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Foundations of Blockchain

By : Koshik Raj

Foundations of Blockchain

By: Koshik Raj

Overview of this book

Blockchain technology is a combination of three popular concepts: cryptography, peer-to-peer networking, and game theory. This book is for anyone who wants to dive into blockchain from first principles and learn how decentralized applications and cryptocurrencies really work. This book begins with an overview of blockchain technology, including key definitions, its purposes and characteristics, so you can assess the full potential of blockchain. All essential aspects of cryptography are then presented, as the backbone of blockchain. For readers who want to study the underlying algorithms of blockchain, you’ll see Python implementations throughout. You’ll then learn how blockchain architecture can create decentralized applications. You’ll see how blockchain achieves decentralization through peer-to-peer networking, and how a simple blockchain can be built in a P2P network. You’ll learn how these elements can implement a cryptocurrency such as Bitcoin, and the wider applications of blockchain work through smart contracts. Blockchain optimization techniques, and blockchain security strategies are then presented. To complete this foundation, we consider blockchain applications in the financial and non-financial sectors, and also analyze the future of blockchain. A study of blockchain use cases includes supply chains, payment systems, crowdfunding, and DAOs, which rounds out your foundation in blockchain technology.

Preface

Preface

Who this book is for

What this book covers

To get the most out of this book

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Free Chapter

Introduction

Introduction

What blockchain is

What blockchain isn't

Blockchain definitions

How are blockchains different from databases?

History of blockchain

The motivations behind blockchain

Characteristics of blockchain

Background of DLT

The different types of blockchain

Overview of blocks

Influence of Moore's law on blockchain technology

Summary

A Bit of Cryptography

A Bit of Cryptography

Cryptography in blockchain

Classical cryptography

Cryptographic primitives

Symmetric key cryptography

Asymmetric key cryptography

Cryptographic hashing

Encoding schemes

Summary

Cryptography in Blockchain

Cryptography in Blockchain

Hashing in blockchain

Digital signatures in blockchain

Summary

Networking in Blockchain

Networking in Blockchain

Peer-to-peer (P2P) networking

Network discovery

Block synchronization

Building a simple blockchain in a P2P network

Summary

Cryptocurrency

Cryptocurrency

Bitcoin basics

Keys and addresses

Transactions

Mining and consensus

Blockchain

Blockchain networks

Bitcoin hard forks and altcoins

A simple cryptocurrency application

Summary

Diving into Blockchain - Proof of Existence

Diving into Blockchain - Proof of Existence

MultiChain blockchain platform

Setting up a blockchain environment

Getting started with MultiChain

Proof of Existence architecture

Building the Proof of Existence application

Summary

Diving into Blockchain - Proof of Ownership

Diving into Blockchain - Proof of Ownership

Digital assets and identity

Proof of ownership

Smart contracts

Choosing the smart contract platform

NEO blockchain

Ethereum blockchain

Summary

Blockchain Projects

Blockchain Projects

Categorizing the blockchain projects

Financial blockchain projects

Non-financial blockchain projects

Links for the projects

Summary

Blockchain Optimizations and Enhancements

Blockchain Optimizations and Enhancements

Blockchain optimizations

Blockchain enhancements

Summary

Blockchain Security

Blockchain Security

Transaction security model

Decentralized security model

Attacks on the blockchain

Threats of quantum computing

Summary

When Shouldn't We Use Blockchain?

When Shouldn't We Use Blockchain?

Distributed databases versus distributed ledger technology (DLT)

What can we store on a blockchain?

Centralized versus decentralized application architecture

Properties of blockchain

Decision models for blockchain

Summary

Blockchain Use Cases

Blockchain Use Cases

Tracking provenance in the supply chain

Financial system

Crowdfunding

Non-profit autonomous organizations

Summary

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NEO blockchain

NEO is a blockchain platform and cryptocurrency that facilitates the creation and management of digital assets and smart contracts. The NEO project was originally launched in 2014 under the name of AntShares, until it changed its name in June, 2017. All the development resources were provided by founder, Da Hongfei, from his business blockchain solution company, called Onchain. The main motive of the NEO project is to achieve a smart economy with the help of digital assets, digital identity, and smart contracts in a distributed network.

The platform uses two kinds of token, called NEO and GAS. Unlike Bitcoin, a NEO token is a non-divisible token, which means that the minimum unit of NEO is 1. Holding the NEO tokens gives the right to vote during the consensus mechanism, which is explained in the, Consensus algorithm section. Holding the NEO token generates a new...

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