Book Image

Foundations of Blockchain

By : Koshik Raj
Book Image

Foundations of Blockchain

By: Koshik Raj

Overview of this book

Blockchain technology is a combination of three popular concepts: cryptography, peer-to-peer networking, and game theory. This book is for anyone who wants to dive into blockchain from first principles and learn how decentralized applications and cryptocurrencies really work. This book begins with an overview of blockchain technology, including key definitions, its purposes and characteristics, so you can assess the full potential of blockchain. All essential aspects of cryptography are then presented, as the backbone of blockchain. For readers who want to study the underlying algorithms of blockchain, you’ll see Python implementations throughout. You’ll then learn how blockchain architecture can create decentralized applications. You’ll see how blockchain achieves decentralization through peer-to-peer networking, and how a simple blockchain can be built in a P2P network. You’ll learn how these elements can implement a cryptocurrency such as Bitcoin, and the wider applications of blockchain work through smart contracts. Blockchain optimization techniques, and blockchain security strategies are then presented. To complete this foundation, we consider blockchain applications in the financial and non-financial sectors, and also analyze the future of blockchain. A study of blockchain use cases includes supply chains, payment systems, crowdfunding, and DAOs, which rounds out your foundation in blockchain technology.
Table of Contents (14 chapters)

Financial system

Finance has always been one of the biggest use cases of blockchain, dating back to the invention of Bitcoin. Blockchain, at face value, seems to be the best fit for many of the implementations that affect the global economy, whether it's banking, stock exchanges, or payment networks. Yet, in the past, financial systems have been manipulated by centralized authorities, even in the global economy, due to the wide variety of solutions for different financial systems available across the world and the barriers between them; there is a lot of complexity involved.

Banking systems are the largest financial institutions in the world. These banking systems are regulated differently by each nation, and this has resulted in the creation of barriers when it comes to cross-border financial services. As seen in Figure 12.3, a banking transaction between two users, who...