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2017 | Book

Blockchain Enabled Applications

Understand the Blockchain Ecosystem and How to Make it Work for You

Authors: Vikram Dhillon, David Metcalf, Max Hooper

Publisher: Apress


About this book

Work with blockchain and understand its potential application beyond cryptocurrencies in the domains of healthcare, Internet of Things, finance, decentralized organizations, and open science. Featuring case studies and practical insights generated from a start-up spun off from the author’s own lab, this book covers a unique mix of topics not found in others and offers insight into how to overcome real hurdles that arise as the market and consumers grow accustomed to blockchain based start-ups.

You'll start with a review of the historical origins of blockchain and explore the basic cryptography needed to make the blockchain work for Bitcoin. You will then learn about the technical advancements made in the surrounded ecosystem: the Ethereum virtual machine, Solidity, Colored Coins, the Hyperledger Project, Blockchain-as-a-service offered through IBM, Microsoft and more.

This book looks at the consequences of machine-to-machine transactions using the blockchain socially, technologically, economically and politically. Blockchain Enabled Applications provides you with a clear perspective of the ecosystem that has developed around the blockchain and the various industries it has penetrated.

What You’ll Learn

Implement the code-base from Fabric and Sawtooth, two open source blockchain-efforts being developed under the Hyperledger Project.

Evaluate the benefits of integrating blockchain with emerging technologies, such as machine learning and artificial intelligence in the cloud. Use the practical insights provided by the case studies to your own projects or start-up ideas. Set up a development environment to compile and manage projects.

Who This Book Is For

Developers who are interested in learning about the blockchain as a data-structure, the recent advancements being made and how to implement the code-base.

Decision makers within large corporations (product managers, directors or CIO level executives) interested in implementing the blockchain who need more practical insights and not just theory.

Table of Contents

Chapter 1. Behold the Dreamers
Anxiety is perhaps the best way to describe the attitude that dominated the minds of investors and the general public toward financial markets by the end of 2008. The 2008 financial crisis is considered by numerous economists to have been the worst financial crisis since the Great Depression. The years leading up to the crisis saw a flood of irresponsible mortgage lending and a massive systemic failure of financial regulation and supervision. The fallout was so immense that it threatened the collapse of large financial institutions. National governments had to intercede to bail out major banks. This chapter begins with a discussion about the 2008 financial crisis, and then we discuss the aftermath, which led to an environment where a new banking system and alternative currency such as Bitcoin could thrive. Then, we dive into the technology stack that powers Bitcoin. Remarkably, the components of this stack are not entirely new, but they are strung together in an ingenious design. Finally, we end the discussion by talking about the heightened interest in blockchain, a major technical breakthrough that has the potential to revolutionize several industries.
Vikram Dhillon, David Metcalf, Max Hooper
Chapter 2. The Gold Rush: Mining Bitcoin
Mining is a key operational concept in understanding how the Bitcoin protocol operates. It refers to a decentralized review process performed on each block of the blockchain to reach consensus without the need for a central authority to provide trust. In other words, mining is the computational equivalent of peer review in a decentralized environment where neither party involved trusts the other. Then, we integrate the concepts of block target values and network difficulty with mining and how mining has evolved to keep up with the increasing difficulty. This will lead us further into talking about the types of hardware mining that have recently been developed. We end the chapter with an analysis of startups that began selling dedicated hardware for mining, leading to the Bitcoin mining arms race and their eventual failure.
Vikram Dhillon, David Metcalf, Max Hooper
Chapter 3. Foundations of Blockchain
The blockchain is a decentralized data structure with internal consistency maintained through consensus reached by all the users on the current state of the network. It’s an enabling technology that resolved the Byzantine generals’ problem (message communication between untrusted parties) and opened up a new horizon of possibilities for trustless transactions and exchange of information. If the Internet democratized the peer-to-peer exchange of information, then the blockchain has democratized the peer-to-peer exchange of value. We begin this chapter by exploring how transactions work between users on the Bitcoin network. This entails a technical discussion of structures of a block and a transaction. We then dive into the role of wallets and user addresses. After talking about wallets, we shift our focus to simple payment verification (SPV) implemented in the Bitcoin network. SPV allows us to understand why blocks have a peculiar structure and more important, how the Bitcoin network can retain efficiency despite the network scaling at a high rate. Finally, we conclude our discussion by talking about hard and soft forks in the blockchain. We present the implications of forks in the context of forward compatibility for merchants and users involved in running the Bitcoin-core code.
Vikram Dhillon, David Metcalf, Max Hooper
Chapter 4. Unpacking Ethereum
Ethereum is an open source, decentralized, blockchain platform with computational capabilities that reconstruct elementary currency exchange into a transfer of value between users via a scripting language. Ethereum is widely recognized as a successor to the Bitcoin protocol, generalizing the original ideas and enabling a more diverse array of applications to be built on top of blockchain technology. Ethereum has two essential components. The first is a Turing-complete virtual processor that can load resources and execute scripts, called the Ethereum Virtual Machine (EVM). The second component is a token of value called Ether, which is the currency of the network used for user-to-user transactions or compensation to miners of the network. In this chapter, we begin our journey by exploring the architecture of Ethereum, focusing on the EVM and Turing-completeness properties. Following the architecture, there will be a short discussion on PoS in Ethereum, the currency Ether, and gas, which is a spam-prevention mechanism in the network. Then, we deconstruct the notion of a smart contract enabled by EVM, the security concerns revolving around sandboxing executable code, and how the EVM pushes executable code (bytecode) to the blockchain. After that, we dive deeper into Solidity, the programming language behind writing smart contracts with Ethereum. We explore the syntax of the language and the common integrated development environments (IDEs) being used to work with it. Next, we look at a few enterprise applications of Ethereum that have recently become available, particularly the blockchain-as-a-service deployed on the Azure cloud by Microsoft. Finally, we will end our journey with a look at the structure of a distributed app (Dapp) built on top of Ethereum and showcase an example of a decentralized publishing application where posts are stored permanently without any fear of censorship.
Vikram Dhillon, David Metcalf, Max Hooper
Chapter 5. Decentralized Organizations
Bitcoin can be thought of as the first prototypical decentralized autonomous organization (DAO). It created a network-based ecosystem of participants who contributed computational power toward a singular goal. In Bitcoin, the distributed protocol providing a financial service and rewarding miners became a rudimentary decentralized organization. In this chapter, we talk about more complex and full DAOs made in Aragon. Aragon ( is a decentralized application (DApp) that lets anyone create and manage different kinds of organizations (nongovernmental organizations [NGOs], nonprofits, foundations) on the Ethereum blockchain. Creating a DAO requires numerous steps and originally it was more difficult to implement in Ethereum. However, Aragon implements all the basic features of an organization in a base template that is deployed whenever a user instantiates a company. Most of the traditional features such as a cap table, voting, fundraising, and accounting are offered in Aragon as a decentralized counterpart to run on the blockchain. In addition, an Aragon company can be customized to a very granular extent and extended using new modules that can be added to a company’s existing smart contracts. Aragon enables different organizations to be built on the blockchain, and one interesting use case integrates identity using a two-way verification scheme with Keybase. We talk about how the Keybase to Aragon peg functions to provide identity services in the context of a decentralized system. We also briefly go over the Aragon kernel, which is essentially a task manager with subroutines that ensure smooth communication within an organization, among its members, and in the underlying blockchain.
Vikram Dhillon, David Metcalf, Max Hooper
Chapter 6. The DAO Hacked
Here, we want to highlight a historic moment leading to the creation of the first DAO, and how it eventually got hacked. Our discussion begins with a fresh perspective on decentralized organizations from Buterin, and leads into the story of, the company at the heart of the DAO revolution. Then, we present some code that made The DAO dysfunctional: pieces of the smart contract relevant to the vulnerability, the conditions that allowed repetitive withdrawals from The DAO, and the exploit itself. We conclude the chapter by talking about the consequences of this hack: the debate about hard vs. soft forks, and the creation of Ethereum Classic.
Vikram Dhillon, David Metcalf, Max Hooper
Chapter 7. Ethereum Tokens: High-Performance Computing
In the Ethereum ecosystem, transfer of value between users is often realized by the use of tokens that represent digital assets. Ether is the default token and the de facto currency used for transactions and initializing smart contracts on the network. Ethereum also supports the creation of new kinds of tokens that can represent any commonly traded commodities as digital assets. All tokens are implemented using the standard protocol, so the tokens are compatible with any Ethereum wallet on the network. The tokens are distributed to users interested in the given specific use case through an ICO. In this chapter, we focus our attention on tokens created for a very specific use case: high-performance computing (HPC). More precisely, we discuss a model of distributed HPC where miners offer computational resources for a task and get rewarded in some form of Ethereum tokens.
Vikram Dhillon, David Metcalf, Max Hooper
Chapter 8. Blockchain in Science
Evidence-based clinical sciences are currently suffering from a paralyzing reproducibility crisis. From clinical psychiology to cancer biology, recent metaresearch indicates a rise in researchers failing to replicate studies published by their peers. This problem is not just limited to benchwork that happens in a lab; it also plagues translational research where the transformation from bench to bedside happens. Treatments, tests, and technologies are converted from simple lab experiments to government-approved devices and assays that affect hundreds of lives. Therefore, replicability is crucial to converting scientific breakthroughs into pragmatic remedies.
Vikram Dhillon, David Metcalf, Max Hooper
Chapter 9. Blockchain in Health Care
The health care sector is a $3 trillion industry, and about $1 trillion of it goes to waste annually. Care coordination is becoming more complex as chronic conditions in the aging population continue to rise. In many instances, the technology available to health care providers is not adequate enough to capture all aspects of the care being provided. The result is a rugged transfer of information between parties that ultimately reduces the quality of care being provided to patients. This is largely due to providers having legacy systems, lack of integration with non-vendor-specific technologies, paper-based medical records, and a lack of horizontal transfer between allied health care professions. Hospitals are investing a considerable amount of resources into duplicating the work that can be completed by a sophisticated technology infrastructure, and amplifying the inefficiency of using poorly designed systems. In this use case, we discuss the payer–provider–patient model in the context of the incentives and services each provides and how this model is likely to change in the near future. We then introduce how blockchain can integrate into tracking the workflow of a patient from the first visit to final diagnosis and treatment plan. We introduce two new features that blockchain integration can enable: hot switching of components and medical data curation. Finally, we conclude by discussing waste management in health care and the efforts by Capital One + Gem to increase the economic output.
Vikram Dhillon, David Metcalf, Max Hooper
Chapter 10. The Hyperledger Project
The Hyperledger Project is a Linux Foundation initiative to develop an open source ecosystem of blockchain development. The Linux Foundation aims to create an environment in which communities of software developers and companies meet and coordinate to build blockchain frameworks. Hyperledger itself is not another cryptocurrency, but rather an open hub for enterprise-grade blockchain projects to incubate and mature through all stages of development and commercialization. In this chapter, we talk about the current state of the Hyperledger Project, with a focus on the currently incubating projects, a summary of the project scope being implemented, and a review of the comprehensive set of technologies involved in creating an open source enterprise-grade blockchain.
Vikram Dhillon, David Metcalf, Max Hooper
Chapter 11. Recent Developments in Blockchain
In this chapter, we focus on three new technologies that have significantly advanced our understanding of blockchain-enabled applications and opened up several new avenues for research. We begin our discussion with EOS, an Ethereum competitor built with an OS inspired architecture and platform-support design philosophy. It uses a new consensus mechanism called delegated proof-of-stake to enable rapid transaction verification and a continuous cycle of voting for delegates that support the network. The message passing protocols implemented in EOS are very advanced, allowing automated response handlers and action triggers on message delivery. They make up most of the smart contract system. There is also support for parallel lockless execution of smart contract instructions across the network, massively reducing latency in communication and state updates.
Vikram Dhillon, David Metcalf, Max Hooper
Chapter 12. Technological Revolutions and Financial Capital
The global financial markets are undergoing a drastic change that makes it clear that without innovation most business and financial models could soon become obsolete. A recent overview of the global financial system described the current system as a:
Vikram Dhillon, David Metcalf, Max Hooper
Blockchain Enabled Applications
Vikram Dhillon
David Metcalf
Max Hooper
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