Inside Blockchain, Bitcoin, and Cryptocurrencies
-10%
portes grátis
Inside Blockchain, Bitcoin, and Cryptocurrencies
Chowdhury, Niaz
Taylor & Francis Ltd
09/2019
390
Dura
Inglês
9781138618152
15 a 20 dias
700
Descrição não disponível.
Contents
List of Figures...............................................................................................xix
List of Tables................................................................................................xxv
Section I ?BLOCKCHAIN AND BIT COIN
1 Introduction to Blockchain.....................................................................3
1.1 The Birth of Bitcoin............................................................................3
1.1.1 A Mysterious Scientist............................................................4
1.1.2 What is Bitcoin?.....................................................................4
1.1.3 Double-Spending Problem.....................................................5
1.1.4 Nakamotos Solution..............................................................6
1.2 Blockchain..........................................................................................7
1.2.1 Motivation.............................................................................7
1.2.2 Definition of Blockchain........................................................8
1.2.3 Distributed Ledger.................................................................8
1.2.4 Key Properties........................................................................9
1.3 Architectural Overview....................................................................10
1.3.1 Centralised vs Decentralised Architecture...........................10
1.3.2 Peer-to-Peer Network...........................................................11
1.3.3 Characteristics.....................................................................13
1.4 Block................................................................................................14
1.4.1 Structure..............................................................................14
1.4.2 Block Identifier and Height..................................................15
1.4.3 Genesis Block.......................................................................16
1.5 Mining.............................................................................................16
1.5.1 What is Mining?..................................................................16
1.5.2 Consensus............................................................................16
1.5.3 Incentivisation.....................................................................17
1.6 Forks................................................................................................17
1.6.1 When Does a Fork Occur?...................................................17
1.6.2 Types of Forks......................................................................18
1.7 Consensus Mechanisms....................................................................18
1.7.1 Proof of Work (PoW)...........................................................18
1.7.2 Alternative Consensus Algorithms.......................................19
1.7.3 Comparison.........................................................................20
1.8 Types of Blockchains........................................................................21
1.8.1 Public and Private Blockchains............................................21
1.8.2 Consortium, Shared Ledger, Sidechain................................21
1.8.3 Hybrid Blockchains.............................................................22
1.8.4 Comparison.........................................................................22
1.9 Applications......................................................................................23
1.10 Revisiting the Double-Spending Problem.........................................26
1.11 Summary..........................................................................................26
2 Immutability of Blockchain..................................................................27
2.1 Cryptography...................................................................................27
2.1.1 What is Cryptography and Cryptanalysis?...........................28
2.1.2 Background.........................................................................28
2.1.3 Basic Concepts.....................................................................29
2.2 Modern Cryptography......................................................................30
2.2.1 Symmetric-Key Cryptography.............................................31
2.2.2 Public-Key Cryptography....................................................33
2.3 Cryptographic Applications..............................................................36
2.3.1 TLS and SSL........................................................................36
2.3.2 Cryptographic Hash Function.............................................37
2.3.3 Digital Signature..................................................................38
2.4 Elliptic Curve Cryptography (ECC).................................................41
2.4.1 Basic Concept......................................................................41
2.4.2 Public and Private Keys....................................................... 42
2.4.3 How Does ECC Compare to RSA?......................................43
2.5 Making Blockchain Immutable....................................................... 44
2.5.1 Block and Block Header..................................................... 44
2.5.2 Timestamp.......................................................................... 44
2.5.3 Merkle Tree.........................................................................45
2.5.4 Building the Chain..............................................................45
2.6 Summary..........................................................................................48
3 Consensus Mechanisms of Blockchain..................................................49
3.1 Distributed Systems and Consensus.................................................49
3.1.1 Distributed Systems.............................................................50
3.1.2 Coordination and Agreement..............................................50
3.1.3 Consensus............................................................................51
3.2 Byzantine Generals Problem.............................................................52
3.2.1 Two Generals Paradox..........................................................52
3.2.2 Byzantine Generals Problem................................................53
3.2.3 Byzantine Fault Tolerance....................................................55
3.3 Blockchain's Consensus Mechanism.................................................56
3.3.1 Hashcash Proof of Work......................................................56
3.3.2 Proof of Work in Blockchain...............................................57
3.3.3 BFT in Blockchain...............................................................58
3.4 Solving the Double-Spending Problem.............................................59
3.5 Summary..........................................................................................60
4 Bitcoin: World's First Cryptocurrency..................................................61
4.1 What is Bitcoin?...............................................................................61
4.2 Brief History of Bitcoin....................................................................63
4.2.1 Before Bitcoin......................................................................63
4.2.2 Bitcoin Era.......................................................................... 64
4.3 Token: BTC.................................................................................... 64
4.3.1 Bitcoin Mining and Supply..................................................65
4.3.2 Units of Bitcoin................................................................... 66
4.4 Bitcoin's Blockchain........................................................................ 66
4.4.1 Block Header.......................................................................67
4.4.2 Timestamp...........................................................................67
4.4.3 Merkle Tree.........................................................................67
4.4.4 Hash Generation..................................................................68
4.4.5 Genesis Block.......................................................................68
4.5 Bitcoin Address.................................................................................69
4.5.1 Formats................................................................................71
4.5.2 Hash Generation..................................................................72
4.5.3 Address Structure.................................................................72
4.6 Transactions.....................................................................................73
4.6.1 Input and Output................................................................74
4.6.2 Redeeming Tokens.............................................................. 77
4.6.3 Multi-Signature...................................................................78
4.6.3.1 Escrow..................................................................78
4.6.3.2 Cold Storage.........................................................78
4.6.4 Generation Transaction.......................................................79
4.6.5 Storing Data........................................................................79
4.6.6 Contracts.............................................................................79
4.7 Mining.............................................................................................80
4.7.1 Method................................................................................80
4.7.2 Proof of Work......................................................................82
4.7.3 Target and Difficulty...........................................................83
4.7.4 Mining Process................................................................... 84
4.8 Split Coins and Altcoins...................................................................85
4.8.1 Split Coins...........................................................................85
4.8.1.1 Bitcoin Cash.........................................................85
4.8.1.2 Bitcoin Gold.........................................................85
4.8.1.3 Bitcoin Private.......................................................86
4.8.2 Altcoins................................................................................86
4.8.2.1 Namecoin.............................................................87
4.8.2.2 Litecoin.................................................................87
4.8.2.3 Peercoin................................................................88
4.8.2.4 Nxt........................................................................88
4.8.2.5 Dash.....................................................................88
4.9 Summary..........................................................................................89
Section II ?SMART CONT RACTS
5 Ethereum and Smart Contracts.............................................................93
5.1 Introduction to Smart Contracts......................................................93
5.1.1 Vending Machine Analogy..................................................94
5.1.2 Nick Szabo and Bit Gold.....................................................95
5.1.3 Turing-Completeness...........................................................96
5.2 What is Ethereum?...........................................................................96
5.3 Token: ETH.....................................................................................97
5.3.1 Pre-Mining..........................................................................97
5.3.2 Price.....................................................................................98
5.3.3 Units....................................................................................98
5.4 Architecture......................................................................................99
5.4.1 Ethereum Virtual Machine (EVM).....................................99
5.4.2 Account.............................................................................100
5.4.3 Address..............................................................................101
5.4.4 Mist...................................................................................101
5.5 Mining...........................................................................................102
5.5.1 Mining Process..................................................................102
5.5.2 Block-Generation Rate.......................................................103
5.5.3 Rewards.............................................................................103
5.6 Smart Contracts in Ethereum.........................................................103
5.6.1 Transactions.......................................................................103
5.6.2 Gas....................................................................................104
5.6.3 High-Level Languages.......................................................104
5.7 ERC Standards...............................................................................105
5.7.1 ERC-20..............................................................................105
5.7.2 ERC-223............................................................................106
5.7.3 ERC-721............................................................................106
5.7.4 Other Standards................................................................107
5.8 Comparison to Bitcoin...................................................................107
5.9 Summary........................................................................................107
6 NEO ..................................................................................................109
6.1 What is NEO?................................................................................109
6.2 Token: NEO and GAS................................................................... 110
6.2.1 Token Generation.............................................................. 110
6.2.2 Token Distribution............................................................ 111
6.3 Architecture.................................................................................... 111
6.3.1 Basic Structure................................................................... 111
6.3.2 Advanced Features............................................................. 111
6.4 Consensus Mechanism: dBFT........................................................112
6.4.1 Algorithm..........................................................................112
6.4.2 Procedure...........................................................................113
6.4.3 Transaction Validation.......................................................113
6.4.4 View Change..................................................................... 114
6.4.5 Fault Tolerance and Transaction Time............................... 114
6.5 Smart Contracts............................................................................. 114
6.6 Summary........................................................................................ 116
7 EOS ..................................................................................................117
7.1 What is EOS?................................................................................. 117
7.2 Token: EOS.................................................................................... 118
7.2.1 Initial Coin Offering.......................................................... 118
7.2.2 Transaction Fees................................................................ 119
7.2.3 Inflation............................................................................. 119
7.3 Architecture.................................................................................... 119
7.4 Consensus Mechanism: DPoS........................................................120
7.4.1 Algorithm..........................................................................120
7.4.2 Procedure...........................................................................121
7.4.3 Reward..............................................................................122
7.5 Smart Contracts.............................................................................122
7.6 EOS.IO Operating System.............................................................123
7.6.1 Schema-Defined Actions and Database..............................123
7.6.2 Separation of Authentication from Applications................124
7.6.3 Inter-Blockchain Communication.....................................124
7.7 Summary........................................................................................124
Section III ?FINANCIAL NET WORKS
8 Ripple ..................................................................................................127
8.1 What is Ripple?..............................................................................127
8.2 Token: XRP....................................................................................128
8.2.1 Token Generation and Distribution...................................128
8.2.2 Bridge Currency.................................................................129
8.2.3 Market Capitalisation........................................................129
8.3 Architecture....................................................................................129
8.3.1 Hawala...............................................................................130
8.3.2 XRP Ledger.......................................................................131
8.3.3 Transactions.......................................................................132
8.4 Consensus Mechanism: RPCA.......................................................133
8.4.1 Components......................................................................133
8.4.2 Consensus Process.............................................................134
8.4.3 Correctness........................................................................135
8.5 Codius and Interledger...................................................................136
8.6 Real-Time Gross Settlement System...............................................136
8.6.1 RippleNet..........................................................................137
8.6.2 xCurrent............................................................................138
8.6.3 xRapid...............................................................................139
8.6.4 xVia....................................................................................139
8.7 Partners..........................................................................................139
8.8 Summary........................................................................................141
9 Stellar ..................................................................................................143
9.1 What Is Stellar?..............................................................................143
9.2 Token: Lumens (XLM)..................................................................144
9.2.1 Generation and Distribution..............................................144
9.2.2 Price and Market Cap........................................................145
9.2.3 Role of XLM in the Protocol.............................................145
9.3 Architecture....................................................................................146
9.4 Consensus Mechanism...................................................................146
9.4.1 Quorum and Slices............................................................146
9.4.2 Agreement..........................................................................148
9.5 Applications....................................................................................148
9.5.1 Anchors..............................................................................148
9.5.2 Distributed Exchange........................................................149
9.5.3 Multi-Currency Transactions.............................................149
9.6 Partners.......................................................................................... 153
9.7 Summary........................................................................................ 153
Section IV ADVANCED LEDGERS AND APPLICATION S
10 Purpose-Built Distributed Ledgers.....................................................157
10.1 Purpose-Built Ledgers and Blockchains.......................................... 157
10.2 Internet of Things: IOTA............................................................... 159
10.2.1 Overview........................................................................... 159
10.2.2 Technical Details............................................................... 159
10.2.3 Applications....................................................................... 161
10.2.4 Alternatives: IBM Watson and Waltonchain...................... 161
10.3 Supply Chain: OriginTrail..............................................................162
10.3.1 Overview...........................................................................162
10.3.2 Technical Details...............................................................163
10.3.3 Applications.......................................................................163
10.3.4 Alternatives: VeChain and OpenChain..............................163
10.4 Connectivity: Moeco......................................................................164
10.4.1 Overview...........................................................................164
10.4.2 Technical Details...............................................................164
10.4.3 Applications.......................................................................166
10.5 Cybersecurity: Naoris.....................................................................166
10.5.1 Overview...........................................................................166
10.5.2 Technical Details...............................................................167
10.5.3 Applications.......................................................................168
10.6 Private Network: HydraChain........................................................168
10.6.1 Overview...........................................................................168
10.6.2 Technical Details...............................................................168
10.6.3 Applications.......................................................................170
10.7 Framework: Hyperledger................................................................170
10.7.1 Overview...........................................................................170
10.7.2 Technical Details...............................................................171
10.7.3 Application........................................................................173
10.8 Emerging Distributed Ledgers........................................................173
10.8.1 Medical Services: MediChain and MediLedger.................173
10.8.2 Drug Development: BlockPhrama..................................... 174
10.8.3 Quality Assurance: Ambrosus............................................ 174
10.8.4 Sharing Economy: Slock.it................................................. 174
10.8.5 Genomic Data Collection: Nebula Genomics.................... 174
10.9 Summary........................................................................................175
11 Applications of Blockchain.................................................................177
11.1 Hype or Hope?...............................................................................177
11.2 Classification..................................................................................180
11.2.1 Classifying the Domains....................................................181
11.2.2 Classifying the Categories..................................................181
11.3 Citizen Services..............................................................................182
11.3.1 e-Governance.....................................................................182
11.3.2 Healthcare.........................................................................183
11.3.3 Education..........................................................................185
11.4 Business and Financial Services......................................................186
11.4.1 Financial Services...............................................................186
11.4.2 Smart Property..................................................................187
11.4.3 Exchange and Trading.......................................................187
11.5 Online Marketplace........................................................................187
11.5.1 e-Commerce......................................................................188
11.5.2 Online Betting, Gambling and Gaming............................189
11.5.3 e-Auctions and Online Bidding.........................................189
11.6 Supply Chain, Production and Provenance..................................... 191
11.6.1 Commercial Supply Chain................................................. 191
11.6.2 Food Production................................................................ 191
11.6.3 Drug Manufacturing.........................................................192
11.7 Safety and Security.........................................................................193
11.7.1 Cybersecurity.....................................................................193
11.7.2 Physical Safety, Security and Tracking...............................194
11.8 Smart City......................................................................................195
11.8.1 Smart Home......................................................................195
11.8.2 Smart Transportation.........................................................196
11.8.3 Smart Grid.........................................................................196
11.8.4 Citizen Engagement...........................................................197
11.8.5 Quality Control.................................................................197
11.9 Summary........................................................................................198
Section V CRYPTO CURREN CY
12 Evolution of Money: From Barter to Bitcoin.......................................201
12.1 Money............................................................................................201
12.1.1 Functions of Money...........................................................202
12.1.2 Properties...........................................................................202
12.1.3 Money Supply....................................................................203
12.1.4 Central Bank.................................................................... 204
12.2 Origin and Early Forms................................................................. 204
12.2.1 Barter: The Origin of Money?........................................... 204
12.2.2 Commodity and Representative Money............................ 206
12.2.3 Coinage.............................................................................207
12.2.4 Banknotes..........................................................................209
12.3 Fiat Money.....................................................................................212
12.3.1 Gold Standard...................................................................212
12.3.2 US Dollar Standard...........................................................212
12.3.3 Nixon Shock and Creation of Fiat Money..........................213
12.4 Digital Money................................................................................213
12.4.1 Centralised Digital Money.................................................213
12.4.2 Decentralised Digital Money.............................................214
12.5 Cryptocurrency.............................................................................. 215
12.6 Summary........................................................................................217
13 Cryptocurrency Mining......................................................................219
13.1 Mining........................................................................................... 219
13.1.1 Evolution of Mining......................................................... 220
13.1.2 Mining Process................................................................. 220
13.1.3 Difficulty...........................................................................221
13.1.4 Rewards.............................................................................221
13.2 Hash Rate.......................................................................................221
13.2.1 Understanding Hash Rate..................................................221
13.2.2 Calculating Hash Rate...................................................... 222
13.2.3 Hash Rate and Profits....................................................... 222
13.3 Mining Hardware.......................................................................... 222
13.3.1 Non-Specialised Hardware............................................... 222
13.3.2 Specialised Hardware (ASICs)...........................................224
13.3.3 Profitability Factors............................................................225
13.4 Pooled Mining................................................................................225
13.4.1 Pooled Mining Basics.........................................................225
13.4.2 Mining Pools.................................................................... 226
13.4.3 Reward Sharing................................................................ 228
13.5 Mining Nations............................................................................. 228
13.6 Criticism of PoW Mining...............................................................229
13.7 Summary........................................................................................231
14 Cryptocurrency Wallet........................................................................233
14.1 Wallet.............................................................................................233
14.1.1 Private Key and Address.................................................... 234
14.1.2 Transferring Funds........................................................... 234
14.2 Types of Wallets.............................................................................235
14.2.1 Web Wallet........................................................................236
14.2.2 Software Wallet.................................................................236
14.2.3 External Storage Media......................................................238
14.2.4 Paper Wallet.......................................................................238
14.2.5 Hardware Wallet................................................................239
14.2.6 Brain Wallet.......................................................................240
14.3 Special Wallets...............................................................................241
14.3.1 Multi-Signature Wallet......................................................241
14.3.2 Cold-Storage Wallet...........................................................241
14.3.3 Receive-Only Wallet..........................................................242
14.4 Deterministic Wallet......................................................................242
14.4.1 Type-1 Wallet....................................................................242
14.4.2 Type-2 Wallet....................................................................243
14.4.3 HD Wallet........................................................................ 244
14.5 Wallet Providers............................................................................ 246
14.6 Summary........................................................................................247
15 Cryptocurrency Trading and Investment............................................249
15.1 Investment......................................................................................249
15.1.1 Financial Instruments........................................................250
15.1.2 Commodities.....................................................................251
15.1.3 Currencies..........................................................................251
15.1.4 Derivatives.........................................................................252
15.1.5 Status of Cryptocurrency...................................................253
15.2 Portfolio.........................................................................................253
15.2.1 Funds.................................................................................253
15.2.2 Indices...............................................................................254
15.2.3 ETFs..................................................................................256
15.3 Exchanges and Platforms................................................................257
15.3.1 Cryptocurrency Trading Exchange....................................258
15.3.2 Derivative Trading Exchanges...........................................259
15.3.3 Investment Platforms........................................................ 260
15.4 Investment Strategy........................................................................261
15.4.1 Day Trading.......................................................................261
15.4.2 Buy and Hold....................................................................262
15.4.3 Value Investment...............................................................262
15.5 Investing in Cryptocurrencies.........................................................262
15.5.1 Self-Investment..................................................................263
15.5.2 Guided Investment........................................................... 264
15.6 Regulation and Tax Affairs.............................................................265
15.7 Summary....................................................................................... 266
16 Initial Coin Offerings (ICOs)..............................................................267
16.1 Overview........................................................................................267
16.1.1 The Creation of ICOs....................................................... 268
16.1.2 How Do ICOs Work?........................................................269
16.2 Token Creation...............................................................................269
16.2.1 Token.................................................................................269
16.2.2 Platforms............................................................................270
16.3 Understanding ICOs......................................................................271
16.3.1 ICOs vs IPOs.....................................................................271
16.3.2 Signs of Good and Bad ICOs.............................................272
16.3.3 Advantages and Disadvantages..........................................273
16.4 ICOs in Number............................................................................274
16.4.1 Amount Raised..................................................................274
16.4.2 Breakdown by Industry......................................................274
16.4.3 Biggest Winners and Losers...............................................275
16.5 Scams and Criticisms.....................................................................275
16.6 Summary........................................................................................277
Section VI ?SOCIO -ECONO MIC LANDSCAPE
17 Economic Outlook of Cryptocurrency................................................281
17.1 Classification..................................................................................281
17.1.1 Currency............................................................................282
17.1.2 Commodity.......................................................................283
17.1.3 Stock................................................................................. 284
17.2 Price of Bitcoin.............................................................................. 284
17.3 Volatility of Bitcoin........................................................................285
17.4 Historic Price Predictions...............................................................287
17.5 Price Movement of Major Cryptocurrencies...................................287
17.5.1 ETH..................................................................................288
17.5.2 XRP...................................................................................288
17.5.3 XLM..................................................................................289
17.5.4 NEO..................................................................................289
17.5.5 EOS...................................................................................289
17.6 Reception.......................................................................................290
17.6.1 Acceptance by Merchants..................................................290
17.6.2 Acceptance by Investors.....................................................291
17.6.3 Acceptance by Governments..............................................292
17.7 Summary........................................................................................293
18 Crime, Criminals and Cryptocurrencies.............................................295
18.1 Criminal Activities.........................................................................295
18.2 Deep Web.......................................................................................296
18.2.1 Darknet and Dark Web.....................................................297
18.2.2 Onion Routing and Tor.....................................................297
18.2.3 Bitcoin: The Missing Piece.................................................298
18.3 Darknet-Based Crimes...................................................................299
18.3.1 Silk Road...........................................................................299
18.3.2 Post-Silk Road Markets......................................................301
18.3.3 Assassination Markets....................................................... 304
18.3.4 Cybercrimes...................................................................... 306
18.4 Financial Crimes........................................................................... 308
18.4.1 Money Laundering........................................................... 308
18.4.2 Market Manipulation........................................................310
18.5 Fraudulent Activities.......................................................................310
18.5.1 False Claims....................................................................... 311
18.5.2 Scams.................................................................................312
18.6 Prevention......................................................................................312
18.6.1 Regulation.........................................................................313
18.6.2 Cooperation....................................................................... 314
18.6.3 Participation...................................................................... 315
18.7 Summary........................................................................................316
19 Regulations, Laws and Practices.........................................................317
19.1 Legality of Blockchain and Cryptocurrency................................... 317
19.2 Regulatory Issues............................................................................ 318
19.2.1 Misuse of Pre-Mining and ICOs........................................ 319
19.2.2 Crackdowns on Mining and Trading................................. 319
19.3 Current Landscape.........................................................................320
19.3.1 Challenges.........................................................................320
19.3.2 Areas..................................................................................321
19.3.3 Blockchain-Friendly Nations.............................................322
19.4 Regulations for Blockchain Technology and Cryptocurrency.........323
19.4.1 The Americas.....................................................................323
19.4.2 Europe...............................................................................324
19.4.3 Asia....................................................................................326
19.4.4 Australia and Africa...........................................................327
19.5 Summary........................................................................................328
20 Criticism, Scepticism and Support......................................................329
20.1 Before It All Started........................................................................329
20.2 Early Days of Bitcoin......................................................................330
20.3 Bitcoin Grabs Attention..................................................................331
20.4 Beginning of the Bull Run.............................................................332
20.5 Crazy Price Hike............................................................................334
20.6 To Invest or Not to Invest?.............................................................335
20.7 $10K and Counting........................................................................337
20.8 Nosedive.........................................................................................338
20.9 Summary....................................................................................... 344
Bibliography.................................................................................................345
Index............................................................................................................355
List of Figures...............................................................................................xix
List of Tables................................................................................................xxv
Section I ?BLOCKCHAIN AND BIT COIN
1 Introduction to Blockchain.....................................................................3
1.1 The Birth of Bitcoin............................................................................3
1.1.1 A Mysterious Scientist............................................................4
1.1.2 What is Bitcoin?.....................................................................4
1.1.3 Double-Spending Problem.....................................................5
1.1.4 Nakamotos Solution..............................................................6
1.2 Blockchain..........................................................................................7
1.2.1 Motivation.............................................................................7
1.2.2 Definition of Blockchain........................................................8
1.2.3 Distributed Ledger.................................................................8
1.2.4 Key Properties........................................................................9
1.3 Architectural Overview....................................................................10
1.3.1 Centralised vs Decentralised Architecture...........................10
1.3.2 Peer-to-Peer Network...........................................................11
1.3.3 Characteristics.....................................................................13
1.4 Block................................................................................................14
1.4.1 Structure..............................................................................14
1.4.2 Block Identifier and Height..................................................15
1.4.3 Genesis Block.......................................................................16
1.5 Mining.............................................................................................16
1.5.1 What is Mining?..................................................................16
1.5.2 Consensus............................................................................16
1.5.3 Incentivisation.....................................................................17
1.6 Forks................................................................................................17
1.6.1 When Does a Fork Occur?...................................................17
1.6.2 Types of Forks......................................................................18
1.7 Consensus Mechanisms....................................................................18
1.7.1 Proof of Work (PoW)...........................................................18
1.7.2 Alternative Consensus Algorithms.......................................19
1.7.3 Comparison.........................................................................20
1.8 Types of Blockchains........................................................................21
1.8.1 Public and Private Blockchains............................................21
1.8.2 Consortium, Shared Ledger, Sidechain................................21
1.8.3 Hybrid Blockchains.............................................................22
1.8.4 Comparison.........................................................................22
1.9 Applications......................................................................................23
1.10 Revisiting the Double-Spending Problem.........................................26
1.11 Summary..........................................................................................26
2 Immutability of Blockchain..................................................................27
2.1 Cryptography...................................................................................27
2.1.1 What is Cryptography and Cryptanalysis?...........................28
2.1.2 Background.........................................................................28
2.1.3 Basic Concepts.....................................................................29
2.2 Modern Cryptography......................................................................30
2.2.1 Symmetric-Key Cryptography.............................................31
2.2.2 Public-Key Cryptography....................................................33
2.3 Cryptographic Applications..............................................................36
2.3.1 TLS and SSL........................................................................36
2.3.2 Cryptographic Hash Function.............................................37
2.3.3 Digital Signature..................................................................38
2.4 Elliptic Curve Cryptography (ECC).................................................41
2.4.1 Basic Concept......................................................................41
2.4.2 Public and Private Keys....................................................... 42
2.4.3 How Does ECC Compare to RSA?......................................43
2.5 Making Blockchain Immutable....................................................... 44
2.5.1 Block and Block Header..................................................... 44
2.5.2 Timestamp.......................................................................... 44
2.5.3 Merkle Tree.........................................................................45
2.5.4 Building the Chain..............................................................45
2.6 Summary..........................................................................................48
3 Consensus Mechanisms of Blockchain..................................................49
3.1 Distributed Systems and Consensus.................................................49
3.1.1 Distributed Systems.............................................................50
3.1.2 Coordination and Agreement..............................................50
3.1.3 Consensus............................................................................51
3.2 Byzantine Generals Problem.............................................................52
3.2.1 Two Generals Paradox..........................................................52
3.2.2 Byzantine Generals Problem................................................53
3.2.3 Byzantine Fault Tolerance....................................................55
3.3 Blockchain's Consensus Mechanism.................................................56
3.3.1 Hashcash Proof of Work......................................................56
3.3.2 Proof of Work in Blockchain...............................................57
3.3.3 BFT in Blockchain...............................................................58
3.4 Solving the Double-Spending Problem.............................................59
3.5 Summary..........................................................................................60
4 Bitcoin: World's First Cryptocurrency..................................................61
4.1 What is Bitcoin?...............................................................................61
4.2 Brief History of Bitcoin....................................................................63
4.2.1 Before Bitcoin......................................................................63
4.2.2 Bitcoin Era.......................................................................... 64
4.3 Token: BTC.................................................................................... 64
4.3.1 Bitcoin Mining and Supply..................................................65
4.3.2 Units of Bitcoin................................................................... 66
4.4 Bitcoin's Blockchain........................................................................ 66
4.4.1 Block Header.......................................................................67
4.4.2 Timestamp...........................................................................67
4.4.3 Merkle Tree.........................................................................67
4.4.4 Hash Generation..................................................................68
4.4.5 Genesis Block.......................................................................68
4.5 Bitcoin Address.................................................................................69
4.5.1 Formats................................................................................71
4.5.2 Hash Generation..................................................................72
4.5.3 Address Structure.................................................................72
4.6 Transactions.....................................................................................73
4.6.1 Input and Output................................................................74
4.6.2 Redeeming Tokens.............................................................. 77
4.6.3 Multi-Signature...................................................................78
4.6.3.1 Escrow..................................................................78
4.6.3.2 Cold Storage.........................................................78
4.6.4 Generation Transaction.......................................................79
4.6.5 Storing Data........................................................................79
4.6.6 Contracts.............................................................................79
4.7 Mining.............................................................................................80
4.7.1 Method................................................................................80
4.7.2 Proof of Work......................................................................82
4.7.3 Target and Difficulty...........................................................83
4.7.4 Mining Process................................................................... 84
4.8 Split Coins and Altcoins...................................................................85
4.8.1 Split Coins...........................................................................85
4.8.1.1 Bitcoin Cash.........................................................85
4.8.1.2 Bitcoin Gold.........................................................85
4.8.1.3 Bitcoin Private.......................................................86
4.8.2 Altcoins................................................................................86
4.8.2.1 Namecoin.............................................................87
4.8.2.2 Litecoin.................................................................87
4.8.2.3 Peercoin................................................................88
4.8.2.4 Nxt........................................................................88
4.8.2.5 Dash.....................................................................88
4.9 Summary..........................................................................................89
Section II ?SMART CONT RACTS
5 Ethereum and Smart Contracts.............................................................93
5.1 Introduction to Smart Contracts......................................................93
5.1.1 Vending Machine Analogy..................................................94
5.1.2 Nick Szabo and Bit Gold.....................................................95
5.1.3 Turing-Completeness...........................................................96
5.2 What is Ethereum?...........................................................................96
5.3 Token: ETH.....................................................................................97
5.3.1 Pre-Mining..........................................................................97
5.3.2 Price.....................................................................................98
5.3.3 Units....................................................................................98
5.4 Architecture......................................................................................99
5.4.1 Ethereum Virtual Machine (EVM).....................................99
5.4.2 Account.............................................................................100
5.4.3 Address..............................................................................101
5.4.4 Mist...................................................................................101
5.5 Mining...........................................................................................102
5.5.1 Mining Process..................................................................102
5.5.2 Block-Generation Rate.......................................................103
5.5.3 Rewards.............................................................................103
5.6 Smart Contracts in Ethereum.........................................................103
5.6.1 Transactions.......................................................................103
5.6.2 Gas....................................................................................104
5.6.3 High-Level Languages.......................................................104
5.7 ERC Standards...............................................................................105
5.7.1 ERC-20..............................................................................105
5.7.2 ERC-223............................................................................106
5.7.3 ERC-721............................................................................106
5.7.4 Other Standards................................................................107
5.8 Comparison to Bitcoin...................................................................107
5.9 Summary........................................................................................107
6 NEO ..................................................................................................109
6.1 What is NEO?................................................................................109
6.2 Token: NEO and GAS................................................................... 110
6.2.1 Token Generation.............................................................. 110
6.2.2 Token Distribution............................................................ 111
6.3 Architecture.................................................................................... 111
6.3.1 Basic Structure................................................................... 111
6.3.2 Advanced Features............................................................. 111
6.4 Consensus Mechanism: dBFT........................................................112
6.4.1 Algorithm..........................................................................112
6.4.2 Procedure...........................................................................113
6.4.3 Transaction Validation.......................................................113
6.4.4 View Change..................................................................... 114
6.4.5 Fault Tolerance and Transaction Time............................... 114
6.5 Smart Contracts............................................................................. 114
6.6 Summary........................................................................................ 116
7 EOS ..................................................................................................117
7.1 What is EOS?................................................................................. 117
7.2 Token: EOS.................................................................................... 118
7.2.1 Initial Coin Offering.......................................................... 118
7.2.2 Transaction Fees................................................................ 119
7.2.3 Inflation............................................................................. 119
7.3 Architecture.................................................................................... 119
7.4 Consensus Mechanism: DPoS........................................................120
7.4.1 Algorithm..........................................................................120
7.4.2 Procedure...........................................................................121
7.4.3 Reward..............................................................................122
7.5 Smart Contracts.............................................................................122
7.6 EOS.IO Operating System.............................................................123
7.6.1 Schema-Defined Actions and Database..............................123
7.6.2 Separation of Authentication from Applications................124
7.6.3 Inter-Blockchain Communication.....................................124
7.7 Summary........................................................................................124
Section III ?FINANCIAL NET WORKS
8 Ripple ..................................................................................................127
8.1 What is Ripple?..............................................................................127
8.2 Token: XRP....................................................................................128
8.2.1 Token Generation and Distribution...................................128
8.2.2 Bridge Currency.................................................................129
8.2.3 Market Capitalisation........................................................129
8.3 Architecture....................................................................................129
8.3.1 Hawala...............................................................................130
8.3.2 XRP Ledger.......................................................................131
8.3.3 Transactions.......................................................................132
8.4 Consensus Mechanism: RPCA.......................................................133
8.4.1 Components......................................................................133
8.4.2 Consensus Process.............................................................134
8.4.3 Correctness........................................................................135
8.5 Codius and Interledger...................................................................136
8.6 Real-Time Gross Settlement System...............................................136
8.6.1 RippleNet..........................................................................137
8.6.2 xCurrent............................................................................138
8.6.3 xRapid...............................................................................139
8.6.4 xVia....................................................................................139
8.7 Partners..........................................................................................139
8.8 Summary........................................................................................141
9 Stellar ..................................................................................................143
9.1 What Is Stellar?..............................................................................143
9.2 Token: Lumens (XLM)..................................................................144
9.2.1 Generation and Distribution..............................................144
9.2.2 Price and Market Cap........................................................145
9.2.3 Role of XLM in the Protocol.............................................145
9.3 Architecture....................................................................................146
9.4 Consensus Mechanism...................................................................146
9.4.1 Quorum and Slices............................................................146
9.4.2 Agreement..........................................................................148
9.5 Applications....................................................................................148
9.5.1 Anchors..............................................................................148
9.5.2 Distributed Exchange........................................................149
9.5.3 Multi-Currency Transactions.............................................149
9.6 Partners.......................................................................................... 153
9.7 Summary........................................................................................ 153
Section IV ADVANCED LEDGERS AND APPLICATION S
10 Purpose-Built Distributed Ledgers.....................................................157
10.1 Purpose-Built Ledgers and Blockchains.......................................... 157
10.2 Internet of Things: IOTA............................................................... 159
10.2.1 Overview........................................................................... 159
10.2.2 Technical Details............................................................... 159
10.2.3 Applications....................................................................... 161
10.2.4 Alternatives: IBM Watson and Waltonchain...................... 161
10.3 Supply Chain: OriginTrail..............................................................162
10.3.1 Overview...........................................................................162
10.3.2 Technical Details...............................................................163
10.3.3 Applications.......................................................................163
10.3.4 Alternatives: VeChain and OpenChain..............................163
10.4 Connectivity: Moeco......................................................................164
10.4.1 Overview...........................................................................164
10.4.2 Technical Details...............................................................164
10.4.3 Applications.......................................................................166
10.5 Cybersecurity: Naoris.....................................................................166
10.5.1 Overview...........................................................................166
10.5.2 Technical Details...............................................................167
10.5.3 Applications.......................................................................168
10.6 Private Network: HydraChain........................................................168
10.6.1 Overview...........................................................................168
10.6.2 Technical Details...............................................................168
10.6.3 Applications.......................................................................170
10.7 Framework: Hyperledger................................................................170
10.7.1 Overview...........................................................................170
10.7.2 Technical Details...............................................................171
10.7.3 Application........................................................................173
10.8 Emerging Distributed Ledgers........................................................173
10.8.1 Medical Services: MediChain and MediLedger.................173
10.8.2 Drug Development: BlockPhrama..................................... 174
10.8.3 Quality Assurance: Ambrosus............................................ 174
10.8.4 Sharing Economy: Slock.it................................................. 174
10.8.5 Genomic Data Collection: Nebula Genomics.................... 174
10.9 Summary........................................................................................175
11 Applications of Blockchain.................................................................177
11.1 Hype or Hope?...............................................................................177
11.2 Classification..................................................................................180
11.2.1 Classifying the Domains....................................................181
11.2.2 Classifying the Categories..................................................181
11.3 Citizen Services..............................................................................182
11.3.1 e-Governance.....................................................................182
11.3.2 Healthcare.........................................................................183
11.3.3 Education..........................................................................185
11.4 Business and Financial Services......................................................186
11.4.1 Financial Services...............................................................186
11.4.2 Smart Property..................................................................187
11.4.3 Exchange and Trading.......................................................187
11.5 Online Marketplace........................................................................187
11.5.1 e-Commerce......................................................................188
11.5.2 Online Betting, Gambling and Gaming............................189
11.5.3 e-Auctions and Online Bidding.........................................189
11.6 Supply Chain, Production and Provenance..................................... 191
11.6.1 Commercial Supply Chain................................................. 191
11.6.2 Food Production................................................................ 191
11.6.3 Drug Manufacturing.........................................................192
11.7 Safety and Security.........................................................................193
11.7.1 Cybersecurity.....................................................................193
11.7.2 Physical Safety, Security and Tracking...............................194
11.8 Smart City......................................................................................195
11.8.1 Smart Home......................................................................195
11.8.2 Smart Transportation.........................................................196
11.8.3 Smart Grid.........................................................................196
11.8.4 Citizen Engagement...........................................................197
11.8.5 Quality Control.................................................................197
11.9 Summary........................................................................................198
Section V CRYPTO CURREN CY
12 Evolution of Money: From Barter to Bitcoin.......................................201
12.1 Money............................................................................................201
12.1.1 Functions of Money...........................................................202
12.1.2 Properties...........................................................................202
12.1.3 Money Supply....................................................................203
12.1.4 Central Bank.................................................................... 204
12.2 Origin and Early Forms................................................................. 204
12.2.1 Barter: The Origin of Money?........................................... 204
12.2.2 Commodity and Representative Money............................ 206
12.2.3 Coinage.............................................................................207
12.2.4 Banknotes..........................................................................209
12.3 Fiat Money.....................................................................................212
12.3.1 Gold Standard...................................................................212
12.3.2 US Dollar Standard...........................................................212
12.3.3 Nixon Shock and Creation of Fiat Money..........................213
12.4 Digital Money................................................................................213
12.4.1 Centralised Digital Money.................................................213
12.4.2 Decentralised Digital Money.............................................214
12.5 Cryptocurrency.............................................................................. 215
12.6 Summary........................................................................................217
13 Cryptocurrency Mining......................................................................219
13.1 Mining........................................................................................... 219
13.1.1 Evolution of Mining......................................................... 220
13.1.2 Mining Process................................................................. 220
13.1.3 Difficulty...........................................................................221
13.1.4 Rewards.............................................................................221
13.2 Hash Rate.......................................................................................221
13.2.1 Understanding Hash Rate..................................................221
13.2.2 Calculating Hash Rate...................................................... 222
13.2.3 Hash Rate and Profits....................................................... 222
13.3 Mining Hardware.......................................................................... 222
13.3.1 Non-Specialised Hardware............................................... 222
13.3.2 Specialised Hardware (ASICs)...........................................224
13.3.3 Profitability Factors............................................................225
13.4 Pooled Mining................................................................................225
13.4.1 Pooled Mining Basics.........................................................225
13.4.2 Mining Pools.................................................................... 226
13.4.3 Reward Sharing................................................................ 228
13.5 Mining Nations............................................................................. 228
13.6 Criticism of PoW Mining...............................................................229
13.7 Summary........................................................................................231
14 Cryptocurrency Wallet........................................................................233
14.1 Wallet.............................................................................................233
14.1.1 Private Key and Address.................................................... 234
14.1.2 Transferring Funds........................................................... 234
14.2 Types of Wallets.............................................................................235
14.2.1 Web Wallet........................................................................236
14.2.2 Software Wallet.................................................................236
14.2.3 External Storage Media......................................................238
14.2.4 Paper Wallet.......................................................................238
14.2.5 Hardware Wallet................................................................239
14.2.6 Brain Wallet.......................................................................240
14.3 Special Wallets...............................................................................241
14.3.1 Multi-Signature Wallet......................................................241
14.3.2 Cold-Storage Wallet...........................................................241
14.3.3 Receive-Only Wallet..........................................................242
14.4 Deterministic Wallet......................................................................242
14.4.1 Type-1 Wallet....................................................................242
14.4.2 Type-2 Wallet....................................................................243
14.4.3 HD Wallet........................................................................ 244
14.5 Wallet Providers............................................................................ 246
14.6 Summary........................................................................................247
15 Cryptocurrency Trading and Investment............................................249
15.1 Investment......................................................................................249
15.1.1 Financial Instruments........................................................250
15.1.2 Commodities.....................................................................251
15.1.3 Currencies..........................................................................251
15.1.4 Derivatives.........................................................................252
15.1.5 Status of Cryptocurrency...................................................253
15.2 Portfolio.........................................................................................253
15.2.1 Funds.................................................................................253
15.2.2 Indices...............................................................................254
15.2.3 ETFs..................................................................................256
15.3 Exchanges and Platforms................................................................257
15.3.1 Cryptocurrency Trading Exchange....................................258
15.3.2 Derivative Trading Exchanges...........................................259
15.3.3 Investment Platforms........................................................ 260
15.4 Investment Strategy........................................................................261
15.4.1 Day Trading.......................................................................261
15.4.2 Buy and Hold....................................................................262
15.4.3 Value Investment...............................................................262
15.5 Investing in Cryptocurrencies.........................................................262
15.5.1 Self-Investment..................................................................263
15.5.2 Guided Investment........................................................... 264
15.6 Regulation and Tax Affairs.............................................................265
15.7 Summary....................................................................................... 266
16 Initial Coin Offerings (ICOs)..............................................................267
16.1 Overview........................................................................................267
16.1.1 The Creation of ICOs....................................................... 268
16.1.2 How Do ICOs Work?........................................................269
16.2 Token Creation...............................................................................269
16.2.1 Token.................................................................................269
16.2.2 Platforms............................................................................270
16.3 Understanding ICOs......................................................................271
16.3.1 ICOs vs IPOs.....................................................................271
16.3.2 Signs of Good and Bad ICOs.............................................272
16.3.3 Advantages and Disadvantages..........................................273
16.4 ICOs in Number............................................................................274
16.4.1 Amount Raised..................................................................274
16.4.2 Breakdown by Industry......................................................274
16.4.3 Biggest Winners and Losers...............................................275
16.5 Scams and Criticisms.....................................................................275
16.6 Summary........................................................................................277
Section VI ?SOCIO -ECONO MIC LANDSCAPE
17 Economic Outlook of Cryptocurrency................................................281
17.1 Classification..................................................................................281
17.1.1 Currency............................................................................282
17.1.2 Commodity.......................................................................283
17.1.3 Stock................................................................................. 284
17.2 Price of Bitcoin.............................................................................. 284
17.3 Volatility of Bitcoin........................................................................285
17.4 Historic Price Predictions...............................................................287
17.5 Price Movement of Major Cryptocurrencies...................................287
17.5.1 ETH..................................................................................288
17.5.2 XRP...................................................................................288
17.5.3 XLM..................................................................................289
17.5.4 NEO..................................................................................289
17.5.5 EOS...................................................................................289
17.6 Reception.......................................................................................290
17.6.1 Acceptance by Merchants..................................................290
17.6.2 Acceptance by Investors.....................................................291
17.6.3 Acceptance by Governments..............................................292
17.7 Summary........................................................................................293
18 Crime, Criminals and Cryptocurrencies.............................................295
18.1 Criminal Activities.........................................................................295
18.2 Deep Web.......................................................................................296
18.2.1 Darknet and Dark Web.....................................................297
18.2.2 Onion Routing and Tor.....................................................297
18.2.3 Bitcoin: The Missing Piece.................................................298
18.3 Darknet-Based Crimes...................................................................299
18.3.1 Silk Road...........................................................................299
18.3.2 Post-Silk Road Markets......................................................301
18.3.3 Assassination Markets....................................................... 304
18.3.4 Cybercrimes...................................................................... 306
18.4 Financial Crimes........................................................................... 308
18.4.1 Money Laundering........................................................... 308
18.4.2 Market Manipulation........................................................310
18.5 Fraudulent Activities.......................................................................310
18.5.1 False Claims....................................................................... 311
18.5.2 Scams.................................................................................312
18.6 Prevention......................................................................................312
18.6.1 Regulation.........................................................................313
18.6.2 Cooperation....................................................................... 314
18.6.3 Participation...................................................................... 315
18.7 Summary........................................................................................316
19 Regulations, Laws and Practices.........................................................317
19.1 Legality of Blockchain and Cryptocurrency................................... 317
19.2 Regulatory Issues............................................................................ 318
19.2.1 Misuse of Pre-Mining and ICOs........................................ 319
19.2.2 Crackdowns on Mining and Trading................................. 319
19.3 Current Landscape.........................................................................320
19.3.1 Challenges.........................................................................320
19.3.2 Areas..................................................................................321
19.3.3 Blockchain-Friendly Nations.............................................322
19.4 Regulations for Blockchain Technology and Cryptocurrency.........323
19.4.1 The Americas.....................................................................323
19.4.2 Europe...............................................................................324
19.4.3 Asia....................................................................................326
19.4.4 Australia and Africa...........................................................327
19.5 Summary........................................................................................328
20 Criticism, Scepticism and Support......................................................329
20.1 Before It All Started........................................................................329
20.2 Early Days of Bitcoin......................................................................330
20.3 Bitcoin Grabs Attention..................................................................331
20.4 Beginning of the Bull Run.............................................................332
20.5 Crazy Price Hike............................................................................334
20.6 To Invest or Not to Invest?.............................................................335
20.7 $10K and Counting........................................................................337
20.8 Nosedive.........................................................................................338
20.9 Summary....................................................................................... 344
Bibliography.................................................................................................345
Index............................................................................................................355
Este título pertence ao(s) assunto(s) indicados(s). Para ver outros títulos clique no assunto desejado.
Bitcoin Price;authentication;EUR Exchange;banking technology;Byzantine Fault Tolerance;Bitcoin;QR Code;blockchain;Blockchain Technology;crypto mining;CTO;crypto regulations;ASIC;digital signature;IoT Device;cryptocurrency;Smart Contract;cryptography;Darknet Markets;elliptic curve cryptography;Cryptocurrency Exchange;financial services;Consensus Mechanism;hash function;Merkle Tree;SSL;Private Key;cryptoanalysis;Bitcoin Network;Distributed Ledger Technology;Virtual Currency;Bitcoin Blockchain;Elliptic Curve;Bitcoin Mining;Bitcoin Transactions;Block Building Process;Public Key;Virtual Machine;RTGS.
Contents
List of Figures...............................................................................................xix
List of Tables................................................................................................xxv
Section I ?BLOCKCHAIN AND BIT COIN
1 Introduction to Blockchain.....................................................................3
1.1 The Birth of Bitcoin............................................................................3
1.1.1 A Mysterious Scientist............................................................4
1.1.2 What is Bitcoin?.....................................................................4
1.1.3 Double-Spending Problem.....................................................5
1.1.4 Nakamotos Solution..............................................................6
1.2 Blockchain..........................................................................................7
1.2.1 Motivation.............................................................................7
1.2.2 Definition of Blockchain........................................................8
1.2.3 Distributed Ledger.................................................................8
1.2.4 Key Properties........................................................................9
1.3 Architectural Overview....................................................................10
1.3.1 Centralised vs Decentralised Architecture...........................10
1.3.2 Peer-to-Peer Network...........................................................11
1.3.3 Characteristics.....................................................................13
1.4 Block................................................................................................14
1.4.1 Structure..............................................................................14
1.4.2 Block Identifier and Height..................................................15
1.4.3 Genesis Block.......................................................................16
1.5 Mining.............................................................................................16
1.5.1 What is Mining?..................................................................16
1.5.2 Consensus............................................................................16
1.5.3 Incentivisation.....................................................................17
1.6 Forks................................................................................................17
1.6.1 When Does a Fork Occur?...................................................17
1.6.2 Types of Forks......................................................................18
1.7 Consensus Mechanisms....................................................................18
1.7.1 Proof of Work (PoW)...........................................................18
1.7.2 Alternative Consensus Algorithms.......................................19
1.7.3 Comparison.........................................................................20
1.8 Types of Blockchains........................................................................21
1.8.1 Public and Private Blockchains............................................21
1.8.2 Consortium, Shared Ledger, Sidechain................................21
1.8.3 Hybrid Blockchains.............................................................22
1.8.4 Comparison.........................................................................22
1.9 Applications......................................................................................23
1.10 Revisiting the Double-Spending Problem.........................................26
1.11 Summary..........................................................................................26
2 Immutability of Blockchain..................................................................27
2.1 Cryptography...................................................................................27
2.1.1 What is Cryptography and Cryptanalysis?...........................28
2.1.2 Background.........................................................................28
2.1.3 Basic Concepts.....................................................................29
2.2 Modern Cryptography......................................................................30
2.2.1 Symmetric-Key Cryptography.............................................31
2.2.2 Public-Key Cryptography....................................................33
2.3 Cryptographic Applications..............................................................36
2.3.1 TLS and SSL........................................................................36
2.3.2 Cryptographic Hash Function.............................................37
2.3.3 Digital Signature..................................................................38
2.4 Elliptic Curve Cryptography (ECC).................................................41
2.4.1 Basic Concept......................................................................41
2.4.2 Public and Private Keys....................................................... 42
2.4.3 How Does ECC Compare to RSA?......................................43
2.5 Making Blockchain Immutable....................................................... 44
2.5.1 Block and Block Header..................................................... 44
2.5.2 Timestamp.......................................................................... 44
2.5.3 Merkle Tree.........................................................................45
2.5.4 Building the Chain..............................................................45
2.6 Summary..........................................................................................48
3 Consensus Mechanisms of Blockchain..................................................49
3.1 Distributed Systems and Consensus.................................................49
3.1.1 Distributed Systems.............................................................50
3.1.2 Coordination and Agreement..............................................50
3.1.3 Consensus............................................................................51
3.2 Byzantine Generals Problem.............................................................52
3.2.1 Two Generals Paradox..........................................................52
3.2.2 Byzantine Generals Problem................................................53
3.2.3 Byzantine Fault Tolerance....................................................55
3.3 Blockchain's Consensus Mechanism.................................................56
3.3.1 Hashcash Proof of Work......................................................56
3.3.2 Proof of Work in Blockchain...............................................57
3.3.3 BFT in Blockchain...............................................................58
3.4 Solving the Double-Spending Problem.............................................59
3.5 Summary..........................................................................................60
4 Bitcoin: World's First Cryptocurrency..................................................61
4.1 What is Bitcoin?...............................................................................61
4.2 Brief History of Bitcoin....................................................................63
4.2.1 Before Bitcoin......................................................................63
4.2.2 Bitcoin Era.......................................................................... 64
4.3 Token: BTC.................................................................................... 64
4.3.1 Bitcoin Mining and Supply..................................................65
4.3.2 Units of Bitcoin................................................................... 66
4.4 Bitcoin's Blockchain........................................................................ 66
4.4.1 Block Header.......................................................................67
4.4.2 Timestamp...........................................................................67
4.4.3 Merkle Tree.........................................................................67
4.4.4 Hash Generation..................................................................68
4.4.5 Genesis Block.......................................................................68
4.5 Bitcoin Address.................................................................................69
4.5.1 Formats................................................................................71
4.5.2 Hash Generation..................................................................72
4.5.3 Address Structure.................................................................72
4.6 Transactions.....................................................................................73
4.6.1 Input and Output................................................................74
4.6.2 Redeeming Tokens.............................................................. 77
4.6.3 Multi-Signature...................................................................78
4.6.3.1 Escrow..................................................................78
4.6.3.2 Cold Storage.........................................................78
4.6.4 Generation Transaction.......................................................79
4.6.5 Storing Data........................................................................79
4.6.6 Contracts.............................................................................79
4.7 Mining.............................................................................................80
4.7.1 Method................................................................................80
4.7.2 Proof of Work......................................................................82
4.7.3 Target and Difficulty...........................................................83
4.7.4 Mining Process................................................................... 84
4.8 Split Coins and Altcoins...................................................................85
4.8.1 Split Coins...........................................................................85
4.8.1.1 Bitcoin Cash.........................................................85
4.8.1.2 Bitcoin Gold.........................................................85
4.8.1.3 Bitcoin Private.......................................................86
4.8.2 Altcoins................................................................................86
4.8.2.1 Namecoin.............................................................87
4.8.2.2 Litecoin.................................................................87
4.8.2.3 Peercoin................................................................88
4.8.2.4 Nxt........................................................................88
4.8.2.5 Dash.....................................................................88
4.9 Summary..........................................................................................89
Section II ?SMART CONT RACTS
5 Ethereum and Smart Contracts.............................................................93
5.1 Introduction to Smart Contracts......................................................93
5.1.1 Vending Machine Analogy..................................................94
5.1.2 Nick Szabo and Bit Gold.....................................................95
5.1.3 Turing-Completeness...........................................................96
5.2 What is Ethereum?...........................................................................96
5.3 Token: ETH.....................................................................................97
5.3.1 Pre-Mining..........................................................................97
5.3.2 Price.....................................................................................98
5.3.3 Units....................................................................................98
5.4 Architecture......................................................................................99
5.4.1 Ethereum Virtual Machine (EVM).....................................99
5.4.2 Account.............................................................................100
5.4.3 Address..............................................................................101
5.4.4 Mist...................................................................................101
5.5 Mining...........................................................................................102
5.5.1 Mining Process..................................................................102
5.5.2 Block-Generation Rate.......................................................103
5.5.3 Rewards.............................................................................103
5.6 Smart Contracts in Ethereum.........................................................103
5.6.1 Transactions.......................................................................103
5.6.2 Gas....................................................................................104
5.6.3 High-Level Languages.......................................................104
5.7 ERC Standards...............................................................................105
5.7.1 ERC-20..............................................................................105
5.7.2 ERC-223............................................................................106
5.7.3 ERC-721............................................................................106
5.7.4 Other Standards................................................................107
5.8 Comparison to Bitcoin...................................................................107
5.9 Summary........................................................................................107
6 NEO ..................................................................................................109
6.1 What is NEO?................................................................................109
6.2 Token: NEO and GAS................................................................... 110
6.2.1 Token Generation.............................................................. 110
6.2.2 Token Distribution............................................................ 111
6.3 Architecture.................................................................................... 111
6.3.1 Basic Structure................................................................... 111
6.3.2 Advanced Features............................................................. 111
6.4 Consensus Mechanism: dBFT........................................................112
6.4.1 Algorithm..........................................................................112
6.4.2 Procedure...........................................................................113
6.4.3 Transaction Validation.......................................................113
6.4.4 View Change..................................................................... 114
6.4.5 Fault Tolerance and Transaction Time............................... 114
6.5 Smart Contracts............................................................................. 114
6.6 Summary........................................................................................ 116
7 EOS ..................................................................................................117
7.1 What is EOS?................................................................................. 117
7.2 Token: EOS.................................................................................... 118
7.2.1 Initial Coin Offering.......................................................... 118
7.2.2 Transaction Fees................................................................ 119
7.2.3 Inflation............................................................................. 119
7.3 Architecture.................................................................................... 119
7.4 Consensus Mechanism: DPoS........................................................120
7.4.1 Algorithm..........................................................................120
7.4.2 Procedure...........................................................................121
7.4.3 Reward..............................................................................122
7.5 Smart Contracts.............................................................................122
7.6 EOS.IO Operating System.............................................................123
7.6.1 Schema-Defined Actions and Database..............................123
7.6.2 Separation of Authentication from Applications................124
7.6.3 Inter-Blockchain Communication.....................................124
7.7 Summary........................................................................................124
Section III ?FINANCIAL NET WORKS
8 Ripple ..................................................................................................127
8.1 What is Ripple?..............................................................................127
8.2 Token: XRP....................................................................................128
8.2.1 Token Generation and Distribution...................................128
8.2.2 Bridge Currency.................................................................129
8.2.3 Market Capitalisation........................................................129
8.3 Architecture....................................................................................129
8.3.1 Hawala...............................................................................130
8.3.2 XRP Ledger.......................................................................131
8.3.3 Transactions.......................................................................132
8.4 Consensus Mechanism: RPCA.......................................................133
8.4.1 Components......................................................................133
8.4.2 Consensus Process.............................................................134
8.4.3 Correctness........................................................................135
8.5 Codius and Interledger...................................................................136
8.6 Real-Time Gross Settlement System...............................................136
8.6.1 RippleNet..........................................................................137
8.6.2 xCurrent............................................................................138
8.6.3 xRapid...............................................................................139
8.6.4 xVia....................................................................................139
8.7 Partners..........................................................................................139
8.8 Summary........................................................................................141
9 Stellar ..................................................................................................143
9.1 What Is Stellar?..............................................................................143
9.2 Token: Lumens (XLM)..................................................................144
9.2.1 Generation and Distribution..............................................144
9.2.2 Price and Market Cap........................................................145
9.2.3 Role of XLM in the Protocol.............................................145
9.3 Architecture....................................................................................146
9.4 Consensus Mechanism...................................................................146
9.4.1 Quorum and Slices............................................................146
9.4.2 Agreement..........................................................................148
9.5 Applications....................................................................................148
9.5.1 Anchors..............................................................................148
9.5.2 Distributed Exchange........................................................149
9.5.3 Multi-Currency Transactions.............................................149
9.6 Partners.......................................................................................... 153
9.7 Summary........................................................................................ 153
Section IV ADVANCED LEDGERS AND APPLICATION S
10 Purpose-Built Distributed Ledgers.....................................................157
10.1 Purpose-Built Ledgers and Blockchains.......................................... 157
10.2 Internet of Things: IOTA............................................................... 159
10.2.1 Overview........................................................................... 159
10.2.2 Technical Details............................................................... 159
10.2.3 Applications....................................................................... 161
10.2.4 Alternatives: IBM Watson and Waltonchain...................... 161
10.3 Supply Chain: OriginTrail..............................................................162
10.3.1 Overview...........................................................................162
10.3.2 Technical Details...............................................................163
10.3.3 Applications.......................................................................163
10.3.4 Alternatives: VeChain and OpenChain..............................163
10.4 Connectivity: Moeco......................................................................164
10.4.1 Overview...........................................................................164
10.4.2 Technical Details...............................................................164
10.4.3 Applications.......................................................................166
10.5 Cybersecurity: Naoris.....................................................................166
10.5.1 Overview...........................................................................166
10.5.2 Technical Details...............................................................167
10.5.3 Applications.......................................................................168
10.6 Private Network: HydraChain........................................................168
10.6.1 Overview...........................................................................168
10.6.2 Technical Details...............................................................168
10.6.3 Applications.......................................................................170
10.7 Framework: Hyperledger................................................................170
10.7.1 Overview...........................................................................170
10.7.2 Technical Details...............................................................171
10.7.3 Application........................................................................173
10.8 Emerging Distributed Ledgers........................................................173
10.8.1 Medical Services: MediChain and MediLedger.................173
10.8.2 Drug Development: BlockPhrama..................................... 174
10.8.3 Quality Assurance: Ambrosus............................................ 174
10.8.4 Sharing Economy: Slock.it................................................. 174
10.8.5 Genomic Data Collection: Nebula Genomics.................... 174
10.9 Summary........................................................................................175
11 Applications of Blockchain.................................................................177
11.1 Hype or Hope?...............................................................................177
11.2 Classification..................................................................................180
11.2.1 Classifying the Domains....................................................181
11.2.2 Classifying the Categories..................................................181
11.3 Citizen Services..............................................................................182
11.3.1 e-Governance.....................................................................182
11.3.2 Healthcare.........................................................................183
11.3.3 Education..........................................................................185
11.4 Business and Financial Services......................................................186
11.4.1 Financial Services...............................................................186
11.4.2 Smart Property..................................................................187
11.4.3 Exchange and Trading.......................................................187
11.5 Online Marketplace........................................................................187
11.5.1 e-Commerce......................................................................188
11.5.2 Online Betting, Gambling and Gaming............................189
11.5.3 e-Auctions and Online Bidding.........................................189
11.6 Supply Chain, Production and Provenance..................................... 191
11.6.1 Commercial Supply Chain................................................. 191
11.6.2 Food Production................................................................ 191
11.6.3 Drug Manufacturing.........................................................192
11.7 Safety and Security.........................................................................193
11.7.1 Cybersecurity.....................................................................193
11.7.2 Physical Safety, Security and Tracking...............................194
11.8 Smart City......................................................................................195
11.8.1 Smart Home......................................................................195
11.8.2 Smart Transportation.........................................................196
11.8.3 Smart Grid.........................................................................196
11.8.4 Citizen Engagement...........................................................197
11.8.5 Quality Control.................................................................197
11.9 Summary........................................................................................198
Section V CRYPTO CURREN CY
12 Evolution of Money: From Barter to Bitcoin.......................................201
12.1 Money............................................................................................201
12.1.1 Functions of Money...........................................................202
12.1.2 Properties...........................................................................202
12.1.3 Money Supply....................................................................203
12.1.4 Central Bank.................................................................... 204
12.2 Origin and Early Forms................................................................. 204
12.2.1 Barter: The Origin of Money?........................................... 204
12.2.2 Commodity and Representative Money............................ 206
12.2.3 Coinage.............................................................................207
12.2.4 Banknotes..........................................................................209
12.3 Fiat Money.....................................................................................212
12.3.1 Gold Standard...................................................................212
12.3.2 US Dollar Standard...........................................................212
12.3.3 Nixon Shock and Creation of Fiat Money..........................213
12.4 Digital Money................................................................................213
12.4.1 Centralised Digital Money.................................................213
12.4.2 Decentralised Digital Money.............................................214
12.5 Cryptocurrency.............................................................................. 215
12.6 Summary........................................................................................217
13 Cryptocurrency Mining......................................................................219
13.1 Mining........................................................................................... 219
13.1.1 Evolution of Mining......................................................... 220
13.1.2 Mining Process................................................................. 220
13.1.3 Difficulty...........................................................................221
13.1.4 Rewards.............................................................................221
13.2 Hash Rate.......................................................................................221
13.2.1 Understanding Hash Rate..................................................221
13.2.2 Calculating Hash Rate...................................................... 222
13.2.3 Hash Rate and Profits....................................................... 222
13.3 Mining Hardware.......................................................................... 222
13.3.1 Non-Specialised Hardware............................................... 222
13.3.2 Specialised Hardware (ASICs)...........................................224
13.3.3 Profitability Factors............................................................225
13.4 Pooled Mining................................................................................225
13.4.1 Pooled Mining Basics.........................................................225
13.4.2 Mining Pools.................................................................... 226
13.4.3 Reward Sharing................................................................ 228
13.5 Mining Nations............................................................................. 228
13.6 Criticism of PoW Mining...............................................................229
13.7 Summary........................................................................................231
14 Cryptocurrency Wallet........................................................................233
14.1 Wallet.............................................................................................233
14.1.1 Private Key and Address.................................................... 234
14.1.2 Transferring Funds........................................................... 234
14.2 Types of Wallets.............................................................................235
14.2.1 Web Wallet........................................................................236
14.2.2 Software Wallet.................................................................236
14.2.3 External Storage Media......................................................238
14.2.4 Paper Wallet.......................................................................238
14.2.5 Hardware Wallet................................................................239
14.2.6 Brain Wallet.......................................................................240
14.3 Special Wallets...............................................................................241
14.3.1 Multi-Signature Wallet......................................................241
14.3.2 Cold-Storage Wallet...........................................................241
14.3.3 Receive-Only Wallet..........................................................242
14.4 Deterministic Wallet......................................................................242
14.4.1 Type-1 Wallet....................................................................242
14.4.2 Type-2 Wallet....................................................................243
14.4.3 HD Wallet........................................................................ 244
14.5 Wallet Providers............................................................................ 246
14.6 Summary........................................................................................247
15 Cryptocurrency Trading and Investment............................................249
15.1 Investment......................................................................................249
15.1.1 Financial Instruments........................................................250
15.1.2 Commodities.....................................................................251
15.1.3 Currencies..........................................................................251
15.1.4 Derivatives.........................................................................252
15.1.5 Status of Cryptocurrency...................................................253
15.2 Portfolio.........................................................................................253
15.2.1 Funds.................................................................................253
15.2.2 Indices...............................................................................254
15.2.3 ETFs..................................................................................256
15.3 Exchanges and Platforms................................................................257
15.3.1 Cryptocurrency Trading Exchange....................................258
15.3.2 Derivative Trading Exchanges...........................................259
15.3.3 Investment Platforms........................................................ 260
15.4 Investment Strategy........................................................................261
15.4.1 Day Trading.......................................................................261
15.4.2 Buy and Hold....................................................................262
15.4.3 Value Investment...............................................................262
15.5 Investing in Cryptocurrencies.........................................................262
15.5.1 Self-Investment..................................................................263
15.5.2 Guided Investment........................................................... 264
15.6 Regulation and Tax Affairs.............................................................265
15.7 Summary....................................................................................... 266
16 Initial Coin Offerings (ICOs)..............................................................267
16.1 Overview........................................................................................267
16.1.1 The Creation of ICOs....................................................... 268
16.1.2 How Do ICOs Work?........................................................269
16.2 Token Creation...............................................................................269
16.2.1 Token.................................................................................269
16.2.2 Platforms............................................................................270
16.3 Understanding ICOs......................................................................271
16.3.1 ICOs vs IPOs.....................................................................271
16.3.2 Signs of Good and Bad ICOs.............................................272
16.3.3 Advantages and Disadvantages..........................................273
16.4 ICOs in Number............................................................................274
16.4.1 Amount Raised..................................................................274
16.4.2 Breakdown by Industry......................................................274
16.4.3 Biggest Winners and Losers...............................................275
16.5 Scams and Criticisms.....................................................................275
16.6 Summary........................................................................................277
Section VI ?SOCIO -ECONO MIC LANDSCAPE
17 Economic Outlook of Cryptocurrency................................................281
17.1 Classification..................................................................................281
17.1.1 Currency............................................................................282
17.1.2 Commodity.......................................................................283
17.1.3 Stock................................................................................. 284
17.2 Price of Bitcoin.............................................................................. 284
17.3 Volatility of Bitcoin........................................................................285
17.4 Historic Price Predictions...............................................................287
17.5 Price Movement of Major Cryptocurrencies...................................287
17.5.1 ETH..................................................................................288
17.5.2 XRP...................................................................................288
17.5.3 XLM..................................................................................289
17.5.4 NEO..................................................................................289
17.5.5 EOS...................................................................................289
17.6 Reception.......................................................................................290
17.6.1 Acceptance by Merchants..................................................290
17.6.2 Acceptance by Investors.....................................................291
17.6.3 Acceptance by Governments..............................................292
17.7 Summary........................................................................................293
18 Crime, Criminals and Cryptocurrencies.............................................295
18.1 Criminal Activities.........................................................................295
18.2 Deep Web.......................................................................................296
18.2.1 Darknet and Dark Web.....................................................297
18.2.2 Onion Routing and Tor.....................................................297
18.2.3 Bitcoin: The Missing Piece.................................................298
18.3 Darknet-Based Crimes...................................................................299
18.3.1 Silk Road...........................................................................299
18.3.2 Post-Silk Road Markets......................................................301
18.3.3 Assassination Markets....................................................... 304
18.3.4 Cybercrimes...................................................................... 306
18.4 Financial Crimes........................................................................... 308
18.4.1 Money Laundering........................................................... 308
18.4.2 Market Manipulation........................................................310
18.5 Fraudulent Activities.......................................................................310
18.5.1 False Claims....................................................................... 311
18.5.2 Scams.................................................................................312
18.6 Prevention......................................................................................312
18.6.1 Regulation.........................................................................313
18.6.2 Cooperation....................................................................... 314
18.6.3 Participation...................................................................... 315
18.7 Summary........................................................................................316
19 Regulations, Laws and Practices.........................................................317
19.1 Legality of Blockchain and Cryptocurrency................................... 317
19.2 Regulatory Issues............................................................................ 318
19.2.1 Misuse of Pre-Mining and ICOs........................................ 319
19.2.2 Crackdowns on Mining and Trading................................. 319
19.3 Current Landscape.........................................................................320
19.3.1 Challenges.........................................................................320
19.3.2 Areas..................................................................................321
19.3.3 Blockchain-Friendly Nations.............................................322
19.4 Regulations for Blockchain Technology and Cryptocurrency.........323
19.4.1 The Americas.....................................................................323
19.4.2 Europe...............................................................................324
19.4.3 Asia....................................................................................326
19.4.4 Australia and Africa...........................................................327
19.5 Summary........................................................................................328
20 Criticism, Scepticism and Support......................................................329
20.1 Before It All Started........................................................................329
20.2 Early Days of Bitcoin......................................................................330
20.3 Bitcoin Grabs Attention..................................................................331
20.4 Beginning of the Bull Run.............................................................332
20.5 Crazy Price Hike............................................................................334
20.6 To Invest or Not to Invest?.............................................................335
20.7 $10K and Counting........................................................................337
20.8 Nosedive.........................................................................................338
20.9 Summary....................................................................................... 344
Bibliography.................................................................................................345
Index............................................................................................................355
List of Figures...............................................................................................xix
List of Tables................................................................................................xxv
Section I ?BLOCKCHAIN AND BIT COIN
1 Introduction to Blockchain.....................................................................3
1.1 The Birth of Bitcoin............................................................................3
1.1.1 A Mysterious Scientist............................................................4
1.1.2 What is Bitcoin?.....................................................................4
1.1.3 Double-Spending Problem.....................................................5
1.1.4 Nakamotos Solution..............................................................6
1.2 Blockchain..........................................................................................7
1.2.1 Motivation.............................................................................7
1.2.2 Definition of Blockchain........................................................8
1.2.3 Distributed Ledger.................................................................8
1.2.4 Key Properties........................................................................9
1.3 Architectural Overview....................................................................10
1.3.1 Centralised vs Decentralised Architecture...........................10
1.3.2 Peer-to-Peer Network...........................................................11
1.3.3 Characteristics.....................................................................13
1.4 Block................................................................................................14
1.4.1 Structure..............................................................................14
1.4.2 Block Identifier and Height..................................................15
1.4.3 Genesis Block.......................................................................16
1.5 Mining.............................................................................................16
1.5.1 What is Mining?..................................................................16
1.5.2 Consensus............................................................................16
1.5.3 Incentivisation.....................................................................17
1.6 Forks................................................................................................17
1.6.1 When Does a Fork Occur?...................................................17
1.6.2 Types of Forks......................................................................18
1.7 Consensus Mechanisms....................................................................18
1.7.1 Proof of Work (PoW)...........................................................18
1.7.2 Alternative Consensus Algorithms.......................................19
1.7.3 Comparison.........................................................................20
1.8 Types of Blockchains........................................................................21
1.8.1 Public and Private Blockchains............................................21
1.8.2 Consortium, Shared Ledger, Sidechain................................21
1.8.3 Hybrid Blockchains.............................................................22
1.8.4 Comparison.........................................................................22
1.9 Applications......................................................................................23
1.10 Revisiting the Double-Spending Problem.........................................26
1.11 Summary..........................................................................................26
2 Immutability of Blockchain..................................................................27
2.1 Cryptography...................................................................................27
2.1.1 What is Cryptography and Cryptanalysis?...........................28
2.1.2 Background.........................................................................28
2.1.3 Basic Concepts.....................................................................29
2.2 Modern Cryptography......................................................................30
2.2.1 Symmetric-Key Cryptography.............................................31
2.2.2 Public-Key Cryptography....................................................33
2.3 Cryptographic Applications..............................................................36
2.3.1 TLS and SSL........................................................................36
2.3.2 Cryptographic Hash Function.............................................37
2.3.3 Digital Signature..................................................................38
2.4 Elliptic Curve Cryptography (ECC).................................................41
2.4.1 Basic Concept......................................................................41
2.4.2 Public and Private Keys....................................................... 42
2.4.3 How Does ECC Compare to RSA?......................................43
2.5 Making Blockchain Immutable....................................................... 44
2.5.1 Block and Block Header..................................................... 44
2.5.2 Timestamp.......................................................................... 44
2.5.3 Merkle Tree.........................................................................45
2.5.4 Building the Chain..............................................................45
2.6 Summary..........................................................................................48
3 Consensus Mechanisms of Blockchain..................................................49
3.1 Distributed Systems and Consensus.................................................49
3.1.1 Distributed Systems.............................................................50
3.1.2 Coordination and Agreement..............................................50
3.1.3 Consensus............................................................................51
3.2 Byzantine Generals Problem.............................................................52
3.2.1 Two Generals Paradox..........................................................52
3.2.2 Byzantine Generals Problem................................................53
3.2.3 Byzantine Fault Tolerance....................................................55
3.3 Blockchain's Consensus Mechanism.................................................56
3.3.1 Hashcash Proof of Work......................................................56
3.3.2 Proof of Work in Blockchain...............................................57
3.3.3 BFT in Blockchain...............................................................58
3.4 Solving the Double-Spending Problem.............................................59
3.5 Summary..........................................................................................60
4 Bitcoin: World's First Cryptocurrency..................................................61
4.1 What is Bitcoin?...............................................................................61
4.2 Brief History of Bitcoin....................................................................63
4.2.1 Before Bitcoin......................................................................63
4.2.2 Bitcoin Era.......................................................................... 64
4.3 Token: BTC.................................................................................... 64
4.3.1 Bitcoin Mining and Supply..................................................65
4.3.2 Units of Bitcoin................................................................... 66
4.4 Bitcoin's Blockchain........................................................................ 66
4.4.1 Block Header.......................................................................67
4.4.2 Timestamp...........................................................................67
4.4.3 Merkle Tree.........................................................................67
4.4.4 Hash Generation..................................................................68
4.4.5 Genesis Block.......................................................................68
4.5 Bitcoin Address.................................................................................69
4.5.1 Formats................................................................................71
4.5.2 Hash Generation..................................................................72
4.5.3 Address Structure.................................................................72
4.6 Transactions.....................................................................................73
4.6.1 Input and Output................................................................74
4.6.2 Redeeming Tokens.............................................................. 77
4.6.3 Multi-Signature...................................................................78
4.6.3.1 Escrow..................................................................78
4.6.3.2 Cold Storage.........................................................78
4.6.4 Generation Transaction.......................................................79
4.6.5 Storing Data........................................................................79
4.6.6 Contracts.............................................................................79
4.7 Mining.............................................................................................80
4.7.1 Method................................................................................80
4.7.2 Proof of Work......................................................................82
4.7.3 Target and Difficulty...........................................................83
4.7.4 Mining Process................................................................... 84
4.8 Split Coins and Altcoins...................................................................85
4.8.1 Split Coins...........................................................................85
4.8.1.1 Bitcoin Cash.........................................................85
4.8.1.2 Bitcoin Gold.........................................................85
4.8.1.3 Bitcoin Private.......................................................86
4.8.2 Altcoins................................................................................86
4.8.2.1 Namecoin.............................................................87
4.8.2.2 Litecoin.................................................................87
4.8.2.3 Peercoin................................................................88
4.8.2.4 Nxt........................................................................88
4.8.2.5 Dash.....................................................................88
4.9 Summary..........................................................................................89
Section II ?SMART CONT RACTS
5 Ethereum and Smart Contracts.............................................................93
5.1 Introduction to Smart Contracts......................................................93
5.1.1 Vending Machine Analogy..................................................94
5.1.2 Nick Szabo and Bit Gold.....................................................95
5.1.3 Turing-Completeness...........................................................96
5.2 What is Ethereum?...........................................................................96
5.3 Token: ETH.....................................................................................97
5.3.1 Pre-Mining..........................................................................97
5.3.2 Price.....................................................................................98
5.3.3 Units....................................................................................98
5.4 Architecture......................................................................................99
5.4.1 Ethereum Virtual Machine (EVM).....................................99
5.4.2 Account.............................................................................100
5.4.3 Address..............................................................................101
5.4.4 Mist...................................................................................101
5.5 Mining...........................................................................................102
5.5.1 Mining Process..................................................................102
5.5.2 Block-Generation Rate.......................................................103
5.5.3 Rewards.............................................................................103
5.6 Smart Contracts in Ethereum.........................................................103
5.6.1 Transactions.......................................................................103
5.6.2 Gas....................................................................................104
5.6.3 High-Level Languages.......................................................104
5.7 ERC Standards...............................................................................105
5.7.1 ERC-20..............................................................................105
5.7.2 ERC-223............................................................................106
5.7.3 ERC-721............................................................................106
5.7.4 Other Standards................................................................107
5.8 Comparison to Bitcoin...................................................................107
5.9 Summary........................................................................................107
6 NEO ..................................................................................................109
6.1 What is NEO?................................................................................109
6.2 Token: NEO and GAS................................................................... 110
6.2.1 Token Generation.............................................................. 110
6.2.2 Token Distribution............................................................ 111
6.3 Architecture.................................................................................... 111
6.3.1 Basic Structure................................................................... 111
6.3.2 Advanced Features............................................................. 111
6.4 Consensus Mechanism: dBFT........................................................112
6.4.1 Algorithm..........................................................................112
6.4.2 Procedure...........................................................................113
6.4.3 Transaction Validation.......................................................113
6.4.4 View Change..................................................................... 114
6.4.5 Fault Tolerance and Transaction Time............................... 114
6.5 Smart Contracts............................................................................. 114
6.6 Summary........................................................................................ 116
7 EOS ..................................................................................................117
7.1 What is EOS?................................................................................. 117
7.2 Token: EOS.................................................................................... 118
7.2.1 Initial Coin Offering.......................................................... 118
7.2.2 Transaction Fees................................................................ 119
7.2.3 Inflation............................................................................. 119
7.3 Architecture.................................................................................... 119
7.4 Consensus Mechanism: DPoS........................................................120
7.4.1 Algorithm..........................................................................120
7.4.2 Procedure...........................................................................121
7.4.3 Reward..............................................................................122
7.5 Smart Contracts.............................................................................122
7.6 EOS.IO Operating System.............................................................123
7.6.1 Schema-Defined Actions and Database..............................123
7.6.2 Separation of Authentication from Applications................124
7.6.3 Inter-Blockchain Communication.....................................124
7.7 Summary........................................................................................124
Section III ?FINANCIAL NET WORKS
8 Ripple ..................................................................................................127
8.1 What is Ripple?..............................................................................127
8.2 Token: XRP....................................................................................128
8.2.1 Token Generation and Distribution...................................128
8.2.2 Bridge Currency.................................................................129
8.2.3 Market Capitalisation........................................................129
8.3 Architecture....................................................................................129
8.3.1 Hawala...............................................................................130
8.3.2 XRP Ledger.......................................................................131
8.3.3 Transactions.......................................................................132
8.4 Consensus Mechanism: RPCA.......................................................133
8.4.1 Components......................................................................133
8.4.2 Consensus Process.............................................................134
8.4.3 Correctness........................................................................135
8.5 Codius and Interledger...................................................................136
8.6 Real-Time Gross Settlement System...............................................136
8.6.1 RippleNet..........................................................................137
8.6.2 xCurrent............................................................................138
8.6.3 xRapid...............................................................................139
8.6.4 xVia....................................................................................139
8.7 Partners..........................................................................................139
8.8 Summary........................................................................................141
9 Stellar ..................................................................................................143
9.1 What Is Stellar?..............................................................................143
9.2 Token: Lumens (XLM)..................................................................144
9.2.1 Generation and Distribution..............................................144
9.2.2 Price and Market Cap........................................................145
9.2.3 Role of XLM in the Protocol.............................................145
9.3 Architecture....................................................................................146
9.4 Consensus Mechanism...................................................................146
9.4.1 Quorum and Slices............................................................146
9.4.2 Agreement..........................................................................148
9.5 Applications....................................................................................148
9.5.1 Anchors..............................................................................148
9.5.2 Distributed Exchange........................................................149
9.5.3 Multi-Currency Transactions.............................................149
9.6 Partners.......................................................................................... 153
9.7 Summary........................................................................................ 153
Section IV ADVANCED LEDGERS AND APPLICATION S
10 Purpose-Built Distributed Ledgers.....................................................157
10.1 Purpose-Built Ledgers and Blockchains.......................................... 157
10.2 Internet of Things: IOTA............................................................... 159
10.2.1 Overview........................................................................... 159
10.2.2 Technical Details............................................................... 159
10.2.3 Applications....................................................................... 161
10.2.4 Alternatives: IBM Watson and Waltonchain...................... 161
10.3 Supply Chain: OriginTrail..............................................................162
10.3.1 Overview...........................................................................162
10.3.2 Technical Details...............................................................163
10.3.3 Applications.......................................................................163
10.3.4 Alternatives: VeChain and OpenChain..............................163
10.4 Connectivity: Moeco......................................................................164
10.4.1 Overview...........................................................................164
10.4.2 Technical Details...............................................................164
10.4.3 Applications.......................................................................166
10.5 Cybersecurity: Naoris.....................................................................166
10.5.1 Overview...........................................................................166
10.5.2 Technical Details...............................................................167
10.5.3 Applications.......................................................................168
10.6 Private Network: HydraChain........................................................168
10.6.1 Overview...........................................................................168
10.6.2 Technical Details...............................................................168
10.6.3 Applications.......................................................................170
10.7 Framework: Hyperledger................................................................170
10.7.1 Overview...........................................................................170
10.7.2 Technical Details...............................................................171
10.7.3 Application........................................................................173
10.8 Emerging Distributed Ledgers........................................................173
10.8.1 Medical Services: MediChain and MediLedger.................173
10.8.2 Drug Development: BlockPhrama..................................... 174
10.8.3 Quality Assurance: Ambrosus............................................ 174
10.8.4 Sharing Economy: Slock.it................................................. 174
10.8.5 Genomic Data Collection: Nebula Genomics.................... 174
10.9 Summary........................................................................................175
11 Applications of Blockchain.................................................................177
11.1 Hype or Hope?...............................................................................177
11.2 Classification..................................................................................180
11.2.1 Classifying the Domains....................................................181
11.2.2 Classifying the Categories..................................................181
11.3 Citizen Services..............................................................................182
11.3.1 e-Governance.....................................................................182
11.3.2 Healthcare.........................................................................183
11.3.3 Education..........................................................................185
11.4 Business and Financial Services......................................................186
11.4.1 Financial Services...............................................................186
11.4.2 Smart Property..................................................................187
11.4.3 Exchange and Trading.......................................................187
11.5 Online Marketplace........................................................................187
11.5.1 e-Commerce......................................................................188
11.5.2 Online Betting, Gambling and Gaming............................189
11.5.3 e-Auctions and Online Bidding.........................................189
11.6 Supply Chain, Production and Provenance..................................... 191
11.6.1 Commercial Supply Chain................................................. 191
11.6.2 Food Production................................................................ 191
11.6.3 Drug Manufacturing.........................................................192
11.7 Safety and Security.........................................................................193
11.7.1 Cybersecurity.....................................................................193
11.7.2 Physical Safety, Security and Tracking...............................194
11.8 Smart City......................................................................................195
11.8.1 Smart Home......................................................................195
11.8.2 Smart Transportation.........................................................196
11.8.3 Smart Grid.........................................................................196
11.8.4 Citizen Engagement...........................................................197
11.8.5 Quality Control.................................................................197
11.9 Summary........................................................................................198
Section V CRYPTO CURREN CY
12 Evolution of Money: From Barter to Bitcoin.......................................201
12.1 Money............................................................................................201
12.1.1 Functions of Money...........................................................202
12.1.2 Properties...........................................................................202
12.1.3 Money Supply....................................................................203
12.1.4 Central Bank.................................................................... 204
12.2 Origin and Early Forms................................................................. 204
12.2.1 Barter: The Origin of Money?........................................... 204
12.2.2 Commodity and Representative Money............................ 206
12.2.3 Coinage.............................................................................207
12.2.4 Banknotes..........................................................................209
12.3 Fiat Money.....................................................................................212
12.3.1 Gold Standard...................................................................212
12.3.2 US Dollar Standard...........................................................212
12.3.3 Nixon Shock and Creation of Fiat Money..........................213
12.4 Digital Money................................................................................213
12.4.1 Centralised Digital Money.................................................213
12.4.2 Decentralised Digital Money.............................................214
12.5 Cryptocurrency.............................................................................. 215
12.6 Summary........................................................................................217
13 Cryptocurrency Mining......................................................................219
13.1 Mining........................................................................................... 219
13.1.1 Evolution of Mining......................................................... 220
13.1.2 Mining Process................................................................. 220
13.1.3 Difficulty...........................................................................221
13.1.4 Rewards.............................................................................221
13.2 Hash Rate.......................................................................................221
13.2.1 Understanding Hash Rate..................................................221
13.2.2 Calculating Hash Rate...................................................... 222
13.2.3 Hash Rate and Profits....................................................... 222
13.3 Mining Hardware.......................................................................... 222
13.3.1 Non-Specialised Hardware............................................... 222
13.3.2 Specialised Hardware (ASICs)...........................................224
13.3.3 Profitability Factors............................................................225
13.4 Pooled Mining................................................................................225
13.4.1 Pooled Mining Basics.........................................................225
13.4.2 Mining Pools.................................................................... 226
13.4.3 Reward Sharing................................................................ 228
13.5 Mining Nations............................................................................. 228
13.6 Criticism of PoW Mining...............................................................229
13.7 Summary........................................................................................231
14 Cryptocurrency Wallet........................................................................233
14.1 Wallet.............................................................................................233
14.1.1 Private Key and Address.................................................... 234
14.1.2 Transferring Funds........................................................... 234
14.2 Types of Wallets.............................................................................235
14.2.1 Web Wallet........................................................................236
14.2.2 Software Wallet.................................................................236
14.2.3 External Storage Media......................................................238
14.2.4 Paper Wallet.......................................................................238
14.2.5 Hardware Wallet................................................................239
14.2.6 Brain Wallet.......................................................................240
14.3 Special Wallets...............................................................................241
14.3.1 Multi-Signature Wallet......................................................241
14.3.2 Cold-Storage Wallet...........................................................241
14.3.3 Receive-Only Wallet..........................................................242
14.4 Deterministic Wallet......................................................................242
14.4.1 Type-1 Wallet....................................................................242
14.4.2 Type-2 Wallet....................................................................243
14.4.3 HD Wallet........................................................................ 244
14.5 Wallet Providers............................................................................ 246
14.6 Summary........................................................................................247
15 Cryptocurrency Trading and Investment............................................249
15.1 Investment......................................................................................249
15.1.1 Financial Instruments........................................................250
15.1.2 Commodities.....................................................................251
15.1.3 Currencies..........................................................................251
15.1.4 Derivatives.........................................................................252
15.1.5 Status of Cryptocurrency...................................................253
15.2 Portfolio.........................................................................................253
15.2.1 Funds.................................................................................253
15.2.2 Indices...............................................................................254
15.2.3 ETFs..................................................................................256
15.3 Exchanges and Platforms................................................................257
15.3.1 Cryptocurrency Trading Exchange....................................258
15.3.2 Derivative Trading Exchanges...........................................259
15.3.3 Investment Platforms........................................................ 260
15.4 Investment Strategy........................................................................261
15.4.1 Day Trading.......................................................................261
15.4.2 Buy and Hold....................................................................262
15.4.3 Value Investment...............................................................262
15.5 Investing in Cryptocurrencies.........................................................262
15.5.1 Self-Investment..................................................................263
15.5.2 Guided Investment........................................................... 264
15.6 Regulation and Tax Affairs.............................................................265
15.7 Summary....................................................................................... 266
16 Initial Coin Offerings (ICOs)..............................................................267
16.1 Overview........................................................................................267
16.1.1 The Creation of ICOs....................................................... 268
16.1.2 How Do ICOs Work?........................................................269
16.2 Token Creation...............................................................................269
16.2.1 Token.................................................................................269
16.2.2 Platforms............................................................................270
16.3 Understanding ICOs......................................................................271
16.3.1 ICOs vs IPOs.....................................................................271
16.3.2 Signs of Good and Bad ICOs.............................................272
16.3.3 Advantages and Disadvantages..........................................273
16.4 ICOs in Number............................................................................274
16.4.1 Amount Raised..................................................................274
16.4.2 Breakdown by Industry......................................................274
16.4.3 Biggest Winners and Losers...............................................275
16.5 Scams and Criticisms.....................................................................275
16.6 Summary........................................................................................277
Section VI ?SOCIO -ECONO MIC LANDSCAPE
17 Economic Outlook of Cryptocurrency................................................281
17.1 Classification..................................................................................281
17.1.1 Currency............................................................................282
17.1.2 Commodity.......................................................................283
17.1.3 Stock................................................................................. 284
17.2 Price of Bitcoin.............................................................................. 284
17.3 Volatility of Bitcoin........................................................................285
17.4 Historic Price Predictions...............................................................287
17.5 Price Movement of Major Cryptocurrencies...................................287
17.5.1 ETH..................................................................................288
17.5.2 XRP...................................................................................288
17.5.3 XLM..................................................................................289
17.5.4 NEO..................................................................................289
17.5.5 EOS...................................................................................289
17.6 Reception.......................................................................................290
17.6.1 Acceptance by Merchants..................................................290
17.6.2 Acceptance by Investors.....................................................291
17.6.3 Acceptance by Governments..............................................292
17.7 Summary........................................................................................293
18 Crime, Criminals and Cryptocurrencies.............................................295
18.1 Criminal Activities.........................................................................295
18.2 Deep Web.......................................................................................296
18.2.1 Darknet and Dark Web.....................................................297
18.2.2 Onion Routing and Tor.....................................................297
18.2.3 Bitcoin: The Missing Piece.................................................298
18.3 Darknet-Based Crimes...................................................................299
18.3.1 Silk Road...........................................................................299
18.3.2 Post-Silk Road Markets......................................................301
18.3.3 Assassination Markets....................................................... 304
18.3.4 Cybercrimes...................................................................... 306
18.4 Financial Crimes........................................................................... 308
18.4.1 Money Laundering........................................................... 308
18.4.2 Market Manipulation........................................................310
18.5 Fraudulent Activities.......................................................................310
18.5.1 False Claims....................................................................... 311
18.5.2 Scams.................................................................................312
18.6 Prevention......................................................................................312
18.6.1 Regulation.........................................................................313
18.6.2 Cooperation....................................................................... 314
18.6.3 Participation...................................................................... 315
18.7 Summary........................................................................................316
19 Regulations, Laws and Practices.........................................................317
19.1 Legality of Blockchain and Cryptocurrency................................... 317
19.2 Regulatory Issues............................................................................ 318
19.2.1 Misuse of Pre-Mining and ICOs........................................ 319
19.2.2 Crackdowns on Mining and Trading................................. 319
19.3 Current Landscape.........................................................................320
19.3.1 Challenges.........................................................................320
19.3.2 Areas..................................................................................321
19.3.3 Blockchain-Friendly Nations.............................................322
19.4 Regulations for Blockchain Technology and Cryptocurrency.........323
19.4.1 The Americas.....................................................................323
19.4.2 Europe...............................................................................324
19.4.3 Asia....................................................................................326
19.4.4 Australia and Africa...........................................................327
19.5 Summary........................................................................................328
20 Criticism, Scepticism and Support......................................................329
20.1 Before It All Started........................................................................329
20.2 Early Days of Bitcoin......................................................................330
20.3 Bitcoin Grabs Attention..................................................................331
20.4 Beginning of the Bull Run.............................................................332
20.5 Crazy Price Hike............................................................................334
20.6 To Invest or Not to Invest?.............................................................335
20.7 $10K and Counting........................................................................337
20.8 Nosedive.........................................................................................338
20.9 Summary....................................................................................... 344
Bibliography.................................................................................................345
Index............................................................................................................355
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Bitcoin Price;authentication;EUR Exchange;banking technology;Byzantine Fault Tolerance;Bitcoin;QR Code;blockchain;Blockchain Technology;crypto mining;CTO;crypto regulations;ASIC;digital signature;IoT Device;cryptocurrency;Smart Contract;cryptography;Darknet Markets;elliptic curve cryptography;Cryptocurrency Exchange;financial services;Consensus Mechanism;hash function;Merkle Tree;SSL;Private Key;cryptoanalysis;Bitcoin Network;Distributed Ledger Technology;Virtual Currency;Bitcoin Blockchain;Elliptic Curve;Bitcoin Mining;Bitcoin Transactions;Block Building Process;Public Key;Virtual Machine;RTGS.
