Blockchain for Dummies

Unravel the mysteries of blockchains 

Blockchain technologies are disrupting some of the world’s biggest industries. Blockchain For Dummies provides a fast way to catch up with the essentials of this quickly evolving tech. Written by an author involved in founding and analyzing blockchain solutions, this book serves to help those who need to understand what a blockchain can do (and can't do).

This revised edition walks you through how a blockchainsecurely records data across independent networks. It offers a tour of some of the world’s best-known blockchains, including those that power Bitcoin and other cryptocurrencies. It also provides a glance at how blockchain solutions are affecting the worlds of finance, supply chain management, insurance, and governments.

• Get a clear picture of what a blockchain can do
• Learn how blockchains rule cryptocurrency and smart contracts
• Discover current blockchains and how each of them work
• Test blockchain apps

Blockchain has become the critical buzzword in the world of financial technology and transaction security — and now you can make sense of it with the help of this essential guide.

Tiana Laurence is a blockchain pioneer, an investor, and a serial entrepreneur. She co-founded Factom, Inc., a software company that builds technology within the blockchain space. She is currently a columnist for TechTarget with writings focusing on blockchain and IoT and managing partner of Laurence Ventures, a firm investing in technology initiatives.

Introduction 1

About This Book 1

Foolish Assumptions 2

Icons Used in This Book 2

Beyond the Book 3

Where to Go from Here 3

Part 1: Getting Started with Blockchain 5

Chapter 1: Introducing Blockchain 7

Beginning at the Beginning: What Blockchains are 7

What blockchains do 8

Why blockchains matter 9

The Structure of Blockchains 10

Blockchain Applications 12

The Blockchain Life Cycle 12

Consensus: The Driving Force of Blockchains 13

Blockchains in Use 15

Current blockchain uses 16

Future blockchain applications 16

Chapter 2: Picking a Blockchain 19

Where Blockchains Add Substance 19

Determining your needs 20

Defining your goal 21

Choosing a Solution 22

Drawing a blockchain decision tree 23

Making a plan 24

Chapter 3: Getting Your Hands on Blockchain 27

Diving into Blockchain Technology 28

Creating a secure environment 28

Buying your first Bitcoin 31

Securing and Exchanging Your Cryptocurrency 32

Downloading Jaxx 33

Securing your Jaxx wallet 33

Transferring Bitcoin to Jaxx 34

Trading Bitcoin for Ether 35

Loading up your MetaMask account 35

Setting up a CryptoKitties account 36

Building a Private Blockchain with Docker and Ethereum 38

Preparing your computer 39

Building your blockchain 41

Part 2: Developing Your Knowledge 43

Chapter 4: Beholding the Bitcoin Blockchain 45

Getting a Brief History of the Bitcoin Blockchain 46

The New Bitcoin: Bitcoin Cash 48

Debunking Some Common Bitcoin Misconceptions 50

Bitcoin: The New Wild West 51

Fake sites 52

No, you first! 52

Get-rich-quick schemes 52

Mining for Bitcoins 53

Making Your First Paper Wallet 54

Chapter 5: Encountering the Ethereum Blockchain 57

Exploring the Brief History of Ethereum 58

Ethereum: The Open-Source World Wide Computer 59

Decentralized applications: Welcome to the future 60

The power of decentralized autonomous organizations 61

Hacking a Blockchain 64

Understanding smart contracts 64

Discovering the cryptocurrency Ether 65

Getting Up and Running on Ethereum 65

Mining for ether 66

Setting up your Ethereum wallet 66

Building Your First Decentralized Autonomous Organization 67

Test net and congress 68

Governance and voting 69

Uncovering the Future of DAOs 69

Putting money in a DAO 70

Building smarter smart contracts 70

Finding bugs in the system 71

Creating Your Own ERC20 Tokens 71

Seeing up your GitHub account 71

Requesting KETH on the Gitter Faucet 72

Creating your tokens 73

Chapter 6: Riding the Waves Blockchain 77

Seeing How the Waves Blockchain Differs from Other Blockchains 78

Unleashing the Full Power of Waves 79

Setting up your Waves wallet 80

Backing up your wallet 80

Uncovering Your Wallet’s Features 81

Transferring crypto assets 82

Using a decentralized exchange 82

Creating and Leasing Out Your Own Cryptocurrency 85

Chapter 7: Finding the Factom Blockchain 87

A Matter of Trust 88

The purpose of the Factom blockchain: Publishing anything 89

Incentives of federation 90

Building on Factom 93

Authenticating documents and building identities using APIs 93

Getting to know the Factoid: Not a normal cryptocurrency 93

Anchoring your application 94

Publishing on Factom 94

Building transparency in the mortgage industry 96

Verifying physical documents: dLoc with Factom 98

Chapter 8: Examining the EOS Blockchain 101

Getting Familiar with EOS 102

New mining versus old mining 104

The 21 block producers 104

Setting Up EOS Voting for Block Producers 105

Setting up the Greymass voting tool 106

Voting for a block producer 107

Introducing the EOS Decentralized Application Collection 108

Everipedia: The next-generation encyclopedia 108

Decentralized EOS games 109

Part 3: Powerful Blockchain Platforms 111

Chapter 9: Getting Your Hands on Hyperledger 113

Getting to Know Hyperledger 114

Identifying Key Hyperledger Projects 115

Focusing on Fabric 115

Investigating the Iroha project 115

Diving into Sawtooth Lake 117

Building Your System in Fabric 119

Building asset tracking with Hyperledger Composer 119

Working with Smart Contracts on Hyperledger 123

Step 1: Setting up an auction network 123

Step 2: Setting up auction windows 124

Step 3: Creating an auctioneer 124

Step 4: Creating two participants 124

Step 5: Creating a new asset 125

Step 6: Creating a new listing 126

Step 7: Auctioning off the car 127

Step 8: Closing your auction 128

Chapter 10: Applying Microsoft Azure 129

Bletchley: The Modular Blockchain Fabric 129

Cryptlets for encrypting and authenticating 130

Utility and Contract Cryptlets and CrytoDelegates 132

Building in the Azure Ecosystem 133

Getting Started with Chain on Azure 135

Installing Chain’s distributed ledger 135

Creating your own private network 135

Using financial services on Azure’s Chain 136

Deploying Blockchain Tools on Azure 136

Exploring Ethereum on Azure 137

Cortana: Your analytics machine learning tool 137

Visualizing your data with Power BI 138

Managing your access on Azure’s Active Directory 138

Chapter 11: Getting Busy on IBM Bluemix 139

Business Blockchain on Bluemix 140

Your isolated environment 140

Bluemix use cases 141

Watson’s Smart Blockchain 142

Building Your Starter Network on Big Blue 144

Part 4: Industry Impacts 147

Chapter 12: Financial Technology 149

Hauling Out Your Crystal Ball: Future Banking Trends 149

Moving money faster: Across borders and more 151

Creating permanent history 152

Going International: Global Financial Products 153

Border-free payroll 155

Faster and better trade 155

Guaranteed payments 156

Micropayments: The new nature of transactions 156

Squeezing Out Fraud 157

Chapter 13: Real Estate 159

Eliminating Title Insurance 160

Protected industries 160

Consumers and Fannie Mae 162

Mortgages in the Blockchain World 162

Reducing your origination costs 163

Knowing your last-known document 163

Forecasting Regional Trends 164

The United States and Europe: Infrastructure congestion 165

China: First out of the gate 166

The developing world: Roadblocks to blockchain 166

Chapter 14: Insurance 169

Precisely Tailoring Coverage 169

Insuring the individual 170

The new world of micro insurance 171

Witnessing for You: The Internet of Things 172

IoT projects in insurance 173

Implications of actionable big data 173

Taking Out the Third Party in Insurance 174

Decentralized security 174

Crowdfunded coverage 175

The implications of DAO insurance 175

Chapter 15: Government 177

The Smart Cities of Asia 177

Singapore satellite cities in India 179

China’s big data problem 180

The Battle for the Financial Capital of the World 181

London’s early foresight 182

The regulatory sandbox of Singapore 183

The Dubai 2020 initiative 184

Bitlicense regulatory framework: New York City 185

Friendly legal structure of Malta 186

Securing the World’s Borders 187

The Department of Homeland Security and the identity of things 188

Passports of the future 188

The new feeder document 188

Chapter 16: Other Industries 191

Lean Governments 191

Singapore’s Smart Nation project 192

Estonia’s e-Residency 193

Better notarization in China 194

The Trust Layer for the Internet 194

Spam-free email 195

Owning your identity 196

Oracle of the Blockchain 196

Trusted authorship 197

Intellectual property rights 197

Part 5: The Part of Tens 199

Chapter 17: Ten (or So) Free Blockchain Resources 201

Ethereum 201

DigiKnow 202

Blockchain University 202

Bitcoin Core 202

Blockchain Alliance 202

Multichain Blog 203

HiveMind 203

Smith + Crown 204

Unchained and Unconfirmed Podcasts 204

Chapter 18: The Ten Rules to Never Break on the Blockchain 205

Don’t Use Cryptocurrency or Blockchains to Skirt the Law 205

Keep Your Contracts as Simple as Possible 206

Publish with Great Caution 207

Back Up, Back Up, Back Up Your Private Keys 207

Triple-Check the Address Before Sending Currency 209

Take Care When Using Exchanges 209

Beware Wi-Fi 210

Identify Your Blockchain Dev 210

Don’t Get Suckered 210

Don’t Trade Tokens Unless You Know What You’re Doing 211

Chapter 19: Ten Top Blockchain Projects 213

The R3 Consortium 213

T ZERO: Overstocking the Stock Market 215

Blockstream’s Distributed Systems 215

MadHive 216

Blockdaemon 217

Gemini Dollar and Exchange 217

Decentraland 218

TransferWise 218

Lightning Network 219

Bitcoin Cash 219

Index 221

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