Sidechains: Alpha Sidechain Tutorial

In this tutorial we will take a practical look at sidechains [1]. We will concentrate on the Elements project [2] and its first sidechain known as Alpha . Alpha is a developer sidechain that is pegged to Bitcoin’s testnet [3]. In order to play around with sidechains in general and with Alpha in particular we need to have the mainchain installed on our machine. The mainchain in our case is the bitcoin testnet. Then we will need to install the Alpha sidechain. Let’s proceed. The instructions below are for Linux Ubuntu. Step 1 – Install bitcoind & alphad First we need to get some dependencies:

If you do not have git installed on your machine:

To be organized

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Smart Contracts and Insurance on the Blockchain

Introduction Smart contracts are a new and exciting area in computing science. Their application in finance, gambling, e-commerce, and automation of various tasks that are currently performed semi-manually is very promising. Smart contract are computer scripts (software) that aid in the self-execution and self-enforcement of traditional contracts. For the first time in history money or more precisely digital tokens, like bitcoin, are native to these software contracts, opening up wide areas of possibilities. Having money as a native type available to a computer program is a big deal. It allows the removal of the whole complicated layer of payment processing that current websites, apps, and other software systems have to deal with. One area that might benefit immensely from smart

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Bitcoin & Blockchain Programming #006 – Blockchain Notary System Design

by Albert Szmigielski Notary System Let’s design a notary system. A system that can notarize a document and store it. There are three solutions possible: a decentralized one, that can keep functioning for ever, a centralized system that would depend on a company running it, and a combination of both. We would like the system to be decentralized, so that in the event of our company’s demise the system can keep on functioning. This is a desirable property to have as wills may need to exist for decades before they are executed. In addition to this we will have a centralized component where we keep the information stored for our users. Added functionality like storing authorized users able to access

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Rootstock – Smart Contracts on the Bitcoin Blockchain

by Albert Szmigielski As a concept the Rootstock [1] platform is one of those ideas that once it is proposed it is obvious that it is a great idea. Essentially Rootstock aims to be what Ethereum is, a decentralized, Turing-complete smart contract platform. However, Rootstock aims to utilize the Bitcoin ecosystem rather than creating a new one from scratch. The way this will be accomplished is via the still not fully implemented sidechains technology [2]. This approach presents both advantages, and its own set of challenges. We will briefly outline what the Rootstock platform promises to offer and then will discuss the main points of the proposal. Smart Contract Platform Smart contracts are an active area of interest and research.

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Bitcoin Block Size Debate – Two sides to each coin.

by Albert Szmigielski As Bitcoin, the secure network and bitcoin, the currency gain in popularity, the number of transactions per time frame, and therefore per block increases. There is a limit to the number of transactions that can be included in a block. As the number of transactions is trending upwards, we are approaching the 1MB per block limit. A natural reaction would be to shrug and say: “so what, just raise the limit, problem solved”. However raising the limit has consequences on the economics of the network. Conversely, not changing the limit presents a different set of consequences. What follows is a summary and a review of arguments for and against the block size increase. Those in favour. The

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Case Study: A Rural Farmer in a Less Developed Country

Background and Assumptions The premise of this paper is that I am a farmer living in a rural region of a LDC; Mexico in my case. I have an entrepreneurial streak. My farm is a modestly successful enterprise, and in order to increase my profits, I have plans to expand and purchase 10 hectares of land next to my present farm. Fortunately, I live in a region with cell phone and Internet access, and use a smartphone to help manage my business affairs. I have also had the good fortune to be educated in a MDC institution of higher learning and am fully aware of the potential digital currencies and blockchain technologies can bring to my situation. My parents made

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Bitcoin and blockchains are here to stay.

by Albert Szmigielski This post will argue why Bitcoin, blockchains, and blockchain-based applications are here to stay and thrive. Bitcoin The Bitcoin network and ecosystem is enormous. The computational power of the Bitcoin network is mind boggling (around 600 Petahashes per second as of Dec 2015). The amount of investment in the Bitcoin ecosystem is already in the Billions. Currently Bitcoin’s market cap is only around five billion US dollars, but this is a lot for a peer-to-peer, open source project. Bitcoin also solves a problem that has eluded people for quite some time, how to send money cheaply, efficiently, and quickly? The services that exist now do not have any of these traits. Just ask anyone who routinely sends

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Bitcoin Basics #002 – Blockchain

By Albert Szmigielski This post will attempt to describe in simple terms what a blockchain is. Append only Data Structure A blockchain is a data structure. What is a data structure you ask. Simply put, a container to store some data. What is so special about the blockchain then? The blockchain is an append only data structure, which means we can add to it, but never delete from it. This simple fact opens up vast possibilities. All kinds of record keeping is possible with blockchains, including a ledger of accounts. What about the chain part? Yes, the chain is very important in the blockchain. Data is stored in bunches, just because it is more efficient that way. Those bunches are

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Bitcoin, Blockstream, Sidechains, and Innovation.

Pick any one component of the bitcoin ecosystem and one company that you consider truly innovative in this component. What type(s) of innovation does it offer, e.g. in terms of the 4Ps framework? Would you consider this a disruptive innovation? Justify your answer. Since its inception in 2008 [1] the Bitcoin ecosystem has been slowly expanding. In recent years the expansion has accelerated. Investment in Bitcoin and blockchain related companies reached almost a billion dollars in the last 24 months [2]. Many commentators, speculators, investment professionals, and seasoned entrepreneurs argue that the potential of the blockchain technology may rival that of the Internet [3] [8]. A number of companies have been started whose sole purpose is to provide bitcoin related products

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Blockchain & Investment Opportunities.

  Introduction In short Bitcoin[1] is the first digital, not centralised (ie not issued by any government, and not controlled by any one entity), global, internet-based currency. It is also a payment network, open to use by anyone. By convention we refer to the network as Bitcoin, with an uppercase ‘B’. The unit of account, is referred to as bitcoin with a lower case ‘b’. Blockchain Bitcoin is however, just a first app, built on a new technology that, because of Bitcoin’s success does not get much attention. That technology is called blockchain. A blockchain is an append-only database of records, we can also view it as a chronological order of records. In Bitcoin’s case the blockchain is used to

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Sidechains Explained

Introduction The current major cryptocurrency is Bitcoin[1]. Changes to the Bitcoin protocol have to be conservative and slow so as not to destabilize the network, and thereby diminish its value. This in turn prevents rapid innovation that is prevalent in software development. The original solution to innovate upon Nakamoto’s invention was simply to fork the Bitcoin software, tweak it as desired and release a new system. Namecoin[2] was the first such fork. It introduced features that were not present in Bitcoin, such as an alias system, a .bit top level domain registration and DNS service. Not too long after that developers started releasing Bitcoin-based clones on a regular basis. In late 2013, early 2014 there were upwards of a 100

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Insurance products and the Blockchain

Describe a plausible scenario of the state of the cryptocurrency ecosystem that would allow traditional insurance products to be built/delivered in a decentralized manner. For the first time in history, distributed, decentralized, and autonomous entities are capable of existing and functioning in cyberspace. Blockchain is the underlying technology that makes it possible. In this brief paper we will outline how an insurance operation can utilize blockchains to its advantage. We will also touch on some societal benefits of blockchains in the insurance industry. Furthermore, we will outline a case where an insurance company as a DAC could exist with technology that is currently available (but perhaps is not fully deployed). Blockchains are essentially databases. Insurance companies can utilize them in

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