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2.5 Introducing the Tools (Short Overview) We Discussed the Field, the Positions in the Field and the Different Players That Are Active in the Game

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2.5 Introducing the Tools (Short Overview) We Discussed the Field, the Positions in the Field and the Different Players That Are Active in the Game 2.5 Introducing the tools (short overview) We discussed the field, the positions in the field and the different players that are active in the game. Let’s now discuss the different tools they can use during the game. An entire overview of the hardware and software can be found here, but here is a quick overview of the most commonly used tools. 1. Keys 2. Wallets 3. Clients 4. Nodes 5. Mining tools 6. Github 7. Internet protocol & communication Side note: in level 3 will we do a deeper dive per tool! 1. Keys Nothing new here: we discussed the keys already so a short recap (details in level 3). We have, as you know, public/private key pairs. The private key is nothing more than a very, very, very (!!!!!!!!!!!!!!!!!!!!) big number (approx. between 1^77 = 2^256 in case of Bitcoin). For competition: current science states that there are between 1078 to 1082 atoms in the known, observable universe. The public key is nothing more than a hash of a hash of a hash, often using different hashing formulas, rendering is virtually impossible to calculate back to the original number. (“chances of succeeding are as big as being hit by a comet within 2 seconds”). But….what do we do with this key pair? Send (private) and receive (public) data transactions (often this data presents some form of value, like a bitcoin). So tool #1 is like the bat you need in baseball to move the ball. No keys = no bat = no game. 2. Wallets In short: the game of blockchain is played with as many keys as you like. Wallets offer the service of keeping your keys together and often ordened. A wallet is software that holds all your addresses. Use it to send bitcoins and manage your keys. Ownership is established through digital keys and digital signatures. These keys are generated locally on Bitcoin end-users’ computers using special software called a Bitcoin client. They can be stored in a file, in a database, or just printed on a piece of paper, but most commonly they are stored in a Bitcoin wallet. The keys within each user’s wallet allow the user to sign transactions, thereby providing cryptographic proof of the ownership of the bitcoins sourced by the transaction. Keep in mind that if you don’t know who generates your private keys, where they are stored, or if someone else has them (as when using a cryptocurrency exchange), they are not actually yours, as seen in the case of MtGox, which discontinued operations in February 2014. “Like email addresses, Bitcoin addresses can be shared with other Bitcoin users who can use them to send bitcoins directly to your wallet. Unlike email addresses, you can create new addresses as often as you like, all of which will direct funds to your wallet. A wallet is simply a collection of addresses and the keys that unlock the funds within. There is practically no limit to the number of addresses a user can create.” (from Antonopoulos, Mastering Bitcoin). Different wallets for different scenario’s, but most importantly: pick your wallet very carefully! In level 3 will we discuss and show you the different types, mainly categorized in hot wallets (created online) and cold wallets (created offline, stored away from internet). 3. Client In short: the client, also known as client software, is software that lets the wallet communicate with the network. In other words: it connects the wallet, that holds your keys, with the miners that records your transactions. Side note: this also enables to participate without becoming a full node (we rely on the client software of the wallet to connect to the SSOT). Check out the work Wikipedia did for us https://en.bitcoin.it/wiki/Clients 4. Nodes Catching up with the digital time (ledger) itself…downloading the bitcoin ledger (blockchain). Bitcoin “client” software - downloads the blockchain (transaction history). You know become a recordkeeper, just another copy of the distributed ledger among “client nodes” But…which blocks does the software pick? How does it (do I) reach consensus with other clients = BGP = longest chain principle Integrity check: do we have the same hash as others nodes?) A node is hardware (or an entity, just like a “miner”). It is quite easy to become a node (instructions), but it does require a lot of bandwidth and memory storage on your hardware device. (Bitcoin, n.d.) 5. Mining hardware The hardware we already discussed. Here is a comprehensive overview of the different kind of software. Students will explain in level 3 how to set up a rig in detail, will be an awesome session! (Beigel, 2019) 6. Github Developers Playground in the blockchain realm in short Github is a platform to co-work on projects together and to share data and code. Nowadays owned by Microsoft, www.github.com. More info on the platform can be found here, explained visually here. Get used to it, we will be working intensively with it in further levels. Here is your pick of tutorials (oooow what beautiful things did the internet for us teachers ). (Wikipedia, 2019) (GitHub, 2016) 7. Internet protocol & communication software Bitcoin uses a simple broadcast network to propagate transactions and blocks. All communications are done over TCP. Bitcoin is fully able to use ports other than 8333 via the -port parameter. IPv6 is supported with Bitcoind/Bitcoin-Qt v0.7. Using bitcoin over tor is also supported. (Bitcointalk, 2012) (Bitcoin, 2019)In general: Source (Bitcoin, 2018) The Transmission Control Protocol is one of the main protocols of the Internet protocol suite. It originated in the initial network implementation in which it complemented the Internet Protocol. Therefore, the entire suite is commonly referred to as TCP/IP. Always wanted to know how the internet works? Click here. Perhaps also interesting: here you can find how your phone communicates. (Engineering, 2019) (Learn Engineering , 2018) Further readings - Overview tools: https://en.bitcoin.it/wiki/Main_Page - Clients explained: https://en.bitcoin.it/wiki/Clients - Instructions on how to become a node: https://bitcoin.org/en/full-node - A comprehensive overview of the different kind of mining software: https://99bitcoins.com/bitcoin-mining/software/ - Github explained https://en.wikipedia.org/wiki/GitHub - Github explained visually: https://www.youtube.com/watch?v=w3jLJU7DT5E - Github Tutorial: https://www.youtube.com/results?search_query=github+website+tut orial - Bitcoin communications: https://bitcointalk.org/index.php?topic=81378.0 - Tor explained: https://en.bitcoin.it/wiki/Tor - Bitcoin Network Tech: https://en.bitcoin.it/wiki/Network - How does the internet work (short?): https://www.youtube.com/watch?v=x3c1ih2NJEg - How does the internet work (Harvard, long): https://www.youtube.com/watch?v=U6hkOAnFJxM&feature=emb_logo - How does your mobile phone works: https://www.youtube.com/watch?v=1JZG9x_VOwA 2.6 I Transactions This session is all about the ball in the game, no ball = no game. With blockchains it is all about sending value from one to another, hard to do without transacting. We first start with a minor overview of transactions and the different accounting ways on how to record them (which we will do an entirely separate course about later, this is like in the crypto flower, an entire field on its own called accounting & auditing). After you have learned the very basic elements we will explain how transactions work on Bitcoin and on Ethereum. This way we have covered most of the different types of transactions being send around the world We of course invite you to dig out other variants as well on your own! So let’s start with the beginning, what were the transactions again? In short. As you know we use transactions to send value from entity a to for example entity b. Value in the digital realm is represented by data (bits & bytes), and blockchain either fully transfers the data (= processed in totality) or nothing at all. If a transaction is deemed valid by the protocol the miners and minters record them as you know now, it they aren’t valid they are ignored (but you are always able to try to send invalid transactions, they just don’t record them). No recording = no transfer. An abbreviation a transactions = “tx”. Where the internet enabled us to transfer information, a blockchain additionally enables us to transfer value. By solving the BGP, we can create a global Single Source of Truth without Trusted Third Parties = creating a digital ledger we can use to send unique pieces of data representing value. It is unique, because we all agree about who owns that data (we will discuss “the how” of this later on). This article explains why bitcoin is an accounting revolution. It portrays a good overview and history of accounting & audit, all the way leading up to lightning network. A must read for our students as you may have seen in the portfolio already ! In short: it explains the migration from single entry accounting to “triple entry accounting”. 2.6.1 Single Entry Single entry accounting = profit & loss recording. Did not work optimally because you could not determine balance positions (needed for example for stock positions etc.). Single-entry accounting is a form of bookkeeping and accounting in which each financial transaction is a single entry in a journal or transaction log (system is called single- entry system, the approach single-entry bookkeeping). Easy approach, does not require training in accounting. A few (small!) businesses choose single-entry accounting instead of the more common double-entry system. With the single-entry approach, each financial event calls for just one accounting system transaction.
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