Coding for Beginners: Blockchain

Development

A step-by-step guide to create your own Blockchains,

Cryptocurrencies and NFTs

By

Elliot Davis
 © Copyright 2021 by Elliot Davis - All rights reserved.
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Table of Content
INTRODUCTION

CHAPTER 1: THE FUNDAMENTALS

1.1 History of Bitcoin
1.2 What is Coding?
1.3 What is a Program?
1.4 A Brief Introduction to Programming
1.5 Advantages of Learning Coding

CHAPTER 2: WHAT IS BLOCKCHAIN?

2.1 Cryptocurrency and Blockchain
2.2 Bitcoin and Ethereum Blockchain
2.3 Centralized and Decentralized Systems
2.4 Smart Contracts

CHAPTER 3: IDE AND FRAMEWORKS

3.1The Main Concept of IDEs
3.2 The Advantages of IDEs
3.3 Commonly Used IDEs
3.4 Blockchain Development Tools

3.5 Blockchain Development Frameworks

CHAPTER 4: HOW TO BECOME A BLOCKCHAIN DEVELOPER

4.1 Planning the Blockchain
4.2 Using The Blockchain

CHAPTER 5: ETHER WALLETS

5.1 Crypto wallets
5.2 The Cryptocurrency Wallets' Operation
5.3 Different Crypto Wallets
5.4 A Brief Overview of Wallet Technology
5.5 Nondeterministic Wallets
5.6 Deterministic (Seeded) Wallets

CHAPTER 6: TOKENS
6.1 Understanding The Concept of Tokens
6.2 The ERC20 Token
6.3 Launching Our Own ERC20 Token
6.4 The ERC721 Non-Fungible Tokens (NFT) Standard
6.5 Some More Insight into NFTs
6.6 Uses of Token Standards

CONCLUSION
Introduction

The world as we know it is powered by coding, although most people are

unaware of its capabilities. Regardless of what it is, coding is critical for most
of today's enterprises.
Coding powers our digital world forward. Every website, mobile application,
computer program, calculator, and even microwave depends on code to
function. It is surprising to know how many people are still unaware of how
coding works and its role in our modern world. The latest innovation in the
financial world is cryptocurrency, a complex code construction. Transactions
are carried out through different platforms developed by coding and have no
physical existence. Still, they have changed the way people look at currency,
trading, and business transactions in the digital marketplace and is making its
way into the physical marketplace.
This book is a great introduction to the technology known as Blockchain.
According to some, the Blockchain will accomplish for transactions what the
Internet accomplished for information. This means that it has the power to
enhance efficiency and trust in every transaction of goods or services. The
Blockchain has the potential to alter how the world operates fundamentally. If
you have ever purchased a home, you are likely to have had to sign a large
stack of documents from different stakeholders to complete the transaction. If
you have ever registered a vehicle, you are probably aware of how
inconvenient the procedure may be.
Many people want to know more about programming and blockchains, but
they cannot find a book that gives the precise and to-the-point instructions to
keep them engaged. This book aims to provide both, a learning platform that
targets beginners of coding. This book is for those who want to learn to code
but have little to no knowledge about how to create apps and programs, or
they may participate in the latest form of finance and technology-
cryptocurrency. This book serves as a guide for all.
I have been trading for nearly a decade, and nothing has captured my
attention more than the rising cryptocurrency technology. I devote most of
my time and resources to studying how digital currencies and cryptocurrency
mechanisms function and how these new currencies might be used to benefit
individuals in today's financial world. I have been in the cryptocurrency
business for the better part of a decade at the time of writing this. Being
involved in crypto research and blockchain development has put me in a
position of authority and expertise to teach people who are interested in this
new technology. As for coding and development, I have always been
passionate about it, and I have attended numerous coding courses throughout
the years to improve my skills. I have failed numerous times along the way to
understand the obstacles that new comers may face on their journeys and
have discovered the best strategies for overcoming these obstacles.
This book aims to provide an interesting, enjoyable, and straightforward
introduction to Blockchain and Blockchain development through a
breakdown of basic coding and programming concepts. By the end of this
book, readers will have a working knowledge of Blockchain concepts by
creating their own cryptocurrency and NFT and also delving deeper into the
idea of Decentralized Apps or DApps by using different programming
languages.
Blockchain technology, which is most simply described as a shared,
immutable ledger, can revolutionize how the modern world handles
transactions. To be clear, when I discuss Blockchain, I am not referring to
bitcoin. I am referring to the underlying digital infrastructure that allows
applications such as bitcoin to work. To be clear, the Blockchain's reach
extends well beyond bitcoin.
Some terminologies require technical knowledge of information technology.
However, this is not required for this book. To avoid confusion, this book
uses everyday English, and it will walk you through the process of how
digital money was created and how you can learn to code and develop your
own blockchains, cryptos, or NFTs.
To help with comprehension, we will briefly review history of finance and
then explain what brought about the formation of many cryptocurrencies in
today's society. Following that, we will examine the ideas and motivations of
the Bitcoin inventor Satoshi Nakamoto. Then, in further detail, we will
examine the various contenders for the birth father of Blockchain. We will
also discuss how each block is formed and how they eventually form a chain,
which we refer to as Blockchain.
In the last chapters, we will discuss the security measures implemented on the
Blockchain further in depth. We will then examine why this technology will
transform the world by examining commercial applications and future
banking systems. Finally, a summary of what the Blockchain is in a nutshell.
While blockchain technology is as robust as the Internet, it stores identical
data blocks across its network, in contrast to the Web2 Internet of today. As a
result, a blockchain cannot be centralized or have a single point of failure. By
distributing data across its network, the Blockchain eliminates the risks
associated with centrally stored data. Blockchain networks lack centralized
points of vulnerability that computer hackers can easily exploit.
Everybody is familiar with the security issues that afflict today's Internet. To
access our online assets, we all rely on username and password credentials.
Blockchain technology enhances security by utilizing encryption technology.
By enabling the widespread distribution of data and information, blockchain
technology has established the backbone of the new Internet, Web3. Though
Blockchain was initially developed for the digital currency Bitcoin, the
business and technology communities are discovering a plethora of uses for
it. Not only programmers, but all businesses, will require knowledge of this
new technology. Blockchain will fundamentally alter business models across
all industries—and may even alter how people work and live.
As a company the Code Connections team has been involved in computing
technology since 1974 when it made its first practical appearance on Wall
Street. We have used and written about a variety of evolving technology
tools, from IBM Assemblers, Fortran, COBOL, and data access methods such
as QSAM, BDAM, and VSAM to modern REST web services, Java, and
SQL, and everything in between (including client/server tools such as
PowerBuilder). We have been fortunate that our enthusiasm for learning and
becoming proficient in each new and emerging technology has served us well
in the business world. We have recognized blockchain technology as an
ingenious invention because it combines the best of previous database design,
cryptography, and virtual machine container technology with today's
extremely capable distributed computing environment. Our enthusiasm for
technology stems from a case of love at first sight. We have assembled a
strong network of blockchain entrepreneurs, fellow blockchain technologists,
and others who have contributed significantly to this book's content and text.
This book is intended for anyone interested in blockchain technology and its
applications. It is also useful to anyone designing a blockchain application—
which is necessary to create solutions in this domain. Furthermore, online and
application developers at all levels and tech-savvy businesses interested in
staying current on technology in general and Blockchain, in particular, will
find the talks in this book informative.
The book discusses the definition of Blockchain, use cases, distributed
technology, and, most importantly, blockchain development, with code
snippets and recommended practices. It focuses on the Ethereum blockchain,
introducing Solidity and other Ethereum framework components. Also, it
covers the setup, development, validation, and deployment of a fully-featured
blockchain application or a stand-alone program.
Interest in coding has increased in recent years. Worldwide, schools are
incorporating coding into their curriculum, code clubs are forming to teach
newcomers, and adults are returning to college to acquire the skills
increasingly deemed essential in the industry. And millions of individuals
throughout the world are learning to code for the sheer joy of it.
Fortunately, there has never been a more favorable time to begin learning to
code. Historically, programmers had to manually enter each line of code,
employing arcane commands and mathematical symbols. A single misplaced
full stop might devastate the entire composition. Today, using drag-and-drop
coding languages such as ScratchTM, you can create astonishingly powerful
programs in minutes.
As learning to code has become more accessible, society has become aware
of computers' creative potential, which is where this book comes in.
Each chapter in the book is self-contained, focusing on a specific area of
blockchain technology and its applications. The chapters are structured to
build on the preceding one to create a sound conceptual knowledge of
Blockchain. This is supplemented by a full overview of getting started as a
blockchain application designer and developer.
We will discuss programming and coding in the first chapter of the book to
give you an overview of how these systems work.
Chapter 1: The Fundamentals

The first chapter of this book will discuss the basic fundamentals of coding
and cryptocurrency. To understand the concept of blockchains and
cryptocurrency, it is very important to understand how computer
programming works.
Now, coding is not a very complex field of work and can be understood if
one gives proper time and dedication to the subject. To understand in-depth
coding concepts, we need to learn a bit about what a program is. But first,
let’s go through a brief overview of Bitcoin & Blockchains
1.1 History of Bitcoin

Bitcoin can be broadly classified as a "digital currency." Bitcoin functions

similarly to traditional forms of money in many ways, except that there is no
physical money, and all transactions take place exclusively through the
Internet. Different digital currencies are available, but Bitcoin is now the
most popular, highly valued, and widely utilized.
As we dive deeper, it will be beneficial to consider Bitcoin in two contexts: a
currency and a technology. Later in this book, we discuss the groundbreaking
technology that underpins Bitcoin. For the time being though, let us consider
Bitcoin as a currency and learn a little about its history.
Bitcoin Beginnings
It is truly superior to any superhero origin narrative, as it is entirely factual.
This origin story is true and within our own universe!
Satoshi Nakamoto, a mysterious individual, published an online paper titled
"Bitcoin: A Peer-to-Peer Electronic Cash System" in 2008. He described his
vision for a new kind of electronic money in it. Consider a world in which
transmitting money to other individuals is as simple as sending an email.
Electronic money had been attempted previously but had typically failed due
to the ease of copying anything over the Internet; you can see this in
examples like music files, films, and confidential government data. To create
trustworthy and secure digital cash, Satoshi's vision was to combine a number
of new technologies—cryptography, peer-to-peer file sharing, and
blockchain.
He referred to it as bitcoin.
Bitcoin is the most well-known blockchain initiative; it is a type of "digital
money" that enables users to send money as easily as they send a text
message.
Nobody knew who Satoshi was, but no one cared since after all it was the
Internet. Over the next two years, he expanded the bitcoin technology,
enlisting the assistance of a small group of programmers to test, build, and
refine it. They were compensated for their efforts on the project with small
sums of bitcoin, which were worth nothing at the time but a bit bragging
rights.
Satoshi was never found, as he interacted solely through internet forums and
email. Meanwhile, the bitcoin network increased in size and strength. As with
the Internet, bitcoin operated on a shared network of computers, with
"miners" rewarded for contributing computational power to the network with
little quantities of bitcoin that were still worthless except for bragging rights
at that moment.
This established a vicious cycle: miners were suddenly "paid" in bitcoin,
which created an incentive to contribute additional processing power because
who knows what might happen if this bitcoin becomes valuable one day?
Satoshi toiled away in the background, correcting issues, offering
improvements, and herding the cats. However, no one ever met him in
person. In 2010, Satoshi began distributing all of the source code to his
developers, heightening the mystery.
And then he vanished.
He left many personal bitcoin accounts containing at least one million
bitcoins, worth more than 19 billion dollars seven years later. And he never
returned to retrieve it.
Who is responsible for this? Who develops a life-changing technology and
then vanishes, leaving wealth behind?
The nature of bitcoin is such that others can see what he has in his account,
much like a transparent bank vault but cannot access it without his
permission. Additionally, because no bank "holds" bitcoin, Satoshi can
remain safely anonymous. His unclaimed money is trapped in time.
Bitcoin devotees have gone insane in their pursuit of Satoshi's identity. From
conspiracy theorists to language experts, everyone has combed over every
letter he ever sent, attempting to deduce his ethnicity or even just his time
zone.
In 2014, Newsweek believed it had a scoop when it discovered a guy named
Dorian Satoshi Nakamoto residing in California. (He vehemently denied it.)
Even the world's leading investigative journalists were baffled. Perhaps
Satoshi was a female, a group, a government or extraterrestrials! Nobody
knows for certain.
Bitcoin was the "explosion" that triggered the Blockchain Revolution. Satoshi
may have vanished, but his creation is wreaking havoc on the world.
Bitcoin as a form of currency
When we consider Bitcoin as a currency or a digital asset, there are two
significant questions that most people immediately ask:
How is the Bitcoin value determined?
How is it used in practice?
To address the first question, we have to consider paper money, such as US
dollars. When pressed, there is little physical difference between a $100 bill
and a scrap of paper. A hundred-dollar bill is perceived as more than a piece
of paper because citizens have come to accept it as having a designated value
that can be exchanged for goods and services. Numerous elements contribute
to a society's agreement, but in a nutshell, every currency has value because a
sufficient number of people agree that it does.
The same is true for Bitcoin. Bitcoin's worth is determined by the number of
people ready to accept it as payment, a rapidly expanding group. If no one is
ready to accept Bitcoin as a form of currency, it is an undesired possession,
nobody wants it, and it becomes worthless. However, as evidence by the
price of Bitcoin, it is used and has value. As with other commodities, the
price of Bitcoin is controlled by the relationship between supply and demand.
As demand increases, the price of Bitcoin climbs as well, and vice versa.
What is the primary purpose of bitcoin?
Bitcoin can be used in the same way any other conventional currency, such as
US dollars or Euros. You may use Bitcoin to send and receive payments,
make purchases, or even save BTC for future usage. Bitcoin can also be
viewed as an investment, much like a stock.
Have you ever used your credit card to make an online transaction or
transferred money electronically between accounts? When it comes to
transacting with Bitcoin, the method is quite similar in practice. We can make
purchases by moving a specified quantity of Bitcoin directly between two
accounts, from buyer to seller.
Currently, Bitcoin may be used to purchase a wide variety of items, but not
everything. To make a purchase with Bitcoin, you must first find a vendor
willing to accept it as payment. Numerous well-known companies, like
Subway, Microsoft, OkCupid, Whole Foods, Etsy, and Overstock.com,
already accept Bitcoin.
New merchants from a diverse variety of industries are constantly adding
Bitcoin payment alternatives. As more people worldwide become involved in
the Bitcoin economy, retailers are responding to the growing demand from
customers to take Bitcoin.
How is Bitcoin unique?
One of the greatest hurdles of entry for Bitcoin is that many people struggle
with the concept of a non-physical currency. When we consider traditional
currencies ("fiat") such as the US Dollar or the Euro, we frequently envision
paper money. Many of us are accustomed to thinking of money in terms of
cash as something physical that we carry around.
However, the majority of people don’t carry around sacks of cash. The
majority of our money is held in banks. Why is this the case?
While paper money has been used for a long time, it is not very practical in
the long run. It is easily lost, stolen, or damaged. Additionally, there is
nothing that connects a single piece of paper money to a specific individual.
If you stuff your entire life savings beneath your mattress and get robbed,
nothing in the money will identify you as the owner. Unless the authorities
apprehend the robber, the money is almost certainly lost forever. This
vulnerability is largely why we rely on banks to store the majority of our
money for us. Banks provide security in exchange for fees and control the
money we store in our bank accounts.
Banks have historically been the only choice for customers to store their
currency in a secure, centralized location backed by a guarantee. However,
are banks truly the best solution to the problem of money storage?
Banks can restrict, limit, and manage our access to our money based on
various variables. For instance, we may be prohibited from withdrawing
more than a specified sum at any particular time. We may be charged a large
transaction fee while transferring funds across our various accounts. If a bank
gets hacked, it can damage millions of accounts, as everything is housed in a
single database. Ultimately, despite the numerous drawbacks, most of us end
up depositing our money in banks since there is no better choice. We are
forced to rely on these banks or risk tucking cash beneath our mattresses.
Bitcoin, in contrast to traditional currencies, is decentralized. Peer-to-peer
transactions occur without the intervention of a "middle man" such as a bank,
government agency, or other third-party institution. As a result, Bitcoin and
many other cryptocurrencies are frequently referred to as "trustless,"
implying that we can conduct transactions without placing our trust in
another party or a financial institution.
1.2 What is Coding?

A common language must exist to enable humans to communicate and create

tasks that computers can perform. Computer sciences’ history began with the
search for a universal language. Humans are already familiar with a variety of
specific codes. One such example is the color code used by an electronics
student to identify the amount of resistance of a particular resistor. Alphabetic
codes have been created for communication purposes. The Morse code used
by telegraphers and the semaphore code used for maritime communication
are notable examples. Various devices, such as the parity bit, are incorporated
into these codes to increase the speed and reliability of its communications.
When viewed through the lens of a coder, one may observe how coding has
evolved in a variety of “Editor's Introduction” scenarios. "Why do offspring
look like their parents?" is a fundamental question in biology. The genetic
code serves as the transmission route, as almost all organisms store
descriptions of important proteins in a sequence of triplets. Variations on this
fundamental idea enable us to account for the immune response, mutations,
and a variety of other biological events.
Coding can also take place in the bodily form. The messages used to
represent a sensation can be sampled in a variety of ways. The nervous
system is responsible for transmitting information from one portion of the
body to another. Additionally, coding is used throughout the animal world.
Bees' code for communicating the location of a food source is arguably the
best-known example of insect coding.
A machine is only capable of comprehending two forms of data: off and on.
Indeed, a computer is nothing more than a collection of "on/off" switches,
commonly referred to as transistors. Anything a computer can do, results
from a unique combination of some switches being turned on and some
switches being turned off.
Binary code represents these combinations as 0s and 1s, with each digit
representing a single switch. Bytes are groupings of eight digits that indicate
eight switches in binary code, for example, 11001101. Modern computers
generate millions, if not billions, of switches, resulting in an
incomprehensibly large number of possible configurations.
However, there is one caveat here. To create a computer program by writing
billions of 1s and 0s will require superhuman abilities, and even if successful,
it will take a lifetime or more.
This is why programming languages are necessary.
We can create computer applications, mobile applications, and websites using
hundreds of different programming languages. Rather than binary code, such
as 01010, they let us produce relatively easy code to read, write, and
comprehend. Each language requires unique software to convert the data we
add into binary code that a machine can understand.
Numerous languages have been developed to assist programmers with
specific goals in mind - some are useful for web development, some for
desktop application development, and others for numerical and scientific
problems.
There are two sorts of programming languages: low-level and high-level.
Low-level languages bear a greater resemblance to the binary code (for
example, 01101) that computers understand, whereas high-level languages
bear a considerably less resemblance to binary code. High-level languages
are easier to program because they are less difficult and designed to be
straightforward for users to write.
Almost all of today's popular programming languages are high-level
languages.
Now, before I get more into the fundamentals of coding, allow me to
illustrate how beneficial it may be for you.
1.3 What is a Program?

A program is a set of instructions intended to be executed by humans or

intelligent machines.
We are primarily concerned with the instructions that a computer program
issues to a digital computer. The program may be quite basic, requiring only
the input of a few statements and their output in alphabetical order, or it may
be rather sophisticated, requiring branch points and convergence criteria to
determine when it is complete. Computer programs must be written in a
computer language that is both human and computer-readable. Computer
language development is as an important topic as is linguistics—the study of
languages and their grammars.
1.4 A Brief Introduction to Programming

In general, programming is a collection of instructions that the computer uses

to perform specific tasks. This is also referred to as coding. Before getting
into an in-depth discussion, it is necessary to understand how programming
works and how the computer processes instructions. It becomes relatively
simple to construct functions, operators, and syntax for any language when
you understand how to write computer programs correctly. Additionally,
programming communicates with computers via binary language, requiring
programmers to comprehend high-level and low-level languages and syntax.
Solving Problems Through Computer Programming
To utilize a computer to solve a problem, users must give the solution in a set
of instructions. Given that a program is a set of instructions necessary to
solve an issue, the right statements and functionality must be included to get
the desired result. For instance, if you are assigned to develop a program to
add two integers (numbers), the program collects statements that accomplish
the addition operation. If the program does not execute successfully, there
may be an issue with your syntax. The compiler or editor will be unable to
execute the program if it contains any faults or syntax errors.
Rather than memorizing lengthy methodologies or intricate procedures,
programming is best learned by practice and creating codes. While it may
appear to be an enjoyable hobby at first, it can quickly become time-
consuming and irritating if you do not take the proper approach. Additionally,
this book will assist beginners in selecting the most appropriate programming
languages and easing their entry into the world of computer programming.
1.5 Advantages of Learning Coding

Many people regarded coding as an odd hobby reserved for geeks tinkering
with gadgets in their basements. However, coding has transformed from a
hobby to a critical employment skill over the last few years. Employers have
indicated an interest in paying a premium for personnel with coding and
programming skills. With that in mind, let us examine our first advantage:
Earning Profitability: One of the finest and most evident benefits of
learning to code is the earning potential for coding and programming experts.
The Bureau of Labor Statistics (BLS) collects and analyses pay and other
employment data for a broad range of occupations.
Consider the 2019 median annual wage statistics from the Bureau of Labor
Statistics for the following coding and programming-related occupations
(bearing in mind the average annual wage of $45,000):

Network and computer system administrators earn an average of

$83,510.
For web developers, the average salary is $73,760.
Computer programmers earn an average of $86,550.
$107,510 in compensation for software developers
Database managers earn $93,750.
As you can see, careers that need specific programming, coding, or scripting
abilities typically pay more than the national average.
A More Intelligent Perspective: It has been proven that learning to code can
improve your performance in other topics that you’re learning. Programming
teaches you to break down big issues into separate parts and logically design
a functioning program using a computer-friendly language to come up with a
viable solution.
Being able to see your result in real time, you develop a unique attitude for
tackling issues and dissecting data, both of which are necessary for mastering
any subject. In other words, you develop the ability to view challenges from a
broader perspective, adapt to the frustrations associated with reaching a
roadblock and develop a plan of action to resolve them.
Coding requires critical thinking and teaches youngsters to break down
complex difficulties into smaller, easier-to-manage problems. This process is
known as decomposition. Even if a child does not grow up to be a software
engineer or computer programmer, developing this way of thinking is
transferable.
It has been said that mastering how to think is more important than mastering
your thought content. Learning to code requires more than acquiring
knowledge of a particular programming language. It requires cultivating an
efficient and constructive approach to problem-solving that will help any new
intellectual endeavor you embark on.
Job Opportunities: It appears as though there are still lots of opportunity for
coding jobs.
The BLS's most recent predictions for job growth in coding and
programming-related occupations are as follows:

Web developers make around 13% of the workforce.

5%: Network and operating system administrators
Computer programmers make up 7% of the workforce.
Database administrators make about 9% of the workforce.
21% are application developers.
When the national average of 5% growth is considered, it is clear that a small
number of jobs are growing faster than others. Computer programmers are an
intriguing exception in this group, but some argue that computer
programming talents are incorporated into other in-demand tech
opportunities.
While the job remains incredibly valuable, a rising number of hybrid
positions are being added to the workforce. As a result, fewer job
advertisements for "computer programmers" are available, while more jobs
incorporate programming ability into other job titles.
The technological breakthrough is pervasive in practically every aspect of
life, from smart TVs and technologically enhanced kitchen equipment to
online games, puzzles, and over-the-top services. Much more is occurring,
and much more is predicted to come in the future years.
As a result, several new occupations are generated, and a sizable number of
current jobs are redefined. This is where computer programming or coding
becomes critical for people seeking the finest career opportunities or who
want to better their current skills.
Coding is a game-changer, and individuals who are proficient in the language
get a competitive edge in their careers. While computer programming was
long considered a skill confined for computer nerds and geeks, it has gained
popularity as a necessary competency and an added advantage for a wide
variety of job descriptions.
It is not necessary for anyone interested in pursuing a career in computer
programming to take a university course. Today, it is also an integral part of
many curricula, including those in primary schools.
Coding is undoubtedly one of the most critical talents for current and future
generations to acquire. For young learners, programming teaches them
problem-solving abilities, growing the ability to solve an issue logically and
creatively.
Additionally, coding improves one's capacity to think logically, tactically,
and analytically.
Most significantly, coding is the future, making it a very valuable ability to
acquire. Students that begin coding at an early age will have a plethora of
progressive employment choices in the future.
Coding is a critical employment skill for today and tomorrow.
Coding is no longer a choice for young people; it is a necessary life skill. As
a result, it is a terrific idea to comprehend the digital world, interact with
others, be creative, and learn to code.
According to IBEF's February 2021 study on the Indian e-commerce
business, the Indian e-commerce market is expected to increase from $38.5
billion in 2017 to $200 billion in 2026. With the increasing popularity and
importance of e-commerce, the need for coders, software developers, and
analytics specialists with coding knowledge is also increasing.
Customer expectations are also changing, as they increasingly need a simple
and quick purchasing experience and personalized product recommendations.
As a result, the services provided by programmers have become a critical
component of retail success.
Apart from software and application developers, a variety of additional
professional roles require coding proficiency. Business analysts, graphic
artists, and data scientists are just a few of these job titles. Additionally, as
data becomes a valuable commodity and data breaches become a growing
hazard, the demand for cyber security professionals is expanding.
According to the 2021 Skills Report, software, hardware, information
technology, and internet industries are predicted to hire the most people in
2021. As a result, persons with coding skills have a plenty of excellent job
alternatives.
Chapter 2: What is Blockchain?
Blockchain technology represents a major change in the environment of
information collecting, distribution, and governance for the world's
technology users. This argument has been made often in the publications and
presentations that promote and fantasize about this new future. This is one of
the first books to address the topic of blockchain application development. As
such, we shall outline a development strategy for developing possibilities and
trends. That being stated, this is the first installment of a series tracking the
progress of the Blockchain. This book is intended for developers, software
engineers, and anybody else interested in the fundamentals of blockchain
technology and the languages and tools necessary to create decentralized
applications. We will cover everything necessary to understand the
technology, writing "smart contracts," developing apps that interface with
them and deploying these applications on many upcoming platforms.

Thus, let us begin. Simply described, a blockchain is a digital ledger in which

transactions are recorded chronologically and publicly. A blockchain consists
of a number of data blocks linked together, hence the name, with each
transaction added to a new block being validated and then included. When a
block is completed, it is appended to the end of the chain of blocks already in
existence. Additionally, in contrast to the standard CRUD (create, read
update, delete) model, the only two operations are: add transaction and view
transaction. Thus, the fundamental actions of blockchain processing are as
follows.

Create new, irreversible transactions and group them into blocks.

Verify each transaction in the block cryptographically.
Add the new block to the end of the immutable Blockchain that already
exists.

More broadly, a blockchain is also a decentralized database that stores an

ordered list of multi-linked blocks. Every block is around 1 megabyte in size.
It contains approximately 200 bytes of control data, such as a timestamp, a
connection to a previous block, and a few other fields, as well as many
transactions as possible within the remaining space.

Once recorded, the blocks are designed to be immutable; the data contained
within a block cannot be modified retroactively. A public blockchain
database is managed independently via a peer-to-peer system and a
distributed timestamping server. Blockchains are an open, decentralized
technology that enables the efficient and permanent recording of two-part
transactions.

As a result, a decentralized consensus can be achieved via a public

blockchain. As we will describe in further detail later, these characteristics
make blockchains perfect for recording events, medical records and other
types of record keeping management operations, identity management,
transaction processing, and a host of other developing applications.
Additionally, blockchain technologies enable large-scale and systematic
collaboration on a completely decentralized basis. This can be viewed and
implemented as a form of global governance, capable of controlling large-
scale social interactions. For instance, in 2015, libertarian political activist
Vit Jedlicka declared Gornja Siga—a seven-square-kilometre area of
uninhabited forest located on the border between Croatia and Serbia—the
"Free Republic of Liberland." He established a temporary government on the
Bitcoin blockchain. He published a constitutional text outlining how this new
country would be governed:
Voluntary taxation
An almost non-existent government
No limits on speech or information
2.1 Cryptocurrency and Blockchain

When learning about cryptocurrency, one of the first terms you may
encounter is "blockchain." Understanding the Blockchain is critical for
understanding Bitcoin, cryptocurrency, and the promise of digital software in
general. Thus, what is a blockchain, and why is it so critical?

Bitcoin is built on the Blockchain platform (or "protocol").

A distributed, peer-to-peer network controls the Blockchain.

A Blockchain is a P2P-network, which means that it is constantly saved and
upgraded across multiple machines located throughout the world. Anyone
can run the program to transform their computer into a "server" in this large
network, contributing to the continuing transaction record. Due to the
distributed concept, numerous Blockchain implementations exist worldwide,
making it nearly impossible for anybody to modify transaction data once it
has been registered.
It is designed to be safe:

Take Fort Knox as an example. Fort Knox is well-known as the depository

for the United States' gold bullion. Fort Knox conceals a boatload of gold.
Fort Knox secures this gold by employing armed guards, blast-proof vaults,
and a variety of other on-site safeguards. If gold must be carried, armored
trucks and troops armed with machine guns may monitor the procedure. It
would be exceedingly difficult for a burglar to enter Fort Knox and steal the
gold, not only because the site is heavily secured but also because gold is a
tangible physical thing that would be difficult to move.

Banks (and a large number of other institutions) have historically

followed a model.
When it comes to property security, a similar strategy is taken, with all items
being stored nearby and protected on multiple levels. However, the great
majority of financial information is now maintained as data online. We
expect banks to have the cash necessary to back up the figures in our bank
accounts. Yet, for the vast majority of individuals, those figures represent a
value ledger rather than a physical cash balance kept in a vault at any one
time.

Rather than physical vaults, we store the majority of our financial

reserves electronically.
Financial data is held on a bank servers' "internet vault." Banks are
attempting to transform these servers into the digital equivalents of Fort
Knox. However, in today's digital transaction environment, this unified
paradigm does not perform well. Whereas infiltrating Fort Knox and
grabbing gold will require dynamite, specialized gear, escape vehicles, and
Ocean's 11-style deception. Hackers can routinely breach bank servers and
steal financial information using merely computers. Credit card fraud,
identity theft, and data breaches are all genuine concerns that constantly
afflict financial institutions.

Banks are continuing to add layers of encryption to their "digital"

assets.
Hackers are still breaking into these "vaults." Fort Knox is ideal for storing
physical gold but fails miserably when applied to digital data. Let us take a
step back and examine the situation. We may begin to wonder if there is a
more efficient model for storing data and handling digital transactions than
attempting to secure and manage everything through a single central server.
This is the application of blockchain technology.

Each block on the Blockchain is linked to the previous one.

Numerous nodes from all around the world have been openly registered.
Rather than getting into a single central server and stealing or altering data, a
hacker will need to alter data not only in a single block but across the entire
Blockchain. Simultaneously, on the vast majority of the machines that store it
worldwide.

This would technically require a significant amount of computational

power.
At the moment, achieving this level of computer power would be nearly
impossible. Due to the lack of centralized data storage, blockchain
technology is inherently secure. If someone attempts to enter a fictitious
contract, such as handing themselves non-existent Bitcoins, the Blockchain's
several independent computers will discover that the sum does not add up. If
the sum does not add up, the transaction is declared null and not added to the
blockchain ledger.

The term "Bitcoin" is frequently used interchangeably with

"Blockchain" technologies.
Smart contracts, crowdsourcing, government, intellectual property,
healthcare, file management, and even the Internet of Things are just a few of
the applications for this cryptocurrency. Numerous businesses are now only
beginning to explore the possibilities of electronic ledgers for resource and
transaction management. As a result, those interested in investing in new
industries should investigate blockchain technology on its own.

This chapter discusses the problem that the Blockchain is intended to solve
and why solving it is vital. This level deepens the understanding of the
Blockchain's application area, the environment in which it offers the most
value, and the relationship between trust, honesty, and ownership
management. By the end of this section, you will have a better grasp of how
the Blockchain works and a more nuanced definition of the term
"Blockchain."

The Blockchain's primary objective turns out to maintain transparency in

shared networks. However, why is maintaining trust so difficult in these
networks, particularly tightly distributed peer-to-peer systems? We will
tackle that concern by illuminating the complex relationship between the trust
and honesty of tightly distributed peer-to-peer systems. As a result, you will
have a deeper appreciation for the importance of honesty, as well as the
honesty issue that the Blockchain can address.

The parable
Numerous languages have a graphic expression for when someone seeks to
organize an unruly mob. In English, this situation is sometimes referred to as
attempting to herd cats. It shows the difficulties inherent in herding a bunch
of stubborn and refractory animals that refuse to recognize or consider a
central authority. Is it common for you to desire to join a coalition of
individuals who refuse to accept or acknowledge a central authority? This is
the situation with a completely distributed peer-to-peer network composed of
independent and self-contained nodes with little central control or
coordination. This action exemplifies how the Blockchain addresses a
significant issue in strictly distributed peer-to-peer networks.

Trust and Integrity in Peer-to-Peer Systems

The concepts of "integrity" and "trust" are synonymous. Integrity is a
nonfunctional property of a software system that assures it to be secure,
comprehensive, dependable, appropriate, and free of manipulation and errors.
Without truth, proof, or investigation, humans have a deep belief in the
honesty, legitimacy, or ability of someone or something. This is called trust.
Trust is developed over time and can either increase or diminish in value
based on present connections.

This means that individuals can join and contribute to a peer-to-peer

community if they have faith in it. Additionally, if the consequences of their
interactions with it consistently validate and deepen their trust. The integrity
of the system is required to meet the needs of the users and sustain their
confidence. If the system fails to re-establish users' faith due to a lack of
credibility, they will abandon it, resulting in the system's demise. The major
problem is establishing and maintaining credibility in a tightly distributed
peer-to-peer environment, given the critical nature of confidence in peer-to-
peer systems.

Credibility in tightly distributed systems is contingent on several factors, the

most critical of which are as follows:

• Number of nodes or peers

• Recognized trustworthiness of peers

Knowing the number of nodes and their trustworthiness increases the odds of
obtaining credibility in a distributed peer-to-peer system. This is comparable
to maintaining a private club with strong moral standards and a rigorous
onboarding procedure for new members. When the quantity and
trustworthiness of nodes are unknown, the worst conditions for ensuring
honesty in a distributed peer-to-peer system occur. This is true when an open-
source, strictly distributed peer-to-peer system is running on the Internet.

Threats to the Integrity of Peer-to-Peer Systems

Two major credibility problems in peer-to-peer networks should be
considered for convenience's sake:

• Errors in technology
• Peers who are malicious

Technical Inaccuracies:

Peer-to-peer networks are composed of users' computers connected over a

network. The hardware and software components of a computer system and
any component of a computer network all incur the risk of failing or
generating problems. As a result, any distributed system must account for the
risk that one or more of its components will fail or produce inaccurate results
from an accident.

Peers Possess a Negative Attitude:

Malicious representatives are the second integrity threat in peer-to-peer
networks. This root of untrustworthiness has nothing to do with technology.
Rather, it is a problem produced by those seeking to profit from the system.
This threat may be more sociological and based on group dynamics more
than on technology. The most serious challenge to the peer-to-peer system
comes from dishonest and manipulative peers, as they undermine the basic
foundation of peer-to-peer systems, trust. Once users lose trust in their peers,
they will withdraw and avoid adding processing energy to the system. As a
result, membership will decline, and the scheme as a whole will become less
enticing to surviving members, hastening the system's demise until it is
completely abandoned.

The Mystery That Blockchain Is Supposed to Resolve:

In ideal circumstances, establishing honesty and trust is simple. In the worst-
case scenario, the real issue is achieving consistency and trust in a distributed
system. This is the problem that the Blockchain is intended to solve. The
underlying goal of the Blockchain is to address the challenge of establishing
and maintaining credibility in a strictly distributed peer-to-peer system with
an undisclosed number of peers who are both untrustworthy or have no track
record of trustworthiness. This is not a novel issue. Indeed, it is a well-known
and widely debated topic in computer science. Using a military metaphor, the
topic is frequently referred to as the Byzantine general problem.
2.2 Bitcoin and Ethereum Blockchain

Before delving into the intricacies of Ethereum, it is critical to grasp some of

the fundamental concepts behind blockchain technology in general. For those
unfamiliar with the cryptocurrency industry, one of the more perplexing
topics is the link between cryptocurrencies and Blockchain.

While blockchain technology is at the heart of both Bitcoin and Ethereum,

both projects use the technology differently. To fully grasp how Ethereum
implements the Blockchain, some familiarity with Bitcoin is beneficial.

Bitcoin was the first decentralized digital currency and the first program
created on a blockchain platform. Bitcoin is by far the most popular and well-
known cryptocurrency today, as well as the world's largest and most active
open Blockchain. As Bitcoin gained public acceptance, several media outlets
began to use "Bitcoin" and "blockchain" interchangeably. Even today,
numerous articles struggle to explain the relationship between Bitcoin, other
cryptocurrencies, and blockchain technology in a straightforward manner.

To ensure clarity, let us begin with the essentials. Bitcoin is, at its core, a
currency. It was created to facilitate digital, secure, peer-to-peer financial
transactions and has largely accomplished this purpose. Bitcoin operates
based on a blockchain. On the other hand, blockchain technology has uses
that reach well beyond Bitcoin and the field of digital currency in general.

Bitcoin's blockchain model works extremely well, yet there are several areas
for development. (For instance, Bitcoin transactions can take a long time to
process, posing a barrier of entry for many companies interested in taking
Bitcoin payments.) Nobody enjoys waiting an hour in a store while a Bitcoin
transaction is verified.

While Bitcoin was the first technology to deploy the Blockchain, early
adopters such as Vitalik Buterin rapidly saw the Blockchain's promise in a
broad range of other contexts. Because Bitcoin was created expressly to be a
currency, entrepreneurs began to consider whether the Bitcoin blockchain
structure was the best paradigm for developing applications other than peer-
to-peer digital money transactions. Ethereum was created out of the need to
provide a more flexible environment for universally leveraging the potential
of blockchain technology across a diverse range of various applications.

Therefore, what is a blockchain, and how does it operate? To properly

address this subject in-depth, one would have to go through some rather deep
mathematical concepts, which are somewhat outside the scope of this book.
Fortunately, unless you intend to become a coder, you do not need to be an
expert in cryptographic hashing methods to grasp the broader concepts and
structure of Blockchain.

While blockchains employ sophisticated mathematics, they are ultimately

quite simple to comprehend when viewed from a bird's eye view. To begin,
we have "blocks" that are connected sequentially to form a "chain." Each
block contains data relating to events that occurred over a specified period.
The most recent block of data offers information on recent events. In the case
of Bitcoin, this data is transaction data, which includes the addresses of the
Bitcoin wallets that are sending and receiving payments, the amount of
currency being transacted, the time stamp of the transactions, and other
similar characteristics.

Thus, each new block is a compilation of data about the most recent
transactions. Each block is cryptographically secure and is linked to the
previous block via a specific type of timestamp. Here, very complex
arithmetic is performed to ensure that each new block corresponds to the
whole history of all prior transactions on the entire Blockchain.

Each new timestamp must match the timestamp of the preceding block,
which was linked to the one before that, forming a continuous chain in which
each block is verifiably related to the one before it, all the way back to the
very first block, dubbed the "genesis block." The whole history of every
Bitcoin transaction is stored on the Blockchain, which is publicly accessible
to anybody. The ability to conduct secure transactions with this level of
transparency has attracted many individuals to Bitcoin and blockchain
technology.
To put it simply, the Bitcoin blockchain is a record of every validated Bitcoin
transaction that has ever occurred. Blocks are used to aggregate together
transactions that occur over a specified period. Multiple, identical versions of
the Blockchain are constantly stored and updated by a global network of
participating computers. This is commonly referred to as a "distributed
ledger." Fundamentally, a distributed ledger is merely a massive
decentralized database or a record of data, events, or transactions.
Decentralization is a fundamental principle underlying both Bitcoin and
Ethereum's blockchain architectures and numerous other blockchain-based
initiatives and cryptocurrencies.

Although not all distributed ledgers are blockchains, all blockchains use some
form of a distributed ledger. Typically, this means that identical copies are
stored and updated concurrently on many separate devices located throughout
the world. In the case of Bitcoin, anyone wishing to hack or "cheat" the
Blockchain would have to modify the data of not just one block but the entire
historical record across the majority of the network's decentralized machines.
Due to the amount of computational power necessary to accomplish this, it is
almost impossible to do so under current conditions, ensuring that the system
is safe by design.

Ethereum Blockchain
While not identical conceptually, the Ethereum blockchain is structured
similarly. When it comes to Ethereum, the basic distinction is in the type of
data stored in blocks and how that data is processed.

Today, Bitcoin remains the largest open public Blockchain and serves as the
de facto blueprint for many other blockchain-based applications. The Bitcoin
blockchain, on the other hand, is merely one implementation of blockchain
technology. As more sectors investigate the potential of Blockchain, new
models emerge regularly, frequently tailored to a particular purpose.

When we examine Bitcoin, we notice that its primary objective is to function

as a decentralized, peer-to-peer digital currency. Bitcoin addresses a specific
issue: how to conduct safe financial transactions peer-to-peer from anywhere
globally without relying on trust, an intermediary, or a centralized authority
such as a bank. While Bitcoin is not perfect, it has been fairly effective in
terms of accomplishing its stated objective.

As developers and entrepreneurs recognized the potential for blockchain

technology to be used for purposes other than financial transactions, many
began to envision alternative blockchain architectures that would be better
suited for various purposes. Vitalik Buterin, the Ethereum creator, envisioned
an open platform on which anybody could create a blockchain-based
application capable of performing any function.

Unlike Bitcoin's Blockchain, which is designed to store financial transaction

data simply, Ethereum's Blockchain is designed to run code based on verified
transactions. Rather than just transferring funds from Account A to Account
B, as Bitcoin does, Ethereum may enable a transaction from Account A to
Account B to activate a wide variety of events. For instance, Ethereum
transactions can be used to register a new domain name, transfer ownership
of real estate, handle voter registration, and execute secure contracts between
two or more parties. Hence why Ethereum "transactions" are frequently
referred to as "smart contracts."
2.3 Centralized and Decentralized Systems

Due to the decentralized structure of Blockchain, it contradicts the centralized

nature. This is why we are examining the debate over-centralization vs
decentralization. The difference between decentralized and centralized
systems is not always obvious. They are frequently misinterpreted and
described inadequately. This is because there are no structures that are strictly
centralized or decentralized. The majority of the concepts and examples in
this part are drawn from Mr. Vitalik Buterin's notes as the creator of the
Ethereum blockchain.

So, what is a distributed system exactly? Let us comprehend it first and then
cross it off the list to avoid interfering with the ongoing discussion. Please
keep in mind that every system, whether centralized or decentralized, can be
distributed. A centralized distributed system is composed of a master node
responsible for decomposing tasks or data and dispersing the burden among
the nodes. On the other side, a distributed system that is decentralized does
not have a "master" node, but the computing is distributed.

Let us return to our debate over-centralization vs decentralization. It is critical

to keep in mind that a system's centralized/decentralized state is governed by
factors other than its technological design. Meaning, a system can be
centralized or decentralized in terms of technologically, but not logically or
politically. Let us examine these distinct perspectives to construct a better
framework that meets the demand.

Technological Architecture: A framework may be centralized or

decentralized in terms of technical architecture. We consider the number of
physical computers (or nodes) required to construct a system, the number of
node failures that the system can withstand before failing, and so on.

Political perspective: This perspective describes the degree to which an

individual, a group of individuals, or a whole organization has control over a
system. If they have control over the system's computers, the system becomes
centralized automatically. However, if no single individual or party
dominates the system and everyone has equal access to it in a political
context, the system is decentralized.

A system can be theoretically centralized or decentralized based on its

appearance, regardless of functionally or politically centralized or
decentralized. Another example is that if you vertically divide a system (say,
computing equipment) into two halves, each with its own set of service
providers and consumers, the halves are decentralized if they can function as
independent units and centralized if they cannot.

Both perspectives, as mentioned earlier, are critical when designing a real-

world structure and determining whether it should be centralized or
decentralized. To dispel any doubts, consider the following examples that
integrate these perspectives:

• Corporations are centralized architecturally (one headquarters),

politically (under the leadership of a CEO or a board of directors), and
conceptually. (Cutting them in half is impossible.)
• Every aspect of our contact language is decentralized—architectural,
political, and logical. By and large, when two people connect, their
language is neither politically affected nor logically dependent on the
communication languages of other people.
• BitTorrent and comparable torrent systems are completely
decentralized. Because every node can act as a provider or a buyer, the
device can be halved and still function.
• On the other hand, while the Content Distribution Network is
technically and architecturally decentralized, it is economically
centralized because a business operates it. Amazon CloudFront is one
such service.

Right now, let us have a look at Blockchain. The purpose of Blockchain

technology was to enable decentralization. As a result, it is decentralized
structurally. Politically, it is also decentralized, with no one in charge.
Technically, it is centralized, as there is a single agreed-upon state and the
entire system operates as a single global device.
Consider each of these terms independently and in comparison to
understanding why Blockchain is supposed to be decentralized.

Centralized Systems:
As the name implies, a unified system is one in which all administrative
functions are coordinated through a single management point. While such
systems are straightforward to establish, administer, enforce, and rule, they
have various inherent flaws, including the following:

• They are less robust because they include a single point of failure.
• They are more prone to attack and thus less secure.
• Concentrating power can result in immoral behavior.
• Scalability is frequently a problem.

Decentralized Systems:
As the name implies, a decentralized structure lacks centralized power and
grants equal authority to each node. Building, managing, controlling, and
enforcing confidence in such systems is not easy. They do not, however, have
the drawbacks associated with typical centralized structures. Several
advantages of decentralized systems include the following:

• They do not have a single point of failure, making them more reliable
and less prone to failure.
• It is more stable due to the lack of a concentrated point of attack.
• Symmetrical authority structure that limits the scope of immoral
activity and is often democratic
2.4 Smart Contracts

The term "Smart Contracts" is frequently used in conjunction with Ethereum.

What is the definition of a smart contract? In a nutshell, a smart contract is a
computer program. Smart contracts are the "meat and potatoes" of Ethereum,
and it is worth delving deeper into this notion to appreciate the platform's
strength and vision fully.

Do not be concerned if you lack a strong technical background. When writing

smart contracts, you will either need to learn to code or hire a programmer,
but you do not need to know how to code to grasp how smart contracts
function theoretically. However, having a fundamental understanding of how
computer program functions is beneficial, even if you do not know how to
build them yourself.

While computer programs are capable of incredible complexity, they all

operate by asking a sequence of yes or no questions. When we consider that
all "data" is ultimately made up of 1's and 0's, or binary code, the 1's and 0's
represent "yes's" and "no's." In general, a computer has no "maybes."

When we consider digital transactions involving Bitcoin, what we are doing

is executing a basic computer program. What occurs is that Person A sends
monies to Person B. Bitcoin's program will prompt you with the following
questions: Is Person A truly self-sufficient? Is it possible for Person A to
verify ownership of the address where those assets are being held? Is Person
B's address valid? As long as the necessary inputs are provided, the
decentralized Bitcoin network will establish a consensus to do the
computations and execute the program: the transaction will be verified, and
Person B will receive the monies.

With Bitcoin, the running software is limited to one sort of transaction.

"Bitcoins" are simply just numbers transferred from one digital address to
another, and the Blockchain keeps track of all of these transactions. The
Blockchain is a distributed ledger technology that enables a decentralized
network of computers to establish consensus on which tasks to perform and
then accomplish those activities. While "duties" in the instance of Bitcoin are
transactions between Person A and Person B, is there any reason why this
system could not be utilized to manage other types of tasks? No, and it is
precisely what Ethereum is designed to accomplish. Ethereum is executed on
top of the same blockchain technology as Bitcoin, but it enables the execution
of any program.

Even if we continue to conceive financial transactions, Ethereum's

capabilities provide for things like conditions, resulting in a much more
flexible environment for payment systems. For instance, with Ethereum, a
secure deposit might be stored on the Blockchain for a specific amount of
time and returned to the payer if certain requirements were not met; if the
circumstances were met, the payment might be released to the payee. Without
the involvement of a third party, there is no way to store a payment in
"escrow" in this manner in Bitcoin. This is a simple example of a conditional
transaction that might be executed via a smart contract in Ethereum.

Smart contracts bring up a new universe of possibilities as we become more

integrated with the Internet of Things. For instance, if smart cars become
more widespread, we can readily foresee a transition away from the
traditional paying for parking via a parking meter and toward a system solely
based on smart contracts. Sensors could easily be used to associate certain
vehicles with specific parking spaces. A smart contract could be used to
deduct the appropriate price based on the amount of time a vehicle was
parked in a given location. Rather than searching for change beneath the seat
or negotiating parking meters, vehicles could park, and the smart contract
would do the transaction in the background. Cities might eliminate the need
for meter maids and automate the entire process.

Despite their basic differences, many people regard Bitcoin and Ethereum as
"competitors" vying for control of the blockchain space. This perspective is
not entirely accurate even for individuals who are only concerned with Ether
as money and have no interest in technology. Bitcoin and Ethereum are two
independent, coexisting technologies with distinct objectives and purposes.
Bitcoin is intended to function as a medium of exchange; it is not a means to
an end. Ethereum makes use of Ether to facilitate the execution of smart
contracts; the Ether currency serves as a means to an end. In this way, the two
projects are complementary, as they have distinct visions, objectives, and
uses.

To better understand smart contracts and how the Ethereum platform works,
it is helpful to review certain software development fundamentals. If you
have executed any programming language, you will have an advantage in
understanding how smart contracts execute code. If not, have no fear. Again,
you do not need to write code to grasp how Ethereum works, although it is
beneficial to familiarize yourself with some fundamental programming ideas.
Chapter 3: IDE and Frameworks

An integrated development environment (IDE) is a type of software that

merges commonly used development tools into a unified graphical user
interface (GUI) to develop applications Typically, an IDE comprises of the
following:
Source Code: A source code editor is a text editor that aids in the
development of software code by emphasizing syntax with visual cues,
giving language-specific auto-completion, and automatically checking for
defects as code is produced.
Local build automation: Tools that automate routine operations associated
with making a local build of software for developer use, such as packaging
binary code, compiling source code into binary code, and performing
automated tests
Debugger: A program used to test other programs that visually display a
defect's location in the source code.
3.1The Main Concept of IDEs

An IDE helps developers quickly create new apps since many tools are not
required to be integrated manually during the setup phase. Additionally,
developers save time by not spending hours on learning how to utilize many
different tools when they are all represented on the same workbench. This is
particularly advantageous for onboarding new engineers, who may rely on an
IDE to quickly become familiar with a team's standard tools and procedures.
Indeed, most features in integrated development environments (IDEs) are
designed to save time, such as intelligent code completion and automatic
code generation, which eliminates the need to write out whole character
sequences.
Other popular IDE features are intended to assist developers in organizing
their work and resolving issues. IDEs parse code as it is written, allows for
real-time detection of problems caused by human mistakes. Since a single
graphical user interface presents utilities, developers may perform operations
without moving between apps.
Syntax highlighting is also a feature included in most integrated development
environments (IDEs), which employs visual signals to distinguish between
different types of grammar in the text editor. Additionally, several IDEs
feature class, object explorers and representations of the class hierarchy for
certain languages.
It is possible to develop apps without using an IDE or for each developer to
create their IDE manually. The advantage of this method for certain
developers is the extreme customizability and control it provides. However,
in a corporate setting, the time savings, environment consistency, and
automation capabilities of current IDEs typically surpass any other benefits.
Before the advent of integrated development environments, programmers
created their scripts in text editors. This entailed composing and saving a
program in a text editor before running it through the compiler, noting any
error warnings, and then returning to the text editor to update their code.
It was not until 1983 that Borland Ltd. bought a Pascal compiler and released
it as TurboPascal, the first language to provide an integrated editor and
compiler
While TurboPascal popularized the concept of an integrated development
environment, many feel Microsoft's Visual Basic (VB), released in 1991 to be
the first true IDE. Visual Basic was a widely-used programming language
throughout the 1980s. It was written in the earlier BASIC language. With the
advent of Visual Basic, programming could be conceived of in graphical
terms, resulting in significant productivity gains.
Today, most enterprise development teams choose a pre-configured
integrated development environment (IDE) optimized for their unique use
case; hence, the decision is not whether to implement an IDE but which IDE
to choose.
3.2 The Advantages of IDEs

Integrated development environments help developers to be more productive.

These IDEs increase productivity by reducing setup time, increasing the pace
of development activities, keeping developers informed of the newest best
practices and security concerns, and streamlining the development process to
ensure that everyone is on the same page.
Faster setup: Without an IDE interface, programmers must spend time
setting different development tools. By incorporating an IDE, programmers
can access the same set of capabilities in one location, eliminating the need to
switch tools frequently.
Faster development tasks: Improved developer productivity is a result of
deeper integration of development tasks. For instance, developers may scan
code and validate syntax as they edit, providing rapid feedback when syntax
problems are made. Programmers are no longer need to move between
applications to complete tasks. Additionally, the IDE's tools and features
assist programmers in organizing resources, avoiding errors, and
implementing shortcuts.
Additionally, IDEs can aid in reorganizing the development process by
supporting holistic planning. They encourage programmers to consider their
activities in the context of the complete development lifecycle (SDLC) rather
than as a collection of discrete jobs.
Learning: Another advantage is the opportunity to keep updated and
educated. For instance, an IDE's help topics are continually updated with new
samples, project templates, and enhancements. Continuously learning and
staying updated on the best practices enables developers to bring value to
their team and organization, increasing productivity.
Standardization: Standardization also governs the development process,
allowing programmers to collaborate effortlessly and enabling recruits to
ramp up to speed quickly.
3.3 Commonly Used IDEs

There are several technical and business applications for IDEs, implying
numerous proprietary and open-source IDE solutions. Typically, the essential
aspects that distinguish IDEs are as follows:
The range of supported languages: Some IDEs are language-specific and
better suited to a particular programming style. For example, IntelliJ is
largely recognized as a Java integrated development environment (IDE).
Other IDEs, such as the Eclipse IDE, support various languages in one
package, including Java, XML, and Python.
Supported operating system(s): A developer's operating system will narrow
down which IDEs are feasible (unless the IDE is cloud-based) and if the
application created is meant for an end-user running a certain operating
system (such as Android or iOS), this constraint may be amplified.
While most IDEs have the three critical capabilities of a text editor, build
automation, and debugger, many also incorporate refactoring, code search,
and continuous integration and deployment (CI/CD) tools.
Impact on system performance: If a developer wishes to run other memory-
intensive apps concurrently, the memory footprint of an IDE may be critical
to consider.
Extensions and plugins: Some IDEs enable developers to tailor processes to
their specific requirements and preferences.
Integrated development environments for mobile devices
Almost every sector has been impacted by the growing popularity of
smartphone and tablet applications, which has prompted many businesses to
build mobile applications in addition to traditional web applications. Platform
selection is a critical component in mobile application development. For
example, if a new application will be used on iOS, Android, and a web page,
it may be prudent to begin with an IDE that supports several operating
systems.

Cloud-based integrated development environments

Unlike local development environments, IDEs delivered as a cloud-based
Software-as-a-Service (SaaS) provide several distinct advantages. For
starters, as is the case with any SaaS product, there is no need to download
software or establish local environments and dependencies, which enables
developers to begin contributing to projects instantly. Additionally, this gives
a level of homogeneity across team members' environment, which can help
minimize the frequently encountered "this works on my machine, why does
not it work on yours" issue. Additionally, because the development
environment is centrally maintained, no code is stored on the computer of an
individual developer, which alleviates worries about intellectual property and
security.
Processes also have a varied effect on local computers. Because processes
like building and testing are often compute-intensive, developers are unlikely
to continue using their workstations while a process is ongoing. A cloud-
based integrated development environment (IDE) can dispatch long-running
processes without monopolizing the computational resources of a local
workstation. Additionally, cloud IDEs are often platform-agnostic, allowing
for access to a variety of cloud suppliers.
Developers must choose an IDE that is appropriate for the sort of application
they intend to create. For instance, if a developer wants to create an iOS
application, an IDE that accepts Apple's Swift programming language is
required. IDEs come in various forms from web- and cloud-based to mobile,
language-specific, and multi-language.
Web-based integrated development environments (IDEs) are ideal for
developing web-based applications in HTML, JavaScript, or comparable
programming languages. Microsoft's Visual Studio Code is a web-based
integrated development environment (IDE) that includes syntax
highlighting, a code editor, code completion, and debugging.
IDEs are increasingly being delivered via a platform as a service (PaaS)
architecture. The advantages of these cloud-based integrated development
environments (IDEs) include remote access to software development tools
from any suitable device, little to no download and installation requirements,
and ease of cooperation among geographically dispersed developers. Cloud9
is an AWS-hosted integrated development environment (IDE) that supports
up to 40 languages, including C, C++, Python, Ruby, and JavaScript. Cloud9
provides users with code completion, an image editor, and a debugger and
additional capabilities such as support for Microsoft Azure and Heroku
deployments (which is a cloud-based PaaS IDE).
Typically, an integrated development environment (IDE) for mobile
development works with code that runs on android or IOS devices. Xamarin
is an example of a cross-platform mobile integrated development
environment (IDE), which implies that it can generate code for various
mobile platform types. For instance, a developer may create a feature in C,
and Xamarin will automatically convert it to Swift for iOS and Java for
Android. Additionally, Xamarin provides user interface testing and the ability
to deploy beta tests to consumers.
Language-specific integrated development environments (IDEs) such as C-
Free — including a code editor, debugger, and an environment for running C
and C++ programs — are available. Other IDEs, such as the previously
mentioned Cloud9 and Visual Studio Code, allow numerous languages.
Among the most popular IDEs are NetBeans, Eclipse, and IntelliJ IDEA.
Disambiguation: IDE may also refer to integrated drive electronics.
3.4 Blockchain Development Tools

Blockchain is the market's fastest-growing skill set today. Due to the

enormous success of Bitcoin, every business now wants a piece of the action
(it is Blockchain!). After all, blockchain technology is an exciting field with
enormous potential for advancement. This has increased demand for qualified
Blockchain specialists, now the market's most highly compensated
professionals.
However, finding work in Blockchain is not easy. First, you must have the
necessary skills and, most crucially, the ability to deal with the various
blockchain tools required for blockchain development. A Blockchain
education from a reputable university will significantly increase your chances
of finding a job at large corporations. Additionally, if you intend to remain
relevant in the market and provide your services to a reputable firm, you must
maximize the potential of Blockchain development tools.
Blockchain tools not only streamline the blockchain development process but
also assist you in improving your topic expertise.
Solidity
Without question, Solidity is one of the most popular programming languages
utilized by blockchain engineers. It was created keeping C++, Python, and
JavaScript in mind and is optimized for the Ethereum Virtual Machine.
Solidity is dynamically typed and includes inheritance, libraries, and
sophisticated user-defined types.
Solidity adheres to the OOP paradigm and is most frequently used for the
development of smart contracts. Solidity enables blockchain developers to
create apps that execute self-enforcing business logic in smart contracts,
resulting in a non-repudiable and authentic record of transactions. This is
useful for constructing voting contracts, crowdfunding campaigns, multi-
signature wallets, and blind auctions.
Follow this link to visit their website and learn more:
https://soliditylang.org/
Geth
Geth is a Go-based implementation of an Ethereum node. It comes with three
interfaces: a JSON-RPC server, a command-line interface, and an interactive
console. Geth is compatible with all three major operating systems i.e.,
Windows, Mac, and Linux and can construct blockchain applications.
Geth is used for various functions on the Ethereum Blockchain, including
token contracts, ether mining, smart contract creation, and block history
exploration. Once Geth is installed, you may connect to an existing
blockchain or construct your own. The good news is that Geth simplifies
matters by connecting immediately to the Ethereum main net.
Follow this link to visit their website and learn more:
https://geth.ethereum.org/

Blockchain Testnet
Blockchain Testnet is the last addition to the list of the top blockchain tools
accessible right now. It is a fundamental tool for blockchain developers and is
useful for pre-production testing of decentralized applications. Each
blockchain solution has its own Blockchain Testnet, optimized for best
performance with the respective blockchain solution.
When it comes to Blockchain development, the value of the Blockchain
Testnet cannot be overstated. A Blockchain Testnet enables you to evaluate
decentralized applications (dApps) before launching them live. Each
blockchain solution has its Testnet, and it is strongly advised that you utilize
the Testnet associated with that solution for the best results. There are three
different types of Blockchain Testnets: public, private, and GanacheCLI.
Testnets are incredibly beneficial since they enable you to test your
decentralized applications thoroughly for faults and problems without
investing a lot of money or resources. For instance, Ethereum utilizes gas as a
fuel source for several functions. Spending money on petrol each time you
need to perform a test drive can quickly add up to a significant financial
burden. Testing becomes possible as a result of Testnets. Users may choose
from three distinct types of Blockchain Testnets: public, private, and Ganache
CLI. Testnet is a useful resource for identifying flaws and vulnerabilities in
decentralized applications without requiring large financial inputs. Gorli
Testnet is now one of the most popular among developers.
Follow this link to visit their website and learn more:
https://www.blockchain.com/explorer?view=btc-testnet

Ganache
As a Truffle Suite Blockchain tool, Ganache enables Blockchain developers
to establish their own private Ethereum blockchain for testing decentralized
applications, analyzing state, and executing commands while maintaining
complete control over the chain's operation.
Ganache is a Truffle Suite Blockchain tool that enables you to construct your
own private Ethereum blockchain for testing decentralized applications,
executing commands, and inspecting state while maintaining complete
control over the chain's operation.
The most significant feature of Ganache is that it enables users to do any
operations that are possible on the main chain without paying for them.
Ganache is a widely popular Blockchain tool among developers due to its
features, including an integrated block explorer and powerful mining
controls. Blockchain engineers use Ganache to test their smart contracts
throughout the development process.
Follow this link to visit their website and learn more:
https://trufflesuite.com/ganache/

Embark
As a developer platform for Ethereum decentralized applications, Embark
enables developers to create and deploy decentralized applications quickly.
Additionally, it enables users to design and deploy serverless HTML5
applications that take an application of decentralized technology.
Additionally, one can use Embark to develop smart contracts and make them
accessible in the JS code. If the contract is amended, Embark and the
associated Dapp will adjust it independently.
In the case of numerous contracts, migration, redeployment, and
modifications are all readily handled. To interface with Embark, one may
utilize a regular web development language and any build workflow. Embark
enables developers to write contracts using Javascript on a test-driven basis
and manage their contracts across many blockchains.
Follow this link to visit their website and learn more:
https://framework.embarklabs.io/

Truffle
Truffle is a significant rival among the top blockchain tools. It is an Ethereum
blockchain framework designed to simplify the development of Ethereum-
based applications by providing a development environment. Additionally,
Truffle contains a vast library of custom deployments that enable the creation
of new smart contracts and the resolution of blockchain development
difficulties.
Additionally, Truffle is well-suited for developing complicated Ethereum
decentralized applications. Automated contract testing is another major
feature of Truffle as a blockchain tool. Truffle can automate contract testing
using Mocha and Chai. Additionally, Truffle can assist in facilitating the
development of smart contracts and their linkage, compilation, and
deployment. Notably, Truffle also has a customizable build pipeline that
enables the execution of bespoke build methods.
Follow this link to visit their website and learn more:
https://trufflesuite.com/

Metamask
At the moment, the majority of blockchain technology usage is focused on
cryptocurrencies. Thus, wallets are also considered the greatest blockchain
tools, while Metamask offers some additional features. It acts as a bridge
between a web browser and the Ethereum blockchain.
Additionally, Metamask provides a software platform for providing Ether and
other ERC-20-compliant assets. Simultaneously, it enables interaction with
Ethereum's decentralized applications. The browser-based capability may
contribute to Metamask's simplicity of usage. It is critical to understand that
users may connect Coinbase and Shapeshift to Metamask to sell and acquire
ERC20 tokens and ETH.
Additionally, users may utilize Metamask to store keys for ETH and ERC20
tokens. Metamask is compatible with various Ethereum test networks,
making it an ideal wallet for blockchain engineers. After installing the app in
the browser, users will have access to an integrated Ethereum wallet.
Follow this link to visit their website and learn more:
https://metamask.io/

Parity
Parity is an Ethereum client. This is another powerful platform among
blockchain engineers since it is a mission-critical management tool.
Additionally, parity makes use of the Rust programming language. Another
fantastic aspect of this technology is that it gives an infrastructure that is both
fast and dependable.
In any case, creating your blockchain network for personal or commercial
use, or even simply for research purposes, is simple. To put it another way,
all of these are fully customizable.
Follow this link to visit their website and learn more:
https://www.parity.io/technologies/ethereum/
3.5 Blockchain Development Frameworks

As with a peer-to-peer network, blockchain technology is built on

decentralized networking technologies. The decentralization of the
Blockchain is similar to that of Napster: each party in the network is linked to
the others. This is not your typical client-server network. Each node in a
blockchain network performs both client and server functions.
In a blockchain network, nodes maintain and share a public database, ledger,
or record. This ledger contains transactions of network transactions, which
are confirmed by majority consensus on the network. Once a new transaction
has been confirmed and recorded in the ledger, the ledger is broadcast to all
network nodes. Thus, the nodes have access to the current ledger, which
contains the most recent transactions.
It is simple to see why businesses across several industries use blockchain
technology to enable safe transactions of valuable assets such as digital
information, real estate, and cash.
Without further ado, let us look at six of the most popular frameworks for
building blockchain-based applications. We will highlight essential features
and break down strengths and shortcomings to assist you in making an
educated decision when developing your blockchain network on the proper
platform.
Ethereum
Ethereum is the world's most frequently used and popular blockchain
development platform. Indeed, it is the development's first platform for
developing blockchain applications. Built-in 2015, it pioneered a new
concept known as the smart contract.
A smart contract is a computer program comprised of functions and states.
Each smart contract on the Ethereum blockchain is paired with a unique
address. Because smart contracts are an independent sort of account on
Ethereum, they can send transactions and maintain a balance.
The Ethereum Virtual Machine is another incredible aspect of Ethereum
(EVM). In EVM, a virtual machine is a computer that runs Ethereum
accounts and smart contracts.
The EVM supports the development of Ethereum-based decentralized
applications (DApps). The variety of DApp use cases is rapidly extending
beyond banking into industries as diverse as healthcare, logistics, real estate,
and the legal system, to name a few.
Ethereum's smart contracts are implemented using the Solidity programming
language. Etheruem is a permission less ledger that is available to the public.
Its consensus process is known to be rather slow: proof of work.
Ethereum has its coin, Ether. On the Ethereum blockchain, Ether is used to
pay for the creation and initialization of transactions.
Hyper ledger Fabric
The Hyperledger Hub created Hyperledger Fabric, a permissioned distributed
ledger platform. The Hyperledger Hub is a Linux Foundation initiative that
fosters the open development of centralized and decentralized blockchain
systems.
Fabric is geared for businesses looking to use, integrate, or build blockchain-
based solutions and applications.
Not only is Hyperledger Fabric comparable to Ethereum in terms of
permissions ledger technology, but also terms of its modular design. Fabric's
flexibility enables a plug-and-play interface for users to choose their desired
services, such as the consensus method and smart contract types.
Additionally, Hyperledger Fabric enables smart contracts. On Fabric, smart
contracts may be written in Go, Java, or JavaScript.
Hyperledger Sawtooth
Hyperledger Sawtooth is another modular blockchain technology developed
by the Hyperledger Hub to build distributed ledger applications and
networks. The Linux Foundation released Hyperledger Sawtooth, which IBM
and Digital Assets presently support.
Enterprises leverage Hyperledger Sawtooth to develop scalable and resilient
systems and implement highly secure blockchain solutions. Hyperledger
Sawtooth, like Fabric and Ethereum, is a permissioned ledger.
Hyperledger Sawtooth is equipped with several advanced features and
integrations, including the following:
Seth (Sawtooth-Ethereum) connection, which enables the deployment of
Etheruem smart contracts on Hyperledger Sawtooth, Parallel processing,
which enables quicker transaction processing than other blockchain systems,
A dynamic, undefined consensus protocol means that the consensus method
can be changed at any moment.
In terms of consensus algorithms, Hyperledger Sawtooth supports a variety of
them, including the following:
The PoET (proof of elapsed time) technique leverages secure instruction
execution to deliver the scalability benefits of a Nakamoto-style consensus
process without the power consumption disadvantages associated with proof
of work algorithms.
PBFT (practical Byzantine fault tolerance), a voting-based algorithm that
votes for agreement among network participants by utilizing dynamic
network membership, regular view modifications, and block catch-up
procedure characteristics.
Raft is a consensus engine that is based on and leverages Raft. The logs of
reasonably independent subproblems are used to agree on a value and reach a
judgment in this consensus.
EOSIO
EOSIO is a high-performance, open-source blockchain platform that Block.
one introduced in 2018. EOSIO is a platform for developing blockchain apps
which is quick, dependable, and extremely secure.
EOSIO enables the deployment of smart contracts on its established
networks. Additionally, you may create your EOSIO networks and use them
to implement smart contracts.
EOSIO smart contracts are written in C++. The official documentation on
how to develop and deploy smart contracts using EOSIO can be found here.
Though not as well-known as Ethereum or Bitcoin, EOSIO offers some
distinct selling qualities. Developers prefer EOSIO for their blockchain
applications because it is:
Rapid and effective.
Configurable to a fault
 Extremely secure
Extremely compatible
Developer-focused
As a bonus, the EOSIO website does an excellent job of keeping the
community informed of current events and news.
Corda
Corda is an open-source blockchain platform developed in 2015 by the R3
Consortium. Corda was originally intended for financial institutions but has
subsequently been expanded to include healthcare, insurance, digital assets,
and finance. The next-generation blockchain architecture promotes itself as
"the preferred distributed ledger technology platform for financial services
and beyond."
Corda is a permissioned ledger that supports smart contracts, which means
that smart contracts may be written and deployed on the Corda blockchain.
Smart contracts in Corda may be written in either Java or Kotlin.
Because the platform lacks a mining component, a portion of the transactions
are never seen in most nodes. Corda transactions, in other words, are not
available to all nodes. Corda does not support cryptocurrencies or tokens.
Corda is a pluggable consensus protocol, which implies that it supports a
large number of consensus techniques.
Corda possesses validity, consensus, and uniqueness in consensus. Validity
consensus verifies that all state contracts approve the transaction and contain
all needed signatures.
If the transaction inputs are unique and have not been utilized in previous
transactions, unique consensus agrees on a value.
Quorum
Quorum is an open-source Ethereum-based blockchain platform. It was
launched in 2016 to serve the banking industry and enable businesses to "use
Ethereum for their high-value blockchain applications."
ConsenSys just bought Quorum from JP Morgan. Numerous firms, including
Microsft, JP Morgan, Covantis, the South African Reserve Bank, SiaChain,
and Komgo, trust Quorum and have used it in their operations.
Quorum assists businesses interested in using the blockchain platform. It
utilizes a permissioned ledger but also allows for client-specific
customization. Additionally, Quorum facilitates the creation of public and
private networks, as well as smart contracts.
As with Ethereum, smart contracts in Quorum are written in Solidity, which
simplifies migrating from Ethereum to Quorum. Quorum's consensus process
is based on voting; it agrees to a transaction and a block-based on their votes
from nodes.
Although there are other blockchain development frameworks available, the
ones listed here are the most widely used.
Chapter 4: How to Become a Blockchain Developer

This step of learning is the book's cornerstone since it teaches how the
blockchain operates inside. This stage's learning activities will take you
through all of the blockchain's principles and underlying technology. By the
end of this level, you will have a firm grasp of all of the blockchain's
fundamental principles, how they operate independently, and how they work
together to form the massive apparatus known as the blockchain.
4.1 Planning the Blockchain

The fundamental ideas behind the blockchain-based system for maintaining

ownership:
Blockchain Design
The preceding phases established a connection between trust, integrity, and
completely distributed peer-to-peer networks, as well as the blockchain.
Consequently, you now have a firm grasp of what blockchain technology is,
why it is necessary, and what problem it resolves. However, you remain
unaware of the core workings of the blockchain. Additionally, it covers the
primary responsibilities involved in developing a blockchain for ownership
management and gives an overview of the key principles.
Objective
The purpose of this section is to familiarize yourself with blockchain
principles. I will offer the task of creating your ownership management
system for educational purposes. Thus, you will face the same issues that the
blockchain's inventor did: creating software that handles ownership in a truly
distributed peer-to-peer system of ledgers that functions in an entirely open
and untrustworthy environment.
Commencement
To begin, the following summarizes the key facts concerning the system
under consideration:
• The system will be entirely distributed peer-to-peer, relying on system-
contributed computational resources.
• The peer-to-peer system connects the individual nodes over the
Internet.
• The number of nodes, as well as their trustworthiness and
dependability, are unknown.
• The peer-to-peer system's objective is to manage the ownership of a
digital good (e.g., sales bonus points or digital money).

The Way to Proceed

Seven primary issues must be solved when building and implementing a
software system for managing ownership in an open and untrustworthy
environment through the use of a purely distributed peer-to-peer ledger
system:
• Descriptors of ownership
• Ownership protection
• Keeping track of transactions
• Preparation of ledgers for distribution in an insecure environment
• Distribute ledgers
• Updating ledgers with fresh transactions
• Determining which ledgers contain the truth
1st Task: Defining ownership
Before you can begin constructing the blockchain, you must determine its
purpose. You will be developing a software system to handle ownership, so
you must first decide how to define ownership. Transactions, it turns out, are
an excellent method to represent any transfer of ownership, and the whole
history of transactions is critical for identifying the current owners.
2nd Task: Protecting ownership
Using transactions to define ownership is only the beginning. Additionally,
you must have a method for preventing unauthorized access to other people's
property. In reality, you can prevent anyone from using your automobile or
entering your house by installing locks on your doors. Cryptography provides
a mechanism for protecting transactions on an individual level, analogous to
how locks on doors safeguard your particular automobile or house.
Protecting ownership entails three primary components: identifying and
authenticating owners and limiting owners' access to the property. These
procedures will also provide fascinating insights for anyone with a technical
background or familiarity with hash values.

3rd Task: Transaction Data Storage

Defining ownership in transactions and implementing security mechanisms
that protect ownership at the transaction level are critical stages in developing
a software system that controls ownership. However, you will require a
method to store the whole history of transactions, as this will be utilized to
establish ownership. Because the transaction history is secure for establishing
ownership, it must be securely preserved. The blockchain-data structure is the
digital counterpart of a ledger.
4th Task: Preparation of Ledgers for Distribution in an Untrustworthy
Environment
While having a single isolated ledger or blockchain data structure containing
transaction data is advantageous, the goal is to create a distributed peer-to-
peer system of ledgers that functions in an untrustworthy environment. As a
result, you will have copies of the ledger operating on unreliable nodes in an
unreliable network. Additionally, you will delegate control of the ledgers to
the whole network, eliminating the need for a single point of control or
coordination. How do you guard against faked or modified ledgers e.g., by
removing or adding unlawful transactions to history? As it turns out, the most
effective strategy to prevent transaction histories from being altered is to
make them immutable. This implies that once ledgers and later transaction
histories are created, they cannot be modified.
As a consequence, you will never have to worry about the ledgers being
altered or falsified, as they cannot be altered in the first place. However,
having a distributed peer-to-peer system with unchangeable ledgers seems
extremely secure but ultimately pointless, as it will prevent you from adding
new transactions. Thus, the blockchain-data-problem structure is to remain
immutable on the one hand while still admitting new transactions on the
other. As a result, the blockchain data structure is append-only. New
transactions may be added, but it is not easy to modify previously contributed
data.
5th Task: Distribute the Ledgers
Once the ledger is append-only, it is possible to establish a distributed peer-
to-peer ledger system by making copies available to anybody who requests
them. However, just supplying copies of append-only ledgers will not
accomplish your objectives. A distributed system that controls ownership
requires communication between peers or nodes.
6th Task: Updating the Ledgers with New Transactions
The distributed peer-to-peer system members will retain individual copies of
an append-only blockchain data structure on their computers. Because the
data structure supports additional transaction data, you must guarantee that
only genuine and permitted transactions are added. This is accomplished by
allowing all members of the peer-to-peer system to add new data and
transform each member of the peer-to-peer system into a peer supervisor. As
a consequence, all members will oversee one another and point attention to
their peers' errors.
7th Task: Determining Which Ledgers Accurately Reflect the Truth
Once new transactions may be added to the peer-to-peer system's ledgers, an
issue occurs that is characteristic of any distributed peer-to-peer system:
different peers may have received different transactions, and their history of
transactions soon diverges. As a result, in a peer-to-peer system, many copies
of the transaction history may exist. Given that the transaction history serves
as the foundation for identifying authorized owners, having contradictory
transaction histories poses a severe danger to the system's integrity. Thus, it is
critical to discover a technique to either prevent the creation of several
transaction histories or determine which transaction history reflects the truth.
The previous technique is not practicable due to the nature of a purely
distributed peer-to-peer system. As a result, you require a criterion for
determining and selecting the single transaction history that accurately
represents the truth. However, there is another issue: in a truly distributed
peer-to-peer system, no central authority can determine which transaction
history must be picked. It turns out that one may resolve this issue by
requiring each node in the peer-to-peer system to independently choose
which transaction history reflects the truth in a fashion that the majority of
peers agree on. Additionally, it turns out that the way the blockchain allows
for the addition of new transactions to the append-only blockchain data
structure already has the answer to this problem.
Outlook
This stage defines seven challenges that give a strenuous intellectual journey
via the blockchain's principles. Once these challenges are completed, you will
reach the summit: a comprehension of the blockchain.
To create a purely distributed peer-to-peer system of ledgers for managing
ownership, the following challenges must be addressed:
• Determining ownership
• Protecting ownership from illegal access
• Storing transaction data
• Preparing ledgers for distribution in an untrustworthy environment
• Forming a system of distributed ledgers
• Adding and confirming new transactions to the ledgers
4.2 Using The Blockchain

We have already discussed what a blockchain is, its use, and how it operates.
However, the blockchain was not invented, so that we might waste time
debating its technical concepts. Rather than that, the blockchain was invented
for real-world applications. As a result, this stage delves deeper into the
application of the blockchain. Additionally, it specifies generic blockchain
application patterns and connects them to the blockchain's features.
Additionally, this stage sketches some blockchain applications and discusses
the details that should be addressed while examining a particular blockchain
application.

The Allegory
Why are shelves, cabinets, drawers, and boxes used? These storage methods
are frequently utilized since they allow for the storing and organization of
items regardless of their intended function. A box can be used to hold a
variety of items, including documents, technical spare parts, office supplies,
photographs, money, DVDs, clothing, and wine bottles. The versatility of
boxes, drawers, cabinets, and shelves is limited only by the diversity of goods
stored in them. However, I will first discuss the blockchain's capabilities as a
specific box for digital objects.
The Blockchain's Characteristics
The blockchain is a decentralized peer-to-peer data storage system that
possesses the following properties:
• Immutable
• Append-only
• Ordered
• Time-stamped
• Transparent and open
• Secure (identification, authentication, and authorization)
These qualities of the blockchain are agnostic to the data that is stored on it.
Thus, the blockchain may be thought of as a specific type of box for keeping
digital goods from a basic point. This paves the way for a plethora of
blockchain-based applications.

Patterns of Generic Application

We can come up with the following generic use cases based on the
blockchain's features and its attribute of being a generic data repository for all
types of data:
• Proof of existence
• Proof of non-existence
• Proof of time
• Proof of order
• Proof of identity
• Proof of authorship
• Proof of ownership
Proof of Existence
This application of the blockchain is focused on storing data solely to prove
its existence. As a result, this application does not make use of the
blockchain's ordering or time-stamping capabilities. For example, registries
of goods that are supposed to be unique, such as brand names, patents,
license codes, and Internet or e-mail addresses, are concrete applications.
Proof Non-existence
This application of the blockchain is the polar opposite of proof of existence.
It enables the verification of whether particular entries or items do not exist
on the blockchain. Complaints, penalties, or convictions are all examples of
concrete applications of this.
Proof of time
The existence of an entry in the blockchain is significant in this scenario and
the moment at which the record was added. The blockchain may fulfil this
requirement since the blocks of the blockchain data structure retain the time
stamp of when adding them began. The blockchain's time-stamped features
enable applications that track the occurrence of events across time, such as
tracking delivery or notice, tracking payments, tracking the orderly opening
and closing of public bidding procedures, and managing predictions.
Proof of Order
This type of usage makes use of the blockchain's ordering feature. The
blockchain's relative ordering attribute is advantageous for applications that
maintain the relative ordering of events regardless of their exact time, such as
tracking application processes, auditing public bidding procedures, and
escrow services. Proving that a particular occurrence was the first or last is a
special instance of proof of order. This type of proof is critical when
resources are allocated in the same order as claims or documents are
presented, such as college or university applications, patent applications, or
copyright claims.
Proof of Identity
Proof of identity can be regarded as a subset of proof of existence because it
establishes the existence of a particular identity. The blockchain is well-
suited for this use case since it holds data that may be used to identify
someone or something and implements fundamental security concepts for
identification and authentication. This usage pattern has concrete applications
in the form of digital identity documents for people, animals, and objects.
Governments might use blockchains to manage personal documents such as
driver's licenses or passports as part of their e-government plan.
Proof of Authorship
This usage pattern focuses on proving who or what added certain data to the
blockchain. The blockchain is capable of serving this role since it maintains
data that is uniquely identifiable by its cryptographic fingerprint and provides
fundamental security principles such as identification, authentication, and
authorization. Identification and authentication are required to identify and
verify writers. Authorization is required in this use case to prevent
unauthorized data from being added to the blockchain. This pattern is used in
various applications, including electronic publishing, tracking content
changes in documents, content delivery, collaborative editing, and copyright
protection.
Proof of Ownership
This usage pattern is geared toward managing and establishing ownership. It
is based on all of the preceding patterns, including proof of existence, proof
of order, proof of identity, and proof of authorship, as well as the three
fundamental security principles of identification, authentication, and
authorization. Examples of applications that use this pattern include systems
for managing real estate ownership, automobiles, business stock, bonds,
digital money, and cryptographic currencies.
Particular Use Cases
The blockchain is data-agnostic. As a result, the variety of data saved in the
blockchain and application fields are as varied as human activities
themselves. As a result, providing a comprehensive overview of all
blockchain applications is impractical. As a result, this section highlights a
few real blockchain application areas where the blockchain is either being
utilized or will be employed in the near future1:
• Payments: Managing digital fiat currency ownership and transfer.
• Cryptocurrencies: Managing the ownership and generation of digital
payment instruments not backed by any government, central bank, or
other central organization.
• Micropayments: The transmission of little sums of money that would
be too expensive to send via standard forms of payment.
• Digital assets: Managing the creation, ownership, and transfer of
digital products that are valuable in and of themselves or represent
valuable real-world goods.
• Digital identity: Proving and verifying identification and
authentication through the use of unique digital things.
• Notary services: Digitizing, archiving, and validating documents or
contracts, as well as establishing proof of ownership or transfer.
• Compliance and auditing: Conducting audits of individuals or
companies operating in regulated industries.
• Taxation: Calculating and collecting taxes based on transactions or
single ownership, decreasing tax evasion2 and double taxation.
• Voting: Creating, disseminating, and tallying electronic ballot sheets.
• Record management: The process of creating and keeping medical
records.
Chapter 5: Ether Wallets

The term "wallet" has various meanings in Ethereum. At its most basic level,
a wallet is a piece of software that acts as the principal user interface for
Ethereum.
The wallet maintains track of a user's keys and addresses and initiates and
also signs transactions. Additionally, certain Ethereum wallets are capable of
communicating with contracts, like ERC20 tokens. From a programmer's
perspective, the phrase "wallet" relates to the system that stores and manages
users' keys.
Each wallet has a key management component. That is the extent of most
wallets. Other wallets are classified as browsers, gateways to Ethereum-based
decentralized apps, or DApps. There are no apparent boundaries between the
many categories often referred to as "wallets."
5.1 Crypto wallets

A crypto wallet is a type of digital wallet used to accept, transmit, and store
digital currencies such as Bitcoin or Ethereum. The majority of currencies
have an official wallet or a third-party wallet approved for the storage of
digital money.
They would function identically to traditional leather wallets used to carry
cash and credit cards in an ideal world. The main distinction is that
cryptocurrency wallets are virtual. However, unlike a typical wallet, this
virtual wallet displays your current balance, your most recent spending, and
other information that a leather wallet cannot. As with digital apps,
cryptocurrency wallets are smarter in that they combine all of the advantages
of a physical wallet with additional flexibility and sophistication. With just
one wallet, users may store a variety of digital currencies without ever having
to worry about running out of capacity.
As a cryptocurrency investor, you should acquaint yourself with how wallets
function so that once you have your tokens, trading in the ICO market will be
seamless.
5.2 The Cryptocurrency Wallets' Operation

Cryptocurrency wallets operate similarly to a safety deposit box where you

keep valuables such as jewels, certificates, or a will. You cannot afford to
lose the key to such a box since doing so effectively results in losing
ownership of the precious things contained therein.
Cryptocurrency wallets operate similarly, except that you will have a digital
key instead of physical keys, colloquially referred to as a master key. These
are sometimes referred to as "private keys."
They may appear difficult and intimidating at first, but with practice, you will
master them. When investing in initial coin offerings (ICOs) or any other
digital asset, it is critical to safeguard your wallet by safeguarding your
private key. You will always require the key to access your wallet assets and
allow transactions from them. Therefore, always store your key in a secure
location that is quickly accessible whenever you require it.
Where to get A Cryptocurrency Wallet?
By joining up for one of the wallets, you may quickly obtain cryptocurrency
wallets. The following types of cryptocurrency wallets are available:
Desktops
These are wallets that are downloaded and kept on a laptop or desktop
computer, and they can be accessed only from the machine on which they
were downloaded. While desktop wallets are extremely secure, their security
might be jeopardized if your computer becomes infected with a virus or is
hacked. However, desktop wallets are some of the most secure wallets
available.
Online wallets
This type of wallet is cloud-based, and it can be accessed from any
computing device. They are handier and easier to use, but they are more
vulnerable to hackers because the key is held online by a third party.
Mobiles
These wallets run on a mobile application and are extremely handy to use
since they can be used anywhere to conduct ICO token-related transactions.
Hardware
Hardware wallets are distinguished from software wallets because the private
key is physically saved on hardware, such as a USB device. Although
transactions are still done online with a hardware wallet, there is a higher
level of security with this type of wallet because everything is stored offline.
The user only has to connect the hardware to an Internet-connected device
from any location to conduct transactions.

Is It Better to Use a Single Currency or Multiple Currencies?

While Bitcoin is the most well-known digital money, many other currencies
have developed their own infrastructure and environment. However, some
good news for individuals investing in many different ICOs is that certain
wallets support multiple tokens. You do not need to create a separate wallet
for each coin. Instead, create a multi-currency wallet that enables you to
utilize many currencies concurrently from a single wallet.
Are crypto wallets secure?
Cryptocurrency wallets have been designed to be extremely secure. However,
the amount of protection varies amongst wallets. Similar to the security of
your usernames and passwords, the security of your wallet is secured by
adhering rigorously to the best security standards. To serve as a guide, the
following are some secure wallet practices:
1. Obtain a secure wallet
With so many cryptocurrency wallets accessible, it is prudent to find one that
goes above and beyond the basic wallet supplied by most wallet providers.
Some wallets now include encryption mechanisms to increase the secrecy of
private keys.
2. Make advantage of the technology of cold storage
Users should have at least two wallets, but the number should vary according
to the quantity of crypto they own. One wallet should be used only for
transactional and trading reasons, while the other should be used exclusively
for the secure storage of ICO tokens. This sort of wallet is typically referred
to as a "cold storage" wallet because it is used just for storage and never
participates in any transactions. Always ensure that the trading wallet has a
small number of ICOs sufficient for your present trading operations.
3. WIFI Knowledge
Always use caution while visiting websites online and using a device
equipped with an ICO wallet. Risky Wi-Fi and dangerous websites may
jeopardize your wallet. Additionally, keep in mind that you should always
watch this item and never give it to anybody.
4. Phishing
Several phishing schemes in the crypto sector use emails or Google Ads.
Phishing scams are prevalent. Therefore, always verify that the wallet firms'
domains are properly indicated in the emails you get from them, and never
search up their site addresses by clicking on a Google Ad.
5. Turn off any auto-updates.
You should disable automatic updates for any crypto-related programs, as
most application bugs have the potential to harm the wallet owner.
6. Double-check all of the addresses.
It is always important to double-check all of the addresses you are
transferring money. This is because malicious applications can copy the
pattern.
5.3 Different Crypto Wallets

The number of wallets available continues to grow daily, and consumers now
have a plethora of alternatives. However, before you decide on which wallet
to use for your key coin offering investment, keep the following points in
mind:
Are you going to invest in many initial coin offerings (ICOs) or just
one?
Do you require access to your digital wallet from any location, or will
you use it at home?
Will you use your wallet for daily transactions, or are you more
interested in purchasing and retaining coins as an investment?
After asking yourself these questions and thoroughly assessing your needs,
you can easily pick which wallet would best serve your interests, allowing
you to pick the most suitable wallet.
Several of the finest crypto wallets for ICO tokens include the following:
MyEtherWallet
This is one of the most widely-used wallets in the crypto community. It may
purchase, trade successfully, and store ERC20 tokens received through initial
coin offerings (ICOs). It is one of the most widely accepted wallets since it
combines an internet wallet with an offline wallet.
Jaxx
This is another incredible wallet. It can store, trade, and control Bitcoin,
Litecoin, Ethereum, Augur, and a slew of other blockchain-based assets. It
allows you total control over your key, in addition to offering a slew of basic
yet useful functions.
Trezor
This hardware wallet provides an extremely secure method of safeguarding
your funds from hackers and malware. Its major distinguishing qualities are
cross-platform compatibility and an OLED display.
KeepKey
This is another hardware wallet for Ethereum, Bitcoin, Litecoin, and other
tokens. Additionally, it includes a USB port as one of its distinctive
characteristics.
The Exodus
This is a multi-digital asset wallet and the first desktop wallet to include an
integrated ShapeShift feature that enables easy and rapid conversion between
various cryptocurrency tokens and altcoins. Additionally, it permits the
storage of the private key in a configurable user interface application.
5.4 A Brief Overview of Wallet Technology

This section will discuss the various technologies used to develop user-
friendly, secure, and customizable Ethereum wallets. When developing
wallets, it is critical to strike a balance between convenience and privacy. The
most efficient Ethereum wallet stores all of its funds with a single private key
and address. Unfortunately, such a method presents a privacy nightmare since
all your operations may readily be tracked. While using a unique key for
every transaction increases security, it becomes incredibly complex to
administer. The optimal balance is tough to attain, which is why a well-
designed wallet is critical. Ethereum wallets do not hold ether or tokens,
contrary to popular belief. Indeed, the wallet contains simply the keys.
Ethereum's blockchain is used to store ether and other tokens. By verifying
transactions only with keys in their wallets, users gain control of the
network's tokens.
In some ways, an Ethereum wallet is similar to a digital keychain. However,
because the wallet keys are the only item necessary to send or receive ether or
tokens, this distinction is mostly unimportant in practice. The distinction is in
changing one's outlook from dealing with the centralized approach of
conventional banking (where only you and the financial institution can see
the money in your account, and you only need to reassure the bank that you
want to move funds to complete a transaction) to interacting with the
decentralized network of blockchain platforms (where anyone can see an
account's ether balance, even if they do not recognize who owns it, and
everybody needs to be reassured that they want to ) to dealing with the
decentralized network of blockchain platforms (where In reality, this implies
that there is a mechanism to check an account's balance without accessing the
wallet. Additionally, you may migrate your existing wallet us account
management to a new wallet.
Wallets are split into two categories based on the relationship between the
keys they store.
The first kind is a nondeterministic wallet, which generates each key
separately using a distinct random integer.
The keys are unrelated. This sort of wallet is often referred to as a
 JBOK wallet, from "Just a Bunch of Keys."
The second form of wallet is the deterministic wallet, which derives all
keys from a single master key, referred to as the seed. Each key in this
form of wallet is connected to the previous one and maybe produced
again if the seed is accessible.
Numerous key derivation methods are employed in deterministic wallets.
As explained in "Deterministic Hierarchical Wallets," the most often utilized
derivation approach makes use of a treelike structure.
To make deterministic wallets a little more secure against data loss accidents,
such as getting your mobile device stolen or accidentally dropping it in the
bathroom, the seeds are regularly encoded as a series of terms (in English or
another language) that you can write down and use in the event of an
accident.
These are the wallet mnemonic code words. Naturally, if your mnemonic
code words are hacked, they can rebuild your wallet, giving them
accessibility to your ether and smart contracts. As a result, proceed with
caution while constructing your list of recovery words! Never save it
digitally, in a file, on a computer, or a mobile device. Make notes of it on
paper and save it in a safe and secure location.
5.5 Nondeterministic Wallets

Each wallet file contains a completely random private key in the first
Ethereum wallet (made for the Ethereum pre-sale). These "traditional"
wallets are being dropped out in preference of deterministic wallets because
of their numerous shortcomings. For example, it is best practice to avoid
reusing Ethereum addresses to optimize your privacy when using Ethereum.
To receive cash using a new address (needing a new private key) each time,
you may go even farther and use a unique address for each transaction, but
this might get costly if you regularly deal with tokens.
To adhere to this approach, a nondeterministic wallet list of keys must be
increased regularly, which implies that backups must be performed
frequently. If you ever lose your data (due to disk failure, a careless accident,
or having your phone stolen) without first backing up your wallet, you may
forfeit access to your assets and smart contracts.
Nondeterministic wallets of "type 0" are the most difficult to manage, as they
produce a new wallet file for each new address "just in time." In the Keystore
format, a key derivation function (KDF), sometimes called a password
stretching method, is employed to guard against dictionary, brute force and
rainbow table attacks. That being said, the pass does not encrypt the private
key directly. Rather than that, the pass is extended by repeatedly hashing it.
As specified by the Keystore JSON option crypto. Kd.params.n the hashing
function is repeated 262,144 times. A brute-force attacker would have to
perform 262,144 rounds of hashing to each attempted pass, considerably
slowing the attack and rendering it unfeasible for sufficiently sophisticated
and lengthy passes.
Numerous software libraries, such as the JavaScript library keythereum, can
read and write the Keystore format. Nondeterministic wallets should not be
used for anything more than rudimentary experiments. They are far too large
to transport and utilize in anything but the most basic of scenarios. Instead of
that, utilize an HD wallet with an industry-standard mnemonic.
5.6 Deterministic (Seeded) Wallets

Deterministic wallets, also referred to as "seeded" wallets, store private keys

that are all obtained from a single key or seed. The seed is a random integer
paired with other information, such as an index number or "chain code, " to
generate infinite private keys because a single backup system at wallet
installation time is enough to secure all funds and smart contracts in a
deterministic wallet. The seed is adequate to retrieve all derived keys.
Additionally, the seed is sufficient for exporting or importing a wallet,
allowing for straightforward key movement between wallet implementations
since just the seed is necessary to access the full wallet, seed security is
crucial. On the other side, the ability to focus security efforts on a specific
piece of data may be seen positively.
Hierarchical Deterministic Wallets
Deterministic wallets were designed to generate the process of creating many
keys from a single seed. At the moment, the most sophisticated sort of
deterministic wallet is the hierarchical deterministic (HD) wallet described by
Bitcoin's BIP-32 standard. HD wallets utilize keys obtained from a tree
structure, which enables a parent key to generate a chain of child keys, each
of which would generate a succession of descendant keys, and so on.
In comparison to deterministic wallets, HD wallets have a few notable
benefits. First, the tree structure may be utilized to convey extra
organizational information, as when one line of sub keys gets incoming
payments. At the same time, another branch collects change from outgoing
payments.
Additionally, key branches can be employed in corporate environments,
where various sections are attributed to departments, subsidiaries, specialized
roles, or accounting categories.
The second benefit of HD wallets is that users may generate a sequence of
public keys without knowing the private keys. This permits the usage of HD
wallets on insecure servers or in a watch-only or receive-only mode, in which
the wallet does not have the private keys necessary to spend the cash.
Seeds and Mnemonic Codes
There are several techniques for securely storing and retrieving a private key.
The current favoured way is to utilize a series of phrases that, when
combined correctly, may be used to reproduce the private key in its entirety.
This is referred as mnemonic, and BIP-39 has standardized the technique.
Numerous Ethereum wallets support this standard, allowing for the import
and export of backup and recovery seeds through interoperable mnemonics.
In practice, the likelihood of making errors when noting down the hex pattern
is just too large. By comparison, the list of often used words is rather simple
to handle, owing to the high degree of duplication in word composition
(particularly English words).
Suppose the word "inzect" was unintentionally recorded. In that case, it could
be readily recognized that it is not a legitimate English word and that the
word "insect" should be used anyway if wallet recovery is necessary.
We are discussing a version of the seed because it is the best practice for
managing HD wallets; the seed is necessary to recover a wallet in case of data
loss (by accident or theft), thus maintaining a backup is critical.
However, since the seed must be kept private, digital copies should be
avoided at all costs. Therefore, the previous recommendation is to back up
with pen and paper.
To summarize, encoding the seed for an HD wallet with a recovery word list
is the most secure method for exporting, transcribing, recording on paper,
reading without error, and importing a private key set into some other wallet.
Chapter 6: Tokens

The term "token" is derived from the Old English word "tcen," which
translates as "a sign or emblem." Transportation tokens, laundry tokens, and
arcade game tokens are privately issued coin-like things with negligible
intrinsic value.
6.1 Understanding The Concept of Tokens

Tokens managed on Blockchains are currently redefining the term to refer to

blockchain based abstractions that may be held and represent assets, cash, or
access rights. The link between the term "token" and little value is mostly
owing to real tokens' limited use.
Physical tokens are frequently confined to certain businesses, organizations,
or locations, are difficult to trade, and generally serve a single function.
These limits are lifted or, more precisely, they are entirely redefinable with
blockchain tokens. Numerous blockchain tokens are used globally and may
be traded for one another or other currencies on worldwide liquid
marketplaces. The expectation of "insignificant value" is likewise obsolete.
With the limits on usage and ownership removed, the assumption of
"insignificant value" is now obsolete.
What Are Tokens Used for?
The most prevalent application of tokens is digital private money. This is,
however, simply one conceivable use. Tokens can perform a wide number of
functions, many of which overlap. A token, for example, can simultaneously
represent a voting right, an access right, and ownership of a resource.
Currency is merely the first "app," as the following list demonstrates:
Currency
A token may serve as a currency medium, with its value decided by a
private transaction.
Resource
A token may represent a resource gained or created in a sharing
economy or resource-sharing environment; for resources, a storage or
CPU token may represent resources shared across a network.

Asset
A token may represent ownership of an intrinsic or extrinsic, tangible
or intangible asset, such as gold, real estate, a car, oil, energy, or
 MMOG goods.
Access
A token can represent the right of access to a digital or physical asset,
such as a discussion forum, an exclusive website, a hotel room, or a
rental car.
Equity
A token may represent shareholder equity in a digital organization (for
example, a decentralized autonomous organization) or a legal entity
(for example, a corporation).
Voting
In a digital or judicial process, a token can reflect voting rights.
Collectible
A token might be digitally collectable (such as CryptoPunks) or
physically collectable (such as CryptoPunks) (such as a painting)
Identity
A token may represent a digital identity (such as an avatar) or a legal
identity (for example, a national ID).
Attestation
A token might represent an authority's verification or attestation of the
fact or a decentralized reputation system (for example, birth certificate,
a marriage record, or college degree).
Utility
Tokens can be used to pay or acquire access to services.
Frequently, many of these functions are merged into a single token.
It might be difficult to tell them apart at times because their physical
manifestations have always been tightly intertwined.
For example, a driver's license (attestation) doubles as an identity document
(identity) in the physical world, and the two are inextricably linked.
In the digital environment, formerly interwoven functions may be isolated
and developed separately (for example, anonymous attestation).
Tokens and Fungibility

In economics, fungibility refers to the characteristic of an item or commodity

whose constituent units are fundamentally interchangeable. When a single
unit of a token may be replaced for another with no difference in value or
function, the token is fungible. To be precise, if a token's past history can be
tracked, it is not fungible. Provenance tracking enables blacklisting and
whitelisting, significantly decreasing or eliminating fungibility.
Non-fungible tokens each represent a unique tangible or intangible thing and
cannot thus be exchanged. For example, a token representing ownership of a
certain Van Gogh artwork is not comparable to another token indicating
ownership of a Picasso, even if both are part of the same "art ownership
token" system.
Similarly, a cryptocurrency token representing a particular digital item, such
as a CryptoKitty, cannot be swapped for another CryptoKitty. Each non-
fungible token is identified uniquely by a unique identifier, such as a serial
number.
Counterparty Danger
Counterparty risk means that the opposite party in a transaction may default
on their commitments. Since certain transactions include more than two
parties, there is extra counterparty risk. For instance, if you hold a precious
metal certificate of deposit and sell it to someone, the transaction involves at
least three parties: the seller, the buyer, and the custodian of the precious
metal. Because someone owns the physical asset, they must become a party
to the transaction's completion, which introduces counterparty risk into every
transaction using that item.
In general, when an asset is traded indirectly via the exchange of a token of
ownership, there is added counterparty risk from the asset's custodian.
Is the asset in their possession?
Will they recognize (or authorize) the transfer of ownership based on the
transfer of a token (such as a certificate, deed, title, or digital token)? As is
the case in the non-digital world, it is vital to understand who owns the
underlying asset represented by the token and what regulations apply to that
underlying asset in the world of digital tokens representing assets.
Tokens and Intrinsicality

The word "Intrinsic" is derived from the Latin word "intra," which means
"from inside." Certain tokens reflect digital assets intrinsic to blockchain
technology. Consensus rules regulate both these digital assets and the tokens
themselves. This has an important consequence: tokens representing intrinsic
assets are not exposed to additional counterparty risk. If you own the keys to
a CryptoKitty, no one else holds them for you—you directly own it.
Consensus rules from the blockchain apply, and your ownership (i.e., control)
of the private keys is equal to direct ownership of the asset. On the other
hand, many tokens represent extrinsic assets like real estate, voting shares in
corporations, trademarks, and gold bars. Ownership of these non-blockchain
assets is regulated by law, custom, and policy, which are different from the
consensus rules governing the token. In other words, token issuers and
owners may continue to use non-smart contracts.
As a result, because these extrinsic assets are maintained by custodians,
registered in external registries, and regulated by external laws and rules, they
introduce additional counterparty risk.
The capacity to transform extrinsic assets to intrinsic assets, eliminating
counterparty risk, is one of the most significant consequences of blockchain-
based tokens. An excellent example is transitioning from a corporation
(irrelevant) to equity or a voting token in a DAO or similar (intrinsic)
organization.
Tokens: Are They for Utility or Equity?

Today, almost all Ethereum projects begin with some form of token.
However, are tokens required for all of these projects? Are there any
disadvantages to employing a token, or is the motto "tokenize everything" a
possibility?
In principle, tokens might be the ultimate management or organizational tool.
In reality, the integration of blockchain platforms, such as Ethereum, into
established social systems has severely restricted their application thus far.
First, let us define the function of a token in a new project.
Tokens are often utilized in one of the two ways in most projects: "utility
tokens" or "equity tokens." Frequently, these two jobs are confused. Utility
tokens are required to access a service, application, or resource. Utility tokens
represent resources such as shared storage or access to services such as social
media networks. Equity tokens denote ownership or control of an entity, such
as a startup. Equity tokens can be as basic as nonvoting shares for dividends
and earnings distribution or as complicated as voting in a decentralized
autonomous organization. The platform is administered via a sophisticated
governance mechanism based on token holders' votes.
That is correct!
Numerous businesses have a problem: while tokens are a wonderful
instrument for fundraising, issuing securities (equity) to the general public is
a regulated activity in most nations.
Numerous firms intend to circumvent these legal limits by disguising equity
tokens as utility tokens and conducting a public offering under the guise of a
pre-sale of "service access vouchers," or utility tokens as we refer to them.
It remains to be seen if these sham equity offers can evade regulatory
scrutiny.
As the ancient adage goes, "If it walks and quacks like a duck, it is a duck."
Regulators are unlikely to be diverted by these semantic twists; rather, they
are more likely to view such legal ambiguity as an attempt to deceive the
public.
Tokens for Utility Tokens: Who Needs Them?

The issue is that utility tokens pose major risks and impediments to startup
adoption. Perhaps "tokenize everything" will become a reality in the far
future. Still, the set of individuals who understand and desire to utilize a
token is a subset of the already limited cryptocurrency market.
Each invention entails a degree of risk and serves as a market filter for a
business. Innovation entails breaking from established practices and choosing
the less-travelled path. Already, this is a lonely stroll. It is a lonely route for a
startup to take when attempting to innovate in a new technology field, such as
storage sharing via peer-to-peer networks. Adding a utility token to the
invention and asking users to adopt tokens to utilize the service, the risk is
compounded, and the adoption barriers are raised.
It deviates from the already isolated road of peer-to-peer storage innovation
and heads into the wilderness.
Consider each advancement as a filter.
It limits adoption to those segments of the market that can be early adopters
of the invention. This impact is exacerbated by adding a second filter, thus
restricting the addressable market. You are asking your early adopters to
embrace not one but two unique technologies: the novel
application/platform/service you invented and the token economy.
Each innovation carries risk, increasing the likelihood of the startup failing.
When you add a utility token to an existing high-risk firm, you add all of the
risks associated with the underlying platform (Ethereum), the larger economy
(exchanges, liquidity), the regulatory environment (equity and commodities
regulators), and technology (smart contracts, token standards). That is a huge
risk for a company.
Advocates of "tokenize everything" would almost certainly claim that they
will inherit the token economy's market fervor, early adopters, technology,
innovation, and liquidity by embracing tokens.
Additionally, this is right. The question is whether the benefits and
exhilaration of adventure exceed the risks and uncertainty. Nonetheless, the
crypto sphere is home to some of the most inventive business models.
Suppose regulators do not move swiftly enough to embrace new rules and
promote new business models. In that case, entrepreneurs and their associated
talent will seek to operate in more crypto-friendly countries.
Finally, when we explored tokens at the chapter's outset, we discussed the
common definition of "token" as "something of negligible value."
The fundamental reason for the low value of most tokens is that they are
limited to a single use: one bus company, one laundry, one arcade, one hotel,
or one corporate shop. Due to low liquidity, restricted application, and high
conversion fees, the value of tokens is reduced to "token" value.
When you include a utility token into your platform but restrict its use to your
single platform with a tiny market, you are re-creating the conditions that
rendered real tokens useless. This may be the optimal way for tokenization
integration in your project.
If, on the other hand, a user needs to change anything into your utility token
to utilize your platform and then convert the remaining back into something
more generally valuable, you have produced a corporate scrip.
While the switching costs of a digital token are orders of magnitude less than
those of a physical token with no market, they are not zero.
Utility tokens that may be utilized in various businesses will be quite
intriguing and, in all likelihood, pretty lucrative. However, if you founded
your business intending to bootstrap a whole industry-standard to flourish,
you may have already done so.
Without a token, a token cannot work. Adopt it because the token eliminates
a significant market barrier or resolves an access issue. Avoid using a utility
token since it is the only method to acquire funds swiftly, and you must
pretend that the offering is not a public securities offering.
6.2 The ERC20 Token

Before Ethereum, there were blockchain tokens. In some senses, Bitcoin, the
first blockchain money, is a token in and of itself. Numerous token platforms
were also established on Bitcoin and other cryptocurrencies before Ethereum.
However, adopting the first token standard on Ethereum resulted in a
proliferation of tokens.
Tokens are one of the most apparent and practical uses of a universal
programmable blockchain like Ethereum, according to Buterin. Indeed, it was
typical to see Vitalik and others wearing T-shirts with the Ethereum logo and
a sample smart contract on the back during Ethereum's first year. This T-shirt
came in various styles, but the most popular included a token
implementation. Before we go into the mechanics of producing tokens on
Ethereum, it is critical to understand how tokens function on the platform.
Tokens are distinct from ether in that the Ethereum protocol does not know of
them. While transmitting ether is a built-in feature of the Ethereum network,
sending or even possessing tokens is not. Ethereum accounts' ether balances
are managed at the protocol level, whilst their token balances are managed at
the smart contract level. To create a new token on Ethereum, you must first
create a new smart contract. Once implemented, the smart contract takes care
of everything, including ownership, transfers, and access permissions. You
may create your smart contract in any way you choose, but it is usually
prudent to adhere to an existing standard. Following that, we shall examine
such norms.
ERC20 Token Standard
The initial standard was proposed in November 2015 by Fabian Vogelsteller
as an Ethereum Request for Comments (ERC). It was immediately allocated
GitHub issue number 20, giving it the moniker "ERC20 token." Currently,
the great majority of tokens adhere to the ERC20 standard.
The ERC20 request for comments evolved into Ethereum Improvement
Proposal 20 (EIP-20). However, it is still commonly known by its original
designation, ERC20.
ERC20 is a standard for fungible tokens, which means that various units of
an ERC20 token are interchangeable and lack any unique attributes. The
ERC20 standard specifies a standardized interface for token-implemented
contracts that enables any compatible token to be accessed and used in the
same way.
The interface comprises several required functions and properties and certain
optional functions and attributes that developers may add.
ERC20-required functions and events
A token contract that is ERC20 complaint must provide the following
functions and events:
totalSupply
Returns the total number of units of this token that are presently in
existence.
ERC20 tokens can have a fixed or variable supply.
balanceOf
Returns the address's token balance when given an address.
transfer
Given an address and an amount, transfers that amount of tokens to that
address from the balance of the address that initiated the transfer.

transferfrom
It transfers tokens from one account to another given a sender, receiver,
and amount.
approve
When used in combination with approval, given a destination address
and an amount, it enables that address to execute numerous transfers up
to that amount from the account that issued the approval.
allowance
Returns the spender's remaining amount and is authorized to withdraw
from the owner given an owner address and a spender address.
 Transfer
An event triggered on successful transfer (call to transfer or
transferFrom) (even for zero-value transfers).
Approval
An approval event is registered when a call to approve is successful.

ERC20 functions that are optional

Along with the mandatory functions stated before, the standard also defines
the following optional functions:
Name
Returns the token's human-readable name (e.g., "US Dollars").
Symbol
Returns a token's human-readable symbol (e.g., "USD").
Decimals
Returns the number of decimals used to split token values.
For instance, if it equals two decimals, the token's value is divided by 100 to
obtain its user representation.
The ERC20 interface defined in Solidity.
This is how an ERC20 interface specification appears in Solidity:

ERC20-compliant data structures

If you examine any ERC20 implementation, you will discover that it uses two
distinct data structures: one to track balances and another to track allowances.
They are implemented via data mapping in Solidity.
The initial data mapping builds an internal database that organizes token
balances by owner. The token contract may then keep track of which parties
own tokens. Each transfer results in reducing funds from one balance and the
addition of funds to another.

The second data structure is an allowances data map.

As we shall see in the next section, an ERC20 token owner can delegate
authority to a spender, enabling them to spend a certain amount (allowance)
from the owner's balance.
Allowances are managed by the ERC20 contract using a two-dimensional
mapping, with the primary key being the token owner's address, which is
mapped to a spender address and an allowance amount.

ERC20 workflows: “transfer” and “approve & transferFrom”

ERC20 is capable of supporting two separate processes.
The first is a straightforward workflow that utilizes the transfer
function.
This is the workflow through which wallets transfer tokens to other wallets.
The vast majority of token transactions occur during the transfer workflow.
The transferred contract is quite simple to execute.
If Alice intends to give Bob ten tokens, her wallet launches a transaction to
the address of the token contract, running the transfer function with Bob's
address and ten as inputs.
The token contract deducts ten dollars from Alice's balance (–10) and adds
ten dollars to Bob's balance (+10), triggering a transfer event.
The second workflow consists of two transactions: authorize and
transferFrom.
A token owner can assign control to another address using this workflow.
It is most frequently used to delegate control over token distribution to a
contract, although exchanges can also utilize it. For instance, if a corporation
wants to sell tokens during an initial coin offering (ICO), they can authorize a
crowdsale contract address to release a certain number of tokens. The
crowdsale contract can then transfer the balance of the token contract owner
to each token buyer.
ICOs
Initial Coin Offerings (ICOs) are a sort of crowdfunding in which businesses
and organizations raise money via the sale of tokens. The term originates
from the phrase "initial public offering," which refers to the procedure
through which a public firm sells shares to investors on a stock market.
Compared to the highly controlled initial public offering (IPO) markets, ICOs
are unregulated, worldwide, and anarchic.
The examples and explanations of ICOs in this book are not intended to
endorse this fundraising method.
Two transactions are required to complete the approve and transfer workflow.
Consider Alice's desire to approve the AliceICO contract to sell 50% of all
AliceCoin tokens to purchasers Bob and Charlie.
Alice uses the AliceCoin ERC20 contract to send AliceCoin to her address.
The AliceICO contract is then launched, which allows for the sale of tokens
in exchange for ether. Alice then initiates the workflow for approval and
transfer.
She sends a transaction to the AliceCoin contract, indicating that it has been
authorized and including the AliceICO contract's address and 50% of the total
supply as arguments.
This initiates the approval event. The AliceICO contract now can sell
AliceCoin and must refund some AliceCoin to Bob when it gets ether from
Bob. The AliceICO contract includes an exchange rate between AliceCoin
and ether.
Alice's exchange rate when she formed the AliceICO contract dictates how
many tokens Bob receives in return for the ether contributed to the AliceICO
contract.
When the AliceICO contract calls the AliceCoin transferFrom function, it
sets Alice's address as the sender and Bob's address as the receiver. It then
uses the exchange rate to determine the number of AliceCoin tokens to
transfer to Bob in the value field.
By moving the balance from Alice's address to Bob's address, the AliceCoin
contract initiates a transfer event. The AliceICO contract may be invoked
indefinitely many times if Alice's approval limit is not exceeded. The
AliceICO contract can keep track of how many AliceCoin tokens it may sell
by using the allowance method.
Issues associated with ERC20 Tokens
The adoption of the ERC20 token standard has been extremely phenomenal.
Thousands of tokens have been issued to test new features and collect
revenue via different "crowdfunding" auctions and initial coin offerings
(ICOs). However, as with the issue of sending tokens to contract addresses,
there are a few possible stumbling blocks.
One of the subtler difficulties with ERC20 tokens is that they emphasize the
distinctions between tokens and ether. When ether is transferred via a
transaction with a recipient address as its destination, token transfers occur
within the particular token contract state and have the token contract as their
destination, not the receiver's address. The token contract maintains balances
and broadcasts events. During a token transfer, no transaction is issued to the
token recipient. Rather, the recipient's address is added to a map included
within the token contract.
A transaction that transfers ether to an address modifies the status of the
address. A transaction that transfers a token to an address does not affect the
recipient address. Even if a wallet supports ERC20 tokens, it will be unaware
of a token balance unless the user specifically adds a token contract to
"monitor." Certain wallets monitor the most popular token contracts for
balances held by addresses under their control, although this is only true for a
tiny portion of extant ERC20 contracts.
Indeed, it is improbable that a user would choose to maintain track of the
balances of all potential ERC20 token contracts. Numerous ERC20 tokens
are more akin to email spam than to functional tokens. To entice users, they
automatically create balances for recently active accounts. If you have an
Ethereum address with a long history of activity, especially one formed
during the pre-sale, it will be brimming with "junk" tokens that emerged out
of nowhere. Of course, the address is not filled with tokens; the address is
included within the token contracts.
These balances are only viewable if the block explorer or wallet used to see
your address monitors the token contracts. Tokens do not act like ether. The
send function transfers ether to any contract's payment function or externally
owned address. Tokens are transferred using the Transferor, approve &
transfer. Functions exclusive to the ERC20 contract and do not activate any
payable functions in the recipient contract (at least in ERC20).
While tokens are designed to operate similarly to cryptocurrencies such as
ether, several distinctions remove that illusion.
Consider another example.
You must first pay gas using ether to transfer or utilize ether or any Ethereum
contract. Additionally, ether is required to send tokens. A token cannot be
used to pay for the gas associated with a transaction, and the token contract
cannot pay for the gas for you. This may change in the far future, but it can
result in some unusual user experiences in the meanwhile.
Assume you are converting some bitcoin to a token via an exchange like
ShapeShift. The token is "received" in a wallet, which manages the token's
contract and displays your balance. It looks to be one of your wallets with
other cryptocurrencies. When you attempt to transmit the token, your wallet
will inform you that the transaction requires ether. You may be puzzled that
you did not require ether to obtain the token. Perhaps you lack ether.
Perhaps you were unaware that the token was an Ethereum-based ERC20
token; perhaps you imagined it was a coin with its blockchain. The illusion
has just been shattered. Several of these issues are specific to ERC20 tokens.
Others are broader concerns about Ethereum's abstraction and interface
boundaries.
Some of these issues can be resolved by altering the token interface. In
contrast, others may need modifications to Ethereum's basic architecture
(such as distinguishing between EOAs and contracts and between
transactions and messages).
Certain problems may not be precisely "solvable," necessitating the use of
user interface design to obscure the subtleties and maintain a uniform user
experience regardless of the underlying disparities.
6.3 Launching Our Own ERC20 Token

Our Own ERC20 Token Is Being Launched

Let us create and launch our cryptocurrency.
In this example, we will utilize the Truffle framework.
This example assumes that you have previously installed and configured
truffle and are acquainted with its basic functionality (see "Truffle").
Our token will be called the "My Ethereum Token," its symbol will be
"MET."
To begin, create and establish a directory for the Truffle project.
Execute the following four programs and allow the default responses to any
questions:

The directory structure should now look like the following:

To set up your Truffle environment, modify the truffle.js and truffle-config.js

configuration files, or copy them from the source.
If you are using the truffle-config.js example, add a file.env in the METoken
directory that includes your test keys for implementation and testing on
public Ethereum test platforms like Ropsten and Kovan.
Exporting your test network's private key is possible using MetaMask.

For our scenario, we will use the OpenZeppelin framework, which has many
critical security tests and is extensible:

The package openzeppelin-solidity will update roughly 250 components in

the node modules directory.
Although the OpenZeppelin library provides significantly more than most
ERC20 tokens, we will utilize a subset of it.
Now, let us build the contract for our token.
Make a new file named METOKEN.sol and put the GitHub sample code
inside.
Because our contract, presented in Example 10-1, derives all of its features
from the OpenZeppelin package, it is straightforward.
A Solidity contract that implements an ERC20 token is METoken.sol.

The optional variables title, symbols, and decimals are defined in this section.
Additionally, we establish an initialsupply variable with a value of 2.1 billion
tokens and subdivide it into two decimal places for a total of 2.1 billion units.
In the contract's activation (constructor) function, we adjust the totalSupply to
match the initialsupply and assign the full initialsupply to the sum of the
account (msg.sender) used to build the METOKEN contract.
We are now using truffle to build the METOKEN code.

As can be seen, truffle includes and builds the OpenZeppelin libraries'

dependencies.
Let us begin by developing a migration script for the METOKEN contract's
deployment.
Create a new file named 2 deploy contracts.js in the METOKEN/migrations
subfolder.
Take the following code from the sample provided in the GitHub repository:

Let us begin by creating a local blockchain to verify everything before

deploying to any of the Ethereum test channels.
Initiate the ganache database from the command line using ganache-cli or via
the user - interface with the ganache-cli command.
Once ganache is operational, we can verify that everything is working well
using our METOKEN contract:
As seen in METoken deployment on ganache, our deployment should create
four new transactions on the ganache console.
METoken interaction through the Truffle console
We can communicate with our contract on the ganache blockchain using the
Truffle console. This interactive JavaScript environment allows access to the
Truffle environment and the blockchain through web3. In this instance, we
will link the Truffle console to the ganache blockchain as follows:

The truffle(ganache)> prompt indicates that we have connected to the

ganache blockchain and are prepared to issue commands. Because the Truffle
console supports all truffle commands, we can build and migrate directly
from it. Given that we have previously executed those instructions, let us
move on. Within the Truffle environment, the METoken contract resides as a
JavaScript object. At the prompt, type **METoken** to dump the complete
contract definition:
Additionally, the METoken object exposes various characteristics, including
the contract's address (as deployed by the migrate command):

To communicate with the deployed contract, we must make an asynchronous

call using a JavaScript "promise." We get the contract object using the
deployed function and then call the totalSupply method:

Following that, let us verify our METoken balance and transfer some
METoken to some other address using the accounts generated by ganache. To
begin, let us obtain the account addresses:

The accounts list now includes all of the ganache's accounts, with account[0]
being the account that deployed the METoken contract. It should have a
METoken balance since our METoken constructor distributes the whole
token supply to the address that generated it. Let us verify:
Finally, use the contract's transfer function to send 1000.00 METoken from
account[0] to account[1].

As you can see, account[0] now has 20,999,000 MET, whereas account[1]
only has 1,000 MET.

Switching to the ganache graphical user interface, as seen in METoken

transfer on ganache, reveals the transaction that invoked the transfer function.

Using ERC20 tokens to send funds to contract addresses

So far, we have created an ERC20 token and moved several tokens across
accounts. All accounts used in these demos are externally owned, which
means they are managed by a private key rather than a contract. What
happens if we send MET to an address specified in the contract? Let us
ascertain!
To begin, let us create another contract and deploy it to our test environment.
In this example, we will utilize our first contract, Faucet.sol. Let us copy it to
the contacts directory of the METoken project. Our directory should seem as
follows:

Additionally, we will add a migration to allow Faucet to be deployed

independently of METoken:

Let us begin by compiling and migrating the contracts directly from the
Truffle console:
Great. Now, let us transfer a little amount of MET to the Faucet contract:

Accepted, 1,000 MET have been transferred to the Faucet contract. How do
we now get those tokens?
Remember, Faucet.
Sol is a rather straightforward contract. It has a single function, withdraws,
used to withdraw ether. It lacks a withdrawal option for MET or any other
ERC20 token. If we use it to withdraw, it will attempt to transmit ether but
fail due to the Faucet's lack of ether balance.
The METoken contract knows that Faucet has a balance, but it cannot
transfer that amount until it gets a transfer call from the contract's address.
We need to invoke the transfer method in METoken from the Faucet contract
somehow.
If you are unsure what to do next, refrain. There is no way to resolve this
issue. The MET sent to Faucet is permanently stuck. Only the Faucet contract
can transfer it, and the Faucet contract lacks the code necessary to invoke an
ERC20 token contract's transfer function.
Perhaps you foresaw this issue. Almost certainly, you did not. Indeed, neither
did hundreds of Ethereum users who transferred different tokens mistakenly
to contracts that lacked ERC20 functionality. According to some estimations,
tokens worth over USD 2.5 billion (at the time of writing) have been "stuck"
in this manner and are now permanently gone.
One possibility for ERC20 tokens to lose their tokens mistakenly during a
transfer is when they try to move to exchange or another service. They copy
an Ethereum address from an exchange's website, mistakenly believing that
they may transfer tokens to it directly. On the other hand, numerous
exchanges advertise receiving addresses that are genuine contracts! These
contracts are designed to accept only ether, not ERC20 tokens, and often
sweep all monies received to "cold storage" or another controlled wallet.
Despite several cautions to "do not transfer tokens to this address," many
tokens are lost in this manner.

Demonstrating the workflow "approve & transferFrom"

Our Faucet contract was unable to process ERC20 tokens. Using the transfer
function to send tokens to it resulted in the loss of those tokens. Let us now
rebuild the contract to support ERC20 tokens. We will convert it into a faucet
that will provide MET to everyone who requests it.
We will create a clone of the truffle project directory (named METoken
METFaucet), start truffle and npm, install the OpenZeppelin dependencies,
and copy the METoken.sol contract in this example. See our first example,
Launching Our Own ERC20 Token, for complete steps.
METFaucet.Sol is our new faucet contract, and it will resemble METFaucet.

We have modified the simple Faucet example quite a bit. METFaucet will
need two more variables due to its usage of the transferFrom function in
METoken. One will include the address of the METoken contract that has
been deployed. The other will have the owner of the MET's address, who will
allow faucet withdrawals. METFaucet will invoke METoken.transferFrom
and order it to transfer MET from the owner to the address associated with
the faucet withdrawal request.
These two variables are declared here:

Since our faucet must be initialized with the necessary METoken and
METOwner addresses, we must define a custom constructor:

The next modification will be to the withdrawal feature. Rather of calling

transfer, METFaucet makes advantage of METoken's transferFrom function
to request that MET be sent to the faucet recipient:

Finally, since our faucet is no longer delivering ether, we should probably

prohibit anybody from sending ether to METFaucet, as we do not want it to
get stuck. We modify the fallback payable method to refuse to receive ether,
reverting any incoming payments using the reverse function:

After completing the METFaucet.sol code, we will need to alter the migration
script to deploy it. This migration script will be a little more involved since
METFaucet is dependent on the METoken address. We will utilize a
JavaScript promise to deploy the two contracts sequentially. Create the
following file: 2 deploy contracts.js

Now that everything is configured, we can test it in the Truffle console. To

begin, we deploy the contracts through migrating. When METoken is
deployed, it will assign all MET to the web3.eth.accounts[0] account that
generated it. Then, we use METoken's approve function to provide
METFaucet permission to transmit up to 1,000 MET on behalf of
web3.eth.accounts[0]. Finally, we call METFaucet.remove from
web3.eth.accounts[1] to attempt to withdraw ten MET. The console
instructions are as follows:
The results show that we can utilize the approve & transferFrom procedure to
authorize the transfer of tokens specified in one contract to another. ERC20
tokens may be used in EOAs and other contracts if utilized appropriately.
However, properly handling ERC20 tokens is shifted to the user interface. If
a user transfers ERC20 tokens to a contract address that is not prepared to
handle ERC20 tokens, the tokens are lost.
6.4 The ERC721 Non-Fungible Tokens (NFT) Standard

All of the token standards examined so far are fungible, implying that token
units are interchangeable. The ERC20 token standard tracks just the final
balance of each account and does not track (explicitly) the origin of every
token. ERC721 is a standard for non-fungible tokens, commonly referred to
as deeds.
According to the Oxford Dictionary, a deed is a legally binding document
that has been signed and delivered, typically relating to property ownership
or legal rights. The term "deed" is used to represent "property ownership,"
even though they are not yet considered "legal papers" in any state.
Legal ownership based on digital signatures on a blockchain network is likely
to be recognized legally at some time in the future. Tokens that are not
fungible are used to track ownership of one-of-a-kind items. The thing
possessed can be a digital item, such as an in-game item or digital collectable,
or a physical item, such as a house, a car, or an artwork, the ownership of
which is tracked by a token. Deeds can also represent loans (debt), liens,
easements, and other objects with a negative value.
The ERC721 standard imposes no constraints or expectations on the nature of
the item whose ownership is tracked by a deed. It simply requires to be
uniquely recognized, which is achieved via a 256-bit identification in this
standard.
The information and discussion of the standard are maintained in two
locations on GitHub:
Initial proposition
Continued discussion
To see the essential distinction between ERC20 and ERC721, examine the
ERC721 internal data structure:

ERC721 keeps track of each deed ID and who owns it, in contrast to ERC20,
which keeps track of each owner's balances, with the owner serving as the
main key for the mapping.
All of the non-fungible token's attributes come from this basic distinction.
ERC721's contract interface standard is as follows:

Additionally, ERC721 supports two optional interfaces: one for metadata

management and another for deed and owner enumeration.

The ERC721 optional interface for metadata is:

The ERC721 optional interface for enumeration is:

6.5 Some More Insight into NFTs

We are in the wild west of NFTs, where practically anything is permissible.

On NFT markets, digital art, songs, jokes, recipes, and even entire enterprises
are now for sale. At the moment, there are minimal constraints on the type of
content that may be "tokenized" and converted into an NFT.
Because the technology is still in its infancy, this is an excellent opportunity
to explore with the medium for your own work, particularly as the market
and demand for digital art continue to increase. A self-evident guideline is to
avoid converting copyrighted content or assets into NFTs.
What am I going to need to get started producing NFTs?
You do not need substantial expertise of crypto to construct an NFT, but a
few tools, such as a crypto wallet and Ethereum, are necessary to get started.
If these terms are unfamiliar to you, that is acceptable. You can configure
anything from your phone in a few minutes.
In this part, I will walk you through the process of creating a crypto wallet,
purchasing Ethereum, and connecting your wallet to an NFT marketplace.
Create an Ethereum Wallet
Acquire a small quantity of Ethereum
Connect your wallet to a NFT marketplace.
The First Step is to Create an Ethereum Wallet.
The first step on your NFT journey is to construct a digital wallet to securely
store the crypto money needed to purchase, sell, and manufacture NFTs.
Additionally, the wallet enables secure sign-in and account creation on NFT
markets.
There are hundreds of platforms that offer free cryptocurrency wallets, and
each of the solutions listed here is guaranteed to operate with the majority of
significant NFT marketplaces and blockchain applications.
Coinbase Wallet
Coinbase is an excellent wallet for beginners.

Coinbase is one of the major cryptocurrency exchanges available today, and

its wallet provides an excellent introduction to the world of virtual money for
individuals who are unfamiliar with it. Coinbase was the first platform I used
to purchase cryptocurrencies, and I can attest to how straightforward it is to
get started here.
MetaMask

Metamask is a cryptocurrency wallet that is accessible as a browser extension

and a mobile application. Metamask is a wallet that is used by over one
million crypto enthusiasts worldwide. The wallet integrates seamlessly with
the majority of crypto applications and NFT markets, and is accessible on
iOS and Android as a browser extension and mobile app. Additionally,
Metamask streamlines the process of acquiring crypto, eliminating the need
to utilize other apps.
Rainbow

Currently, the Rainbow wallet is accessible for iOS and Android.

Rainbow is a very new wallet designed specifically for Ethereum assets. This
means that you cannot keep bitcoin here, but this will not be an issue for
NFTs. I adore the elegant style of this wallet and the ease with which you can
display your NFT collection. Rainbow allows purchasing Ethereum on iOS as
simple as using Apple Pay.
Step 2: Purchase a small quantity of Ethereum
There are expenses connected with converting your content to an NFT on the
majority of big digital art markets and you will need to acquire some
Ethereum (ETH) to pay the price of building your first NFT.

Ethereum's price varies minute by minute and might be difficult to follow.

The simplest method to get started is to select a dollar amount that you are
prepared to invest and then purchase that amount of Ethereum. Both the
Rainbow and MetaMask wallets discussed previously enable you to purchase
crypto directly from your wallet. Coinbase Wallet requires you to acquire
cryptocurrency from a different exchange and transfer it to your wallet.
Step 3: Link your wallet to an NFT Marketplace
After you have configured your wallet and acquired some ETH, it is time to
find a marketplace on which to create an NFT and advertise your work. For
those new to NFTs, I would recommend starting with Rarible, since the site
had the simplest and easiest setup of any I tested.
To link your wallet to Rarible, navigate to the site and click the Connect icon
in the upper right corner.
From the first minute you visit Rarible, the connect button is displayed.

Select the WalletConnect option on the next page if you are using the
Rainbow or Metamask wallets. If you are using Coinbase Wallet, click on
WalletLink. Numerous other wallets are also supported by these connection
options. Therefore, it is worthwhile to investigate each to see whether your
favorite wallet is compatible.
Your connection method is determined by the wallet you are using.
Whichever wallet you are using; the following step is nearly same. Following
your selection of a connecting method, a QR code will show on the screen.
Scan this code with your wallet app. Once the code has been read, indicate
that you want to link your wallet to Rarible.
To get started with Rarible, scan the QR code in your wallet app and press
connect.
This is a secure connection, and Rarible will always need confirmation of
purchases via your wallet app before proceeding. Your Rarible account is
quickly created after linking a wallet. You now own all of the necessary
components for creating, minting, and selling your first NFT.
Where can I sell NFTs?
New NFT markets are springing up on a regular basis as the technology's
popularity grows. In this part, we will go through a few of the most popular
online marketplaces and analyze how each one differs from the others, so you
can make a better educated choice on where to offer your first NFT.
Zora

Zora is a marketplace founded on the principle that content creators should

reclaim ownership of their work from big platforms. Creators can mint
photos, movies, audio files, and even plain text documents using Zora. The
marketplace is just launched, and it is now available to all creators. Zora is
already cooperating with prominent music artists like Toro y Moi, Mura
Masa, and Yaeji, and is promoting itself as one of the trendiest locations for
NFTs. We have also included a link to our own Kapwing Watermark.
Rarible

Rarible is one of the most user-friendly platforms for creators and collectors
interested in NFTs. This was the first site I used when I originally began, and
the platform makes submitting content and creating an NFT as easy as
sharing a YouTube video. In a market dominated by invite-only platforms,
Rarible is one of the few NFT platforms that enable new creators to begin
selling their work as soon as they join up. This openness results in a jumble
of content on the site, and the service's monitoring of copyrighted and
objectionable uploads should be better. Work on the site sells for a broad
range of prices, from a few dollars to tens of thousands of dollars.
SuperRare

The NFT marketplace for digital artists is SuperRare's claim to fame. Memes,
text postings, and basic sound effects are not for sale here. SuperRare's
portfolio is carefully managed, and the company has taken a deliberate
approach to onboarding new creators. As a consequence, viewing SuperRare
is like entering an exclusive digital gallery. The site has a wonderful
collection of NFTs that represent hundreds of hours of work by artists. Prices
may be rather high, and new creators are only approved after submitting an
application.
Nifty Gateway

Nifty Gateway is a carefully selected NFT marketplace that specializes on

digital treasures. Nifty collaborates with high-profile artists and musicians
such as Grimes and Justin Roiland to create limited-edition NFT collections.
Nifty Gateway is one of the few prominent NFT sites that take credit cards,
which sets it apart from the rest of the list. Nifty's art is often very pricey, and
new artists must apply before they can submit work on the site, similar to
SuperRare.
OpenSea
OpenSea has been one of the first NFT markets to be launched, and it offers a
large library of content at a variety of rates. The site sells a wide range of
NFTs, from digital art to 3D souvenirs and video game props. OpenSea is
particularly welcoming to newcomers, making it simple to join. The site is
quite user-friendly for people new to NFTs, and it features one of the greatest
browsing experiences I have seen from a large marketplace. OpenSea is also
the first NFT marketplace to publicly test a free creator creation method.
6.6 Uses of Token Standards

We examined a handful of widely used token contract standards in this

chapter. What are these standards intended to accomplish? Should you abide
by these rules? What are you going to do with them? Should you exceed
these bare minimums? Which standards are you need to adhere to? Following
that, we will examine some of those points.
How Are Token Requirements Defined?
What is their objective?
Token specifications are the very minimal standards for implementation. That
is, to be compatible with, say, ERC20, you must at the very least implement
the ERC20 standard's functions and behaviour. Additionally, you may
enhance the functionality by implementing non-standard functions. These
standards' principal objective is to facilitate contract interoperability.
Consequently, all wallets, exchanges, user interfaces, and other infrastructure
components may predictably be with any contract that complies with the
standard.
In other words, if you create an ERC20 contract, all existing wallet users will
be able to trade your token without requiring them to upgrade their wallets or
exert any effort on your behalf. The rules are descriptive rather than
prescriptive.
It is entirely up to you to implement those functions; the contract's internal
workings are unconnected to the standard. They contain certain functional
requirements that regulate behaviour under specific circumstances, but they
do not describe how they should be implemented. The behaviour of a transfer
function when its value is set to zero illustrates this.
Should These Criteria Be Used?
With all of these standards in place, developers must choose between
adhering to them and innovating outside the limits they impose. This is a
challenging problem to resolve. Standards inherently constrain your freedom
to create by imposing a constricting "rut" on which you must adhere.
On the other hand, the fundamental standards have evolved through
experience with hundreds of applications and typically meet most use cases.
This procedure also considers a far wider issue: the value of interoperability
and widespread adoption. By implementing an established standard, you
acquire the value of all the systems compatible with that standard.
Suppose you want to vary from the standard. In that case, you must factor in
the expense of constructing all of the necessary support infrastructures
yourself or convincing others to support your implementation as a new
standard.
The "Not Invented Here" mentality, incompatible with open-source culture,
refers to the propensity to build your path while disregarding established
standards. On the other hand, creativity and development are contingent upon
striking new ground.
Maturity brings with it a sense of security.
Apart from the standard, there is also an implementation alternative. When
you choose to utilize a standard such as ERC20, you must next choose how to
implement a compliant design. Various widely used "reference"
implementations are available, or you may develop your own from scratch.
Once again, this decision creates a problem with grave security
consequences. Existing implementations have been "battle-tested" in the
field.
While their security cannot be proven, several underpin tokens are valued
millions of dollars. They have been frequently and vehemently assaulted.
There have been no notable issues found so far. Writing your contract is
challenging due to the myriad of subtle ways a contract can be violated. It is
considerably safer to stick with a tried-and-true implementation.
In our examples, we utilized the OpenZeppelin implementation of the ERC20
standard since it is designed keeping security in mind from the start.
Additionally, if you utilize an existing implementation, you may expand it.
Once again, go cautiously with this inclination. Complexity thwarts security.
Each line of the code you write expands the attack surface of your contract
and may represent an exploitable vulnerability. You may not detect an issue
unless you exert considerable effort.
Standard Expansions for the Token Interface
The token standards discussed in this chapter provide a simple user interface
with limited capability. Numerous projects have enhanced their
implementations to meet the features required by their applications.
Among these features are the following:

Ownership authority
The ability to endow single addresses or groups of addresses with
additional capabilities (i.e., multisignature schemes), such as
blacklisting, whitelisting, minting, and recovery.
Burning
The capacity to destroy ("burn") tokens on purpose, either by moving
them to an unspendable address or erasing a balance and lowering
supply.
Minting
The ability to increase the overall quantity of tokens at a specified pace
or using the creator's "fiat."
Crowdfunding
The ability to sell tokens by auction, market sale, or reverse auction,
among other methods.
Recovery through backdoors
Functions to reverse transfers, recover funds, or deactivate the token
that can be activated by a certain address or group of addresses.
Whitelisting
The ability to restrict activities to certain addresses (for example, token
transfers). Most frequently, it is used to provide tokens to "accredited
investors" after being verified following local regulations. Typically,
there is a mechanism for maintaining the whitelist.
Blacklisting
 The ability to restrict token transfers by specifying particular addresses
to be excluded. Typically, a method is provided for updating the
blacklist.
These numerous functions are implemented in reference libraries, such
as the OpenZeppelin library. Several of them are case–sensitive and
appear in only a few tokens. There are currently no widely agreed
standards for these functions' interfaces. As previously stated, the
option to extend a token standard's capabilities constitutes a trade-off
between innovation and risk, as well as interoperability and security.
Tokens and Initial Coin Offerings
Tokens have become an increasingly important component of the Ethereum
ecosystem. They are almost certain to become a necessary component of all
smart contract platforms, including Ethereum. However, the relevance and
potential influence of these standards should not be seen as an endorsement
of present token offers.
As with early-stage technology, the initial wave of goods and firms will
almost always fail, and some will fail miserably.
Numerous tokens accessible on Ethereum are glaringly evident frauds,
pyramid schemes, and money grabs. The difficulty is to discern between the
technology's long-term vision and influence, which are almost certain to be
massive, and the short-term bubble of token ICOs, which is plagued with
deception. Token standards and the platform will very certainly survive the
current token bubble and then alter the course of human history.
In Ethereum, tokens are a strong notion that may serve as the foundation for
many significant decentralized applications.
Conclusion

We appreciate your perseverance in reading this book to the finish; we hope

it was educational and equipped you with the skills necessary to accomplish
your objectives, whatever they may be. Simply finishing this book does not
mean that you have mastered the subject; expanding your horizons is the only
way to master the blockchain.
A distributed ledger enables cryptocurrencies to be audited regularly by an
independent system known as the blockchain. The blockchain's concept is to
use the collective intelligence of the population to verify and archive
automatically. These nodes serve as the backbone of the blockchain network
and provide a critical function.
Blockchain technology is still in its infancy. There is still a long way to go
before we see the true power of the blockchain. Still, if the beginning is any
indication, it is safe to say that the short-term benefits of incorporating the
blockchain into a variety of other distributed technologies would be
enormous.
Cryptocurrency has a skeptical reputation among people who do not
understand it and others who see risk in it—whether actual or perceived.
They frequently classify Bitcoin and the blockchain as illegal activities. I do
not believe that for a moment. While privacy is the core of democracy, it has
been gradually undermined in the name of security, and where have we ended
up? Due to events such as advanced psychographic manipulation on social
media and even large-scale surveillance by the powers that be, the blockchain
has become the backbone of various diverse technologies; even IBM has
begun to invest heavily in it. Cloud storage companies are looking at
blockchain technologies to perfect distributed storage that is virtually
impossible to destroy or hack.
The ideas are endless; consider a business combining the usefulness of
distributed file storage with the adaptability of cryptocurrency to create a
token. I bring this up to demonstrate how different blockchains may be.
The system's nodes form the blockchain, and each node associated
contributes a fraction of its hard drive to the network. As a result, they keep
some of their material on the network, secured by a blockchain. The
blockchain taxes those who store data and then encrypts, splits, and
distributes that data around the network. When a user wishes to retrieve it, he
enters his private key and gains access to all his data, which is returned to
him using BitTorrent technology.
To utilize this service, data must first acquire a cryptocurrency or token (such
as Bitcoin) and then pay the service regularly with that token. Each time his
hard drive space is utilized, the person who provides it receives a percentage
of the revenue. The user automatically depletes his coin reserve as it is sent to
the blockchain administrator and the nodes that store the data.
The money generated by the nodes is almost entirely automated and
autonomous. They only need to keep their computer powered on, and the
coin they pay for storage grows over time.
This example has a dual purpose. The first is to demonstrate the scalability
and nature of blockchains; the second is to showcase the future wave of
distributed applications created on top of blockchains and will operate in
tandem with the token and coin markets.
The more the coin and token markets grow, the more Bitcoin advances. It
appears that Bitcoin is the entrance point for many other cryptocurrencies,
and the exchange market for these tokens and coins has grown extremely
robust and shows no signs of slowing down.
Your interest in the blockchain, Bitcoin and Ethereum is likely based on
sound intuition and should be fostered. You should take an early interest in
this since it marks the beginning of a new era of business and money.
There are a few other areas to investigate if you intend to take this business
seriously. You may wish to address certain concerns about cryptocurrency
mining. There is a massive business out there that is still in its infancy. On
the other side, if you are more of a trader and are not as knowledgeable about
the technical parts of things, cryptocurrency trading may be interesting.
Bitcoin trading has a lot of promise since it is a turbulent market. Program
traders thrive in unpredictable markets because gains can be earned in either
direction, and there are numerous arbitrage possibilities.
If mining and trading are not your things, but you work in other technology
areas, you may want to consider an initial coin offering (ICO). Initial Coin
Offerings, or ICOs, are a method of raising funds through the issuance of
crypto-assets.
There are several areas in which you might invest to capitalize on the
potential offered by this new industry of cryptocurrencies. You made an
excellent choice by beginning with this book to understand the blockchain
technology that underpins the crypto-asset.
Blockchains will revolutionize and transform the Internet. The signals are
already in place, and all that is needed is time and ideas flow. The bigger
institutional structures are collapsing in the face of blockchain technology,
and its deployment will be nothing less than revolutionary. By the end of this
century, the transition from centralized to decentralized architectures will be
complete, and it will serve as the backbone of the Internet. It will also be the
preferred method of deploying artificial intelligence, and the combination of
AI, blockchains and the Internet of Things will define the future. Welcome in
a new world!
This is especially true for the blockchain market, as it is a relatively new
technology that is rapidly evolving. Only by developing a lifetime learning
habit you can absorb it and use it to your advantage.
Whatever you do, bear in mind that the market is nearing an inescapable
saturation point, which means that regardless of how you engage with
blockchain technology, you must ensure that you come out on the winning
side.
It is extremely unlikely that you will see another disruptive technology in
your lifetime. With so many technology variants and cryptocurrencies vying
for market share simultaneously, all you need to do is to recognize the
possibility of success to seek it out and reap the associated benefits.
This also implies that there are multiple ways to fail, which means that you
must do your due diligence and never take action without examining all of
your choices first. Bear in mind that investing in blockchain technology is a
long-term endeavor; patience and persistence always pays off.