitcoin focuses on security and simplicity while

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Ethereum focuses on capability and functionality. Ethereum’s superior functionality is transforming a number of industries. As Buterin puts it, “The Internet tended to displace

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workers doing routine work on the edge of the system; the blockchain tends to disintermediate executives in the center.” Smart

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contracts may disintermediate lawyers, accountants, and bankers who do not get aboard. As Buterin says, “The Internet displaced the jobs of taxi drivers; the blockchain may displace Uber.” Indeed, an Ethereum company called Swarm is attempting to enable cab-drivers to transact directly with their customers through a cooperative scheme on the

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blockchain. As Wright insists, however, a simple system focused on security may in the end be more functional than a complex system focused on capabilities.

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tall, blond-haired software engineer from Arizona who needed help in Manhattan on a storage project named Syndicate, an enterprise file-storage system based on blockchains. Using cryptographic mathematics—hashes across time—it provides safe pointers to computer storage locations and addresses. Syndicate could use storage facilities like Google Drive, Amazon

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Shea, the CEO, sums it up: “We are going for a much simpler system than Ethereum. With a larger attack surface, more things can go wrong. We are using blockchain and software for the core functions of naming, discovery of routing information, and payments. . . . [C]ore components like identity and discovery

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should not be done in a way that exposes a large attack surface.” While Blockstack minimizes the use of blockchain for storage and complex computation, Ethereum burdens its chain with both storage and software loops and recursions. Thus it may become less efficient and less scalable and more

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of a throng of hundreds of new companies raising billions of dollars to launch new capabilities for a reformed Internet based on the blockchain-distributed ledger innovations of Satoshi. Ethereum, its ether valued at $60 billion as I write, is obviously the current leader in providing a global distributed platform for new

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its “state” of time-stamped records) while being organizationally decentralized (distributing control and replicating ledger accounts across all the nodes of the network). Satoshi’s blockchain is the first embodiment of these two apparently contradictory concepts, which evoke the medieval concept of the cadastre, a public record of all real property

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Blockstack chose to use the Namecoin blockchain, one of the first bitcoin rivals, optimized for storing immutable names. But by 2016, Ali and Shea noticed that Namecoin was increasingly vulnerable to attack by an increasingly concentrated group of miners. Scrutinizing data on all the available blockchains, including Ethereum, they discovered that by far

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the most robust, secure, and reliable blockchain was Satoshi’s bitcoin blockchain. Blockstack now faced a critical test, having to move some eighty thousand subscribers from one

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blockchain to another. Fortunately, the team had already anticipated this kind of challenge with Jude Nelson’s virtual chains in

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argue that this makes it easier for average people to reap the business successes of blockchain-powered companies, since (1) there are more of them now, and (2) they all have tokens whose value may appreciate. Ethereum sort of does this with ERC20, but it doesn’t work at scale. Plus,

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his one billion BATs—the unit of exchange for an ingenious new decentralized open-source and efficient digital advertising platform based on Vitalik Buterin’s Ethereum blockchain. Advertisers award BATs to publishers based on the attention of users measured by the pattern of their usage. Users too will be paid in BATs

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works, for example, combine contributions from composers, lyricists, performers, distributors, and other participants, all of whom have particular claims. As an OTOY white paper explains: “Blockchains can handle intricate property rights needed for complex digital assets that can be routinely copied and for which time-stamped proof of authorship is crucial

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” for framing and sending software instructions for smart contracts or conditional transactions. To pay for it all, it also supplies coins—ether. Embedded in the Ethereum blockchain, smart contracts can carry out financial transactions or monetary deals. Buterin offers the analogy of a vending machine, but any similar stepwise tree algorithm applies

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a massive boost to other peer-to-peer protocols by adding an economic layer.” Most of the other crypto-ventures have used this more resourceful Ethereum blockchain and Solidity language to build their infrastructures. For reach and ingenuity, it is hard to excel Golem. Calling itself, with partial felicity, an “Airbnb for

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already loaded down with names such as Intel, J. P. Morgan, Mastercard, and Samsung. Established to build and extend Ethereum-based standards and architectures, this alliance attests to the broad interest in Ethereum blockchain technology at the highest levels of finance and industry. At the end of September of the same year, Toyota

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a distributed computation utility like PG&E, selling our customer’s spare compute cycles on our marketplace. . . .” The blockchain transforms the architecture of the Internet from the bottom up. Vitalik Buterin’s Ethereum transforms the network from an array of parochial hierarchies to a global heterarchy anchored in a new model of

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definition voice, 5G is the technological infrastructure for a coming revolution in networks. It enables new distributed security systems for the Internet of Things, the blockchain ledgers of the new crypto-economy of micropayments, and the augmented and virtual reality platforms of advanced Internet communications. It is especially important for Urs

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the human mind for more creative adventures and accomplishments. Expectations of human sacrifices to the Moloch of machinery are at odds with nature and truth. Blockchains, hashchains, blockstacks, smart contracts, token issues, and cryptocurrencies are new ways to address the evils of the Google Age: porous Internet security, unmoored money,

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satisfied. Then, where suboptimal performance satisfies the market, modularity—using standardized interfaces and components—will reduce costs and expand market share.2 In the bitcoin blockchain, companies accept cumbersome solutions constantly distributing a 120-gigabyte ledger across the network when most of the functions could be performed ten thousand times more

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It thus uses the blockchain for what a blockchain can offer—security, identity, and trust—while freeing the blockchain from what it cannot offer—huge transaction speeds and storage space. Its key figures are Muneeb Ali, Ryan Shea, Luke Nelson, and Michael J. Freedman of Princeton. NEO is an Ethereum rival that is dominant

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the currency space as measuring sticks, one of the most intriguing of the projects is the DigixDAO, another Chinese company. The first ICO on the Ethereum blockchain, it surprised the world by raising $5.5 million in a day. The DXC is a coin based on gold bullion, mined in humane ways

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recompute and restate all the transactions since Genesis. Bitcoins are not coins, but metrics or measuring sticks for transactions that are permanently registered in the blockchain. Blockchain: A database, similar to a cadaster of real estate titles, extended to events, covenants, patents, licenses, or other permanent records. All are hashed together

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, William James et al “Scaling the Power Wall: A Path to Exascale,” IEEE Micro, September/October 2011. Eich, Brendan. Brave Software, Basic Attention Token (BAT), Blockchain Based Digital Advertising, White Paper (March 13, 2018). Gilder, George. “The Information Factories,” Wired, October 1, 2006. Hajdarbegovic, Nermin. “Lingusitic Researchers Name Nick Szabo

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February 16, 2012. Lieber, Franz. “Appointment in Tomorrow,” Galaxy Science Fiction, July 1951. Nelson, Jude and Muneeb Ali, Ryan Shea, Michael J. Freedman. “Extending Existing Blockchains with Virtualchain,” Workshop on Distributed Cryptocurrencies and Consensus Ledgers, Chicago, IL, July 2016. O’Hagan, Andrew. “The Satoshi Affair,” London Review of Books, Vol. 38

Stake Hodler Capitalism: Blockchain and DeFi

by Amr Hazem Wahba Metwaly  · 21 Mar 2021  · 80pp  · 21,077 words

DeFi (Decentralized Finance) Disclaimer Introduction Author's Note Chapter 1: DeFi Apps: The Ultimate Killer Apps in Blockchain What Is DeFi? Cryptography Chapter 2: Blockchain Storage structure Decentralization Transparency How secure is blockchain? Bitcoin vs. Blockchain Ways Blockchains Are Implemented Banking and finance Currency Health care Records of property Supply chains Pros and Cons of

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Blockchain Blockchain Advantages Disadvantages of Blockchain Chapter 3: Introduction to Smart Contracts The Operation Process of a Smart Contract How can you use smart contracts? Government Management Automobile Real estate Healthcare Benefits of Smart Contracts Problems of Smart Contracts Chapter 4: Ethereum and DeFi Popular DeFi Apps: Lending

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system that anyone can access without requiring trusted intermediaries or central authorities such as banks, brokerages, or exchanges. Cryptocurrencies are known to operate on a blockchain or public ledger technology implemented specifically as the backbone for it; the advantages offered by each of these smaller ecosystems formed by cryptocurrencies are unimaginable

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known to operate similarly to the traditional banking systems we have. When it comes to payments, we can achieve the same results with blockchain. The killer edge that blockchain has over conventional banking systems is the immutable and decentralized nature. Decentralization can give you a hundred percent uptime versus what traditional payment

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precise timestamp when it becomes a part of the chain. Decentralization Same as a database, Bitcoin needs a compilation of computers to store its blockchain. For Bitcoin, blockchain is simply a type of database which houses every Bitcoin transaction which ever existed in a series of interlinked blocks. In the case of

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computers and all the information each of them contains. Likewise, Bitcoin consists of thousands of computers; however, individual computers or pools of computers house its blockchain. These computers reside in different geographical locations, and they are all run by different people or groups of people. These computers that Bitcoin's network

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concept called tainting coins, and it’s the same as tainting money that gets stolen from banks through some form of colors. How secure is blockchain? Blockchain technology considers the matter of security and trust in different ways. First, recent blocks are always housed in a straight line and sequentially. They are

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, a French consultancy, roughly calculates that consumers could save up to $16 billion in banking and insurance fees every year with the aid of blockchain-based applications. Currency Blockchain shapes the foundation for cryptocurrencies like Bitcoin. The Federal Reserve controls the U.S. dollar. From this central authority system, a user's

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a decentralized form of record-keeping is almost without restrictions. Ranging from greater user privacy and increased security to reduced processing fees and little errors, blockchain technology may as well view applications far more than those mentioned above. However, there are also some disadvantages. Pros ● Improved correctness by taking away human

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of the potential inefficiencies of blockchain. Bitcoin’s PoW (proof of wor) system takes about ten minutes to include a new blockchain block. At that speed, it’s calculated that the blockchain network can only take care of about seven transactions per second (TPS). Although other cryptocurrencies such as Ethereum function better than Bitcoin

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, they are still restricted by blockchain. Legacy Visa systems, for context, can process

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up to 24,000 TPS. Solutions to this problem have been in development for years. Currently, some blockchains are bragging over 30,000 transactions per second. Illegal

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any need for litigation”. – Jeff Garzik, owner of blockchain services Bloq Smart Contracts are simply programs that run on the Ethereum blockchain. It is a set of code (functions) and data (states) located at a certain Ethereum blockchain address. Smart contracts are a form of an Ethereum account. What it implies is that it contains a

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familiar syntax. Smart contracts regulate the behavior of accounts in the Ethereum platform. Solidity is inspired by C++, Python, and JavaScript and is structured for the Ethereum Virtual Machines. It is mainly used to perform smart contracts on various blockchain platforms such as Ethereum. It was developed by Christian Reitwissner, Alex Beregsazi, and several

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former Ethereum key contributors to enter smart contracts on blockchain platforms. The Solidity programming language is primarily intended for

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code development and implementation of the Ethereum virtual machine. Furthermore, smart contracts establish the

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agreement in the same way that a conventional contract does, but it also enforces those obligations automatically. ● Vyper Vyper allows you to program on Ethereum, a blockchain-based virtual machine that permits smart contracts' design and execution without the need for centralized or trusted intermediaries. It was developed to improve after Solidity

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, another smart contract language for Ethereum, by restricting unsafe practices and increasing readability. Vyper finds to run the security and audits of smart contracts efficiently. Vyper

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of contractual agreements. Before smart contracts are implemented on any blockchain, another essential thing required is to pay the contracts' execution fees. For instance, if a smart contract is to be executed in the Ethereum blockchain, the contract procedures are commonly performed on the Ethereum Virtual Machine (EVM), and the parties to the contract

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pay for the transaction using the Ethereum crypto coin called “gas” or ether. The more complicated a smart contract is

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, insurance premiums, property law, credit enforcement, legal procedures to crowdfunding agreements. How can you use smart contracts? According to Jerry Cuomo, the Vice President for blockchain technologies at IBM, smart contracts can be used across all areas ranging from financial services, health care, insurance, etc. Here are ways through which smart

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method can be used to ensure that research is performed through HIPAA laws securely and confidentially. Furthermore, receipts of surgeries can be stored on a blockchain and automatically sent to insurance providers as evidence of delivery. The ledger can also be used for general healthcare management like overseeing drugs, regulating obedience

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choice of templates for smart contracts. You have to use whatever resource you are given because you cannot code independently of these resources. Ethereum Ethereum is a known blockchain platform that is the most advanced for coding and processing smart contracts. You are given the liberty to code whatever you desire but would

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DeFi Let’s start by specifying that presently, most if not pretty much all of the DeFi projects are built on Ethereum. Ethereum is a decentralized blockchain that allows other decentralized blockchain applications (dApps) to be built on smart contracts, and some of these apps can have their exchangeable tokens. The compound is one

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of the protocols that primarily deal with decentralized financial services that save and lend cryptocurrency. The main reason for this is the fairly powerful Ethereum

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day, and the greatest value lies in smart contracts that create additional networking effects. One of the widely adopted programming languages for smart contracts on Ethereum Blockchain is called Solidity. Solidity allows the creation of advanced smart contracts containing all the necessary logic for the DeFi applications. Besides

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type of cryptocurrency exchange that enables direct peer-to-peer transactions with cryptocurrencies online, securely, and without intermediaries. In transactions made through decentralized exchanges, the blockchain is usually replaced by the usual third-party organizations that monitor decentralized general ledgers' security and asset transfers (e.g., banks, securities brokers, online payment

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) (cTokens) representing your cryptocurrency balance in return. That token and many other tokens are created on Ethereum’s blockchain as an ERC-20. ERC-20 tokens are one of the biggest advantages and innovations in the blockchain-based cryptocurrency market. When earning (or paying) interest, it can be transferred, sold, or programmed to

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other Dapps in the DeFi ecosystem just like any other Ethereum token. Treat these tokens as if they were managing digital assets on the Ethereum blockchain with public and private keys. Interest rates depend on how much cryptocurrency (or liquidity) is available in each market

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and in real-time with supply and demand to reflect current market conditions. The interest rates displayed are listed as annual interest rates and are charged each time an Ethereum block

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distinguishing yield from liquidity and other factors across the DeFi policies. DAOs Decentralized autonomous organization (DAO) cooperates according to the transparent regulations encoded on the Ethereum blockchain, thereby eradicating the desire for a centralized and organizational element. Other popular protocols in the DeFi space like Maker and Compound have initiated DAOs to

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economic system for the underbanked and unbanked populace and help big financial institutions streamlining market infrastructure and serve better wholesale and retail customers. Prediction markets Blockchain-based prediction markets impede the crowd's reasoning and help users vote and exchange value on the result of events. Market prices then become crowdsourced

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-bearing savings account where stakes receive interest – rewards for assessing blocks on the Ethereum policies before it gets appended to the blockchain. Tokenization This is one of the fundamentals of decentralized finance and an aboriginal function of the Ethereum blockchain. Tokens do not only power the network but also opens a diversity of economic

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possibilities. Simply, a token is a digital asset that is developed, granted, and directed on a blockchain. Tokens are built to be safe and immediately movable, and

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programmed with a span of inbuilt functionalities. Ranging from real estate security tokens that illustrate fractionalized properties to platform-specific tokens that motivate using a particular application, Ethereum-based tokens have risen as a safe

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customer protocol (KYC) Requires to Know Your Customer Open source - encouraging free collaboration Closed source -decisions made behind closed doors DeFi is generated on the blockchain CeFi is generated on old foundations DeFi is cheaper, mostly network fees CeFi is more expensive- intermediaries charging hefty fees DeFi is censorship resistant CeFi

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advantages as broadly as possible? This is the challenge that threatens to fruit in the next few years. Benefits of DeFi Decentralized finance uses the Ethereum blockchain's major standards to maximize financial security and translucency, open liquidity and growth opportunities, and consent to an integrated and organized economic system. Programmability Smart

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that are extremely programmable automate performance and encourage new financial tools and digital investments. Immutability Change-proof data coordination across a blockchain's decentralized architecture heightens safety and audibility. Interoperability Ethereum's comparable software stack makes sure that DeFi policies and applications are designed to incorporate and complement one another. Developers have

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it as the money Legos. Transparency All transactions are broadcasted to and validated by the users on the network on the public Ethereum blockchain. It is important to note that Ethereum addresses are encrypted keys that are pseudo-anonymous. The degree of translucency around data transactions is highly desirable due to its rich

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token type. However, this may change in the future. Why? Currently, most of this activity takes place in the Ethereum ecosystem. However, Cross-chain linkages and other similar improvements could make DeFi applications decouple from underlying blockchain platforms in the future. This means that any smart contract would be compatible with any

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, with the aid of smart contract programs. DApps are accessed through a WebCam3 browser extension or application like MetaMask, allowing users to interact with the Ethereum blockchain through a website. Furthermore, most of these DApps can connect and work in unison to create detailed financial services. For instance, a Stable-coin holder

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example of a DeFi policy is Uniswap. This is a decentralized exchange or dex that operates on the Ethereum blockchain and permits the trading of hundreds of various digital tokens that are produced on the Ethereum blockchain. Instead of depending on the centralized market markers to fill orders, Uniswap’s algorithm encourages users to

The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology

by William Mougayar  · 25 Apr 2016  · 161pp  · 44,488 words

's where the fun really begins. Perhaps William's book will inspire you to understand and, perhaps, join in refining the business blockchain. Vitalik Buterin Ethereum inventor and Chief Scientist, Ethereum Foundation APRIL 2, 2016 ACKNOWLEDGMENTS SOME SAY WRITING A BOOK is a labor of love, and they are right. For me, it

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looked at it for three seconds, got agitated, opened Inkscape on his Windows PC, and frenetically started drawing the first version of a blockchain-based architectural framework with Ethereum in it. That architecture drawing was later iterated upon, and appeared in one of Vitalik's blog posts, titled “On Silos.”2 Over

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the next several months, and up to this day, we became reverse mentors. He taught me a lot about blockchains, and I advised him on

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business matters and growing Ethereum. I may never comprehend a fraction of Vitalik's blockchain dreams on a given night, but one thing I am certain about, is that Vitalik Buterin

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is emerging as a savvy business person, following the ranks of other bright technologists, while continuing to lead the Ethereum core technology and its Foundation. I proceeded

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to write 50 blog posts on Bitcoin, blockchains, and Ethereum, and immersed myself with global creators, innovators, pioneers, leaders, entrepreneurs, startups, enterprise executives and practitioners who were

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at the leading edges of blockchain technology and its implementation. Much of this book is marked by the historical perspective

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readers will find The Business Blockchain as useful as I found it exhilarating to write. William Mougayar Toronto, Ontario wmougayar@gmail.com MARCH 2016 NOTES 1.“A Next-Generation Smart Contract and Decentralized Application Platform,” https://github.com/ethereum/wiki/wiki/White-Paper#ethereum. 2.“On Silos,” https://blog.ethereum.org/2014/12/31

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/silos/. INTRODUCTION IF THE BLOCKCHAIN has not shocked you yet, I guarantee it will shake you soon. I have not seen

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terms of capturing the imagination of people, a small number first, but then spreading rapidly. Welcome to the new world of the blockchain and blockchains. At its core, the blockchain is a technology that permanently records transactions in a way that cannot be later erased but can only be sequentially updated, in essence

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them, as the first step in establishing a foundational understanding of the blockchain. 1. Digital Cryptocurrency The digital currency function is probably the most “visible” element in a blockchain, especially if the blockchain is a public one, for example, Bitcoin (BTC) or Ethereum (ETH). Cryptocurrency is generally an economic proxy to the viable operations

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and security of a blockchain. Sometimes it is represented by a token, which is another form

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with prospects of largely exceeding it due to advances in sidechain technology and expected increases in the Bitcoin block size. Some other blockchains are faster than Bitcoins. For example, Ethereum started with 10 TPS in 2015, edging towards 50–100 TPS in 2017, and targeting 50,000–100,000 TPS by 2019

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.8 Private blockchains are even faster because they have less security requirements, and we are seeing 1,000–10,000 TPS in 2016, going

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they do, an audit trail could be destroyed or lost, because it’s not tamper proof. In the blockchain, the transition history is a persistent part of the information about that state. In the Ethereum blockchain, a distinct “state tree” is stored, representing the current balance of each address, and a “transaction list

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there was no platform that could enforce smart contracts, until the advent of the Bitcoin blockchain technology in 2009. Since 2015, smart contracts have been gaining popularity, especially since Ethereum made programming them a basic tenet of their blockchain’s power. Like any new buzzword, the more a term gets popular, the more

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coined as “web3” by Gavin Wood.6 Web3 is an architecture that runs specifically on the blockchain. Using Ethereum as a primary example, a web3 architecture includes: 1) an advanced browser as the client, 2) the blockchain ledger as a shared resource, and 3) a virtual network of computers that runs smart business

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logic programs in a decentralized way by interacting with the blockchain consensus engine that clears transactions or toggles

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. We are witnessing a delayering across various technology pieces: Applications Programming Interfaces (APIs) are now coming from a public infrastructure that is cryptographically secured (the blockchains). Blockchains are being used as a new form of database, for example as a place to permanently store immutable cryptographic keys (or hashes) in Distributed Hash

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that ran the same code. It proceeded to become a self-growing type of network. That is how public blockchains grow. Bitcoin was that first public blockchain, and it inspired many others. Ethereum was another major public blockchain that has grown rapidly to establish itself as the second largest and significant public, multi-purpose

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blockchain. One of the primary differences between a public and private blockchain is that public blockchains typically have a generic purpose and are

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generally cheaper to use, whereas private blockchains have a

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on any Java Virtual Machine (JVM) regardless of computer architecture. Some blockchains such as Ethereum have a similar “virtual machine” capability, which allows programs to execute on the blockchain without requiring developers to be aware of the inherent computer architecture. Another blockchain criticism is the lack of so-called “killer apps” that are supposed

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sufficient. MARKET/BUSINESS CHALLENGES Some of the market and business challenges are macro-related, while others are more organization-specific. Moving assets to the blockchain The blockchain is a super fast rail that moves digital assets. But, the first challenge relates to placing the train on the rails before it can start

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. Unclear Regulations As long as the position of regulators is not clarified, confusion and uncertainty will continue to exist for everyone involved in the blockchain space. The blockchain is a blockbuster technology that affects so many areas, and it is likely that different flavors of regulation will come at it from a

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Mougayar, http://startupmanagement.org/2015/12/08/update-to-the-global-landscape-of-blockchain-companies-in-financial-services/. 7. “Blockchain 2015: Strategic Analysis in Financial Services,” William Mougayar,http://www.slideshare.net/wmougayar/blockchain-2015-analyzing-the-blockchain-in-financial-services. 8. “Ethereum-inspired Clearmatics to save OTC markets from eternal darkness,” Ian Allison, IB

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Times, http://www.ibtimes.co.uk/ethereum-inspired-clearmatics-save-otc-markets-eternal-darkness-1545180. 5 LIGHTHOUSE INDUSTRIES & NEW INTERMEDIARIES

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“Fool you are to say you learn by your experience! I prefer to profit by others’ mistakes, and avoid the price of my own.” –PRINCE OTTO VON BRISMARCK THIS CHAPTER COVERS the blockchain’s impact

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mean they get married in the jurisdiction of Estonia, or in any other jurisdiction. They get married only in the “blockchain jurisdiction.”4 Ukraine is pioneering a blockchain-based election platform (on Ethereum) that will allow multiple levels of elections, including political primaries, elections, online petitions or referenda.5 For traditional companies, BoardRoom6

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is an out-of-the-box board governance platform that relies on the blockchain to manage decentralized consensus with table proposals that

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markets creation, or rule-based payments. RWE, a German energy company, is looking at connecting electric vehicles charging stations to a blockchain (via Slock.it, which is running on Ethereum). This service allows users to charge their cars and pay in microtransaction slices. The charging station handles user authentication, payment processing and

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/notary/. 4. “Bitnation and Estonian Government Start Spreading Sovereign Jurisdiction on the Blockchain," IB Times, Ian Allison, http://www.ibtimes.co.uk/bitnation-estonian-government-start-spreading-sovereign-jurisdiction-blockchain-1530923, November 2015. 5. “Ukraine Government Plans to Trial Ethereum Blockchain-Based Election Platform," Bitcoin Magazine, https://bitcoinmagazine.com/articles/ukraine-government-plans-to

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-trial-ethereum-blockchain-based-election-platform-1455641691, February 2016. 6. BoardRoom, http://boardroom.to/. 7. Otonomos

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, otonomos.com. 8. List of countries by Fragile States Index, Wikipedia, https://en.wikipedia.org/wiki/List_of_countries_by_Fragile_States_Index. 9. “Guartime Secures over a Million Estonian Healthcare Records on the Blockchain," Ian

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is efficient, secure, and well supported. Virtual Machine It is a concept, borrowed by the popular Java Virtual Machine (JVM) approach, but pioneered by Ethereum, within the blockchain development context. The Virtual Machine depicts the part of the protocol that handles internal state and computation. It can be thought of as a

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segments the various approaches: APPROACH HOW IT’S DONE EXAMPLES IT Services We will build you anything Big IT firms Blockchain You work directly with the blockchain’s tools and services Bitcoin, Ethereum Development Platforms Frameworks for IT professionals Eris, BlockApps Solutions Industry-specific Clearmatics, DAH, Chain APIs & Overlays DIY assembling pieces Open

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Assets, Tierion Issue 5: Back-end Integrations When blockchain applications start to reach full deployment levels, they will eventually need to integrate

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. This gets us to the next nugget in this emerging puzzle: how do we create new value? You create value by running services on the blockchain. Blockchain services will succeed by creating a new ecosystem (just like the Web did), and it will get stronger on its own over time. There is

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let us program our world on top of them, any way we would like. Blockchains will be the best new tool of the decade. SELECTED BIBLIOGRAPHY Buterin, Vitalik. “Ethereum and Oracles.” Ethereum Blog. 2014. https://blog.ethereum.org/2014/07/22/ethereum-and-oracles/. Chaum, David, Debajyoti Das, Aniket Kate, Farid Javani, Alan T. Sherman

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A Airbnb algorithms anonymity API Apple ApplePay artificial intelligence assets audit B banks Barack Obama, President Bill Clinton, President bitcoin BitNation BlockApps blockchain applications Blockchain Labs BoardRoom C Cambridge Blockchain capital markets Carlota Perez CFTC Chain clearing clearinghouse Clearmatics cloud consensus ConsenSys counterparty crypto 2.0 crypto 3.0 cryptocurrency Crypto Economy cryptography

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czar D DAO Dapps database David Chaum Decentralization decentralized applications derivatives developers DHT digital asset distributed ledger DTCC E e-commerce energy Eris Estonia Ethereum F

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board of directors of OB1, the OpenBazaar open source protocol that is pioneering decentralized peer-to-peer commerce; a special board advisor to the Ethereum Foundation, the leading blockchain technology platform for decentralized applications; a member of OMERS Ventures Board of Advisors, one of Canada’s top venture capital firms; an advisory

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This Is for Everyone: The Captivating Memoir From the Inventor of the World Wide Web

by Tim Berners-Lee  · 8 Sep 2025  · 347pp  · 100,038 words

Billionaires' Row: Tycoons, High Rollers, and the Epic Race to Build the World's Most Exclusive Skyscrapers

by Katherine Clarke  · 13 Jun 2023  · 454pp  · 127,319 words

Narrative Economics: How Stories Go Viral and Drive Major Economic Events

by Robert J. Shiller  · 14 Oct 2019  · 611pp  · 130,419 words

The New Silk Roads: The Present and Future of the World

by Peter Frankopan  · 14 Jun 2018  · 352pp  · 80,030 words

This Is Not a Drill: An Extinction Rebellion Handbook

by Extinction Rebellion  · 12 Jun 2019  · 138pp  · 40,525 words

Lab Rats: How Silicon Valley Made Work Miserable for the Rest of Us

by Dan Lyons  · 22 Oct 2018  · 252pp  · 78,780 words

Exponential Organizations: Why New Organizations Are Ten Times Better, Faster, and Cheaper Than Yours (And What to Do About It)

by Salim Ismail and Yuri van Geest  · 17 Oct 2014  · 292pp  · 85,151 words