Discussion - Contrasting local and public test blockchains/ 500 words

Dr. Michael G. Solomon

BLCN 631 – Blockchain Implementation

EFD Chapter 1 – Getting to Know Blockchain and

Ethereum

Blockchain Technology - Trust

• Called a disruptive technology

• Devised to solve trust issues

• People like to exchange items of value

• Who do you trust?

• How do you engage in commerce without trust?

• Trust normally depends on a third party

• Bank, broker, middleman

• All take fees

Blockchain Technology -

Solution

• Bitcoin (and blockchain) introduced in 2008

• Whitepaper described a novel way to handle cryptocurrency

• Satoshi Nakamoto (not a real name)

• Enables parties to conduct business without trade relations obstacles

• First blockchain implementation – Bitcoin

• Focus on cryptocurrency exchange

Blockchain Use Case

• Lots of potential blockchain use cases

• Initial focus was on disintermediation

• Removing the middleman (bank, broker, etc.)

• Example – Tutoring service

• You (the tutor) offer tutoring services via an app

• Customers book you and pay with cryptocurrency

• Potential issues – Cancellations/Refusal to pay

More Blockchain Use Cases

Financial services Currency exchanges

Banking

Real estate

Digital identity management

Healthcare

Energy

Supply chain

Blockchain Features

Value without trust

Disintermediation Efficiency

Complete transaction history

Resilience through replication

Transparency

Introducing Ethereum

Ethereum – 2nd generation blockchain

2013 – Vitalik Buterin

Added smart contracts

Native cryptocurrency

Opened the door for

autonomy

Bitcoin – 1st generation blockchain

Limited to cryptocurrency exchange (basically)

Ethereum Features

• Proof of Work (PoW) • Proof of Stake (PoS)

Consensus

• Ethereum Virtual Machine (EVM)

• Deterministic / Turing complete

• Stored on the blockchain

Smart contracts

Immutable

Handling Ether

• Native cryptocurrency – Ether (ETH)

• An Exchange converts fiat currency to cryptocurrency (and vice versa)

• Exchanges - https://99bitcoins.com/ethereum- exchanges/

• ATMs - https://localcoinatm.com/

• Pay with ETH - https://www.paywithether.com/

DAOs and ICOs

Decentralized Autnonomous Organization (DAO)

• Business that runs with limited human interaction

• All rules are smart contracts

• Example – Autonomous ride- sharing

Initial Coin Offering (ICO)

• Common way to raise initial blockchain capital

• Similar to an Initial Public Offering (IPO)

The Ethereum Ecosystem

BLOCKCHAIN EVM WALLET EXCHANGE

DEVELOPMENT ENVIRONMENT

TESTING ENVIRONMENT – LOCAL VS. PUBLIC

CLIENT INTERFACE

Building Blockchain

Apps

• Document goal(s)

• Define blockchain data requirements

• Design procedural requirements

• Build smart contracts

• Build client interface

• Test, test, test

• Deploy

Summary

• Blockchain technology is disruptive

• Blockchain enables value exchanges without trust

• Ethereum is a 2nd generation blockchain

• Smart contracts make blockchains capable of creating autonomous entities

• Developing blockchain apps requires coordination among teams