Peter Kent - Cryptocurrency All-in-One For Dummies

Private networks are shared between trusted parties and may not be viewable to the public. They’re very fast and may have no latency. They also have a low cost to run and can be built in an industrious weekend. Most private networks do not utilize a cryptocurrency and do not have the same immutability and security as decentralized networks. Storage capacity may be unlimited.

Hybrids between these three core types of blockchains seek to find the right balance of security, auditability, scalability, and data storage for applications built on top of them.

Some of the decisions you face while working on a blockchain project within your organization can be difficult and challenging. It pays to take time while making decisions that involve the following:

Uncertainty: Many of the facts around blockchain technology may be unknown and untested.

Complexity: Blockchains have many interrelated factors to consider.

High-risk consequences: The impact of the decision may be significant to your organization.

Alternatives: There may be alternative technologies and types of blockchains, each with its own set of uncertainties and consequences.

Interpersonal issues: You need to understand how blockchain technology could affect different people within your organization.

A decision tree is a useful support tool that can help you uncover consequences, event outcomes, resource costs, and utility of developing a blockchain project.

You can draw decision trees on paper or use a computer application. Here are the steps to create one for uncovering other challenges around your project:

1 Get a large sheet of paper. The more choices you have, and the more complicated the decision, the bigger the sheet of paper you’ll need.

2 Draw a square on the left side of the paper.

3 Write a description of the core goal and criteria for your project in that square.

4 Draw lines to the right of the square for each issue.

5 Write a description of each issue along each line. Assign a probability value to encounter each issue.

6 Brainstorm solutions for each issue.

7 Write a description of each solution along each line.

8 Continue this process until you’ve explored each issue and discovered a possible solution for each one.

Have teammates challenge and review all your issues and solutions before finalizing your decision tree.

At this point, you should have a clear understanding of your goals, obstacles, and what blockchain options you have available.

Here’s a simple road map for building your project:

1 Explain the project to key stakeholders and discuss its key components and foreseen outcomes.

2 Write a project plan.This is a living set of documents that will change over the life of your project.

3 Develop the performance measurements, scope statement, schedule, and cost baselines.

4 Consider creating a risk management plan and a staffing plan.

5 Get buy-in and define roles and responsibilities.

6 Hold a kickoff meeting to begin the project.The meeting should cover the following:Vision for the projectProject strategyProject timelineRoles and responsibilitiesTeam-building activitiesTeam commitmentsHow your team will make decisionsKey metrics the project will be measured against

After you complete your project, you aren’t done! Go back and analyze your successes and failures. Here are some questions to ask yourself:

Are my key stakeholders happy?

Did the project stay on schedule?

If not, what caused it to be delayed?

What did I learn from this project?

What do I wish I had done differently?

Did I actually create new value for my company or save money?

You may want to return to this chapter when you have a deeper knowledge of blockchain technology and you’re developing a plan to build a project.

Chapter 3

IN THIS CHAPTER

Creating and using a Bitcoin and Ethereum wallet

Exchanging Bitcoin for Ether

Creating a blockchain asset

Leasing a blockchain asset

Deploying a private blockchain

Blockchains are very powerful tools and are positioned to change how the world moves money, secures systems, and builds digital identities. If you aren’t a core developer, you probably won’t be doing any in-depth blockchain development in the near future. That said, you still need to understand how blockchains work and what their core limitations are because they’ll be integrated into many everyday online interactions in the near future — from how businesses pay people to how governments know that their systems and data are intact and secure.

In this chapter, you dive right into blockchain technology. You purchase your first cryptocurrency and find out how to exchange it for other currencies. You set up special applications that will give you access to a whole ecosystem of decentralized applications (known as dApps). You also set up a secure environment to use your cryptocurrency, and create and lease out digital blockchain assets through a blockchain game.

This chapter provides you with an understanding of many of the basic functionalities that blockchain technology offers. You also develop a basic understanding of some of the additional security you need to have while working with cryptocurrency. And you begin to establish the basic crypto accounts that you need in later chapters.

The Ethereum blockchain is one of the largest and most powerful blockchains in the world. It was designed to build dApps, which are applications that are built within a trustless, decentralized network. Within the Ethereum network, developers utilize smart contracts to build these applications. Ethereum also utilizes a cryptocurrency called Ether to reward users for providing computing power and creating the trustless system that these smart contracts need in order to execute.

Smart contracts are not really like a typical business contract. Instead, smart contracts are code deployed across a decentralized network. Like a business contract, they have predefined terms. A key difference is that smart contracts are enforced by their blockchain network. They’re an important computing innovation because they allow individuals who don’t know or trust one another to collaborate without fear that the other party won’t perform as outlined by the terms that the two parties have agreed on.

Blockchains that utilize a cryptocurrency can sometimes be called “trustless” systems because the code is enforced by the network (as opposed to a business contract, which is enforced by a court system).