Ethereum - The Insider Guide to Blockchain Technology, Cryptocurrency and Mining Ethereum (2017)

50 Pages·2016·1.03 MB·English

by  Richard Ozer

Ethereum -
The Insider Guide to Blockchain
Technology, Cryptocurrency and
Mining Ethereum

RICHARD OZER
© Copyright 2017 Richard Ozer - All rights reserved.
The contents of this book may not be reproduced, duplicated or transmitted
without direct written permission from the author.
Under no circumstances will any legal responsibility or blame be held against the
publisher for any reparation, damages, or monetary loss due to the information
herein, either directly or indirectly.
Legal Notice:
You cannot amend, distribute, sell, use, quote or paraphrase any part or the content
within this book without the consent of the author.
Disclaimer Notice:
Please note the information contained within this document is for educational and
entertainment purposes only. No warranties of any kind are expressed or implied.
Readers acknowledge that the author is not engaging in the rendering of legal,
financial, medical or professional advice. Please consult a licensed professional
before attempting any techniques outlined in this book.
By reading this document, the reader agrees that under no circumstances are is the
author responsible for any losses, direct or indirect, which are incurred as a result of
the use of information contained within this document, including, but not limited
to, —errors, omissions, or inaccuracies.
ISBN: 1548872199
ISBN-13: 978-1548872199
Other Computer Science Books Written
by Richard Ozer

Cryptocurrency Series
Ethereum: The Insider Guide to Blockchain Technology,
Cryptocurrency and Mining Ethereum
Bitcoin: The Insider Guide to Blockchain Technology, Cryptocurrency
and Mining Bitcoin

Want to keep up-to-date with new releases, special subscriber only
promotions and other news/cool stuff?

Click here to sign up for Richard Ozer’s newsletter.
TABLE OF CONTENTS

Introduction
Chapter 1: A Guide to the Blockchain
Chapter 2: A Guide to Ethereum
Chapter 3: All You Need to Know About Ether
Chapter 4: What is Ethereum Mining?
Chapter 5: Your First Ethereum Smart Contract

Chapter 6: Tomorrow’s Code
Chapter 7: Top Tips for Investing in Cryptocurrencies

Conclusion

Introduction

Although we commonly associate the blockchain technology and
cryptocurrency with Bitcoin, there is far more to it than that.
Blockchain technology has a lot of other practical uses right now, with
much more in the pipeline, all of which go beyond the digital currency.
Nowadays, Bitcoin is just one of hundreds of applications using the
technology.
Until recently, to build a blockchain application, you would have
needed a very complex background in cryptography, coding, math and
you would have needed a lot of resources too. Things have changed and
now using the blockchain is far easier than anyone could have
imagined, with use cases from electronic voting, property and asset
recording to compliance and trading. One of the tools that make all this
possible is Ethereum.
We all call Bitcoin the king of the cryptocurrency world and that makes
Ethereum the queen. In this book, we will be discussing what the
blockchain is before we move on to Ethereum and what it’s all about,
what you can do with it. For now, suffice it to say that the price of
Ethereum is fast rising and it is now becoming one of the most
promising of all the cryptocurrencies. Want to learn more? Read on
and I will tell you all you need to know.
2
Chapter 1: A Guide to the Blockchain

What is this blockchain we keep hearing so much about? Before I go
into too many details, let’s look at a brief example:
Imagine a Google spreadsheet, one that every computer in the world
shares and a spreadsheet that is connected to the internet. Each time
something happens, a transaction, it will be recorded on a separate row
on the spreadsheet.
Anyone who has a computer or a mobile device can log on to the
internet and can see the spreadsheet. They can see every transaction
that happens on the spreadsheet and they can add another transaction
if they want. The only thing they cannot do is make any changes to the
transactions that are already on there.
That is, in essence, the blockchain. Nice and easy, isn’t it? Where the
spreadsheet has the rows, a blockchain has blocks. Each block is a
collection of data and each bit of data is added by the connection of one
block to the next and so on in chronological order, pretty much the
same as a spreadsheet is made up rows that follow one another. These
connected blocks make a chain.
Therefore, the blockchain is a global database, online, that anyone who
has an internet connection can view and use. Because this database
exists on the net, it is classed as decentralized – the ledger or database is
shared between every computer in the world, not just stored in one
specific location with limited access.
This is what makes cryptocurrencies like Bitcoin and Ethereum so
unique.
Bitcoin and the Blockchain
The first application for the blockchain and perhaps the most famous
is Bitcoin, a P2P digital currency. The Bitcoin is created through mining
and is stored on the blockchain. Unlike the physical money we use
today, Bitcoin can be sent to anyone and to anywhere without the need
to go through a bank or a government or any other agency that might
want to interfere and take their cut from you.
The blockchain really doesn’t care whether you are a machine, a
human, even a dog. The security in the blockchain comes from the
verification of each transaction by all the nodes, or computers, that are
4
on the blockchain network and that eliminates the need for all those
expensive intermediaries.
How Does the Blockchain Work and Why Can’t Anyone Hack Into it?
We know what the blockchain is now so let’s look at how they work. I
will stick with using Bitcoin for this because it is one of the easiest and
better-known examples.
In the Bitcoin blockchain, there are a series of 1 MB blocks, each of
which contains P2P transactions. The block is added to the chain every
10 minutes, following verification by the Bitcoin miner network and a
consensus mechanism that is built-in to the system. Each of the entries
within a block is fully secured using cryptographic math, making the
transaction irreversible. The blocks in the chain have the following
features:
Each one is time-stamped, with the date and time
Each one is decentralized and distributed – there are multiple
copies of each block stored in multiple locations
Each one is transparent, which means anyone can see what is on it
Irreversible
When a transaction takes place on the Bitcoin blockchain, it is sent to a
pool that contains transactions not yet verified. These transactions
will then be grouped together in one block, every 10 minutes, and
Bitcoin miners will then work at solving a computational Math
problem, very difficult; when the problem is solved the transactions
are verified and the block is added to the chain.
Because blocks are added regularly, it gets more difficult to reverse any
transaction or to double-spend the Bitcoin used in a transaction. At the
same time, the Bitcoin blockchain is used by many millions of users,
each of which runs the ledger on their own computers – akin to having
millions of copies of the Bitcoin ledger, right from the very first block
ever mined.
These copies all contain the history of every block since Bitcoin started
and this is what makes it so difficult to hack. If that weren’t enough,
each of the transactions is fully secured with cryptographic math. If
anyone were to attempt to change the ledger they would need to be
able to hack into 51% of the network – that means having to hack 51%
of the total computers on the network running that ledger at the same