Daniel Drescher - Blockchain Basics: A Non-Technical Introduction in 25 Steps

Blockchain Basics A Non-Technical Introduction in 25 Steps Daniel Drescher BLOCKCHAIN BASICS A NON-TECHNICAL INTRODUCTIONIN 25 STEPSDaniel DrescherBlockchain Basics: A Non-Technical Introduction in 25 Steps Daniel Drescher Frankfurt am Main, Germany ISBN-13 (pbk): 978-1-4842-2603-2 ISBN-13 (electronic): 978-1-4842-2604-9 DOI 10.1007/978-1-4842-2604-9 Library of Congress Control Number: 2017936232 Copyright 2017 by Daniel Drescher This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Trademarked names, logos, and images may appear in this book. Rather than use a trademark symbol with every occurrence of a trademarked name, logo, or image we use the names, logos, and images only in an editorial fashion and to the benefit of the trademark owner, with no intention of infringement of the trademark. The use in this publication of trade names, trademarks, service marks, and similar terms, even if they are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights. While the advice and information in this book are believed to be true and accurate at the date of publication, neither the authors nor the editors nor the publisher can accept any legal responsibility for any errors or omissions that may be made.

The publisher makes no warranty, express or implied, with respect to the material contained herein. Managing Director: Welmoed Spahr Editorial Director: Todd Green Acquisitions Editor: Susan McDermott Development Editor: Laura Berendson Technical Reviewer: Laurence Kirk Coordinating Editor: Rita Fernando Copy Editor: Mary Bearden Compositor: SPi Global Indexer: SPi Global Artist: SPi Global Distributed to the book trade worldwide by Springer Science+Business Media New York, 233 Spring Street, 6th Floor, New York, NY 10013. Phone 1-800-SPRINGER, fax (201) 348-4505, e-mail press Media, LLC is a California LLC and the sole member (owner) is Springer Science + Business Media Finance Inc (SSBM Finance Inc). SSBM Finance Inc is a Delaware corporation. For information on translations, please e-mit http://www.apress.com/rights-permissions. eBook versions and licenses are also available for most titles. eBook versions and licenses are also available for most titles.

For more information, reference our Print and eBook Bulk Sales web page at http://www.apress.com/bulk-sales. Any source code or other supplementary material referenced by the author in this book is available to readers on GitHub via the books product page, located at www.apress.com/9781484226032. For more detailed information, please visit http://www.apress.com/source-code. Printed on acid-free paper Apress Business: The Unbiased Source of Business Information Apress business books provide essential information and practical advice, each written for practitioners by recognized experts. Busy managers and profes sionals in all areas of the business worldand at all levels of technical sophisticationlook to our books for the actionable ideas and tools they need to solve problems, update and enhance their professional skills, make their work lives easier, and capitalize on opportunity. Whatever the topic on the business spectrumentrepreneurship, finance, sales, marketing, management, regulation, information technology, among oth ersApress has been praised for providing the objective information and unbiased advice you need to excel in your daily work life.

Our authors have no axes to grind; they understand they have one job onlyto deliver up-to-date, accurate information simply, concisely, and with deep insight that addresses the real needs of our readers. It is increasingly hard to find informationwhether in the news media, on the Internet, and now all too often in booksthat is even-handed and has your best interests at heart. We therefore hope that you enjoy this book, which has been carefully crafted to meet our standards of quality and unbiased coverage. We are always interested in your feedback or ideas for new titles. Perhaps youd even like to write a book yourself. The Apress Business Team Contents About the Author vii About the Technical Reviewer ix Introduction xi Stage 1:Terminology and Technical Foundations 1 Step 1:Thinking in Layers and Aspects 3 Step 2:Seeing the Big Picture 9 Step 3:Recognizing the Potential 19 Stage I1: Why the Blockchain Is Needed 27 Step 4:Discovering the Core Problem 29 Step 5:Disambiguating the Term 33 Step 6:Understanding the Nature of Ownership 39 Step 7:Spending Money Twice 49 Stage III: How the Blockchain Works 55 Step 8:Planning the Blockchain 57 Step 9:Documenting Ownership 63 Step 10: Hashing Data 71 Step 11: Hashing in the Real World 81 Step 12: Identifying and Protecting User Accounts 93 Step 13: Authorizing Transactions 103 Step 14: Storing Transaction Data 111 Step 15: Using the Data Store 123 Step 16: Protecting the Data Store 135 Step 17: Distributing the Data Store Among Peers 145 Step 18: Verif ying and Adding Transactions 153 Step 19: Choosing a Transaction History 165 vi ContentsStep 20: Paying for Integrity 183 Step 21: Bringing the Pieces Together 189 Stage IV: Limitations and How to Overcome Them 203 Step 22: Seeing the Limitations 205 Step 23: Reinventing the Blockchain 213 Stage V: Using the Blockchain, Summary, and Outlook 221 Step 24: Using the Blockchain 223 Step 25: Summarizing and Going Further 235 Index 249 About the Author Daniel Drescher is an experienced banking professional who has held positions in electronic security trading in several banks. The Apress Business Team Contents About the Author vii About the Technical Reviewer ix Introduction xi Stage 1:Terminology and Technical Foundations