Blockchain Blockchain Bitcoin is starting to come into its own as a digital currency, but the blockchain technology behind it could prove to be much more significant. This book takes you beyond the currency (“Blockchain 1.0”) and smart contracts (“Blockchain 2.0”) to demonstrate how the blockchain is in position to become the fifth disruptive computing paradigm after mainframes, PCs, the Internet, and mobile/social networking. Author Melanie Swan, Founder of the Institute for Blockchain Studies, explains that the blockchain is essentially a public ledger with potential as a worldwide, decentralized record for the registration, inventory, and transfer of all assets—not just finances, but property and intangible assets such as votes, software, health data, and ideas. Topics include: ■ Concepts, features, and functionality of Bitcoin and the blockchain ■ Using the blockchain for automated tracking of all digital endeavors ■ Enabling censorship-resistant organizational models ■ Creating a decentralized digital repository to verify identity ■ Possibility of cheaper, more efficient services traditionally provided by nations ■ Blockchain for science: making better use of the data-mining network ■ Personal health record storage, including access to one’s own genomic data ■ Open access academic publishing on the blockchain Melanie Swan founded and participated in new markets startups GroupPurchase This book is part of an ongoing O’Reilly series. Mastering Bitcoin: Unlocking and Prosper, and developed virtual world digital asset valuation and accounting Digital Cryptocurrencies introduces Bitcoin and describes the technology principles for Deloitte. She is an instructor behind Bitcoin and the blockchain. Blockchain: Blueprint for a New at Singularity University and an Affiliate Blockchain Economy considers the theoretical, philosophical, and societal impact of Scholar at the Institute for Ethics and cryptocurrencies and blockchain technologies. Emerging Technologies. Swan BLUEPRINT FOR A NEW ECONOMY E-COMMERCE Twitter: @oreillymedia facebook.com/oreilly US $24.99 CAN $28.99 ISBN: 978-1-491-92049-7 Melanie Swan Blockchain Blockchain Bitcoin is starting to come into its own as a digital currency, but the blockchain technology behind it could prove to be much more significant. This book takes you beyond the currency (“Blockchain 1.0”) and smart contracts (“Blockchain 2.0”) to demonstrate how the blockchain is in position to become the fifth disruptive computing paradigm after mainframes, PCs, the Internet, and mobile/social networking. Author Melanie Swan, Founder of the Institute for Blockchain Studies, explains that the blockchain is essentially a public ledger with potential as a worldwide, decentralized record for the registration, inventory, and transfer of all assets—not just finances, but property and intangible assets such as votes, software, health data, and ideas. Topics include: ■ Concepts, features, and functionality of Bitcoin and the blockchain ■ Using the blockchain for automated tracking of all digital endeavors ■ Enabling censorship-resistant organizational models ■ Creating a decentralized digital repository to verify identity ■ Possibility of cheaper, more efficient services traditionally provided by nations ■ Blockchain for science: making better use of the data-mining network ■ Personal health record storage, including access to one’s own genomic data ■ Open access academic publishing on the blockchain Melanie Swan founded and participated in new markets startups GroupPurchase This book is part of an ongoing O’Reilly series. Mastering Bitcoin: Unlocking and Prosper, and developed virtual world digital asset valuation and accounting Digital Cryptocurrencies introduces Bitcoin and describes the technology principles for Deloitte. She is an instructor behind Bitcoin and the blockchain. Blockchain: Blueprint for a New at Singularity University and an Affiliate Blockchain Economy considers the theoretical, philosophical, and societal impact of Scholar at the Institute for Ethics and cryptocurrencies and blockchain technologies. Emerging Technologies. Swan BLUEPRINT FOR A NEW ECONOMY E-COMMERCE Twitter: @oreillymedia facebook.com/oreilly US $24.99 CAN $28.99 ISBN: 978-1-491-92049-7 Melanie Swan Blockchain Blueprint for a New Economy Melanie Swan Blockchain by Melanie Swan Copyright © 2015 Melanie Swan. All rights reserved. Printed in the United States of America. Published by O’Reilly Media, Inc., 1005 Gravenstein Highway North, Sebastopol, CA 95472. O’Reilly books may be purchased for educational, business, or sales promotional use. Online editions are also available for most titles (http://safaribooksonline.com). For more information, contact our corporate/ institutional sales department: 800-998-9938 or [email protected]. Editor: Tim McGovern Indexer: Wendy Catalano Production Editor: Matthew Hacker Interior Designer: David Futato Copyeditor: Rachel Monaghan Cover Designer: Ellie Volckhausen Proofreader: Bob Russell, Octal Publishing, Inc. Illustrator: Rebecca Demarest February 2015: First Edition Revision History for the First Edition 2015-01-22: First Release See http://oreilly.com/catalog/errata.csp?isbn=9781491920497 for release details. The O’Reilly logo is a registered trademark of O’Reilly Media, Inc. Blockchain, the cover image of a Hun‐ garian grey bull, and related trade dress are trademarks of O’Reilly Media, Inc. While the publisher and the author have used good faith efforts to ensure that the information and instructions contained in this work are accurate, the publisher and the author disclaim all responsibility for errors or omissions, including without limitation responsibility for damages resulting from the use of or reliance on this work. Use of the information and instructions contained in this work is at your own risk. If any code samples or other technology this work contains or describes is subject to open source licenses or the intellectual property rights of others, it is your responsibility to ensure that your use thereof complies with such licenses and/or rights. This book is not intended as financial advice. Please consult a qualified professional if you require financial advice. 978-1-491-92049-7 [LSI] Table of Contents Preface. vii 1. Blockchain 1.0: Currency. 1 Technology Stack: Blockchain, Protocol, Currency 1 The Double-Spend and Byzantine Generals’ Computing Problems 2 How a Cryptocurrency Works 3 eWallet Services and Personal Cryptosecurity 3 Merchant Acceptance of Bitcoin 4 Summary: Blockchain 1.0 in Practical Use 5 Relation to Fiat Currency 5 Regulatory Status 6 2. Blockchain 2.0: Contracts. 9 Financial Services 11 Crowdfunding 12 Bitcoin Prediction Markets 13 Smart Property 13 Smart Contracts 16 Blockchain 2.0 Protocol Projects 18 Wallet Development Projects 18 Blockchain Development Platforms and APIs 19 Blockchain Ecosystem: Decentralized Storage, Communication, and Computation 19 Ethereum: Turing-Complete Virtual Machine 21 Counterparty Re-creates Ethereum’s Smart Contract Platform 22 Dapps, DAOs, DACs, and DASs: Increasingly Autonomous Smart Contracts 22 Dapps 23 DAOs and DACs 24 iii DASs and Self-Bootstrapped Organizations 25 Automatic Markets and Tradenets 26 The Blockchain as a Path to Artificial Intelligence 26 3. Blockchain 3.0: Justice Applications Beyond Currency, Economics, and Markets. 27 Blockchain Technology Is a New and Highly Effective Model for Organizing Activity 27 Extensibility of Blockchain Technology Concepts 28 Fundamental Economic Principles: Discovery, Value Attribution, and Exchange 28 Blockchain Technology Could Be Used in the Administration of All Quanta 29 Blockchain Layer Could Facilitate Big Data’s Predictive Task Automation 29 Distributed Censorship-Resistant Organizational Models 30 Namecoin: Decentralized Domain Name System 31 Challenges and Other Decentralized DNS Services 32 Freedom of Speech/Anti-Censorship Applications: Alexandria and Ostel 33 Decentralized DNS Functionality Beyond Free Speech: Digital Identity 33 Digital Identity Verification 34 Blockchain Neutrality 36 Digital Divide of Bitcoin 36 Digital Art: Blockchain Attestation Services (Notary, Intellectual Property Protection) 37 Hashing Plus Timestamping 37 Proof of Existence 38 Virtual Notary, Bitnotar, and Chronobit 40 Monegraph: Online Graphics Protection 41 Digital Asset Proof as an Automated Feature 42 Batched Notary Chains as a Class of Blockchain Infrastructure 42 Personal Thinking Blockchains 43 Blockchain Government 44 Decentralized Governance Services 45 PrecedentCoin: Blockchain Dispute Resolution 48 Liquid Democracy and Random-Sample Elections 49 Random-Sample Elections 50 Futarchy: Two-Step Democracy with Voting + Prediction Markets 51 Societal Maturity Impact of Blockchain Governance 52 4. Blockchain 3.0: Efficiency and Coordination Applications Beyond Currency, Economics, and Markets. 53 Blockchain Science: Gridcoin, Foldingcoin 53 Community Supercomputing 54 Global Public Health: Bitcoin for Contagious Disease Relief 55 iv | Table of Contents Charity Donations and the Blockchain—Sean’s Outpost 55 Blockchain Genomics 55 Blockchain Genomics 2.0: Industrialized All-Human-Scale Sequencing Solution 57 Blockchain Technology as a Universal Order-of-Magnitude Progress Model 58 Genomecoin, GenomicResearchcoin 58 Blockchain Health 59 Healthcoin 59 EMRs on the Blockchain: Personal Health Record Storage 59 Blockchain Health Research Commons 60 Blockchain Health Notary 60 Doctor Vendor RFP Services and Assurance Contracts 61 Virus Bank, Seed Vault Backup 61 Blockchain Learning: