Introduction to Blockchain
This is an introduction to blockchain technology and cryptocurrencies. It is an informational course with some hands-on interaction with exchanges, wallets and block explorers.
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PrerequisitesParticipants would benefit more from the course if they have programming experience, however other IT professionals would also gain as this is not a fully hands-on programming course.
Course ObjectivesThe course will include creating a wallet and getting some cryptocurrency to experiment with and creating a transaction and following it through to completion.
Who should attendIT Professionals beginning to work with or considering working with blockchain.
Important terminologyThere are a lot of unusual terms used when discussing cryptocurrencies and blockchains this module will go through some of the key terms and will explain their significance.
What is a blockchain?The bitcoin blockchain is a trustless distributed ledger where there is consensus as to the order in which the transactions occurred. Understanding this definition and the significance of each of the terms used is a great start to understanding bitcoin and the blockchain concept.
Bitcoin the original blockchainThe first blockchain is Bitcoin and it is still the main cryptocurrency today. It is important to know a little about the pioneers who were involved in this technology at the start.
Does Bitcoin satisfy the definition of money or currency?To understand cryptocurrencies it is important to know a little about the history of money and to have an understanding of what money really is and what constitutes a currency.
Cryptocurrency mining - proof of workThe key technological invention of the bitcoin protocol is proof of work. This is the process whereby transactions are added to the blockchain and the miners are rewarded for running the network in an efficient and transparently honest fashion. It is important to understand proof of work and its limits to scalability.
AltcoinsBitcoin is open source software and as such anyone can take a copy of the software and create their own cryptocurrency. Many people have done this and there are many many altcoins as a result. These altcoins can be broken into three loose categories, those that add nothing and are just clones of bitcoin, those that try to solve one or more problems with bitcoin and thirdly - outright scams.
Privacy, anonymity, pseudo-anonymity, full anonymity with zero knowledge proofsBitcoin is anonymous up to a point and it is important to understand exactly what can be seen once you share your wallet address with someone.
Cryptocurrency walletsStoring your cryptocurrency securely is a surprisingly difficult challenge. Setting up a wallet on your computer or phone is a trivial exercise but protecting your cryptocurrency is a quite different issue. Many people have failed to take proper precautions and have lost access to their investments. Here we will look at the different types of storage including exchange, mobile wallets, cold storage wallets, paper wallets and electronic wallets. We will also cover protecting your private key / recovery phrase.
Cryptocurrency exchangesThere are a variety of cryptocurrency exchanges. We will go through some of the different exchanges and how they work. We will also look at a variety of restrictions and security risks that are inherent in the use of an exchange. We will also look at localbitcoins.com and some of the more prominent exchanges that failed or were hacked.
Looking at a bitcoin transactionHere we will create a bitcoin transaction and watch it as it goes through to completion. Everything about a bitcoin transaction is transparent and visible when you know where to look. We will track a full transaction from start to finish.
What is Ethereum and why is it different?Ethereum is often called the second generation blockchain as it builds on top of the bitcoin idea but adds a lot of extra functionality. If you think of bitcoin as the equivalent of a spreadsheet, Ethereum is a full powered computer.
Introduction to smart contractsThe key innovation with ethereum is the provision of a Smart Contract. This is a computer program that will be executed by the ethereum network and all of the parties involved in the contract are bound to accept the output of the program. This will radically change the way that business is done and it will allow geographically diverse parties who don’t necessarily have to trust each other to transact business in a fair and transparent way that doesn’t require any kind of legal jurisdiction to enforce the contract.
What is an ICO?One of the first smart contract types that ethereum listed is the erc20 standard for tokens. This allows anyone to create their own “token” which is like their own cryptocurrency coin but instead of needing their own network all transactions can be conducted on the ethereum network.
Introduction to Solidity and the web3.js libraryWe conclude our discussion of ethereum with an overview of the programming required to create a smart contract using the solidity programming language and deploy it to a test network using the web3.js library.
Proof of stakeThe proof of work mechanism in bitcoin has proven to be problematic as the network as grown exponentially. The biggest criticism is the vast quantity of electricity that is consumed by the mining process which by some estimates is more than Ireland. An alternative mechanism is to get miners to put up a bond or stake and to randomly assign mining rights to those miners. If they fail to do their job efficiently or honestly then they will lose their stake. This concept is being trialled and it is hoped it will prove to be capable of providing a byzantine resilient trustless distributed blockchain but the jury is still out as to whether it will succeed.
Blockchain challengesBlockchain technology is now proven and has enormous potential to affect everything about the way money is transferred and business is transacted. It faces a number of key challenges which will require solutions. We will look at each of these: