The Building Blocks of Blockchain A Beginner's Guide 9798458837866

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The Building Blocks of Blockchain A Beginner's Guide
 9798458837866

Table of contents :
Introduction
What is blockchain?
Cryptocurrency
Governance and consensus
Different kinds of attacks
Proofing mechanisms
Scalability
Decentralization
Enterprise blockchain
Immutability and traceability
Smart Contracts and Decentralized Applications
Protocol
Forks, soft and hard
Blockchain glossary
Anonymity, traceability and security
Encryption
Block explorers
Approaches to scalability
Functionality in blockchain
Views on blockchain
A look at some modern protocols
Tokenization
ERC contracts
Blockchain Glossary
Investing and cryptocurrency
Use cases
How Ilcoin is changing blockchain
Conclusion
Bibliography

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Copyright © 2021 by Alex Hickey Cover and Back Design by © Szidonia Lorincz ISBN: 9798458837866 All images are claimed by their original owners, they are subject to free use in accordance with google licensing terms and agreement. For a full list of their website origins please email: [email protected]

Table of Contents Introduction What is blockchain? Cryptocurrency Governance and consensus Different kinds of attacks Proofing mechanisms Scalability Decentralization Enterprise blockchain Immutability and traceability Smart Contracts and Decentralized Applications Protocol Forks, soft and hard Blockchain glossary Anonymity, traceability and security Encryption Block explorers Approaches to scalability Functionality in blockchain Views on blockchain A look at some modern protocols Tokenization ERC contracts Blockchain Glossary Investing and cryptocurrency Use cases How Ilcoin is changing blockchain Conclusion Bibliography

Introduction

In 2009, amidst the chaos of the housing market crash, a revolution in finance was just starting to materialize. An anonymous developer would look past the increasingly corporate world and build on an idea that was truly out of the box. Blockchain was born, a decentralized technology that would move our world in a direction that nobody could have ever imagined before. The brain-child of Satoshi Nakamoto gave people a new option for interacting monetarily, without the use of central banks, big businesses or intermediaries. To this effect, there would be no need for a middleman at all in this new system. Blockchain is a digital technology that uses concepts that have been in people’s minds since the nineties alongside encryption software developed by the U.S National Security Agency. Accounting and encryption come together to create a secure system for exchanging sensitive information within a trustless system. The first and most essential piece of information available on this incredible technology would be value in the form of cryptocurrency. Cryptocurrency is a digital placeholder for currency and works according to its own financial system known as crypto-economics. From a financial experiment that was only useful to early tech savants and perhaps some young enthusiastic college students, Bitcoin would soon go worldwide and ignite an interest in this new technology that would change the world.

Since then, blockchain has thrived, grown and has been developed to a point that some new systems are not even remotely reminiscent of the original model. Functionality and ease of use were the first great barriers that needed to be addressed, this led to scaling the technology for the masses and creating a business-friendly version of it. Things have moved quickly in the past ten years and now we are nearing the day when blockchain technology can be applied in almost any situation involving computer technology. The monetary system that helped people work and spend more privately was getting a professional make-over and is today an industry that runs in the trillions. After Bitcoin’s historic rise into the mainstream in the last few months of 2017, many investors, old and new, were hooked. The value of the coin rose from just over $7,000 per coin to almost $20,000 in a month; things were suddenly very real for the cryptocurrency market. This kind of explosive growth was not a onetime shot, Bitcoin has now seen all-time-highs over $60,000 and left people wandering what this is all about. Millions of people around the world use cryptocurrency and indeed blockchain for their everyday habits. Chic coffee shops around Europe and America accept cryptocurrency as a form of payment and in Asia cryptocurrency ATMS exist for all of your crypto needs. Blockchain systems appear in the biggest names in business today, linking Walmart with Hyperledger, Santander with Ripple and JP Morgan Chase bank with Quorum. It may sound strange to an average person to suddenly find this out, but trust me, it is just as strange to a blockchain enthusiast that this is the case too. Many people associate blockchain with all the things they would like to see in society; better equity among more people, a system where one doesn’t rely on big businesses, and a network which allows people the privacy and security that they yearn for. Blockchain is a revolution in finance because it put money back into the hands of ordinary people, it didn’t abide by the rules that kept the old, tired aristocracy of yesteryear profitable and it created a new generation of investors. The cryptocurrency market is thriving, and with new systems and coins released every year, there is no shortage of interest in all the opportunity. After all, each new blockchain would need to surpass the last and improve on something that is necessary for the community. This is the huge pull for the crypto-investor, understanding what the community wants and being able to identify new tech that can give it to them. The details of how the blockchain work were never a secret, it is difficult to profit off of something if you are only known by an alias after all. Building off of this unique technology was like painting on a blank canvas; there was no limit to what could be done.

In the heat of all of the technological innovation, the Ilcoin network was developed. In 2014, a group of talented developers came together with the intention of joining in the conversation surrounding this new and thrilling industry. In this guide book, we provide simple and meaningful instructions that can teach you in plain English what blockchain really is, how it works on a wider level and how the Ilcoin blockchain project is changing our preconceived notions of what blockchain can be. This is both a beginner’s guide and an explanation of all the key developments coming out of the Ilcoin office every single day. We have come to understand the intricate details of blockchain, what has worked over time and what has fallen flat. We know the market and we understand the user, now we are ready to bring a system that will truly revolutionize the revolutionary. We give space and speed a place to co-exist because that is what is demanded of us from the blockchain community. We keep ourselves open to the idea that businesses now need their place in blockchain technology and we are ready to bring them closer to their clients through it. Blockchain has changed the world from the ground up and now we are ready to do the same with the blockchain. The RIFT system is an incredible piece of technology that works off of tried and tested methods that have stuck over time. Beyond that, we have also implemented our own, first-of-its-kind technology that will progress the sector further. Our intentions are simple, to extend the olive branch of this ingenious system to the everyday man and woman who are looking for alternatives, whether that be in finance or in data usage. With scaling technology built into the distributed ledger and mechanisms that can maintain safety while staying decentralized, our users can maintain the confidence they need to get into blockchain successfully. If you are a small business just getting off the ground, we can help you get things done more efficiently. If you are an individual hoping to transact safely and cheaply, we have something for you too. It’s all built into this wonderful system that breaks the boundaries of what is expected from blockchain while bringing it closer to you, the user. The RIFT system is the foundation of our chain, a tech that uses mini-block technology to allow users over twenty million transactions per second, something that is yet unseen in the blockchain world. There is a huge number of innovations built into our network which will be explained in detail throughout this book. The security mechanisms, hashing algorithms and even mining, so that you can make money from the comfort of your home. Never has it been simpler to join in the financial revolution than now; soon it will all be in your hands with this informative and easy to understand guide to the world of blockchain and the RIFT protocol.

Now more than ever is it the time to start introducing new people into the mix so that we can work towards a world where blockchain is open to all. This has always been a key goal of the blockchain revolution and now we are finally coming to that point. Once you have delved into the basics of what blockchain is and how it works, understanding our Ilcoin network will be a piece of cake. In the time it takes you to finish it, this guide will take you from beginner to blockchain master so that you can cruise through the Ilcoin network with ease. Make a splash with friends and colleagues with your newly acquired knowledge and spread the word! The more people using the network, the more we can gain together. As it is said, blockchain is a technology for the people and by the people and you shouldn’t miss out on this opportunity to get involved. From A-Z and back again, all you need to know lies ahead with examples, details and instructions giving you the inside scoop of what is going on now and what lies in store. With all the developments currently coming about in the blockchain space, it is good to know which the winners are and which are still catching up. This is the building blocks of blockchain, a book that brings the jargon and technical language to the reader in simple and digestible terms which anyone can understand. Just because a technology is complex and has a lot of moving parts, doesn’t mean we should exclude anyone from it. That’s what this book is about, bringing blockchain back to basics. If you are someone who is curious about blockchain and want to learn more without having to do any courses or get bogged down in white papers, this easy to understand guide can get you where you want to go. If you are still interested after this beginner’s guide, we implore you to take a deeper look at the Ilcoin specific content at the back, we are sure that you will find it right for you. Truly the best place to start and end your search for the right chain for you is right here. Good luck and enjoy!

What is blockchain?

Many people are coming around to the idea of blockchain technology and so many of them still don’t know what it is exactly. Many will explain away Bitcoin or say that blockchain is some kind of financial computer technology. Which is all true, but what really separates blockchain from other techs, especially those of the fintech industry, are its complexities. The same complexities that people often trip over when trying to explain what blockchain is. The basics of blockchain are centered around a decentralized system of communication1. When we say decentralized it is useful to think of big banks and governments that are controlled by one or a few head figures. Decentralization is the opposite of that, no one person or group of people own the blockchain, rather it works on a network of interconnected computers (or nodes as they are called) on which every user has a copy of the entire system. Communication on the other hand is a broad and necessarily vague expression to talk about the interaction of those computers. We could state that blockchain is a system for transfer of value among its users, however, in today’s world that is simply not true anymore. This brings us to the bitcoin question; if not all blockchain is bitcoin then why are the two referred to in a seemingly interchangeable way? Bitcoin was the first blockchain system, it broke out into popular culture in 2016 and 2017, seven years after it was first released, and has become synonymous with the industry. Because of all the excitement and interest that bitcoin built when it suddenly got big, people tend to think that blockchain and bitcoin are the same; this is unhelpful. Blockchain is an open sourced technology which developers are invited to constantly improve on. As bitcoin was the first functional network, all other systems are built off of its original model. Many blockchain systems are still centered its core concept of exchanging money, but this is where the similarities end.2 As we said before, blockchain today has blurred the lines of what the technology actually is. Bitcoin was a purely financial institution allowing users to exchange value using the native currency of the program, which is also called Bitcoin. Bitcoin is the currency, and bitcoin (small ‘b’), is the network. This however would seem archaic in terms of what can be done using blockchain today. Many chains now cater to specific needs and uses, possibly the most diverse of which is Ethereum3. What makes Ethereum a stand out in the eyes of blockchain users is that it brought about many of the groundbreaking features which we now see as a standards. Decentralized Applications (dApps) allow users to have their own subset of the blockchain for their personal or professional uses4. Smart Contracts created a novel system for building relationships and fulfilling obligations5, as well as forming the foundation of dApp systems. This can be seen as the moment when blockchain became more diverse and harder to pin down as

a concept. People have come to rely on blockchain because of its security and relative anonymity when faced with modern world difficulties. All centralized institutions are plagued by the fact that they are vulnerable to hacking. When you work off of a single server or are under the management of a centralized system, you risk attacks against a single point of failure, that is to say, that one server or one unsafe computer is a lot easier to attack than a group of them keeping each other in check6. This is what blockchain does, as blockchain is owned by everyone and governed by everyone, every computer is kept in check by every other computer. One would need to gain control of over 51% of the computer power of all the computers that have a copy of the blockchain to gain control over it. This is extremely difficult and only gets more so with time. The process of creating the security within blockchain is called consensus, a topic we will get to later on.

So that is why people use blockchain for security purposes, but what about the anonymity we spoke of earlier? Blockchain, unlike many other programs, doesn’t require you to identify yourself to use the chain, and will seldom need you to put in your personal details either. When interacting with another computer on the chain, you will only ever know who is on the other end if you are aware of whose wallet you are crediting the money to; sending some Ilcoin to a friend for the lunch he paid for, for example. Otherwise the only details that a person would have that could be seen as identification would be your wallet address, which is generally a 36 letter7 and number code which allows someone to send or receive cryptocurrency from you. All transactions and exchanges of cryptocurrency are recorded onto the blockchain and permanently saved. Despite some advertising blockchain as total anonymous, this point is where the technology gets murky and the line between fact and fiction become confused8. If you should decide to go to a block explorer, the software or

website on which you can look at all transactions using a specific native currency, you would be able to identify someone by their wallet address. This means that in the event of someone looking into your blockchain usage, they can see all actions you have been involved in and should the identity of one of the parties be discovered, the picture can become very clear. This happens in the event of investigations into things like tax evasion and money laundering. So, as anonymous as blockchain can be, it is also not entirely private. This fact has also been obscured as time went on, with the advent of privatized wallets with changeable addresses and coins that focus on anonymity, like Dash and Zcash. So to recap, blockchain is a decentralized, open source technology that can allow for transfer of value and information in a safe and pseudo-private environment. No one owns the blockchain and therefore you won’t often hear names like Zuckerberg or Gates as key figures, though it does at times happen. Blockchain is a technology that is strictly for the user and maintained by the user. The main drivers in all the moving parts of these blockchain systems is cryptocurrency, which we mentioned already. Cryptocurrency are a varied and versatile both in how they work and in how they are viewed. To some they are the main appeal of blockchain technology, to others a new and exciting way of looking at our financial world. We are now going to take a look at cryptocurrency in depth to understand their place in the big discussion about blockchain and how they can sometimes be confusing to us.

Cryptocurrency

One of the key features of blockchain is cryptocurrency. Probably the first things a person hears about getting into blockchain would be this aspect of the technology. The reason being that cryptocurrency, and its volatile state of value, has made many investors very rich in the past decade. Many people see cryptocurrency and blockchain as the same thing and though they are inextricably linked, the two are not the same. The confusion caused by this convoluting of concepts causes many issues when first learning about blockchain technology. We will be going over this as well as the importance of cryptocurrency in the coming paragraphs. Cryptocurrency is composed of the words crypto and currency, which would imply a cryptographic version of common currency9. Though this idea is accurate to a degree, it is misleading in many ways. Cryptocurrency works off of the mechanics of blockchain and influences the software directly, however, cryptocurrency doesn’t follow the same rules and theories that ordinary currency does. Sometimes called ‘digital assets’, cryptocurrency is mainly seen by the wider world as a trading opportunity with the chance for profit. On the crypto side of the argument, coins like Bitcoin and Ether are cryptographically recorded when they are exchanged in any respect, making them less traceable and more private when used. That is a lot of information to digest and much of the confusion surrounding this aspect of blockchain comes from these facts. So is cryptocurrency an investment opportunity, a tool for private shopping or is it another piece in the blockchain puzzle? In reality, cryptocurrency is all of these things. Starting with the basics, one person may send a Bitcoin, or a smaller denotation of it, to someone in exchange for a product or service, much like any other currency. The difference is in what happens to the coins after they have been sent. Because there are no physical Bitcoin or Ilcoin in existence, or at least none worth any value, they must go through the blockchain and be recorded on a ledger. This process ensures that the person sending the coins actually has the quantity of coins they are trying to send. We have already mentioned how blockchain is decentralized, because of this, there are no people in offices overseeing all the transactions and making sure they are legitimate. This is where the cryptography comes in, anonymous users called miners use hardware and software on their computers (or rigs10) to check the transactions according to what has already happened on the blockchain. They then encrypt the information and add it to the record11. This is one of the many ways in which the coins on the blockchain work in different ways to normal currency.

Another point which separates cryptocurrency from ordinary currency is that when a blockchain is released, all of the coins within it are inbuilt from the start. New currency is never minted, printed or produced. This makes cryptocurrency deflationary rather than inflationary like dollars and euros. And this is where our second point comes in. Cryptocurrency has become a highly sought after investment, as soon as new currencies are released, investors are quick to cash in on them for the hope that they may suddenly and rapidly increase in value. Systems like Bancor, Storj and IPFS’ Filecoin have even offered ICOs, Initial Coin Offerings, before their systems were officially released to gain some extra investment money and build their profile. This has proven beyond doubt just how lucrative the investment side of cryptocurrency is. Whether or not investment helps systems themselves is hard to say; Bitcoin, which takes seven minutes on average to calculate a block of transactions may lose a percentage of its value just in the time it takes to send it12. On a practical level, this is not helpful, despite the average speed of a transaction rising considerably with newer chains. The positive side to cryptocurrency investment would be the increased interest it garnered over the years and the explosion of activity it has produced. This fact has pushed blockchain into the mainstream and created incentive to produce better and more effective chains with time.

Investment into cryptocurrency has also caused many issues though; questions regarding money laundering and markets without regulation are common even today. Since there is no company or head to hold accountable in these cases, governments find themselves at odds with the new technology and have taken some hard steps to regulate it. In the end, this is a crisis for those who use cryptocurrency simply as a tool within the blockchain. Cryptocurrency above all else, is far more dynamic than the regular currency we find in our wallets. In many chains, one may use the coins they have to ‘mine’ data being uploaded to gain more coins, some networks are more functional than simply financial and use cryptocurrency to keep the system rolling. When it comes to the downside of cryptocurrency, in finance and in investment, there is a great majority of the community that lose out. Many people would prefer for there to be less fluctuation in the markets, wishing for a little more stability so that things may be more predictable. The fact is that there is a lot of conflicting ideas surrounding cryptocurrency and their place in the blockchain world. As blockchain becomes more functional and less focused strictly on the financial aspect, we must control the urge to simply see it as a way of getting rich. This way of thinking stems from the burst of value that hit Bitcoin and consequently Ethereum when blockchain became a popular technology. The reality however, is that going forward, we will need to look past this if we hope to move the technology forward. On a final note, we will look at miners, the people who create the value from the system by creating consensus. These people use their computers to make sure that everyone plays by the rules in what is called consensus building. These users keep the system decentralized by checking and verifying all transactions. Ideally there would be many independent miners who work separately to avoid any one person or group becoming too powerful on the network. In the next part of the building blocks of blockchain we will go deeper into things like consensus and how we stay safe on the chain. This segment has explained the core values and points of what cryptocurrency is.

Governance and consensus Building off of the understanding of what blockchain fundamentally is, we will now look at the two central concepts that maintain it. Governance and consensus are ideas that exist with distinct similarities within and outside blockchain. Most adults would be able to explain governance as the management and overseeing of a collaborative effort, and consensus as the coming together in agreement over some kind of decision offered through or to the governing body. Though these facets of blockchain have this in common with those of most societies, how we come to the agreement and complete these decisions is completely different. In the last section, we spoke about how no one person or group owns or runs the blockchain. To the average person this would be in direct conflict with the idea of governance altogether, however, the complex and intricate weave of technology allows for all of these things to exist together in harmony.

Governance of blockchain refers to updates that may be required to keep the system running at its best13. As blockchain has grown and developed, we have learned that there are serious flaws inherent to all chains. For this reason most chains have a sense of governance that either comes from developers themselves or from within the chain in what is called ‘on-chain’ governance. The facts here come from blockchain being decentralized, no one person can simply make changes to any system at will; this would fundamentally destroy the very idea. When a development team sees the need to optimize, include or update their technology they must put it to a vote with the community of users to see if they can agree that these changes are warranted. On chain governance is a newer concept with some chains including milestones at various key points in the sequence of the chain that would allow the technology to update itself. This too would offer users to vote on whether they believe changes are truly needed, but the changes themselves would be made entirely autonomously. In an evolving decentralized technology like blockchain, governance, and who can and cannot make changes, is extremely important. Governance in blockchain today accounts for decision making and the upgrade of blockchain systems14. This sounds strange as for blockchain to function within its ordinary confines, it cannot be manipulated or changed in any way. This is why we have what are called forks. As an evolutionary technology, it is known that blockchain systems often need to be upgraded or changed to deal with a necessity of the user base. Other factors may drive a fork in a blockchain system, such as some lack that is holding it back in terms of contemporary available technology. In these cases, developers would need to step in and make those changes with the permission of the users. Voting is often the way that these decisions are made, with users actively giving their opinion on whether a network requires a change or not. In many cases, if users do not come to a clear and unanimous decision, chains will often be broken off in a hard fork15. This is where the old system will remain available to those who want to use it and a new system, usually with a similar name but the inclusion of alterations, would be created. Conversely, a soft fork would have all users stay on the same chain but with the implemented changes going into the same technology directly. Some examples of hard forks are Ethereum and

Ethereum Classic and bitcoin and bitcoin Cash among others. Our own Ilcoin blockchain has gone through hard forks in the past too, most notably that which led to the RIFT protocol being implemented into the system in 2019. So in short, governance comes into play when there is a necessity or new development that may progress the chain in a positive way. This could be to increase speed or security, it may be because of some fault that needs to be addressed or something that has been suggested by the community in of itself. Consensus plays a large part in all of this, agreeing what should and shouldn’t be done. However, the consensus we are going to look at in this section is more complex than simply making changes in a network.

Consensus is needed in verifying blocks of data and adding them to the sequence of a chain. We need consensus in blockchain so that we can ensure that everyone adheres to the rules of the protocol. We previously said that for the blockchain to be hacked it would take a malicious actor obtaining 51% of the system control of the whole blockchain to do so. This is more difficult than it sounds. Assuming that there are more than a handful of blockchain miners, which is ideally the case, monopolizing blockchain control is far more costly than the reward would be worth16. People who build consensus in the blockchain risk something in return for the right to verify blocks of data. Different approaches have been made on different chains but the two most common stakes are time and energy, or value itself. This is the process of proofing which is deeply connected to consensus building on chain. These people are called miners and whether in a Proof-of-Work system that requires a lot of time, investment and electrical input, or Proof-of-Stake in which one could lose coins staked by acting badly, these people are the builders of the chain. Consensus relies on miners and vice versa to maintain the operation of the chain. As one miner is chosen, this depends on many factors that differ from chain to chain, they will validate the data and broadcast the encryption code that goes with that block to all other current miners for consensus. These other miners, or rather the computers offered by the miners, will attempt to confirm or deny the validity of the code (known as a nonce) that was connected to the block of data. Should a minimum of 51% of the miners come to the same conclusion once a nonce has been projected, the block is confirmed and added to the chain. Should it not be recognized as valid, the initial miner’s efforts would be lost and no reward granted. Whomever reaches consensus first, is rewarded with cryptocurrency from the internal system itself and/or given a mining fee. This is how new currency is brought into the network. Using these methods of governance and consensus, people can use the blockchain knowing that their data is safe and that all other users are also playing by the rules, allowing for a thriving and secure environment for interaction. Doubling back around now, we can see how between developers, users and miners there is a complex relationship between parties that may have differing opinions on what needs to be done. Governance is the consensus that is gathered between all of these groups to create a better chain. The question then becomes whether the chain is

better off in its current state or if changes could make it better. To wrap up, in the case that not enough of a majority is convinced in either direction, two chains will remain. Consensus, in a more general sense, is the active mechanics of transaction calculation. Consensus keeps the blockchain decentralized and takes away the need for institutions like banks for processing deals and purchases. Consensus also keeps the system secure and fair for all involved. Now that we have looked at consensus, governance and what they each hope to achieve, we can get an understanding of what they are trying to prevent. Taking over 51% of a system’s network is a major problem that the consensus and security mechanisms hope to avert, but there are many other ways that users can try to gain an advantage over the decentralized community. In the next section we will be looking at how users may try to cheat the technology and the ways that blockchain is set up to inhibit these activities.

Different kinds of attacks Consensus is essential to blockchain technology as it is the cornerstone of decentralization. Without the use of institutions to moderate and verify actions on a network, we need a process which maintains equilibrium on them instead. At the same time, we also need to make sure that we do not allow anyone to act without consequence. In any kind of system there will always be those who attempt to gain an unfair advantage, in blockchain, these are through ‘attacks’ on the system which try to take advantage of failures in its architecture and structure. Here are some of the kind of common attacks that we may see. 51% attacks17 Starting with what we already know, we can look in more depth at 51% attacks. This kind of malicious behavior would have a single party gain control of a majority of the mining capabilities to manipulate block creation. The great danger of a 51% attack is that of double spend. The idea of decentralization relies on the fact that no one person has a majority stake in any given system. If someone did manage to get 51% of the consensus say they could make decisions on the blockchain without the need for consensus approval. This would be completely detrimental to any working system and can be seen as a form of ‘re-centralization’. Consensus through proofing, which we will be looking at shortly, prevents these kinds of attacks. The need for a diverse and varied consensus network, as well as difficulty in the calculations needed to encrypt a block, is essential to keeping users of a given blockchain safe. In a double spend attack, a user with over 51% mining power could send an amount of coins to one user and create another transaction sending the same funds to their own wallet. The attacker would confirm the first transaction up to a point, giving the receiver the perception of validity, at which point they would send whatever goods are being exchanged. At this point, the attacker could stop validating the first transaction and instead confirm the second one, giving them both the goods exchanged in the first transaction and returning the funds through the second. This would be possible because they would have enough consensus through their own mining to give the idea of actual collaboration. Miners need to risk something to gain the opportunity to create blocks and earn rewards. This utilizes game theory concepts that randomize, incentivize and punish those in consensus building. It is a simple carrot and stick initiative in which, acting appropriately and fairly gains you rewards in the long term, and acting maliciously would, in a working system, be caught out and have their input lost. Different systems have different approaches to consensus, but by far the most commonly used one today is Proof-of-Work. In Proof-of-Work, miners must use heavy computational systems to try and calculate the code of the block before broadcasting it for consensus. The cost of this hardware and the electrical input create a circumstance which would be far too costly to try and manipulate the system. Consensus builders would largely reject malicious blocks and try to stop anyone trying to gain unfair advantages in this way. Sybil attacks18 These kinds of attacks are similar in that they aim to increase their control over consensus but approaches it in a totally different way. In this case, a miner may attempt to create multiple identities to try and gain as much consensus power as possible. In blockchain technology, each computer, or CPU, holds one identity, and that identity has consensus power in mining and governance. Some malicious actors attempt to use these multiple identities to gain a greater say in the network so that they can sway decision making disproportionately in their favor. This is a big problem since all parties are largely anonymous within the network. Someone could make a large group of malicious accounts and attempt to manipulate the system for their own ends. This could include things like voting on changes made to the blockchain and consensus granting in mining. In other cases, a user attempting this kind of attack may try to make your computer seem malicious by surrounding it in fake accounts. The rest of the network would identify your account as the Sybil attacker and refuse your transactions instead of the actual attacker. This is detrimental to anyone who uses the blockchain regularly and would need to send or receive data through the blockchain on a day to day basis. Like with double spending in 51% attacks, these kinds of actions are prevented by making them as impractical as possible to put off users from attempting them. In Proof-of-Work, which we mentioned earlier, users would again need to purchase large amounts of energy heavy mining equipment to attempt these kinds of attacks, which is

very costly while still very unlikely to work. Timejacking19 This kind of attack preys on the timing mechanism of blocks being created. This hypothetical type of attack utilizes Sybil attacks to make another user appear as a malicious node and derives value from the seemingly malicious miner. Essentially, in timejacking, an attacker would have a single account reject a broadcasted block acting as if it doesn’t conform to the rules of block creation. Reputable miners must reject blocks within certain time calculation on a PoW system to prevent malicious actions. In timejacking, one miner will reject this block, while the rest of the network remains oblivious to the situation. After this point, the malicious miner uses the account to increase their own computation power and wreak havoc on the network. Double spend, excluding good miners from contributing, and enriching malicious accounts own computational power are the outcomes of this kind of attack. Any attack on the system will lead to loss of confidence and potentially the failing of a system. Thankfully, like many of the attacks mentioned here, timejacking is largely a hypothetical problem and is averted by diverse consensus groups, security features and proper use of the network. Security features have become an increasingly large part of blockchain systems as newer blockchain systems launch. Young blockchain projects tend to be far more centralized and therefor more susceptible to these kinds of attacks. This is why mechanisms, like the Ilcoin C3P system, are being incorporated into blockchain systems to help stave off would-be attackers. Consensus plays a big part in all of this and as we will see in the following section, there are a variety of methods used to deflect these actions when they crop up. Consensus, like governance, requires users to have a copy of the blockchain ledger to be able to cross check transactions. Each different kind of consensus system is made to fix or account for a problem or lack in previous iterations of blockchain systems. Some are re-imagined to fit the specific needs of a blockchain network while others prioritize different kinds of consensus as a result of community need. Still yet, other mechanism have been introduced to enhance security without the need for ‘consensuses in the traditional sense at all. We will be exploring many different aspects of these security features at a later part, but for now we will look at proofing mechanisms that can create consensus on the blockchain.

Proofing mechanisms Consensus in block production relies on proofing devices that are built within the chain itself. This is the process of mining, in some cases also called forging. Mining gives users the opportunity to maintain the chain and keep it in good working order. To create blocks of encrypted data on the chain, proofing is an absolute necessity, however, the form in which it comes is varied and fits into different situations according to how the chain works and what it aims to achieve. If we imagine blockchain to be a huge system of ongoing accounts, always recording new transactions and balancing existing coins, proofing is like the confirmation stamp. In a decentralized system we need consensus to validate all the blocks of information going into the chain which can be done through the following systems for consensus. Proof-of-Work20 The original system of consensus on the bitcoin network proved a hardy and long-lived first attempt at proofing. What PoW, as it is abbreviated, relies on is hardware and access to power as the main stake in mining. This means that if you hope to mine on the majority of blockchains, or at least the ones that work with this system, you will need to invest in a rig and constant power input to run the hardware. For the greatest percentage of coins, this is a reasonable stake, you put in your energy and computational power and earn rewards from ethical mining practices. This becomes obscured with older and more inflated systems like bitcoin. In today’s world, it is near impossible for a small scale, individual miner to make any reasonable returns on this kind of investment. This is because bitcoin has adjusted the mining difficulty so many times since it was first introduced that only large companies with lots of capital can effectively make the realistic returns that come with it. Bitcoin needs to adjust this difficulty so that the lifespan of the chain can be extended and more long-lasting.

The reason smaller outfits are no longer profitable is in the rigs, the hardware needed to do the calculations for mining. Rigs can be quite large and are very resource intensive machines, they usually come with cooling systems and can vary in price from inexpensive to exclusively expensive. On top of this fact, you would need to be situated in a location with ready access to fairly cheap energy. For all of these reasons, most Bitcoin mining happens in China where whole warehouses are dedicated to the mining of the coin. Luckily for new miners, mining pools have also opened up so that people can engage without having to make the large initial investment; although these people generally make a much smaller percentage than those who simply build their own setup. Anyone with a rig and access to electricity can join a mining pool by looking online and finding setups accepting new miners. Mining pools allow people to pool in their rigs to gain better chances of mining part of a chain. Proof-of-Stake21 The issues that became apparent in the PoW system led to the theorizing of the next generation of proofing mechanisms in blockchain. PoS is the modern choice for blockchain and developers have been attempting to perfect it since Peercoin22 first launched their PoS system back in 2012. The shift towards PoS came as a reaction to, firstly, the need for more diversity in miners to avoid centralization, and secondly, because it was an easier and

more eco-friendly alternative. PoS does not require rigs or large amounts of energy to contribute to consensus building, rather, a forger, which is what a miner in the PoS system is called, stakes their own tokens. Anyone who has tokens and a computer that can hold an entire blockchain software, can stake their coins so that they may make digital rewards.

Whereas in Proof-of-Work mechanisms you would stake your energy and invest in rigs, in Proof-of-Stake, you would cut out the middleman and simply stake your coins directly. Should you be caught acting maliciously, your staked coins are lost and you will have less chance to be chosen to stake again in future. Currently, the Ethereum team are working hard at building a functional and pragmatic PoS system for their upcoming Ethereum 2.0 system. More often than not, PoS systems would employ a system for randomizing who is next to build a block. This would be based off of who last did so and who has the largest stake. The reason behind this is central to one of the larger issues of this kind of consensus system, that if one person has a large enough stake, the chances are they are going to be chosen more often than anyone else. This is where centralization could occur. There is also the fear of the rich getting richer and a bad cycle being created within a chain. Along with this, chains using this system requires forgers to hold their coins for a required period of time before they can begin staking as a prerequisite. This stops users from simply buying a huge amount of coins and getting ahead just by that fact. This is an incentive for people to be truly invested in consensus building. Delegated-Proof-of-Stake23 is a system that works off of PoS and is similar in many ways to mining pools. In this system, users can allocate their coins to another forger through a smart contract and receive back a percent of what the forger would have received as a reward. This still requires users to have a copy of the ledger they are working on, however, it does not need a computer to be running and staking to make the rewards it garners. Proof-of-Capacity24 As blockchain grew more and more diverse, developers began to come up with novel and ‘out-of-the-box’ ways of dealing with things like proofing and storage. This is especially true for the Internet-of-Things focused chains. What these systems aim to do was give users an experience of blockchain synthesized with the internet and smart technology. By this point we had moved beyond simply storing encrypted data and transaction records on the chain and came to a point where data in the form of pictures, video and documents were seen as the core aim of blockchain. For this reason, consensus for things like ethical transacting and prevention of double spend took a backseat. Now space was the big issue. Chains sought to offer faster rates of upload while maintaining a safe space for people to hold their information. Proof-of-Capacity had miners offer space on their own computer for the encrypted data that was sent to the chain in return for rewards. If a miner can prove that they have the capacity to save the data and hold it online for a long period of time, they have the chance to be rewarded for doing so. This form of off-chain storage was an approach to solve the scalability issue, the need for faster and more spacious blocks on the chain. Off-chain storage solutions come with their own inherent issues but are a fascinating and novel attempt at modern blockchain nonetheless. These kinds of blockchain still use digital rewards in the form of cryptocurrency, however, they are used and exchanged in the form of fees and rewards for holding data. In data focused blockchain systems, blocks would hold transactions made, as well as data within them. DAO or SDAO systems25 Decentralized-Autonomous-Organizations what is considered the Sci-Fi version of blockchain technology. These systems rely on internal mechanisms for consensus building that have overlap with AI technology. Though

Ethereum had made a hap hazardous attempt into DAOs which led to their first hard fork26, no system has managed to implement this system effectively as of yet. Currently, the Ilocin blockchain project uses SDAO (semiDecentralized-Autonomous-Organizations) in preparation for the conversion over to our new DCB system (Decentralized Cloud Blockchain), which will use an entirely novel mining system and shed its current mechanism. Otherwise, DAOs remain a hope for the future in blockchain but are still a ways away. DAOs mine themselves, taking out the entire human factor altogether. What this could mean in future is an entire reliance on the technology to police itself and produce blocks entirely autonomously. DAOs are not simply used for consensus building though, they also play a major part in governance and could in future be used for updating a system and offering changes for users to vote on. This would take out the need for developers almost entirely as well. Self-sovereign blockchain systems are being experimented with today and may someday be the foundation of any new system in the future. These are a few of the more interesting and commonly used proofing mechanisms, many more exist and are being investigated currently. These include Proof-of-Burn, Proof-of-Authority, Proof-of-Engagement and others. The main aim of using new proofing mechanisms is to solve some integral issue within blockchain such as the scalability issue. Scalability is the next topic in our building blocks of blockchain sequence where we will look at this issue, as well as some others that crop up from time to time, in the blockchain world.

Scalability

Over the course of the existence of blockchain technology, criticisms of the system have come up that held back the advancement of it into a widely used tech. One of the core problems with blockchain is scalability27, the number of upload-able transactions to function at practical speeds. Blockchain offers a lot to the personal user, as well as to businesses and groups that use it in a more professional setting, however, without overcoming the problem of scalability, it is unlikely that the distributed network will ever become an everyday tool. This is because we have come to rely on technology that can reliably bring us huge amounts of information in seconds like the internet and the VISA standard28. The VISA standard is the amount of payments VISA can calculate in a set time, roughly 1,700 per second. It is exactly this standard that will shape the discussion of scalability. Originally, as a financial tool, blockchain served the purpose of exchanging assets between one person and another while foregoing the banking system; less fees and supposedly a lot faster and easier. Bitcoin, which pioneered this idea, could manage a maximum of seven transactions per second at its very best29. Back then with only so many people aware of this new opportunity, it was reasonable for tech savvy users to adopt this system despite the trade-off. It was secure and as far as speed goes it was reasonable at the time. Now Bitcoin is a trillion dollar coin, with millions of transactions being made each day.

It comes down to three limitations that hold back the technology from working at a faster rate, block size, transaction volume and block time. These factors have hindered the community from realizing the potential of blockchain as a wide scale technology for the masses. The issue that had to be sorted was, what can be done to make the blockchain faster so that we may accommodate more users. The answer to this problem came in a variety of ideas developed over the course of the past ten years. To start with let’s look at these three factors one by one30. Block size is a measurement for how much information, in bitcoin’s case transactions, can fit into a block on the chain. Staying with the bitcoin network, the

original model could store up to 1 megabyte of data at a time, not much space at all. Transaction volume is the same concept that causes bottleneck in banking systems, how many people are trying to send and receive coins at any one time. If there is a high volume, this makes the system slower and less transactions can be done at any one time. The block time is a more technical problem, this concerns the amount of time it takes to build a block. There are multiple aspects that affect this, all of which we will look into at a later point. The third factor is volume. Anyone who understands basic supply and demand can understand that this is an ever-present issue. Anyone trying to increase volume welcomes the idea of more transactions happening, therefore the other two factors need to be approached keeping this in mind always. Many ideas were proposed to solve these problems, including increasing block size, which would allow for greater transactions in a single block, spreading transactions across more blocks for proofing and changing the proofing system altogether. Let’s look at some of these approaches. One idea as to how to solve the scalability issue was in the consensus mechanism used. The old Proof-of-Work system was difficult to keep up with; with time more users piled on and fewer miners were incentivized to join in as a result of the increased competition. The Proof-of-Stake option would soon be available and many other proofing systems along with it. The PoS system made it simpler to validate blocks of information and allowed for greater volumes of them to be produced as it took far less time to make them31. Whereas before, rigs and computers would have to randomly search for the corresponding value of the data to be encrypted, now forgers were selected to build the blocks. This would allow forgers to propose a new block and would cut out a lot of time that was previously needed to build consensus. Some examples of these are Cosmos at 10,000 transactions32 per second and EOS at an average of 4,000 TPS33.

With the new proofing system transactions per second increased, however, other issues came about as a result. Centralization, for example, became a huge concern within some PoS systems, as well as the idea of users getting richer and richer while excluding others from forging their own coins. Another approach came in the form of block size increases; a simple solution that turned out to be far more complicated than was originally thought to be. One of the core issues with increasing the block size is the cost to the user to upload data. Since more information is being put into a single block and miners are still working hard to verify that block, increasing information within a block can make charges connected to creating that block infeasible for the end user34. Bitcoin Cash as well as Bitcoin SV have made attempts to build larger blocks to fit more information into each and reach higher TPS, however this has turned out to be a far too simplistic approach in terms of practical use. Another method that is currently being tested in blockchain is sharding, the process of splitting work between

miners to get more done over a more spread out35 workload. This has so far proven effective and we will likely see the true results of this idea as new systems with larger user bases experiment and report on their findings.

Finally, we can look at a mix of these different approaches in our own team’s attempt to solve the scalability issue. The Ilcoin blockchain project has proposed creating larger blocks that are filled with ‘mini-blocks’36. Though it may sound simple at first, the technology is quite ingenious. What happens is that smaller blocks of 25mb each are filled with data without the need for miners or forgers. These blocks are asynchronized with a far larger 5 Gb block, which is mined once it has been filled with the mini blocks. This relieves a lot of the chunkier mining work and gives greater speeds at a transaction time of over 20 million transactions per second. This is called the RIFT protocol. The core element that keeps this system safe and running is the C2P security feature. This technology can remember malicious wallets and discard them as they attempt to build blocks, keeping the system safe and efficient. Throughout the short history of blockchain technology, the problem of scalability was at the center of every developer’s mind. How do we get more people to use the chain while maintaining its decentralized nature? With time, we have seen a great number of different chains try to resolve this issue, it now seems that that problem will soon be a thing of the past. That being said, there is still the question of decentralization, centralization and recentralization which needs to be looked at.

Decentralization Along with security and scalability, decentralization is the third true pillar of blockchain, but what does it actually mean to be decentralized? The core functions of having a decentralized system for exchange is to maintain equity among users and to increase security by removing the single point of failure. These two necessities in blockchain are what make the system so appealing to individuals and groups around the world. We have seen in the past years the difficulties of maintaining and dealing with a centralized system and as time rolls on, it seems that this kind of system is becoming more and more obsolete. Decentralization37 at its heart means that no one is truly in charge of the system, not even those who created it. Starting with the equity among all users argument we will go through what a decentralized system is and how it works to show the inherent value of it and why this method was adopted over any other type. Even when it comes to banking, you can hardly ever feel like you are truly in control of your money. You leave it in the hands of the institutions that are built to hold and dispense it. This is seen as fundamentally flawed as it creates a business around the storage and security of other people’s assets. When you buy cryptocurrency or decide to use a chain, you are becoming an intrinsic part of the system; with every transaction you are adding to the chain and creating more wealth by doing so. Since everyone has a copy of the blockchain as a result of working on the program, the ecosystem grows and becomes more diverse. Your presence incentivizes greater equity and the need for more oversight. This comes in the form of independent miners or mining farms.

What is seen as truly decentralized is the fact that no one has access to over 50% of the consensus building capacity in a single chain. If this were to happen, a single entity could manipulate the system to their advantage and thus break down the whole idea of blockchain. Therefore, as long as consensus can be met with up to 51% surety across a variety of miners, the blockchain is, practically speaking, decentralized38. This is what we call the trustless system, a system that anyone can join without having to rely on anyone else. We can look at banks for examples. Banks work off of a single server and have a hierarchy in terms of control. Hackers only need break through one or at most a few barriers to gain access to the central system. Though this is exceptionally rare, we are coming to terms that these malicious actors are becoming more adept at succeeding in these activities. This is equally true for some newer technological advancements like cloud storage technology. Amazon, Apple and Microsoft all have their own version of this but because they are all under a single point of control they are vulnerable to hacks in the same way that banks are. In blockchain on the other hand, it is as if

every user becomes a board member, with this in mind, since no one owns more than 50% of the blockchain, no one can make any decisions for the whole chain. Blockchain offers an alternative. Since the ledger is distributed, a hacker would need to gain access to 51% of the block information to be able to see or change any piece of information on the chain. Users have copies of the entire chain and when new blocks come to be mined, those blocks work off of the data from previous blocks and the information built onto the new block will make way for the next; it’s all a sequence which is why we call it ‘block’ ‘chain’. If a miner comes to add information to the next line of blocks in the chain, the computer used to do so should be able to recognize that there has been a change on the system. Since this has never happened on traditional blockchain systems, it is impossible to know with certainty what the result could be, hackers could shift around funds at will or possibly wipe out the ledger as a whole. It is the sequential nature of data upload along with consensus building that keeps the system safe and decentralized from this kind of activity. In the same way that users have no access to the blockchain’s integral system, neither do developers. We spoke previously of forks, divisions in the chain that continue autonomously when some change is implemented into the system. If a developer should see that a fundamental change needs to come to the system, they must first address the users of the chain and propose the alteration before proceeding with it. Going with the logic of the heaviest fork wins, should a majority, or even a strong minority, choose to stay with the pre-update system, two chains would then be the result; the original chain and the new updated chain. This was the case with Ethereum and bitcoin over the course of their lifespans. These changes came as a result of serious bugs in the system and scalability issues respectively. This lack of hold over the blockchain is evident in the fact that to this day the original creator of bitcoin, Satoshi Nakamoto, remains anonymous. It is important to distinguish that though blockchain is a big money maker today, it is not a business. The developers and designers of a blockchain may have an fundamental need for the system themselves, however they are always aware that they will never be able to make money directly from the consumer. This is the great division between standard technologies and the technology of blockchain. In spite of this, some blockchain systems are not concerned by the need for decentralization and are rather more interested in the security and scalability of the network. These systems are called blockchain for business or enterprise blockchain and they are a testimony to how far the technology has come. Big companies like American Express39, Ford40 and Lufthansa41 have all begun to look into how blockchain can improve their profits and sectors overall. We will look into just how effective these systems have been within the scope of business in our next segment.

Enterprise blockchain Though blockchain was first built as a tool for people to work without the intrusion of institutions like banks and remittance services. Blockchain has grown substantially and is now a viable instrument for businesses as well as the individual. Blockchain is known as the disruptive technology, the reason for this is because it has made such a huge change in the way we view money, interact and in the way that business is conducted. The final point is particularly poignant because big corporations like JPMorgan bank came out as openly hostile towards the idea of blockchain when it began its ascent into mainstream culture42. At that time, a decentralized system of value transfer was considered to be something of a thorn in the side of the tradition business method. And of course it was, when you consider that the technology was subversive to the idea of banking altogether, huge banks were never going to be on board, or at least they weren’t at first. The essential difference between blockchain for business and a typical public blockchain is its oversight. Whereas public blockchains allow users the full freedom to use it in an equal and decentralized way, enterprise blockchain maintains the standard hierarchy of a business structure and keeps the functions of the blockchain that are useful to them, security and scalability. Systems like Hyperledger Fabric43, Ripple44 and Corda45, are now being found in businesses that go from banking to shipping and retail. The advantages of blockchain in these cases are the increased security that comes with the distributed ledger and the immutable nature that comes with the chain46. What these attributes bring are decreased spending on expensive departments like accounting and legal. Blockchain streamlines many of these departments and helps to make a simpler and easier work experience throughout medium to large corporations. For smaller businesses, blockchain can also be applied and has been seen to give an edge among developing companies.

Using the blockchain structure, businesses can allocate different positions and authorities to different people within the company. These people have access to different segments of the chain and can apply new transaction or make changes as their position allows. For example, a CEO would have full access across the board with the rights to make transactions, delegate jobs to others and make changes as is necessary. A salesperson within the same company may be able to add transactions to the system or shift some assets, but won’t have the same authority as the upper-management47. This structure is also effective against outside threats; given that each person is allocated a computer registered to the specific company, external parties that gain access to a business system will be an immediate standout. This allows for the company’s technical department to easily identify and remove unwelcomed operators as soon as they appear. This sense of security instills confidence and ensures that data saved to the chain by the company remains entirely private and secure.

This information remains on the chain forever, this is what we call immutability48. Considering that no part of the blockchain can ever be altered and is saved on every server that uses the chain, this data can be traced back infinitely to the original block, the ancestor block as it is known. This is extremely useful for businesses that must account for transactions going back years and years. The blockchain can accurately and easily identify and relate information that was added to the chain at any time. Accounting and legal can then use this information in their departments for things like tax reporting and sales or expense reports for investment and analysis purposes. Many different sectors and industries use these mechanisms in a flexible and versatile way to reach different goals.

The case for the airline industry is an excellent example. Lufthansa, among a handful of other airlines, are exploring avenues to streamline passenger booking and reservation processing. The hope is that they can make it simpler for passengers to book seats and for the airlines themselves to save this data on the blockchain. The fact that blockchain is far more difficult to manipulate or interfere with than current available software, makes it more attractive to them. Another thing that they are seeking from blockchain is the increased transparency that comes with the distributed ledger. The more accurately you can record data, the easier it is to relay that information when necessary. This is one single use case for blockchain for business, we will be getting into this further later on but for now we have an understanding of what blockchain for business is. Many new systems today are no longer simply public chains or private permissioned chains, like the one we have just spoken of. Rather the term ‘hybrid’ chain has been coined to distinguish between the two former chains and a chain that is a mix of both public chain and private chain. These can come in the form of mainly business chains, such as Ripple, or public chain with the potential for business applications. Ilcoin is a hybrid chain with business applications, these applications come from the dApps that are available through the chain, allowing users to have their own breakoff of the system for their private work49. Whatever the case is, businesses the world across in sectors varying from insurance, Igaming, FinTech and supply chain management, are benefitting from the great possibilities that come with blockchain technology. Coming from the starting point of a decentralized system for people to send and receive money, it is hard to believe that businesses now seek out blockchain for its transparency. It is very much true though that trends like these have been growing in popularity over the past five years, it will be unlikely to slow down any time soon. The consideration of blockchain for its transparency is an important one, this aligns with the idea of traceability, another common term used within blockchain communities. We will next dive into what the relevance of these terms are when considering blockchain technology.

Immutability and traceability Immutability and traceability are two concepts that are important in understanding blockchain technology especially when considering transparency. People can find themselves confused with good reason when you explain to them that a cryptocurrency can increase transparency; if it’s transparent, how can it also be cryptographic? And this is valid reasoning, cryptocurrency was devised as a method of exchanging value while maintaining a sense of privacy and confidentiality. That being said, there is a lot of detail to the complexities of blockchain that people don’t recognize; these two ideas, immutability and traceability are two examples of them.

These two concepts are intertwined with each other and exist simultaneously on most blockchains including bitcoin and Ethereum. Immutability means that data uploaded to the blockchain is unchangeable and exists in whatever state it is uploaded forever. If I were to look up a transfer I made to my friend in 2012, I would be able to find it within a relatively short time frame. Traceability works off of this concept and is something that exists solely within this financial system, it is the ability to distinguish where a currency has been before it arrived at you. If you would like to check who owned your Bitcoin before it came to you, you can technically do that; who knows, maybe a president or movie star once held it. Of course, though the last example sounds fanciful and interesting to think about, this is tricky to do and could be more of a problem than you would think. Firstly, to gain an understanding of who owned coins before you, you would need to know what address is linked to which person; that is not a particularly easy thing to find out. Secondly, traceability is a major hole in what we call crypto-economics. If a business owner sells you a product for some cryptocurrency, only to find out that the coins you are giving them were at some point in the hands of criminals, that person may refuse to do business with you. That is a huge problem. It may not be the case that you were the one doing the crimes, but simply the fact that tracing the coins reveals a dirty past could land you into trouble. This is why traceability is an issue within blockchain communities50. Traceability exists because of immutability. For a new block to be created it must work off of the hash code, the code used for encrypting the previous block, to proceed to the next. This is why businesses have begun to adopt blockchain technology, all data is connected to all other data. In most cases, immutability is a welcome trait of blockchain technology, it makes using the chain safer, it makes record keeping easier and it ensures that the blockchain cannot be compromised. Immutability is what keeps the structure of the blockchain upright, however, if you are hoping to keep your money transfers private, this is not the safest way to do so. There are many reasons why someone may want to keep their activities private, this could range from undercover journalists concealing their financial identity or someone trying to send money to a friend or relative in an oppressive nation. There are hundreds of reasons why someone would want to send money around privately and still entirely legally. Many people today believe that this is what blockchain was built for, the facts though don’t line up so neatly.

Though it is time consuming and still relatively unaccounted for legally, there have been grounds for prosecutors to investigate blockchain records for details of illicit activity51; it is possible and has been done. Because developers have seen the need for a truly anonymized currency, they have gotten to work in creating solutions for this gap in the market. Using different protocols, developers have launched coins that do not have the traceability issue. The main examples of these coins would be Monero, Zcash and Dash52.

Monero53 was one of the first anonymous coins to come into the market and it is still one of the most commonly used for this purpose. Monero uses a ring signature54, senders of private funds from one wallet to another have their ‘signature’, the cryptographic link to their wallet, fused with randomly selected users from the blockchain. Once fused together, the original sender signs the transaction, however, when the coins are released, it is impossible to tell who sent the money. It is only known where the money is going. In rotating the coins, they lose their sending identity while still registering that that person has used so many coins; upon being released, the receiver is also left unidentified on the blockchain while they are still registered as receiving funds. The blockchain registers exchange but does not note who has sent what to whom, leaving you and the recipient anonymous, while still keeping the structure of the chain. Zcash55 has a similar approach in that sending coins from an anonymized address to another, the transaction is recorded on the chain, however all details as to who was involved in the exchange, as well as the memo are purposefully left out56. Zcash, unlike Monero, does not use a ring signature in its cycle, instead it uses a system called ZKsnarks to keep the sender’s addresses unknown, another topic we will be looking at later. This function is highly effective and sought after by users who value their privacy while on chain. The Ilcoin blockchain does not have privacy features included in its process but does work as a fast and effective way to get all of your online work done safely. It applies technologies that have already been proven effective, like dApps, over a system that has greater capacity and user focus. Privacy is not everything, and most blockchain users use the technology not for its privacy necessarily but for its features. Security for one is a feature that users see as the cornerstone of systems, but the fact that blockchain is decentralized from any business is another. Still yet, people turn to blockchain for inbuilt technology that is useful in everyday life. Smart Contracts and dApps are some of the features we will be looking into next.

Smart Contracts and Decentralized Applications As blockchain technology grew out of its primarily transaction based state and into something more diverse, we saw the product of new innovation in the form of smart contract technology and dApps. These useful add-ons to blockchain gave users a far wider functionality when using the system and laid the foundation for modern blockchain technology. Smart contracts sound surprisingly self-explanatory but in reality are far more complex then you may think, the same may be said for decentralized applications. Regardless of what you know of these technologies, they form a core part of what blockchain technology is today.

Each of these tools were created with the idea of giving more freedom of movement within blockchain. Whereas before, with bitcoin, you could send coins back and forth between wallets with relative ease, now you could form agreements, set up protocol, and even build your own blockchain. The Ethereum network, which pioneered many of the great concepts we use today, first displayed the effectiveness and pragmatic application of these two new techs. Starting with the far simpler one, smart contracts57, we can digest the integral concepts of this technology fairly easily. This is because, at its heart, this technology is based off of the ideas that we know in ordinary contracts. Two parties set the terms for a deal, there are time frames to be met and funds to be enacted, the major benefit of this over a traditional contract would be the lack of third party intermediating. Normally, an agreement would take a long time to get drawn up, mediated and notarized, with fees going to professionals for processing every step, with blockchain technology at hand, we can do this at a quarter of the price. How cheap exactly? Well, smart contracts work in a way that two parties can make an agreement on the chain and the only time anyone else needs to get involved would be for consensus. A miner needs to make sure that either party have the necessary funds and are able to meet the requirements of the contract. Because of the nature of mining, this can be done a lot faster, anonymously and at a far smaller mining fee that comes with all consensus building. To sum up, a smart contract uses code rather than people to mediate an agreement.

On a far wider scale, smart contracts can be built into blockchains to make sure that users abide by certain protocol, have the opportunity to interact in a fair and equitable way, and even vote on changes made to the chain. Smart contracts are basically in-built code that can be utilized in a far more flexible way than that of the bitcoin protocol. Smart contracts have become extremely popular in recent years with enterprise blockchain, for obvious reasons. Industries like insurance brokers, import and export companies and even online retail businesses take advantage of these programs. One particularly important use case for smart contract technology is in the development and use of decentralized applications.

Now that we have smart contracts out of the way we can focus entirely on decentralized applications, known better as dApps58. This technology, which was another of the brainchildren of the Ethereum network, allows users to create their own subset of a chain and work on it independently in either a public, or closed fashion. To put it into an easy analogy, dApps are like programs on your computer, they can be games, communication systems, accounting tools, etc. The main difference between the software that you own on your computer and decentralized apps, come from the small ‘d’, decentralized. Once a dApp has been developed, it can be used for whatever purposes the developers intended for it. It could be for games or business and it can be used in a private or public way. They may choose to tokenize it and have other people purchase tokens that can be used on the system, they may use the application to communicate among colleagues in an office or among branches of an office. The backend setup is generally available for download and the only thing the individual would need to do is put it together with its own look, name and protocol. On the Ethereum network this would be done through what is called the EVM, Ethereum Virtual Machine, and would have the dApp interconnected with the Ethereum network. Smart contracts play a huge part in the development and workings of dApps.

Though the Ethereum network was the first to bring this technology into the fray, and has more dApps derived from it than any other system, it is the EOS network that has the most capital running within its dApps. This is because many Igaming companies have adopted it as their choice technology for business59. Other dApps that utilize the EOS system are exchanges, these sectors rely heavily on money changing hands and require reliable systems to work well. Smart contract technology in this case handles all of the ins and outs of the system; they deal with sale of tokens, release of funds for bet winners and oversee the effective functioning of the application as a whole. Decentralized apps are, for all intents and purposes, microcosms of blockchain systems as a whole; a break in the system that allows you to own your own blockchain. This technology has become instrumental in the ongoing development and growth of the industry. They have also helped better understand the issues that have hung on to blockchain from the start, re-centralization, scalability and necessities in security and stability, and move forward. They have not been the ‘end-all’ solution to these issues, but they have taught us some important things about the nature of blockchain technology and what it could do for us going forward. Without a doubt, smart contracts and dApps have built upon some of the main concepts that bitcoin lacked, and solved needs that were apparent in the protocol. These protocols are what give users the confidence and security they need to work on the blockchain and it is these same protocols that will lead to mass adoption in future. These programs have helped build blockchain for enterprise and they have led the way for new systems that improve on the old ones. It is an essential question for anyone who is getting started in blockchain to ask; what is protocol exactly and why is it so important? In the next segment, we will be going deeper into more technical territory, understanding protocol and the rules that govern blockchain systems. We will understand what protocol is and look at some examples of different kinds of protocol and what they try to achieve. We will look at how all blockchain, public or permissioned use protocol and what the differences between the two.

Protocol When first learning about blockchain technology we tend to here protocol as the first technical term associated with it. Many people go along with it and accept that it is an intrinsic part of the technology and might even understand its connection to ‘rules’. And this is true, protocol is in fact, the most important thing connected to blockchain and though they are technically a set of rules that users and the system need to abide by, it is so much more than that. In a far wider sense, protocol is the framework by which a system is built, the pillars on which a blockchain stand60. As we know, not all blockchain is created equal and protocol differs from chain to chain; in this segment we will be looking into protocol to demystify the concepts that hold the blockchain together. Satoshi Nakamoto famously laid out the plans for the bitcoin protocol in his whitepapers in 200961. Funnily enough, in blockchain we write up whitepapers as opposed to blueprints, but they are essentially the same. These whitepapers consisted of what bitcoin was meant to do, how it functioned and the mechanics that made it work. These were essentially the rules for what the bitcoin blockchain did and how it would function, or in simple terms, this was the bitcoin protocol.

The first ever protocol was far simpler than many of the chains that came after it. For one thing, it had limited applications, solely in finance and value exchange. You could only use Bitcoin on the bitcoin network, a concept that was immediately obscured by the coming of Ethereum and dApps. You had to gain consensus through miners. At this point in time there was only one mechanism for this, Proof-of-Work, which required miners to use hardware and electricity to calculate the next hash code to encrypt the data being applied to a chain. On top of all of that, bitcoin used the SHA-256 and merkle tree methods of encrypting data. A lot to take in? Definitely, but these are the components of protocol. Blockchain is a technology that has many moving parts; it has to, otherwise it wouldn’t be as safe and reliable as it is. Bitcoin’s protocol proved to be very appealing to techy types of the early 2010s, who saw the technology as a real turning point in computing. The complex and intricate working of the protocol was what made sense at this time, amateur programmers and skilled developers alike could look into the body of this system and understand what made it tick, how it functioned and why it was so safe for users getting in on it. The key components of a blockchain would be its

mining system, hashing style, security features, functionality and how users gain access to information on the chain. We can understand this, and therefore improve on the technology, thanks to the fact that the system is open sourced; this means that the plans of how it worked and more importantly how to recreate it, were lain out in plain text on the whitepaper. These whitepapers are still available online for anyone who may want to do research into most protocols. The entrepreneurs inside of us would scoff at the idea insisting that this kind of open and free sharing of technological plans would invite dozens, if not thousands of copycats. Sure enough it did. We cannot be sure as to whether Satoshi Nakamoto was intending for this to happen or not, but just like his identity, we will likely never know the truth or reasons behind any of it. What followed was a decade of innovation. Starting with the Ethereum network in 2015, people began to realize the vast potentials of blockchain technology. Using the foundation that bitcoin had kicked off, developers started to realize how versatile and revolutionary blockchain protocol could be. As an example, the developer of the Ethereum62 network implemented the first smart contracts into the network, something that has been adopted and used in many of the chains that exist still today. Developers were now looking at the whitepapers, the data that had been collected since its launch and explored what needed to be improved. This led to new protocols that were, in a majority of cases, built off of the original system but with adjustments to cater to specific needs. Firstly, there was the issue of scalability, within the bitcoin network, block size was 1MB, a miniscule amount even at that time. The issue of security and decentralization cropped up all the time, questions of how we can make the blockchain safer, or what if we kept the infrastructure but removed the decentralized nature of the technology? The latter question led to the creation of enterprise blockchain, a concept that we have seen is being employed by major corporations even today. Protocol is the foundation of all chains and comes from the original idea of how we can independently and safely transfer money, or in a wider sense, data, without having to go through a bank, business or broker. These sets of rules implemented into a downloadable technology have changed the way that we interact and work together. The most important facet of protocol is that it cannot be changed once it has been released to the public. The only way for a developer to go back into their creation and fix an issue or change a mechanism, would be through consensus on the part of the community; as with everything else on the blockchain. If the user base does not unilaterally accept the changes made to the blockchain, they may simply stay with the old one while the new system forks in a different direction. If they agree, they must still go through a forking process, but a soft fork rather than a hard fork. These would not be new protocols, but rather protocols with upgrades added at a certain block height. A ‘fork’ is a developer term that indicate a fork in the technological road. As humans we know that things can never be perfect and will often times require change and improvement, this is why forks in blockchain are important. They can negate hacking faults, bugs and implement new changes, like Ethereum 2.0 and its new PoS system of proofing. Forks are the subject of our next topic and will give some examples of important past forks and explain why they are important.

Forks, soft and hard In a technology that is still as young as blockchain is, changes are always bound to be around the corner. This could be new developments in technology, a recent understanding of how things could work more efficiently, or in very rare cases, a reaction to new methods for hacking or manipulating technology. For all this, blockchain has the fork, a method for changing the direction of the technology without upsetting those who feel that the blockchain shouldn’t be tampered with. In a decentralized world, this is extremely important and relies on trust between creator and user.

The best example of this dynamic would be Ethereum and its developer, Vitalik Buterin. After the successful debut of the bitcoin protocol, the Ethereum network set out to improve on it. Opposing the anonymous approach that the bitcoin creator had taken, Vitalik went in the other direction, creating a persona around himself of the ‘Ethereum guy’. Since then, he is seen as the leader of the Ethereum network and has a devoted group of users that trust in his vision for the system; however, that has come with its own set of issues and problems. Ethereum found itself in trouble in 2016 when hackers discovered a vulnerability in one of the smart contracts, the DAO contract63, which allowed them to seize a sizeable chunk of the existing Ether at the time. Changes had to be made fast in order to recover the funds, and though this was done in time, two separate chains remained. This was the first example of a hard fork on the Ethereum network, splitting Ethereum and what was to be called Ethereum Classic. This was the first significant shift that divided the chain, many more would follow, but believe it or not, many had already preceded it too. These were soft forks64, changes in the system that were originally intended and agreed upon by the community. Because Ethereum is overseen by the developer that created it, there is a lot more of a handle over changes, and the Ethereum team love to work in phases. Prior to the big DAO issue, the Ethereum network was changing and developing with time, going from one shift to another as it reached different blocks in the chain. This allowed for more experimentation and more simplicity in the development of the technology over time. Unlike the bitcoin network that had no identifiable leader, Ethereum could be and was changed from within while for the most part maintaining its original structure. Bitcoin was not so easily fixed. With so many of the problems that new chains were exposing, the bitcoin protocol remained popular mainly due to its processes being known and useable. The popularity of bitcoin ensured that it was going to stick around for a long time and that it was not going to fall into obscurity. Things couldn’t stagnate though, the block size was too small65, fees were often times unpredictable and the deflationary nature of it made its price shift wildly from time to time. Changes needed to be made but without a central figure to implement them, people were uneasy about the idea of someone suddenly having a hold over a multi-million dollar system. Starting in 2014, many in the network started sending in ideas that would fix the scalability issue of the chain; debate was heated and many ideas were shared. A soft fork was extremely unlikely considering the amount of people now using the chain and the result was the split into bitcoin and bitcoin Classic66. Bitcoin classic was eventually scrapped as an idea for the far more popular bitcoin Cash, which is still in use today. The new block size

was capable of holding up to two megabytes, doubling its capacity. Since then, the scalability issue has only grown and created a lot of contention within the community. Bitcoin Gold, bitcoin Cash and bitcoin SV are all break offs from the original network that have tried to address and solve the issue of size and scale within bitcoin and blockchain in its entirety. Hard forks are an unfortunate result of often longstanding issues within a protocol. They are a sign that people have not agreed on solutions implemented into a system. Ilcoin had a hard fork that pushed past the issues that bitcoin has had and brought about revolutionary new technology to the forefront of the blockchain conversation in 201967. The fork in this case led to the implementation of the RIFT protocol, a new system that addresses the issue of scalability at its core. This fork is still the heaviest in terms of users today and the RIFT protocol continues to break records with its speed and time in transaction per second. This couldn’t have been possible without a hard fork in the program and shows the possibilities of blockchain today. Similarly, the Ethereum network is going through the first phases of its lead up to the Ethereum 2.0 network, the newest updates in the Ethereum world68. Forks are not always connected to speed and block size, as we have seen today. The main factor that decides a fork is a need in the community, a need that may be suggested by the users themselves, suggested to the users for voting within the chain, or, as with bitcoin, implemented by the users themselves69. Regardless of what the case may be, as an evolutionary technology, forks are necessary to take different technological approaches within the industry. It is important to note however, that this is not the case of how enterprise blockchain was created nor are they dApps. Systems like Hyperledger have different subsets of their chain used for different purposes, Hyperledger Fabric, Sawtooth and Iroha for example. Since these systems don’t require decentralization, they can be built and restructured when the time comes without the need for forks. As we go into this discussion on blockchain technology, we are starting to juggle different terminologies that may be complicated or hard to remember. In the next segment, we will take a recap of some of these words, including some that are yet to be learned. These will help us to develop and apply our language of blockchain whether you intend to build your own blockchain or simply understand the theory of it.

Blockchain glossary In the tangle of jargon and technical terminology the average person may find blockchain jarring. It is a complex and highly intricate system with specialized features and rules, however, that shouldn’t perturb anyone from getting involved in it. Now that we have looked at blockchain’s main functions and mechanics, let’s take a moment to revise some of the important terms we have learned and some that are essential which we haven’t covered yet. Decentralized: This, and the concept of decentralization as a whole, is at the core of the blockchain world. When something is decentralized, it works separate of any entities or businesses that hold a singular sense of control. Blockchain is an inherently decentralized system, unlike Microsoft Windows, your credit card and the central bank of whichever country you live in. These examples are all products, companies or institutions that have a centralized point of power, Bill Gates, your bank and the Federal Reserve in these cases. There is a saying that nobody owns the blockchain, and this is largely true because blockchain is a decentralized system, no individual or group of people can make decisions about it, change it, or even profit off of it. This is a core value in blockchain and is essential to the security and privacy of its users. Nodes: In a nutshell, these are computers that interact on the blockchain. As soon as you have downloaded a blockchain program, your node (computer) has a complete record of the whole blockchain in question. On a more technical level, a node can be any device that can receive, send or create information over a network70. Nodes are important in blockchain because they are the source of information being distributed across the chain, whether buying, selling, uploading or mining information.

Protocol: Every blockchain has a specific protocol; these are the rules and parameters that define what a chain can do. Different protocols will give users access to features and mechanisms that are available on that specific chain, this can be in the form of unique security features, ways that cryptocurrency is mined and how consensus and governance work. Protocol is ultimately how a system works, or at times doesn’t work, and what will make it a success or a failure. As an example, the bitcoin protocol allowed for sending and receiving of Bitcoin and had an original block size of 1 MB, Ethereum conversely had a far larger block size and implemented the first smart contract technology and dApps. dApps: Decentralized Applications are an add-on to the original blockchain ecosystem, what these applications allow you to do is to create your own breakoff chain based off of the original system. An example of this is the Ethereum Virtual Machine (EVM) of which many, many variants of the original Ethereum system came from. EOS allows for dApps too, the majority of EOS dApps are used for financial reasons like exchanges or for Igaming. DApps, in short, allow you to create your own blockchain system off of another chain. When downloading a dApp,

a developer is given all of the back end infrastructure of the chain and can develop the front end, or aesthetic of it, as they please. They may even choose to alter, or add onto the basic structure of the chain to adapt it to a particular need. Smart Contracts: Similar to ordinary contracts, smart contracts produce agreements between nodes and works off of the internal system of blockchain without the need for a third party. Smart contracts use the systems that blockchain have in place to automate deals and oversee the compliancy of either party within the deal. Smart contracts contain details as to when and what should happen and how actions and results will affect aspects of the contracts. Smart contracts can also be used when creating a dApp to work as the moving parts of a new system using computer logic, if A then B and so on within this system, as an example. Consensus: Since there are no traditional mediators in the blockchain world, we need people to anonymously verify and confirm interactions. Within blockchain this is what is referred to as consensus. It happens through the process of mining, forging, burning or any other kind of proofing method. Through these processes, consensus builders check that all of the funds being exchanged or all of the data being uploaded is verifiable and not malicious. Consensus is necessary in the security of the blockchain too, giving users the confidence that outsiders cannot access, change or affect their assets or the chain itself. Proofing methods/algorithms/ mechanisms: Each protocol has a different way of reaching consensus. These systems are different depending on what has been built into the chain, the standard so far is proof-of-work (PoW) but because of the lack of efficiency and environmental cost, this is losing its prominence. Ethereum is pioneering new methods of proof-of-stake (PoS) though they are not the first to implement it practically into a chain. In all proofing methods, a consensus builder must risk value in some form to be given the chance to validate a new block. The risk puts off any malicious activity and digital rewards from the central system act as a reward system for those who act in line with the system. Scalability: When we talk about scalability in blockchain, we go back to the original trilemma of the technology as a whole. Scalability is the ability to have information pass through the system without creating too much gridlock that will slow down the system. The other two factors that come into play in this case would be decentralization and security. It was imperative that the blockchain remain secure, otherwise users wouldn’t find it attractive, and as we have already mentioned decentralization is a core value that separates blockchain from other technologies. Scalability was sacrificed in the early years of blockchain but is now coming to a point where it is no longer an issue. The RIFT protocol, for example, can support upwards of twenty million transactions per second, whereas the bitcoin network can manage seven transaction every second at the best of times. Scalability is a basic idea of how many people can effectively use a chain at any one time. Transactions per second71: This is self-explanatory, this is the way that we calculate the average amount of time it takes to validate a block of data on the chain. According to the volume of transactions being made at the moment, the proofing method, and the hash rate, this could vary wildly. Block height: As blocks are validated and added to the chain, they are ‘numbered’ in sequence, which is called block height. If you wish to find a transaction made on a chain, you would look for the block height. Some other terms that we have not mentioned but are equally important are the following: Peer-to-peer networks: Because the blockchain is a system that works without the use of third parties like companies or governments, it relies on a network built up of people working together. We call this the peer-topeer network and it consists of every user of the particular chain that you may be using. Blockchain connects one node to another through the distributed ledger and makes all interactions direct. Some refer to this as the peerto-peer network. Distributed ledger: Similar to the peer-to-peer network, the distributed ledger is a network of nodes connected to each other through the use of the blockchain. Being a financial system, ledgers are used to record all transactions and build blocks that connect to each other. Like in accounts, these ledgers are what are used to ensure no one double spends coins, hacks to the system or acts in a way that would give any user an unfair advantage while on the chain. Hash rate72: The hash rate is the difficulty involved with encrypting data onto the chain. This comes from a variety of factors, whatever the case may be though, hash rate is only considered in terms of PoW mining. The hash rate is how long it takes to find the value of the code that corresponds with the encrypted data. This comes through mining which can be more or less difficult depending on usage, age of the coin and amount of miners working at the time. Hash rate becomes more difficult with time as the amount of coins available for mining decrease, this

causes deflation within PoW blockchain networks. For this reason, developers implement concepts like halving events to help deal with issues that come as a result of this. The hash rate is not a gradually inclining factor, it goes up and down on a daily basis as per need. Halving/ halvening events73: These occurrences, as well as hash adjustments, come periodically at certain block heights. They are occasions when hash rate and speeds are calculated to optimize the system for its users. These inbuilt markers for adjustment help miners to produce blocks at an appropriate speed and receive justifiable rewards without draining the system. These events effect the fees related to mining, the speed at which a block is calculated and even the value of the coin. The most well-known halving event happened in 2017 when Bitcoin suddenly came into public focus and shot up in value. It is important to note that these kinds of events only happen on systems employing PoW systems for mining. Going forward, we will need to keep these terms in mind as they define a lot of what is coming next. Blockchain is covered with terms like these that make it seem more complicated than it actually is to navigate. Next up, we are going to look at concepts that everyone has run into at least once, anonymity, traceability and security, three ideas that often confuse new users.

Anonymity, traceability and security A lot of novice blockchain users come into the world of blockchain because they feel it is a safe and anonymous alternative to the general economy. Though this is to a large extent true, people tend to convolute much of what blockchain is with what blockchain is not. Simply being paid in Bitcoin to avoid paying taxes, for example, holds no water in law courts; if you were to smile away thinking, how is anybody to know, well, you clearly don’t abide by the cardinal rules of blockchain. To say that blockchain, in the majority of cases is untraceable and completely anonymous is simply incorrect. Understanding that unlike a bank, blockchain does not get regularly monitored by regulators and financial officials, this much is true. However, if law enforcement were to get your wallet address then they could fairly easily find your transactions on the chain; including money sent to or by you. This piece of information goes a long way, as for someone who is not equipped to use cryptocurrency in effective ways could suffer the consequences.

To start with, the vast majority of nations around the world currently have legislation in place that covers cryptocurrency, short of that, blockchain or at least bitcoin. These can range from extremely rigid and obstructive, to minor and open. Regardless of where you live, using cryptocurrency as a method of staying under the radar is only as effective as the person using the currency. It is important to note that the first concepts that are often put under a single umbrella are privacy and anonymity. Blockchain technology allows for great deals of privacy and freedom while on the chain, however, privacy is not anonymity. As there are billions of dollars on any given day going through the world in the form of cryptocurrency, it is easy to slip in and out undetected, for the most part. But if you give people reason to look into your actions while on the blockchain, they can, and most likely will, find what they are looking for. The blockchain of most cryptocurrencies is as open and accessible as the cryptocurrency itself. If anyone goes to the block explorer and searches out any one or other transaction, they will find it. If someone knows your address, they can simply go onto the block explorer and find out what you have been up to. Similarly, exchanges, the main point of access to that cryptocurrency, is now wrought with Know Your Customer (KYC) and Anti-Money Laundering (AML)74 features which ask for your identity upon signing up. All of these things are dead giveaways in terms of who you are and, if needs be, what you are doing. This is traceability and the light hearted, non-meticulous crypto user can easily overlook this fact. Granted, it is time consuming and requires a lot of knowledge to find out someone’s history on the chain, but it is possible. There are ways around this though; should it be entirely necessary for whatever reason, some wallets are made specifically for anonymity and complete privacy while using cryptocurrency and some cryptocurrencies are made with anonymity in mind. Wallets like Bitpay75 and Electrum76 are examples of private spaces to keep your coins. Upon downloading and

setting up these wallets, you won’t be required to give any details regarding your personal info and will be able to receive and send coins with relative ease. The security systems put in place on these wallets are similar and just as effective as those on exchanges or other wallets. One of the core differences is that should you lose your passcode or seeding, your coins could be lost forever as there are no ways of identifying who actually owns that wallet beyond that. Despite of this, wallets like Electrum have built in systems for increased anonymity such as the opportunity to create new wallet addresses without issue.

Coins like Firo77, Dash and Monero are three protocols that were created with the idea of increasing anonymity from the standard coins like Bitcoin and Ethereum. The approaches that each of these coins take to achieve this goal are unique in their own ways. Monero’s system is so different to all other blockchain that some have even argued it to be a technology apart from blockchain entirely. With Dash, masternodes78, computers that have a minimum amount of 1000 Dash coins and act as pseudo-miners, can use the private send system built into Dash that allows for transactions to be private and untraceable. These systems have been introduced as a measure to ensure that users can be confident in their use of the coins. Zk-snarks79, or zero knowledge succinct non-interactive arguments of knowledge, are another method of cryptography that keeps data anonymized. We spoke of this topic when we first mentioned Zcash in an earlier part. Zk-snarks are not necessarily limited to Zcash though, as Firo also uses these mechanisms. Zk-snarks are a tech that allows nodes to communicate with each other and prove facts without exposing what those facts are. If you go to any office building, a person may justifiably ask you, who you are and what your business is there. In reality, a secretary or security person may not be privy to this information but rather simply the question of, ‘are you allowed to enter?’ A driver’s license allows law enforcement to know you are allowed to drive, but the document also gives a far larger sense of who you are. Coins that utilize zk-snarks aim to circumvent this. A wallet making a transaction needs to identify to the network that they have the necessary funds to send the coins to an address, but omit which address is sending them. This mechanism relies, like most other cryptographic functions, on complex mathematics which the system itself balances. They were a direct reaction to the development and understanding of bitcoin’s privacy issues. It brought back the lifelong question, how can we remain private while exchanging funds? On the opposite side of the spectrum, some have seen the crypto revolution as a way to counteract the idea of privacy altogether and gain more insight into lives of everyday citizens. China, the home of many Bitcoin miners

and mining farms80, is poised to introduce the first digital currency based on blockchain in their digital Yuan81. This raises some questions into ethics and what blockchain was originally created for. China has moved increasingly towards a state of total surveillance within the country, from the WeChat credit card and social moral credit scores82; it is natural to think that their adoption of blockchain technology in this sense does not intend to give more freedom to its people. When it comes to this aspect of blockchain technology, a great deal of discussion into morals, ethics and law come out. We don’t, after all, want blockchain to fall into the wrong hands. Cryptocurrency has already been used in the past to fund criminal activity like terrorism and money laundering schemes; both as advocates and users of cryptocurrency and as citizens within a society, we must agree where lines should be drawn in what is acceptable and what is not. Though the Ilcoin network does not have any outstanding KYC or AML systems for starting a wallet or purchasing coins, it does act as most other non-anonymized blockchain systems. Our system uses enhanced encryption techniques with multi-layered security options for whatever level of confidentiality you may be looking for. Before we get into the specifics of how it works though, let’s look into encryption more broadly.

Encryption Encryption is one of the most complicated parts of blockchain technology but is essential to its structure. Encryption is what puts the ‘crypto’ in cryptocurrency and what makes blockchain secure and attractive to users. This aspect of blockchain is what keeps data safe and your cryptocurrency out of reach when being sent back and forth on the chain. There are three main systems at play within encryption, hashing, private and public keys and digital signatures, these three concepts are necessary in block production and the flow of the technology. We are going to look at each of these and see how they vary from chain to chain. Hashing83 is a mathematical concept that was integrated into computer sciences and eventually found its way into blockchain technology. Data that goes through hashing is assigned a unique code that is decided through mathematical cryptography. Anything from a word to a dictionary can be given a hash code, it all depends on the sequence of words, numbers, letters and even punctuation used and in what order. The word ‘hello’ will always have the same hash code if put through an encryption system like the SHA-256, the encryption system used on the bitcoin network. Should you misspell a word, or add a comma or full stop, the whole code would come out entirely differently. The hash codes that result from this kind of encryption are a series on numbers and letters, which the system would produce when presented with the unencrypted material; this series of numbers and letters is called a nonce.

Looking at this from what we have already learned, we can take the example of the bitcoin protocol. As we have said, bitcoin employs the use of the SHA-256 hash function. We have talked in detail about how proof-of-work needs computers to encrypt data. What these computers are doing when trying to reach consensus is basically trying to identify the nonce of the data that is given to it. The first computer that can discover this nonce sends it to other computers on the network and has them check to see if they can confirm it as correct. Since all nonces have to match precisely to information other computers are being fed, a nonce can immediately compare it to the data that is being encrypted and see if the two match up. If enough computers return a positive response on the code, it is accepted and added to the block. Anyone trying to read or replicate the hash code, will need to put in a lot of time and energy draining effort to try and decode it, making the endeavor close to pointless in any given case. The reason that this kind of encryption is so effective is that it is asymmetrical and cannot be deciphered so easily. Above and beyond this, given that nonces are essentially digital fingerprints for data, should they be altered, it is extremely obvious to notice. Any change to a sentence or piece of data that has been encrypted in this way will yield a completely different code, which is how the blockchain can ensure that data is not touched.

From hash functions we can now look at Merkle trees84, another important component of encryption that deals with scalability. Merkle trees exist within blockchain as a way of encrypting large quantities of data while remaining fast and consistent. Simply put, Merkle trees connect pieces of information through a network that resembles a tree, there are leaf nodes that connect to branches which ultimately connect with the root of the system. This structure allows information to be connected together cryptographically and mapped out in a simple and repetitive way making hash functions, which would otherwise be time consuming to create and store, scalable. As we can see from the image below, data is uploaded and put through the hash function. Raw data like this is called the leaves, they are put through the first process of hashing when a block is in the process of being created. It is then processed again into smaller blocks of data before they are finally stored in the roots. This data is what will go on to become a block in the blockchain. Through the hash functions and connectivity between hashes, it only requires a person to know the nodes responsible for the information they are looking up, in the case of blockchain, the transaction ID. Starting from the root and going down the pathway to that ID makes it far simpler to find, but also easier to build up and store encrypted data as well. So to sum up, we use Merkle trees to simplify the process of encrypting and storing data onto the blockchain. It makes it simple to look up as it creates connectivity between specific nodes to a single root which can be followed to any given point using the ID of any transaction made.

Another aspect of encryption that is important in keeping data secure is that of public and private keys85. If you have ever heard of PGP systems then you probably already know what this is and if you don’t you can probably predict what it is all about. Public/private keys work in a similar way to actual keys, they are however digital and more diverse. When you upload data onto the chain, hashing will make it impossible for you to decipher, unless you already know what has been encrypted. For this reason, you have the private key which allows you as the owner of that data to decrypt and read it, even copy and access it. Public keys on the other hand are the keys that allow others to view a piece of data but show the system that the data was not originally uploaded by that person. These keys are essential to keeping personal data accessible to only those who created or uploaded it. Mathematics, just as with hash functions, bind the key pairs together and keep track of ownership while allowing users to share public keys safely. Holding a private key also maintains that only the holder can send messages or more importantly spend the cryptocurrency that is attached to that key. The use of public and private key pairs on blockchain keep the system safe from users with malicious intent and is central to user safety.

Finally we can move on to digital signatures. Much like these other functions of encryption, digital signatures are a way of safeguarding information and transaction histories on the chain. They are the confirmation that an action has been done when adding a block to the chain. Bringing all the information we have looked at so far, we can create an idea of the process of encryption on blockchain. A miner may create a nonce out of a transaction and encrypt it using public and private keys. Those keys are distributed to other computers so that they may be sure that the nonce sent to them was at no point altered or changed, the public and private keys can confirm this. After checking the code that was sent against the decrypted message, the other nodes on the system can confirm that the information is genuine, unchanged and matches the nonce that was sent to them. These public/private key sets used in encrypting data are different to those which are given to users to access data on the chain. So as we can see from this process, the digital signature86 is the final authentication of information that is being processed for the chain. Hash functions encrypt data into a string of infinitely numerous variations depending on the content of the data. Merkle trees create pathways between the encrypted data making it easier and faster to store while making data simpler to get to for users. Public and private keys are used by those who have data on the blockchain to access and share that information. Digital signatures are confirmations of data upload to maintain that it is complete and unaltered. Digital signatures are very self-explanatory and come with the use of timestamps. Though these two concepts are different, they complement each other in their use. Digital signatures authenticate the ownership of data on the chain and timestamps mark their original creation, further verifying the creator. These codes exist within each block as part of the stored data and wrap up the whole concept of encryption into a finished package.

Now that we have an understanding of encryption, let us see how some examples in blockchain protocols. Bitcoin87 The original protocol used SHA-25688 hash functions along with Merkle trees to create blocks of data. The add-on in blockchain at this point was in synchronizing one block to another, creating the chain we so often refer to. The hashes that are created to produce a block rely on each other in sequence with each hash starting with the last pointing towards it and thus starting it. This sequential concept in blockchain means that if any one block or any transaction were to at some point be tampered with, the whole system would crash because of the sudden change in a single sequence. Imagine breaking a link in an actual chain. So, from what we have seen, the bitcoin network set off with the first ever applicable and relatively scalable system that encrypts data for secure transfer. It also safeguards users’ cryptocurrency by holding a complete copy of the distributed system and updating it each time a block is created. This is the idea behind how people can have digital coins without having to trust an institution to hold them. The simplest way of creating these hashes, which are so essential to its security, was through proof-of-work. Using energy and hardware a miner could randomly attempt nonces until a correct one is discovered. From there, private/public key technology can reliably send that nonce to other nodes around the world to be confirmed. Nodes recognize that in this way a message has not been effected or obscured and can be reviewed securely. Once 51% of the nodes come to consensus that the given nonce is verifiable, it can be put through the Merkle tree and into a block. Finally blocks are signed with a digital signature which will point to the next block in line. The larger issue at hand here would be scalability, as we have previously mentioned. This method of encryption is the one employed by Proof-of-Work systems like bitcoin. Though using the Merkle tree has created a more scalable encryption method to the technology, digital signatures and larger demands on the system have slowed it down immensely. This is in part due to the miniscule space in a single block, which we will speak of at a later time, and is only partially resolvable as a result of the randomized approach taken in proof-of-work consensus. So, now that we understand the basis of how proof-of-work tackles encryption in blockchain, we can look at a proof-ofstake system and how it approaches the subject. Proof-of-stake algorithms89 Proof-of-stake was a reaction to the bitcoin and Ethereum networks’ consensus mechanisms, attempting to create a safer and more scalable system for block creation. The main question that we will be tackling in terms of encryption here is, in taking out the hardware that calculates the nonce of blocks, how do we reach the same conclusion in proof-of-stake?

A basic idea of how blocks are created in PoS systems is as followed. Transactions are collected in a pool and sent to the forgers for validation, PoS’ version of miners. Forgers must stake coins to be given the chance to create the next block, there are a variety of factors that effect this not just amount of stake. Once a validator is chosen to create the block, their copy of the distributed ledger checks all transactions against the ledger and rejects any double spend coins. Once they have confirmed all of the transactions, they may build the block and send it to other nodes for confirmation. When enough consensus has been built in favor of the new block, the forger receives their stake back from the system along with the transaction fees paid from those whose transactions are validated. Of course, if enough nodes return a rejection of the block, the forger loses their stake and the next is selected to validate it instead. PoS systems also largely use smart contracts and governance to keep all its users in check. Forgers have to abide by many set rules put in place prior to staking and withdrawing coins. Agreements among forgers keeps data safe and secure while on the chain and each PoS system utilizes different tactics in gathering this consensus. Public and private keys and timestamps are still incorporated into this consensus algorithm, but hashing takes on new meaning as blocks are created. The main takeaway of any PoS system is that other validators are given access to the same information and can agree that the information being added to a block can be legitimized. Randomization is a factor that affects stake in this consensus method with logic based systems like coin-age. In coin-age, the length of time that a coin is held without being staked is considered when a new block creator is being selected. So if you were to stake fifty coins against someone else’s fifty coins, the tie breaker would be which coins were held longest without being staked. This does not only apply to tie breakers but addresses the issue of ‘wealthy’ coin holders being selected over and over for validation, the ‘rich getting richer’ conundrum. Transactions can be checked on block explorers, the platforms that act as browsers for a particular chain. This is true no matter what encryption method a chain uses. The Ilcoin browser allows you to see transactions you’ve made in the past and at what block height your transaction is, among a variety of other interesting statistics. Block explorers are an important part of any blockchain system and just like a web browser, are essential to any crypto user. We will discover this topic next.

Block explorers90 There are many programs that are connected to a blockchain, the chain itself, wallets, and some functional systems even contain separate platforms. One of the most important components of the blockchain is its block explorer. This is particularly true of chains that have more diverse functions than simply exchange of value. Block explorers, like web explorers, are programs that give the user an overview of the blockchain as a whole to see what transactions have been made. These are all entirely encrypted and data cannot actually be retrieved without the private or public key to them. There are times when it is important to go back into the archives and take a look at what has been done, this is the main function of a block explorer.

If you should need to recall all of your past transactions, for tax purposes for example or to prove you actually made a transaction, this information is all stored in the block explorer. Along with this information, we can also find hash rate, wallet addresses and other important information connected to the chain. Below is a list of functions of block explorers and what their use is.

Block and transaction feed: These two aspects are connected in that they give you a view of what blocks have been mined (on blockchains that include mining) and what transactions were included in that mined block. So if you need to check if your transaction was sent and validated, all you would have to do is look up the transaction ID within the block explorer and it would show your transaction and all others done along with it. This will also include the time of verification and the total amount sent within the same block at the time of verification.

Address history: Looking into your address history becomes increasingly important the more you use the blockchain. In the case of businesses that accept cryptocurrency as a payment method for example, this kind of information is important when tax time comes along. As time has gone on and with the development of enterprise blockchain, being able to audit transactions and take account accurately is now one of the great advantages of blockchain technology. This trend has grown steadily since blockchain began to branch out and it is likely that this trend will continue. Block explorers and their continued development will play a big role in this. The mempool: This is the list of yet unconfirmed transactions around the world. Depending on the block explorer, this could be more or less detailed in its content. Some block explorers provide information as to which addresses are currently awaiting confirmation, where they are coming from and which address they are going to. This information is important both to those making transactions and waiting for coins to arrive at the receiving end, and for people who are awaiting payment. Different block explorers can provide users with a lot more information than we have mentioned above. These could include, the biggest block produced throughout the day, the original block in the chain which is referred to as the genesis block and various other facts. This also depends highly on the kind of coin you are using, Bitcoin is one of the more transparent ones with most information being readily available to anyone. Coins like Monero, as we have mentioned, offer little information since it works to protect the privacy and anonymity of the user. Of course, all specific information ascertaining to user identity, product exchanged and so on, is all confidential and requires external knowledge to really be understood. The Ilcoin network has its own block explorer and works in a way that is in line with most other public systems available today. Ilcoin works off of many similar concepts that are intrinsic to many other chains, but is novel in its approach to solving various issues within it.

In the next part of this book we will be looking at the issue of scalability and the methods taken to solve it, what has worked and what has floundered. This fact is one of the defining factors in blockchain today and in understanding blockchain further, it is necessary to take a look at the approaches taken and why they succeed or fail.

Approaches to scalability Scalability is the original problem that faced blockchain as a technology, it encompassed the idea that as time goes on, more and more people would become interested in using it. The question was how can we cater to that need? As a result many developers have attempted to build upon existing systems to find solutions to this issue. Now that enough time has passed we can look at these approaches and analyze what stuck and progressed the conversation, as well as what needs to be done to get us to the next big development. Blockchain has always been an ever evolving technology, starting out with a block size of only one megabyte, it was destined for improvement. It is hard to say exactly why bitcoin started out with such limited capacity, perhaps it was simpler to develop a beta system with smaller blocks or maybe Satoshi Nakamoto didn’t see the software growing to the point where more space would be needed. Whatever the case may have been, here we are, ten years later and still arguing about how to maintain the current state of the blockchain while growing consistently to the needs of the user. Whether expanding the blocks, changing consensus type or coming up with entirely new methods for storing and verifying data, we are getting closer and closer to figuring out how we can expand the user base of blockchain overall. The first and most obvious approach to scaling the system was expanding the block size. This was simple enough in its concept but when practically applied it showed just how difficult it would be to achieve scalability overall. The first question was that of losing the sense of decentralization, this was especially the case with bitcoin; if anyone can simply change the size of the block as per the need then we have a circumstance in which someone is actively manipulating the system, and so begs the question, what is next to be changed? And thus the whole thing falls in on itself. On top of this fact, critics of block size increase would suggest that this is not a long terms solution; if we simply change the block size every time it is needed, we will eventually end up with hundreds upon hundreds of forks with the same issue always around the corner91. For this reason, systems like bitcoin and Ethereum have adopted new styles of data storage like segregated witness and methods for confirming blocks like sharding. Segregated witness92, one of the first attempts to scale the blockchain, is a novel and interesting approach in which the digital signature on the block is moved towards the end of the transaction rather than the input. A digital signature is important in confirming that the information in the block is not manipulated or fabricated, similarly to a signature on a contract. A digital signature takes up a huge portion of the block, and in smaller blocks, they take up essential space. What segregated witness, or SegWit, does is simply move the signature to the end of the transaction which would then latch on to the next set of transactions for verification purposes. In this way, earlier signatures in the block can eventually be omitted entirely, relying instead on newer signatures. This way more space can be made over time and speed up the system. We will be talking about digital signatures a little later on. Though this approach solved the scalability issue to a larger degree than simply increasing block size, it still only improved the bitcoin block size from 1MB to 493, which is not much of a permanent solution. Sharding is a far more advanced method of scaling and will be one of the concepts used in the Ethereum 2.0 soft fork. The main idea of sharding94 is sharing the load when data is uploaded for easier and faster verification and encryption. Because data is spread across different computers when consensus is being reached, less burden is placed on a single node and transactions per second are increased immensely. This takes the baton from the old PoW style of mining and excels beyond what it could ever achieve. As more and more users upload information, more shards are created while each shard maintains the same amount of information allotted to it for verification. In this way, each computer will never have excessive amounts of data to verify, rather more pieces will be added for greater ease on the system as a whole. In short, consensus builders can now work alongside each other, using many computers rather than one or another competing against each other for faster upload time. With what we know so far, you should already understand that systems like that of bitcoin, proof-of-work, cannot be used for this method of scaling. Rather, proof-of-stake is used to create consensus on chains that employ sharding. And proof-of-stake in of itself has played a huge part in the scalability debacle. Using a version of PoS, known among users as forging or staking, has allowed systems like Cosmos and Qtum to thrive in the modern environment. Changing this method of reaching consensus, from one that relies heavily on hardware input and mathematical calculation, proof-of-stake takes away many of the time consuming processes that is connected

with the proof-of-work system. Naturally, there are various obstacles that get in the way of the PoS style of consensus, these include overly competitive atmospheres in getting allotted the chance to validate the next block and the possibility of centralization through the increase of wealth on chain. Though proof-of-stake is becoming a staple in modern blockchain, the above mentioned facts have given us the understanding that there is still a lot yet to be learned about it before it can be perfected. Finally, another protocol that has been developed specifically with the issue of scalability in mind is the RIFT protocol, developed by the Ilcoin development team. This novel concept in blockchain for mass use employs mini block technology to give greater space and autonomy to the miner involved. Mini blocks that are guided by our state-of-the-art security system to automatically collect transaction and data being put onto the chain95. While data is being collected, it is immediately passed on to a larger block that can be mined every five minutes. The automation and synchronization of the mini blocks grant far superior user experience in using the RIFT system. This approach to scalability is now the fastest system available with over twenty million transactions calculated every second.

As always, the system does not come without its criticism as well. Many have claimed that the RIFT protocol is too expensive in its mining fees to be practical, and others still, claim that the system is prone to centralization. This would be because of the central proofing system that allows the mini blocks to work independently. Though many of these claims come from an educated place of technical understanding, the internal system is safe to use and is competitive in price comparatively to other chains. It could be argued that the mini block concept is a step closer towards a true DAO system working alongside traditional consensus building. All in all, any tradeoffs are superficial in the scope of the amount of space that is available while keeping a safe and decentralized environment for the user. The discussion on how to scale the blockchain and keep it attractive to the users goes on even to this day. There have been and are many theories still being tested to prove their feasibility, this is one of the more exciting aspects of blockchain today, the innovation surrounding the industry. Every year new projects and phases get unveiled and impress us with their ingenuity. We will be looking at some of these new projects and what they have led to and, more importantly, taught us about blockchain technology.

Functionality in blockchain

The trends surrounding the blockchain sector have gone in and out quite rapidly with developers around the world producing advancements in distinct eras of their own. These can be divided into three parts all centering on particular ideals that can be found in the systems themselves. Bitcoin signaled the birth of blockchain as we know it today. The first few steps thereafter focused entirely on the refinement of the decentralized coin and how the bitcoin protocol could function in a practical way. This was the start to what is called the ‘disruptive technology’; a system that could change the way we look at the institutions of our society altogether. Once Ethereum was released, which would go on to be the second largest coin after Bitcoin96, it signaled a move into exploring the potential of blockchain in a more diversified way. Smart contracts now gave people the opportunity to create complex transactional agreements, relying on the trustless self-fulfilling infrastructure of blockchain, rather than, for example a notary. DApps brought people closer to the blockchain giving them outlines of the software that they could work on and maintain their own systems. These two ideas would come together in some of projects in developed now and work in tandem to produce some truly groundbreaking platforms. Functionality is the name of the game now, with systems that are so incredibly varied and distinct that, looking back at bitcoin, bare near to no resemblance. The foundation of where these systems come from are still based in the original ideas of the first protocol but have been reimagined in a way that would bend the limits to their fullest extent. Systems like the Brave97 network that allows users to share content in a way that is more similar to Youtube and Netflix than to bitcoin or Ethereum. In this particular case, users can upload information onto the chain in lieu of monetary transactions. Proofing and verifying is entirely redefined here as reward and confirmation of upload to the chain comes entirely through engagement. Rather than holding a wallet or using a block explorer, the platform itself is in focus. What the Brave network does beyond this, and perhaps primarily, is connect content creators, content consumers and advertisers98. The main frame around this three way relationship is giving content creators a platform to join with their audiences. This is a reaction to a direct need of the online world and through merging of concepts, online data for sharing coupled with the decentralization of the blockchain, this program exists virtually, bringing both ideas together. Finally, the idea of mining and digital rewards comes to the front of the blockchain rather than lying underneath. Gaining consensus now comes through the use of the chain and advertisers come in as third parties which viewers may choose not to engage with or, if they do, they will be rewarded for their participation. All blockchain capacities amalgamate and bring more of the same but bent to the particular necessity that it is built for. This is one example of the truly innovative systems that are currently available for use. Projects like these have been coming together over the last couple of years and focus entirely on the end user rather than the financial side of

blockchain. However, the most recent developments in blockchain appear to be moving back to its roots in financial systems.

Nowadays, it is very common to hear about DeFi; it has become somewhat of a buzzword in the blockchain community. Though this is another layer of the evolution of blockchain technology, there is nothing to be concerned about as it follows most of the same logic. Decentralized Finance is what it stands for and it brings back our attention to making money through the blockchain. This time, not so much through offering energy, stake or space or through investing in a coin; now the attention is on producing liquidity in-of-itself. Through smart contracts and dApps, largely coming from the Ethereum system, platforms like Balancer99 and Uniswap100 offer financial opportunities to holders of cryptocurrency. These platforms would provide services like exchange of cryptocurrency, loans and insurance, and many other services that ordinarily come from a broker or a bank101. The most cutting edge at the current time of writing would be liquidity mining. Using smart contracts, liquidity miners use their assets to form a space for easy exchange of value whenever it may be needed102. This addresses another need of the modern age, but it has much closer ties to the blockchain world than anywhere else.

Liquidity mining was created in an effort to make buying and selling cryptocurrency a lot easier, similarly to the earlier example of Brave this comes about through everyday world concepts. In the common stock market, liquidity makers are people who add liquidity to markets to make it easier to trade coins and tokens, they also make them a lot more lucrative by the very nature of their work. In this sense, crypto trading, or even users of crypto have an active and live space for obtaining various cryptocurrency at any time, for the liquidity miner, a percentage reward from any transaction is given to anyone active in the pool. Bringing this concept to blockchain is a natural one and leads to more autonomy from centralized systems like

exchanges. The DeFI space is an obvious move in the modern day and it signals a shift in the creative process of developers, bringing real world application to the decentralized technology. It is significant for a couple of reason but perhaps the two most compelling ones spring from the same place, the trend of average people getting into the blockchain space. For more people to have straightforward access to coins and blockchain platforms as a whole, is something that has become of increased importance among blockchain developers. Secondly, it has also opened up avenues yet unexplored within the investment community. If a system can increase liquidity within itself, it can bring more attention to the industry too. We will be going into some of the specifics of how DeFi works and the effect it has on the community in a later segment. For now it is important to know that this new development is using old and proven technology, like smart contracts, and the decentralized infrastructure in a way that is sure to progress the blockchain conversation into the future.

The next advancement worth discussing is the sudden interest growing in delegated-proof-of-stake built into newer systems. Though we have spoken in depth on the subject of proofing mechanics in earlier segments, and the fact that DPoS is not a particularly new idea, it is significant to speak about now because of the way it is being implemented. One of the longstanding issues faced with proofing methods is that it always has been, and is only getting more, exclusive103. Particularly with PoW systems, it was both expensive and resource consuming to make money in mining. Even when considering newer PoS systems that simply require you to have stake in the coin for a certain period of time, need a downloaded and updated copy of the distributed ledger on your computer to work. This can take a huge toll on an average laptop or computer. Enter delegated-proof-of-stake, a proofing mechanism which allows miners to delegate coins to a far larger and more powerful source for staking. The reason for developers to incentivize more and more miners to their chains is so that recentralization is avoided. The more diluted the mining community is on a chain, the less chance for malicious attacks and manipulation of the blockchain to happen. The ability to delegate your coins means that you don’t necessarily have to have a bulky program like a blockchain system running to gain rewards. The idea behind this style of consensus is not new and can be compared to mining pools in the bitcoin network. The idea insists that cooperation is the best way to maintain both a steady transaction speed and a steady stream of income. The process requires a stake holder to find a reputable pool to delegate their stake to. Using the blockchain platform to delegate your current stake to the delegation pool through a smart contract on the platform itself. This way, your coins are safely within the chain and not in anyone else’s hands or wallets. You then receive small incremental rewards off of the overall coins being produced by the larger pool104. And this has proven fruitful with new systems like Qtum105 as well as well-founded ones like EOS showing the success of this style of consensus building. This era of blockchain seems to be about building back on top of that original idea of blockchain being a system for fairer finance. We have explored how broadly we can define, and utilize the blockchain and now people are feverish to go back to the roots that brought us to where we are now. What will come from here, that’s anyone’s guess; one thing is sure though, that it will be something totally unique and surprising to the whole of the blockchain world. The functionality of blockchain has been at the forefront of the conversation for a few years now and as it continues to move at its momentous speed, it won’t be long till we have moved on completely. Now that we have peeked ever so slightly into more technical waters, in the next section we will explore the social aspect of blockchain and what attitudes are taken to it around the world.

Views on blockchain To meet anyone and ask them what they know about blockchain today usually boils down to a recognition of cryptocurrency, in many cases being put under the umbrella term ‘Bitcoin’, or those who would be involved in the trading of cryptocurrency. The well of understanding of ‘what is blockchain’ is a very polarized thing. One institution, for example, that holds a very strong opinion on the subject would be law makers who can be reasonably nervous by the idea of cryptographic money changing hands. Conversely, many of those who deeply understand the benefits it, see this technology as a means towards the dream of a completely decentralized world. And though, even in reading this book, you may not necessarily be affected by any of these notions, it is important to take a look every now and again into what other people see as ‘the blockchain’. In this segment we will look into legality and moral implications when using blockchain. We will go into what needs to be considered, what attitude one should adopt in being involved in this world, and what effect we can have when interacting. An anonymous system for exchanging data can completely blind us to the consideration that there are other people around and that actions need to be taken to live an ethical life with blockchain.

There is no better place to start this discussion from where most people have their initial point of contact with the technology, investments. The Bitcoin boom of 2017 gave birth to a whole new species of investor, the crypto trader; a large section of the world view blockchain through this lens now. It was never a question of whether or not big money would attract a certain kind of person to this industry but rather when. The holding of cryptocurrency is essential to the usefulness of blockchain, the more people holding coins means the more the system is being used. Blockchain and the investment into cryptocurrency work parallel to each other, both keeping the whole thing going. The question of where does one draw a line is where things get obscured. Naturally, there are a huge number of people who own cryptocurrency strictly for profit and this can create conflict at times. It is true that liquidity in the market stimulates activity and interest in the chain itself, but to view cryptocurrency as an asset alone means that a real portion of the coins available are not accessible to people using the chain. This is unnoticeable when it comes to day to day use, however, there is an argument to be made that development, adoption and mentality toward blockchain is stifled by these facts. Equating blockchain to young people suddenly

becoming millionaires because of some computer software makes many average people very weary. On the other hand, without steady market activity, crypto-economics would be built on stable coins, which again destroys the whole concept. The parallel worlds of how the coin’s value works, must exist despite not necessary complementing each other. This conflict can best be explained in the example of the coffee shop conundrum. Imagine buying a coffee at your regular local café with a Bitcoin (or more realistically some Satoshi106). Notwithstanding mining fees, it would take at the very least, seven minutes to be sent from your wallet to the café’s wallet. If during that time the price fluctuates at all, the small amount that coffee realistically costs, could grow or shrink according to market volatility. In another example, a company that may primarily be paid in Ether could suffer a great sudden loss of profit even though their sales and expenses remained consistent. Sudden changes in the value of a coin can be very problematic on a platform that is built specifically for financial activity. Of course, stable coins do make a huge difference in this regard, but the lack of predictability or consistency will hold back the rapid growth that first started from this same concept. This is especially true now that the idea of recentralization107 of systems is potentially possible. Just as in the outside world we see a consolidation of power through money, this is equally the case in cryptocurrency. Competition in value accumulation of any coin is essential to the system itself. In Bitcoin mining, now the most commonly mined coin but also the most difficult to mine, we are seeing a huge concentration of mining operations in China, where energy is cheap and the potential for profit is immense. With more than 60% of Bitcoins today being mined in China108, we can say without doubt that this a very centralized part of the blockchain world. Because of this fact, things like legislation by the Chinese government could largely affect attitude and view of Bitcoin, or even the mining itself; halving events and Bitcoin dumps are also a key factors when it comes to the value of the coin. When you consider all of these things together, it would definitely prove that, if all blockchain users are born the same, they definitely are not equal. There are genuine concerns over this kind of thing, spilling over in particular to coins that work on a PoS style of consensus109. Circling back to the question of Chinese miners, it is worth mentioning that China has very strict laws in place covering the very capitalist aspect of cryptocurrency110. This is one of the great paradoxes of the technology and the social views surrounding it. It isn’t to say that the Chinese are the only ones to get the short end of the stick in terms of accessing this technology. Other countries, many in Latin America and Southern Asia, have put legislation in the way to either ban Bitcoin, cryptocurrency, and even the technology as a whole. Legislation into the use and possession of cryptocurrency has been an extremely speculative process; wherever there is money after all, there will be laws in place. As a result, most countries around the world have their own laws and regulations surrounding it. These laws fall on a spectrum going from particularly restrictive to particularly liberal, however, most fall somewhere in the center of it.

Large economies like Canada111 and the United States112 will consider all the aspects of your ownership of the coins and require disclosure as to their being attained. That is to say that should someone be paid in cryptocurrency as part of their salary, that would be considered for income taxes and will need to be reported as such. On the other hand, should you have actively bought the cryptocurrency with the idea of making a profit, this

will be assessed as capital gains and profits taxed at the end of the fiscal year. All this said, failing to report cryptocurrency in these economies could lead to audit and possible fines should you fail to report them properly. Many countries in the EU113 follow this same logic in terms of taxation on cryptocurrency but it is important to note that the EU itself does not follow any cross border legislation on these facts. For example, the island of Malta and the country of Slovenia consider themselves crypto-friendly zones, or as some call them, blockchain hubs114. In these nations, taxes are liberal in terms of both income and capital gains but may stop short when profits in business are considered. This too is the case with Switzerland115 which has always been a financially liberal nation. Other countries within the EU and indeed the entire world, simply have not created the infrastructure yet that would agree on the tax laws in this regard, Bulgaria as an example. It can be imagined that many other countries around the world, particularly those lacking financial legislation infrastructure are far wearier of allowing the use of cryptocurrency. Places like Bolivia, Algeria, Pakistan and many African nations outlaw cryptocurrency altogether116. Many citing that the potential for money laundering or tax evasion is increased through its use. Generally these countries would already be suffering from a high potential for these kinds of activities, as a result the whole sector is not recognized. These laws would be set out more than anything else, by the central banks and reserves of the nations, many of which state that they do not accept the validity of the coins’ tender and therefore see them as not permissible within their borders. The problem in this case comes with the lack of intelligible division of blockchain, Bitcoin and cryptocurrency, as we have mentioned in an earlier paragraph. This creates ambiguity in the laws of certain nations as the law would simply state the acquisition of Bitcoin is considered contrary to the law and ends the discussion there. In other cases, the use of blockchain would be what is outlawed without going into further detail; either way, the lack of clarity on these points leads to a lot of speculation and as a result, all things connected to blockchain are then seen as illegal.

In Viet Nam as an example, the use of cryptocurrency is clearly defined as being prohibited as payment, in spite of this there is a growing number of crypto enthusiasts within the country, particularly with Ilcoin. Ilcoin is used as an investment opportunity in this case, seen in the same way as a stock, with inherent value but no legal tender. And it is this ambiguity in the law that creates inconsistencies like these, which leads us to possibly the largest of all inconsistencies in crypto law worldwide, that of China.

It is a well-known fact in the cryptocurrency world, that a lot of what we do is possible because of China. A majority of Bitcoin mining comes from China’s cheap energy, and the country is a hugely attractive market for large scale Bitcoin mining. This is true as a result of the high energy requirements of the Proof-of-Work systems that Bitcoin works off of. Bitcoin is a main trading pair for most other coins and is a driver of price and market fluctuation117, similarly to how the U.S dollar affects global economies. Beyond this, with the shifting of cryptocurrency trends from PoW to PoS and beyond, the Chinese have maintained a strong presence in consensus building across the world. However, China has very strict laws when cryptocurrency is concerned. Cryptocurrency is banned outright in China, yet mining farms within the country are extremely profitable. Chinese Bitcoin miners would usually work with countries on China’s periphery such as Japan or Hong Kong to liquidate their earnings, in many cases even owning holding companies within the nations. In this way, Chinese Bitcoin miners have maintained their place as the top miners in the world. This will only become more speculative as time goes on. Currently, the Chinese government is working on their own version of a digital currency, the digital Yuan118 that

works off of blockchain framework and may cause tension between the government and Chinese miners; leading to further crackdowns on mining farms within China. These facts create friction within the blockchain community around the world as the reliance on the mining capacity of the Chinese miners looms as an existential threat to the market in total. This reliance has come into focus recently, not so much because of their involvement with Bitcoin, but now because of their involvement in new protocols that have been released. Recent claims of ‘mock’ DeFi projects catering specifically to Chinese users have drawn some controversy. DFI.money (YFII) which was launched a week after Yearn Finance (YFI) took off, was criticized for being a copy and paste version of the project. Involvement in the newly released IPFS protocol coin Filecoin has brought the focus back onto the Chinese once more as questions of centralization through hosting farms begin119. We will be looking at this involvement and the mechanics of other protocols as well in the following part.

A look at some modern protocols Now that we have an understanding of the basic foundation of blockchain and how it works we are going to move on to look at some particular protocols and how they function. In the coming examples we will look at some particular systems from a variety of functionalities and uses within the blockchain world. We will discuss how they have progressed the conversation around the subject and how some are paving the way for new and interesting developments. Ethereum120 Having already spoken about Ethereum in depth, it should come as no surprise that this would be the first protocol to look into. What is exceptional about Ethereum is that it created the framework for technology that is now seen as a core part of any new protocol. These include smart contracts, which work within both blockchain systems like enterprise blockchain and public chains, as well as more recently within decentralized finance. Along with smart contracts, Ethereum brought about decentralized applications and the Ethereum Virtual Machine, which is a leap from the idea of the distributed ledger. All of these concepts come together within Ethereum and create a diverse and thriving technological ecosystem. Before we get into the details of some of these components, we will first look at the infrastructure that leads Ethereum. Currently, the Ethereum network is undergoing an overhaul to keep up with modern day demand. As we have previously mentioned, unlike bitcoin, an active development team works constantly to advance and understand what needs to be done to keep the protocol relevant and feasible. For this reason we are looking at the soon to be released Ethereum 2.0 system. Moving away from the PoW consensus protocol, Ethereum 2.0 works with proofof-stake with built in sharding. As we have already discussed how sharding works, we will look at how this seeks to solve the issues of the PoS system. With such a large user base already working on the Ethereum network, changing to PoS is both a blessing and a curse. So many coins are currently in the hands of users and the network is so versatile that this new system is likely to increase workload, both straight off and as time goes on. Sharding will allow for greater transaction capacity by allowing more collaboration within the chain. This means that greater amounts of transactions can be made at any one time making the new system more applicable to vaster amounts of users. When a new block is ready to be created, the data that is to be included into that block, is divided among those who are chosen to validate it. Work is delegated equally in each shard and consensus builders work together to proof the information being uploaded. As a collaborative effort, sharding helps to build blocks more rapidly, helping to scale faster. As the system recognizes consistent increases in demand, shards work in a cascading effect, creating more shards as they are needed. After looking at the scalability coming from the consensus mechanism we can go on to the actual framework of the system. The Ethereum Virtual Machine (EVM), is the connecting tissue that is decentralized and spread among all users, what we would call on other systems the distributed ledger. There are some core differences of course to this base, all users must agree on it and all transactions go through it and update it as they do. Nodes cooperate with each other through the EVM, maintaining that the system is secure through the agreement of its state. This is a variation on the typical system used and proved that the potential for markedly different systems to that of the bitcoin protocol were possible. On top of this fact, the implementation of Gas through Ether, the native coin, meant that users and miners can corroborate in transaction to prevent things like spam or malicious activity. Gas fees are basically what a user would pay for a miner willing to accept to complete a computation on the network for them. These fees go up or down according to demand on the system.

Possibly the most influential concept that has come from the Ethereum development team is the idea of dApps, allowing people for the first time to build their own chain. This creation kicked off a huge number of new chains built for specific purposes, all working off the Ethereum base. Systems for distributing music, gaming chains, freelance work networks and most importantly at the moment, finance. These dApps allow for tokenization which means that tokens can be created to work off of each new system. Tokens are alternatives to coins as they are a stand in for inherent value. For people to exist on a particular chain, they must interact monetarily and thus tokens can be minted for each new dApp. On the Ethereum network, these coins are referred to as ERC-20 tokens121 and can usually be exchanged with Ether or a stable coin. Most popular today of all the ERC-20 tokens are DeFi tokens. DeFi sprung from the EVM off of the concepts of MakerDao, which started to show promise in the late 2010s. A vast majority of tokens on DeFi networks are ERC20 tokens and exist in networks like Chainlink, Uniswap and Yearn Finance. The latter of which we will be looking at now as an example of DeFi protocols and how they work. Yearn Finance122 Though there are a variety of decentralized finance platforms based off of Ethereum, Yearn Finance is fairly simple one to understand. The area of DeFi has been growing significantly recently and Ethereum based dApps like Balancer, Uniswap and Yearn Finance have proven that the next step in blockchain technology is a step back to financial processes. These include DEXes (decentralized exchanges) loans and liquidity mining. Liquidity mining is a function that is common on DeFi platforms, through this process you can add your coins to a pool with other coin holders to create a space for people to easily buy and sell cryptocurrency. The process of liquidity mining is simple, you deposit equal amounts of a stable coin, usually Dai or Tether, and Ether or other specific cryptocurrencies used on the specific pool you choose. As people exchange coins through your pool, you and everyone else in the pool are rewarded with a percent cut of the transaction total for the liquidity provided. Your cut is released to a wallet you have connected to the platform in the form of the token offered; in Yearn’s case, YFI token. The reward you earn from providing liquidity is calculated based on the size of your contribution to the pool. In the process coins are taken out of your pool and replaced with either the stable coin or the equal part crypto, depending on the need of users seeking liquidity. For this reason, though you may have equal amounts of coins to start with, the amount may tip in one direction or another according to what people are generally buying, this is called impermanent loss.

Different DeFi platforms use different approaches to maximize returns and incentivize use. With Yearn, the internal structure allows you to shift between pools for more strategic earning as you go. The main concept behind DeFi would be to bring some of the financial concepts that currently only exist within centralized institutions and give them the decentralized format. In the case of Yearn, the main takeaway would be market making, as opposed to the standard order book model of buying and selling according to availability. With a liquidity pool, there is ample coins available for whomever may need them, the only consideration would be the smart contract connected to your transaction. This is how we get things like decentralized loans and exchanges. DeFi swap systems on DEXes work in tandem with liquidity pools. These are simple type and tap exchange systems which allow users access to different coins available on the platform. Generally speaking, you can swap different ERC-20 tokens against each other, against Ethereum or even some other coins that are offered through the specific system. This makes gathering of coins a lot simpler and keeps the blockchain decentralized. You don’t need to provide any personal information to the wallets or platforms to build a wallet, you will however need to connect an address to send coins to it for exchanging.

Other DeFi programs offer similar services but address some of the key issues that are apparent on previous projects. Balancer for example, does not require equal parts of either coin to function effectively and can have different ratios of coins available in each pool. Chainlink123 is a specialized smart contract executing system that builds off of DeFi’s infrastructure and has been widely popular since the DeFi summer that saw these systems come to center stage. It connects smart contract technology with real world uses, making it unique even in the DeFi space. YFII was another dApp of Ethereum and was essentially a copy of the Yearn Finance system. The key difference is that it was developed with the Chinese market in mind. Essentially becoming a DeFi petri dish for a nation that is highly restrictive on blockchain altogether; it is yet another sign of the Chinese prominence in the market. Once

released, developers who produced the Yearn platform questioned the legality of this move, but because of the decentralized nature of blockchain nothing could really be done; a testament to the good and the bad of decentralization. Stable coins

Stable coins where created with the idea of giving cryptocurrency holders a safe alternative while converting their coins. This applies both within exchanges, which would allow them to be exchanged through the platform to and from coins, and for sending coins to a bank account or card. Coins like Tether, Paxos and TrueUSD maintain a standardized price against fiat currencies like the US dollar. Unlike traditional cryptocurrencies, stable coins, as the name would suggest, keep a relatively stable one for one exchange against these national currencies. This makes them safe for investors who would either like to cash out or stick to something that isn’t volatile before investing in something else. The main reason that these coins can maintain their price is that they are held against collateral by the companies that developed them. In this way stable coins are also a standout because they are centralized and can, if authorities should insist, refuse to redeem payments to users. This could happen if regulation were to kick in for whatever reason, we have already seen controversy surrounding Tether as an example124. Stable coins do not generally work on the blockchain itself but are implemented as second layer ‘add-on’ to systems like Ethereum and bitcoin. Aside from these standard stable coins, recent developments brought about new coins that though maintaining a standard price against the dollar, rely entirely on blockchain technology. What this means is that all of the security related to stable coins, with the added benefit of the decentralized framework is available to crypto holders. One of the bigger names in this respect is MakeDao125, with its stable coin Dai which we have mentioned previously. Though this protocol works off of the EVM, it is important to look into and understand its functionality and how it works. This is the system that we will be taking into account next. MakerDao A project that began in 2015, MakerDao aims to give people a platform where they can safely exchange value within blockchain itself. It works to solve the issues that come from having a centralized system of exchange through collateral, as mentioned before, and has been mainly successful in its exploits. Because of the lack of backing from centralized authorities, the mechanics of this coin mirrors traditional economics. Incorporating smart contract technology to work against Ethereum, the system allows users to hold Dai (now known as Sai) and trade back to Ethereum as they see necessary. Despite being backed by Ethereum, Dai trades against the dollar and works on the Maker platform. Maker, which is a cryptocurrency token of itself and not a stable coin, is a coin that works alongside Dai and is the main governance tool for users. Maker can mitigate decisions like what amount of collateral is appropriate when creating a smart contract and acting as support in case of rapid decrease in the value of Ethereum. To get Dai, users need to deposit Ethereum into a smart contract with a small stability fee, they are then free do as they please with their Dai. Dai can be traded against other Ethereum based tokens like Chainlink, Storj and Maker, among many others. It can be used to make payments or to simply exchange your cryptocurrency into national currencies. MakerDao is seen as the first step into DeFi. Offering advanced smart contract capabilities, creating collateral against cryptocurrency, mediating sudden shifts in coin value and creating the foundation for DeFi systems to come. Using smart contract technology, MakerDao creates an autonomous system for quick exchange against collateral without the need for a middle man. This function has been pivotal in recent moves towards things like liquidity mining and flash loans; decentralized financial systems. Of course, finance is only one facet of blockchain today and other projects have shown how far the specs of the technology can go.

Functional and social chains Functionality has become a huge conversation when it comes to blockchain, things like file sharing and the internet of things. We can see blockchain coming to mirror the internet in many ways and bring us new concepts that, until now, have remained out of reach. A common comparison made in blockchain is between the technology and BitTorrent file sharing systems126. The commonalities are with the sharing of a program with no distinct head, and splitting data spread across different servers. The original concept behind blockchain was very much based around that kind of idea but focused entirely on the monetary side of it, sharing the records of all the different transactions among all users. Now this has expanded to include more than simply transactions on the chain but even data being held and shared within a blockchain. With this new capacity, chains may appear to be more closely related to YouTube and SoundCloud than Ethereum or Litecoin for example. Systems like Chainflix127 allow users to monetize their content by saving it on the blockchain, using all of the technical mechanisms available from it. Users can make money by sharing with other people using the same chain and engaging with others. We are going to look at a particular chain which has broad functionality and has gained a lot of press lately. This chain uses off chain storage and a proof-of- capacity consensus system. There are many novel and interesting improvements that have come as a result of it and, to a larger extent, there is a lot to learn from it too. It’s called IPFS, the Interplanetary Filing System and Filecoin, the coin that goes with it. IPFS [Inter Planetary Filing System]128

The IPFS system was first launched in 2015 by Protocol Labs. The idea behind it was bringing blockchain closer to the internet with higher speeds and greater capacity. Starting with its approach to scalability, IPFS allows ‘hosts’, to save a piece of the encrypted file on their server “off chain”. Since IPFS is a file storage focused system rather than a transaction focused one, there is a much greater need for accessibility on chain. In this sense, the blockchain platform becomes far more important on this system as users seek it out for file storage and information exchange in a similar way to how the internet works. To accomplish the influx of a larger user base, one that could perhaps equal the internet one day, IPFS have adopted an innovative off chain storage system.

Off chain storage systems work very differently to most chains in the way that hosts take over the place of miners. Rather than using their computers to calculate hashes, they use them for storing pieces of the encrypted data that is uploaded to the platform. This uses a proof-of-capacity consensus system wherein hosts must prove they have the space to save the data prior to it being allotted for storage. Filecoin, the cryptocurrency that is used on this chain, incentivizes users to maintain online presence so that users can have access to files at any time. It is also necessary for hosts to hold a cache of Filecoin for a period of time before becoming a host, as with PoS consensus building. This kind of infrastructure keeps people involved within the chain so that the ecosystem can remain active and thriving. IPFS does not have a consequence based system for keeping data online, rather it simply does not retain the stream of rewards while a host has gone offline. This can be done as various servers can save the same data at the same time, ensuring that data is always retrievable. This is different from Siacoin, for example, which actively punishes users by taking some of their tokens when they go over an allowed offline period. Data stored on the IPFS chain is encrypted in two different ways. One would allow plaintext upload of data, just like an ordinary public website, and gives you the private keys with a timestamp stored on chain. This kind of encryption gives you the proof of ownership but largely allows your data to be seen, shared and possibly copied by other users viewing the data. The other method for encryption is more closely related to the standard blockchain style of encryption, encrypting data before it is sent out to host nodes and leaving you the private and public keys to its data for your own private storage. The data is encrypted until someone with the correct security keys attempts to retrieve the data. Users may want to share private information or send data to others in a secure way using IPFS, this is where sharing of security keys is useful. The applications for IPFS in future are various and ambitious. One could say that this is a step forward in the evolution of the internet, with it becoming truly decentralized once more. As a chain, IPFS aims to give people the power of blockchain while using and interacting on the web. The fact that using it gives you a similar structure to the ordinary internet, trading out http/https with ipfs, keeps things simple and accessible to ordinary, nonblockchain savvy, people. Sites like DTube are showing how we might be able to use all of our favorite sites and platforms in future without having to rely on centralized businesses like Google or Amazon. The use of IPFS can also secure data that we upload onto the platform from hacking attempts or corruption of data. With all these great benefits and the things this project has taught us about blockchain systems, it is important to also look at the flaws that have so far been found with it. IPFS promotes hosts with medium size storage availability. Why? Because it prevents centralization of the chain, and though this is a good initiative, it also creates the need for a larger amount of devoted hosts that will need to remain active and online for a long time. This could lead to data being inaccessible or lost and may lead to too much of a reliance on anonymous parties to keep the system going. Beyond that, in its first week of being released, potential hosts boycotted the system because of the huge amount of Filecoin they needed to purchase to start hosting, leading to a very difficult start129. This is a sign of the external forces that have power over the chain, which is significant. We found that many of these potential hosts where located in China, similar to Bitcoin mining. Moreover, reports show that the

system is indeed to a larger extent, centralized, and that the hosts do have influence over the system. Combine this with the fact that IPFS had the largest initial coin offering of any system, we can see that there is a lot of money and a lot of control currently circulating within the chain. The results of how successful this system will be may take years for us to understand clearly, but the ambition and innovation put into this project is undeniable. For now, the difficulties of having an ambitious project like this are teaching us a lot about the potential crisis that blockchain face in the modern world.

Similar chains incorporate many of the same ideas but take on a more focused look into the internet world. The Chainflix network for example, allows users to share files in a way that is similar to social media platforms such as YouTube. However, unlike these platforms where one would need to amass a huge quantity of regular followers to monetize their data, Chainflix allows users to do this from the start of their time on the chain. Chainflix achieves this because it is not centralized and gives out tokens simply from the usage of the chain through tokenization. In this way miners are those who interact on chain, allowing people to make money simply by engaging with each other. Chainflix uses a backing of Proof-of-Authority, where a user needs to stake that the content is originally theirs, and tokenize it before upload. Tokenization, which we will look into with more depth later, means that users can mint new coins for their system and release them through ‘consensus’. Consensus is a term used in a very broad way with Chainflix as it is built through proof-of-engagement, the counterpart to PoA. Users that watch videos or engage with content gain rewards for keeping the system thriving. Content creators are also rewarded anytime a user engages with them. Systems like IPFS and Chainflix show how far the blockchain landscape has evolved and grown since the bitcoin protocol and have led the way for even more development. The Ilcoin system130 The infrastructure that Ilcoin works off of comes from years of research and development into blockchain. The current protocol that the Ilcoin network works off is the RIFT protocol, which is central to all the technology supporting it today. The RIFT protocol is a practical approach to scalability without compromising either decentralization or losing security. The reason behind this is that all components of the protocol rely on each other to achieve the results they do. The outcome of which is a chain that supports tens of millions of transactions per second with safety against 51% attack and quantum resistance. A system that is safe and fast. Command Chain Consensus Protocol (C3P security system) This protocol works off of the concept of the C2P (Command Chain Protocol) system which is unique to the Ilcoin blockchain network. The C2P is the main security feature that prevents from attacks on and off the chain. Essentially this mechanism works to keep all data on the chain safe. Using a tiered system, the C2P relays data being sent to the chain through an information filtration system that analyzes and sorts it. The first level of the C2P collects transactions for validation and synchronizes them with the entire network. Then they are passed to the next section where they are scanned for malicious wallets or ones that have been involved in illegal activities prior to the current transaction; any malicious wallets are excluded from the block. Finally, a

master node provides a signature to the block based on a variety of factors making each signature totally unique and impossible to duplicate. With this process, the C2P can avoid attacks against the system while maintaining a reliable speed without the necessity for increased mining capacity. To conceptualize this, think of the C2P as a quilt sown with a single thread, the system can follow the thread to ensure there are no points of failure. This memory structure can keep the system together while maintaining its security autonomously. Our latest security mechanism is the Command Chain Consensus Protocol (C3P), which allows for faster node communication and more effective consensus building. Based off of the same principles as the C2P, connecting each full mining pool with greater speeds in which more transactions can be calculate at any one time. As the C2P, this automated system collects mini-blocks calculating while simultaneously building them up for consensus, making a platform on which mining can be simplified and highly secure at the same time. Improvements made within the C3P can tackle any major nuisances to the blockchain infrastructure including Sybil, majority attacks and selfish mining. This is done automatically to protect the users of the network, the miners and the system itself. This is through an internal memorizing system that keeps automated records of the chain to scaffold the blockchain and making consensus building more equal, regardless of the size or scale it reaches. An issue that Bitcoin has, for example, is the large sway of hash rate and mining capacity. With China’s leaders very tentative about the existence of Bitcoin mining operations within its borders, the large scale mining operations there drastically affect the amount of transactions being calculated consistently. This is a form of selfish mining and is one of the problems that the C3P prevents. With this new consensus security system, the DCB can maintain its immense speeds and keep up with an ever increasing demand on the industry. We have built this security mechanism with an eye to the future so that we can create solutions before any problem can arise. We know that with a PoW mining system there must be efficiency in its workings to avoid latency, scaffolding for miners to protect them at all times and keep a solid base in transaction upload for users to have the greatest blockchain experience. Consensus is what drives the system and pushes us on into the future, security is what keeps it in check. The RIFT protocol The RIFT protocol is mainly a reaction to the bitcoin protocol and its scalability problem. Along with some of the more traditional blockchain technology and methodology, RIFT brings blockchain into the modern age. This protocol is a direct approach to scalability without re-centralizing the system or manipulating block size over time. The basic concept behind this protocol is the sequential buildup of mini-blocks through the C2P system and common mining pools. Recognizing that simply creating larger blocks of data had its own risks and drawbacks, the RIFT protocol is a novel tactic entirely. Keeping blocks small, around 25Mb per mini-block, and working on an automated consensus system, the C2P, we can circumvent the need to mine every single block while removing the fear of centralization. This is because we use the C2P in a semi-autonomous way, creating a string that follows all blocks back to the genesis block while maintaining the system in a secure fashion, as mentioned. This is all done through PoW consensus building, SHA-256 hash encryption and synchronicity with the larger blocks. This approach is similar to sharding, however, where sharding delegates work to different smaller consensus pools, the RIFT protocol shares information among smaller blocks and builds a larger block out of them through collaboration whenever needed. The idea of common mining pools encourages new miners to constantly build within our network. With consensus on the RIFT system, there is no delegation to a single miner, and does not favor larger mining operations. This works on two key problems in mining; that of having too few/ too many miners competing to build blocks, and having larger miners cash and run, slowing the process at any given time. Common mining pools spread consensus rewards to anyone helping to build a diverse and functional consensus protocol. We aim to have a democratic and diverse space in which miners can cooperate in. Unlike sharding, miners on the RIFT protocol come together to a single larger block, rather than make blocks smaller and sharing them. The basic idea behind the RIFT protocol is that with ensured security on the smaller scale so that creating consensus can be done at the larger scale; we can collect far greater amounts of data at a single time and mine them altogether. This has led to the first ever five gigabyte block being mined in November 2019 on our network, proving beyond doubt that such large quantities of data can feasibly and pragmatically be saved within a single block. One of the ideals held by the Ilcoin development team is that of data being held on chain as opposed to off chain. The reason for this is enhanced security through the internal system and accessibility for the user. What is stored off chain, is the security key, allowing users safe distribution and privacy in data access.

The Decentralized Cloud Blockchain Finally, our most modern technology the DCB is the culmination of our other systems and introduces the RIFT protocol as the basis for its network. The DCB is essentially a vessel for the protocol and can be utilized for a wide variety of needs. At its core, we have sought to build a mass storage system that is secure and decentralized while also being affordable. This hybrid blockchain system can support the most important and detailed data for your business, but also act as a social chain too, giving everyone a chance to become part of the Ilcoin community. We seek to address the longstanding issues that have held back the industry and introduce a new demographic to the sector. Using the C3P model of consensus alongside a PoW proofing mechanism, we can assure safety at levels that easily match that of Ethereum and other major coins while producing block sizes that can deal with far larger demands. Our aim is to make blockchain applicable to all and simple enough for anyone to use. The DCB is the next generation of the Ilcoin network, mounted on the RIFT for its scaling capacity, it adds functionality for a limitless ecosystem. This includes dApp and smart contract mechanisms that allow users a platform to create on. At its core, the DCB is a system within which mass transaction and data storing can happen utilizing the blockchain framework. The RIFT protocol creates the decentralized base of transaction and basic text upload on the network, this is how we maintain the blockchain infrastructure for the security of your data. The DCB pushes these concepts to build on the storage capabilities of on-chain storage. From Jpegs and raw data to transaction ledgers and layered smart contracts, the DCB will bring users of the Ilcoin network a fully immersive decentralized world. Within dApps, you can use the parameters of the DCB to discover and further develop concepts surrounding blockchain from the roots of the RIFT and DCB system. Fortifying this information against 51% attacks and quantum hacking is the C3P defense program. Security has always been paramount to the pragmatic approach of the Ilcoin development team. The DCB envisions the future of blockchain and makes necessary steps to stay ahead of the times. Autonomy and World Wide Web levels of space are the true stepping stones to global blockchain adoption. These ideas have always been the focus of decentralization and will continue to guide the topic of blockchain as we move into the future. The DCB is a blank canvas with the potential to change the way we think about blockchain and how we interact with each other on the chain. Getting rid of much of the gridlock that builds up in even the most advanced system, we can see a truly holistic communication super highway. All within the decentralized space. Of course, being a dynamic system, dApps also permit extension into permissioned chains. Business opportunities and the option to link and connect with other businesses signals a change in the way that enterprise blockchain serves its users. Decentralization can be omitted where needed, however, the method for block creation and data upload leans on the same security and scalable solutions that the chain is known for. Ultimately, the DCB is a system that encapsulates all of the driving forces of blockchain today and grounds them solidly in on-chain storage and advanced security devices. What the DCB will become, what it is used for and how it is regarded by the world as a whole, will be down to the users. This is what decentralization was built for. The DCB is likely to be released by the end of 2021, the technical details of which and how to use the DCB will be available in the second edition of the building blocks of blockchain.

Tokenization Tokenization131 is another important topic that ties a lot of the facts that you have learned together. As you go on in blockchain, you start to hear about ERC-20s and dApps off of the EVM being developed. Though it may sound like a different language altogether, these ideas simply express concepts that exist outside of blockchain but are referred to in this way when connected to blockchain. A simple example would be in online gaming. In certain games, you must pay for tokens within the game to access bonuses or gear. The money that you are substituted in a given game is still carrying value, but is kept strictly in game. There are many benefits to what we call tokenization and it is for this reason that we choose to do it in blockchain too. So to round off the analogy, if ERC-20 tokens, which are not crypto-coins but rather crypto-tokens, are substituted as in-game currency, dApps would be the game itself. ERC-20 tokens are specific to the Ethereum network132, as we have already discussed, EOS also has dApp capabilities which use their own kind of tokens. The problem is that blockchain systems, even larger ones like Ethereum, are clunky machines that have a lot of moving parts. These main systems have to put up with a lot of usage, and users conversely may want something simpler and more focused. This is where dApps come into the picture. As a business, individual or group of individuals, you may be searching for a system that works like a blockchain protocol but without it being so bogged down with millions of users. The only prerequisite to creating a dApp is the ability to code the infrastructure and look to your preferences. DApps are like Lego kits, to keep the idea on games, you have a picture of what it should look like and the instructions with all the pieces in it. What you decide to do with those pieces thereafter is strictly up to you. Now most people would not want an exact copy of the EOS system, for example, but would prefer to bend the use to their own needs, like a gaming platform. Of course, if you decide to develop your dApp off of the EVM, the EOS network or indeed off of Ilcoin, you cannot use FIAT currency like Euros or dollars. Similarly, you would not want to use the native currency of the parent network either. This will firstly lead to convolution of systems and uses, and more over mix tokens that exist within your ecosystem with external ones. The Ethereum network has thousands of dApps, each with their own tokens, Maker & Dao, Uni and BAT on the Brave network for example133. So tokens are created for dApps which people can build for themselves for whatever purpose. In the Ilcoin network, you can build a dApp that centers around communication in an office for example. Everyone using the dApp would be able to discuss freely using the system and saving all information shared saved on the chain. To take that a step further, if the business is an online events organizer, a dApp can be built to stream a performance and tokens may be minted for people to buy to see the show. Users would purchase the coins, either using the native currency as a trade-out or a stable coin that they can buy off of an exchange. There can be separations of token too, for governance reasons for example. Tokens are divided into usage tokens and work tokens, though work tokens are not always needed within a dApp. The difference is in who holds these coins; taking the last example of an online show, organizers will need to be able to discern between colleagues using the system and the audience. Work tokens are those given to people involved in the production and use of the dApp, while usage tokens are the spendable stand-ins for currency. In this case, the system being used would mirror the parameters of enterprise blockchain, keeping a hierarchy of status. DApps are more flexible than the native currency they are developed off of and in cases where it is preferable to have full control over a chain, it is possible to do so. On the opposite side of the spectrum, dApps can be entirely decentralized, only maintaining and using the infrastructure that they ‘borrow’ from the main chain. Smart contracts keep everything together, and consensus needs to be developed and pushed in the same way that it would on any other chain. This is where things can get interesting. On a public dApp, you can use smart contracts alongside consensus building to encourage usage. As with the previously mentioned Chainflix, Proof-of-Authority and Proof-of-Engagement pay out tokens to content creators and content consumers for engaging with content on chain. This is done through smart contract technology. When data is uploaded to the chain, a smart contract is created with the public key and in-built tokens which are released with each interaction with the content. Tokens can then be exchanged as ordinary coins are. Tokens, like coins, are traded on exchanges and are kept in wallets. The price fluctuation of a token is all down to its liquidity. The more use it can get, the more valuable the token is considered, whether that be up or down.

ERC contracts Though we are discussing the uses and technology of the Ilcoin network more specifically in this book, it is worth taking a look into tokenization in the Ethereum network. It is a worthy discussion because of the particularities brought on with some of the newer developments within its smart contract network. DeFi, which we have looked at briefly already, and NFTs (Non-Fungible Tokens) in particular have become novel segments that attract large amounts of attention. Both of these concepts are recent developments of the blockchain world and a majority of them work off of the EVM.

ERC stands for Ethereum Request for Comments, and it is the foundation of any smart contract stipulating an Ethereum dApp. The responding number is the type of contract that it represents, with 20 representing the original standard for creating an EVM based chain134. They are most commonly known today as the contract that DeFi is based on. This is important because it creates the foundation for monetized community based ecosystems within the network. It fixes value in the form of fungible tokens, that is to say tokens which are equally valuable wherever you find them at any one time. It is important to understand that not all ERC-20 tokens are necessarily DeFi tokens, though most DeFi tokens are ERC-20s. The relevance that DeFi brought into the blockchain space, beyond simply its novel usage, is that of decentralized interoperability. Defining this in a very broad sense is that you can have access to a multitude of value holding tokens, without using centralized portals. DeFi brought this sense of trans-chain exchange within the EVM, allowing users to buy and sell Dai, Tether (layered into the EVM but not an ERC-20), BAT, Chainlink or any other ERC-20 token. This is through connection of advanced blockchain wallets like Metamask.

The ability to do this through DeFi has created a decentralized marketplace within the Ethereum network. Beyond that, we are starting to see a development of overlap between separate chains too, for a more holistic industry. WILC (Wrapped Ilcoin) is an ERC-20 token that acts as stable coin against Ilcoin. It can be used in the same way that WBTC (Wrapped Bitcoin) is. However, unlike WBTC, which was created solely as a stand in within the EVM, WILC expands on this idea of interoperability. Because Ilcoin can be traded against WILC and vice versa, this has

created the roots for inter-chain accessibility. Creating reflections from one system to another can create greater collaboration, as well as competition, between the two; both aspects of a healthy financial structure. Moving on from ERC-20 contracts, we can take a look at Non-Fungible Tokens135 for a comparison. The two standards for NFTs are the ERC-721136 and 1155137. The 721 token was the first created in the form of CryptoKitties138, a blockchain based game similar to Tamagochi139. What this token created was a market for oneof-a-kind style tokens. They still had value and could be exchanged, however, they were ‘non-fungible’. Fungibility is the basic understanding of value in an economic system. A five dollar note is legal tender because the government recognize it as such, no standard five dollar bill is more valuable than another. Coins and tokens are fungible in the sense that at any given time they have a fixed value and can be exchanged with each other for that value. They can also be used to pay for items of an equal value too. If you were to look at the reverse of this idea, you could look at classic cars. A person would happily spend on a finely kept and beautifully maintained Rolls Royce, but they wouldn’t pay very much for one that is rusted to the core. Basically, though tokens can be minted in the form of ERC-721s, they are all entirely unique and will be valued according to what a person is willing to pay for them. Similar to sports collectibles like cards. In fact, NFTs are often referred to as collectibles. ERC-721 tokens have the same economic status as ERC-20 tokens, in the way that they hold value and can be exchanged, the former is more like digital art, rather than digital currency though. The ERC-1155 was an improvement on the 721 that created more autonomy and more of a holistic connection across the Ethereum network. The ERC-721 token was created in a way that made it hard to trade with, it didn’t have the internal connection for exchange like with ERC-20 tokens. For them to be traded and exchanged took a lot of excessive data processing and was a burden on the system since each token or ‘collectible’ is treated as its own smart contract. The 1155 upgrade was more flexible and allowed a varied approach to smart contract implementation. This means you could now buy an NFT with an ERC-20 token, and you could mark previous prices of bought and sold tokens, for example. You could even have multiple tokens of the same kind from the same platform with a fungible value, like with Decentraland. This made NFTs particularly attractive to game makers who could now use the tokens to mark valuable items within their games. In the case of Decentraland, it was land which could be bought and sold like property. Enjin token allowed developers to mold Enjin tokens into different objects, similar to what you can find in games, magic golden swords and Mewtwo, for example. The ERC-1155 token created a more open space for development of NFTs, along with a market for their exchange. Now as a result, we are seeing a greater synthesis between the gaming industry and blockchain. Using NFTs in games gives more power to the gamer, actually having proof of authenticity and value in their gear. The greater impact that this is likely to have, both in the investment sense and equally in technical development, is hard to imagine at this time. Whatever the case will be with NFTs, they have clearly made their way into the blockchain mind frame. The most expensive NFT sold so far was that of an artist known as Beeple, it was a JPEG that fetched close to $70M. The fast expanding market is showing no sign of slowing down and it is breaking wall after wall in the ‘blockchain for copyright’ part of blockchain development. Now you may be asking about all the other ERC contracts and what they do. Well, most of these contracts are implemented upgrades to previous ones. In many cases they reduce traction and help new users to integrate into the space. These contracts do not have tokens associated with them as they were put in with a need of the community, rather than the need to create a new community or market. DApps contain contracts that specify what ERCs do and if necessary tokenize a space; the different types of contract mark what unique characteristics a contract will have.

Blockchain Glossary Let’s recap on some of the terms that we have discussed until now.

KYC and AML procedures: KYC stands for Know Your Customer and AML for Anti-Money Laundering. Any newcomer to crypto will have heard about these procedures from when they open their first exchange wallet. These procedures fall under the umbrella term of ‘compliance’. Compliance is necessary for financial institutions to get licensing and ultimately, protects from criminal behavior while investing. These procedures generally include authenticating identity and keeping a company profile with a picture and copy of two forms of ID on file. These are used in the case that government officials need to audit any suspicious activity within the exchanges. Whichever coins or tokens you may be holding, your transactions within an exchange are registered and accounted for under compliance regulation. This is part of these procedures and keep financial crimes in check. These financial crimes could be things like tax evasion, simply holding onto crypto does not absolve you of taxation, fraud, and money laundering through cryptocurrency. Security keys: In encryption, it is sometimes necessary to share private information. Security keys are used to make sure that data is not decrypted while in transit to another computer, and that only authorized entities are allowed to view it. Keys are split between a private key, which only the original party can use for decryption, and a public key, which gives access to outsiders to view the data but not change it. Unlike hashing and merkle trees, security keys are essential to all proofing algorithms, this is due to the transaction based system of blockchain. Digital signatures are also forms of cryptography that work in blockchain systems, they are added prior to the creation of security keys. 51% attacks140: Blockchain systems are effective against hacking because of its unique consensus processes. It is essential that miners and forgers exist in large numbers to prevent anyone from having a majority of consensus over the system. This is what a 51% attack is. For public blockchain systems, centralization is the biggest problem for the community. If a person, or group of people, were to take over at least 51% of the system, they could rewrite the ledger to their own ends. They could send cryptocurrency only to revert it back at a later time, what is known as double spend, and they could prevent other users from making transactions. 51% attacks are only a theoretical concern for most chains, but it is one of the root problems that blockchain aims to control. Sharding: First implemented practically by Zilliqa, sharding is an approach to scalability that separates block production workload. Acting as a cascading delegator of transactions, shards of data are separated and given out to consensus builders. Whenever there is an increase in the workload of a system that uses sharding, new shards are created to further balance the system and increase the amount of transactions per second. These new shards account for the increased workload with users being largely unaffected by bottleneck in block creation, while

digital rewards continue to be amassed as normal too. Liquidity mining: This concept works within DeFi and DEXes. To recap, DeFi stands for decentralized finance and is a decentralized financial service provider for blockchain. DEXes, decentralized exchanges, are like exchanges, places that you can buy and sell cryptocurrency, but within a decentralized blockchain framework. Liquidity mining is essential to DeFi because it provides the peer-to-peer backbone to the system. Users can store their unused cryptocurrency in a liquidity pool along with stable coins and reap rewards off of any transaction that goes through their liquidity pool. Users provide the liquidity that would otherwise be mitigated by the companies that own exchanges, like Binance. Consensus, as with everything else on the blockchain, takes care of the rest. Liquidity mining incentivizes users to provide a cache of cryptocurrency to anyone who may need them. Liquidity provided on a DEX can be retrieved by the original owner at any time they wish. Liquidity provision provides rewards in the form of transaction fees whenever crypto is taken from the pools. These fees are then divided among liquidity miners according to their stake. Impermanent loss: In liquidity mining, users may take from either of the coins that you may be providing. If you have provided Ether and Tether, users may want to take from either of those coins at various times. Trading in Ether for Tether is common in market downturns, the opposite is true when optimism returns to Ether trading. Because of this, at any time, whatever ratio of ETH/USDT you may be holding in a liquidity pool may change. As users take up more Ether or Tether, your share may go down in reflection of the taking and depositing of coins from the pool. In the end, all balances of coins will return to normal, this is why it is called impermanent loss. This will come from a redistribution of coins bringing your percentage of liquidity back to what it was. Despite of this, you may choose to withdraw your liquidity at any time, however, you will take out whatever your ratio may be at that time.

Tokenization: Opening a new smart contract that allows for transactions requires tokenization. We have just spoken about ERC contracts and how anyone can build their own chain. This requires some decision making as to

the monetary standard within it. You will need to decide on the amount of tokens within a contract and how they are distributed through consensus. Bringing new tokens into a marketplace could be a good financial decision, if your chain has a good community or a technology that fits a need in the market. Tokenization is extremely important when developing a public chain as it creates the necessary sense of competition to keep the system going. Layering141 on blockchain: As blockchain grew and developed out of its fundamental form, layering became important to its story. Just as with any manmade structure, there needs to be a foundation, which is called layer 0 in blockchain; improvements are then built onto it thereafter. Layer 0, which is the base of the protocol goes entirely unnoticed as it is strictly a pragmatic set of rules on the chain. Layer 1 would be the chain itself, the Ilcoin protocol is a layer 1 system and outlines the rules associated with it. The RIFT protocol, built onto the Ilcoin network as a soft fork would be a layer 2 implementation, built on top of the mainframe of the system. Smart contracts and dApps fall within the layer 2 area of a blockchain protocol. Finally, layer 3 systems are protocols built off of layer 2 systems of a chain. UniSwap smart contracts on the EVM, for example. We will now talk more in depth about the necessity of competition in cryptocurrency, but among separate coins and tokens now. We will look at the investment side of cryptocurrency and understand what drives the markets.

Investing and cryptocurrency For many users of cryptocurrency the main pull isn’t even in the technology but rather in the investment opportunity. As part of a unique economy with its own community and rules that it lives by, this is an essential piece to the puzzle. However, here we will not be giving any advice on what you should invest in, any strategies or hints to make money fast; rather, we will look at how markets are effected by things like halving events, centralization and new technological releases. This is all to give a deeper understanding of why investment and the trading, or ‘hodling’ of coins, is important to keep a versatile ecosystem within the technological space. Without doubt, getting into blockchain will require some initial investment on the part of the user. It is essential that this is taken with the right mind and research at hand. Even if you receive coins from a friend or as payment for a service, your coins are subject to rise and fall in value and can be traded in for other coins at will. Coins and tokens today can be exchanged and traded most commonly through a centralized exchange (a CEX) or a wallet connected to a decentralized exchange (DEX). We have already spoken about big names like Bitcoin and Ethereum, as well as tokens and stable coins, it is important now that we bring into the picture another name, altcoins. Altcoins are any alternative to larger coins like Bitcoin and Ethereum, and are not tokens which are produced from things like the EVM. They are their own protocols with their own rules, upgrades and uses. Ilcoin is an example of an altcoin. It is important to mention this now as we will be referring to them a lot in many of the coming sections.

Different coins are attractive to both investors and users at various times and for various reasons. For example, with the launch of a proof-of-stake upgrade on a particular system, it is likely to see a sudden buying trend within the market as potential new forgers may want to buy up a cache of coins to stake. Whether you yourself would be interested in forging new blocks or simply making a profit, the days before and conceivably week or so after, sudden increases in value come, and eventual cool off. This is the process of what are called peaks and corrections respectively. These spikes in value in a coin are a sign of the ecosystem becoming more diverse, or at least more liquid. The opposite is possible too in the case that, for whatever reason, people begin to move away from one system or another. Bitcoin and other major coins, especially those that work through mining, go through periodical streaks of selling

when large account holders liquidate their coins for profit. Whenever a market leader does see a major shift, up or down, transaction fees are greatly affected. With a greater workload and higher mining necessity, fees increase as the demand for assets go up. Fees are also key players in the value of a coin, Ethereum142 for example, struggled after the Bitcoin halving event of 2020 and found greater friction as it increased value; this was due to high demand. These are market and technology based issues coming from economic factors, increased interest in a coin, and limited scalability. This is a practical example of why scalability is such an issue within the blockchain space. Even when buying coins on exchanges like Binance or Etorro, coins must be passed through the respective blockchain system to keep the ledger balanced and accounted for. On the topic of halving we can now take a look at the effects of trading in the market place based off of specific scenarios that happen within blockchain technology. As we have mentioned, a halving event is a time when a chain reaches a certain block height and adjusts the difficulty level for miners so the lifespan of the chain may be extended. Though this is a technology based factor that affects the cost of a coin, economic factors come into play, specifically supply and demand. As the supply of coins lessens, thanks to the increased difficulty of mining them, the cost goes up and creates a buyers’ market. 2020, being a halving year, saw both of the ideas mentioned above come about. With the increased interest and difficulty level, transaction fees and bottleneck in validating transactions created stagnation in the system preventing value growth post halving. As time went on and adjustments began to kick in, we saw an increased growth over the third and fourth quarter of the year. The effects of the 2020 event pushed even further creating a market boom into 2021. Generally speaking, the fourth quarter of any trading year, that is to say between October and December, is a good trading time for Bitcoin and Ethereum as the larger coins have historically grown during this time of the year.

Following these periods of time, first quarters are generally quieter with coin dumps in Bitcoin and other big name coins being common. This comes from the pseudo-centralization of mining in places like China; mining pools and mining farms require a period of heightened value to make up profits from the year’s mining work, creating a situation in which value begins to decrease gradually. Suffice to say that these periods of time are better for alt coins in what is called an alt coin market. However, being that alt coins are generally also affected by the rises and falls in their trading pairs, Bitcoin or Ether, make them somewhat less predictable. Despite of this, there are some key factors that can help us understand how the value of these alt coins work.

Altcoin season is a reference to any time that altcoins become more attractive to investors. When this dynamic comes into play is also disputed among analysts, with some saying that it is any time the Bitcoin market dominance drops, others are more flexible with their understanding of it. Time of year has less to do with the fluctuations connected to alt coins, but there are key milestones that indicate value increase or decrease. Of the most obvious of these would be release of new technology, upgrades to a system, such as mechanisms to address scalability or increase security, halving, which does occur in systems other than bitcoin, and new markets opening up around the world. The key word in the alt coin trading game is research; it is easy enough to get into crypto trading with Bitcoin and Ether, generally safer bets, but with alt coins, research is truly essential. This is because it is nearly impossible to understand what goes on behind the scenes in the crypto market without being sure of what you are getting into. Remember that this is a decentralized and loosely regulated economy, very few people would be sympathetic if you lost a lot of money on a scam. And there are many scams going on in the crypto trading circles. Most networks, like Ethereum have Twitter, Telegram and Reddit communities through which people discuss, and where development teams share vital information. This comes alongside websites that are run by the development team themselves and report on all that is going on within their chain. This includes new exchanges distributing their coins, testnet and mainnet launches and even developments that are scheduled which may slow the release of coins or affect the processes of the chain altogether. As a thriving and active community, it is essential that a trader keeps up with habits and trends that come whenever buzz is about.

This was evident, for example, in the release of Filecoin from IPFS. The initial ICO, which made headlines as the most lucrative of all time, created a lot of interest in the following three years leading up to its release143. We saw a diversification in things like futures and IOUs of pre-owned coins, anomalies in terms of the crypto-market today. When release finally came, a buyers’ market came suddenly but died down almost as quickly. This was due to protest coming from potential hosts who found that they needed a far larger cache of coins prior to hosting than initially expected. This stagnated the coin’s value and created problems for users and the development team alike. A sign of the difficulties faced with a semi-centralized consensus market. Conversely, burning of coins and tokens also play on the economic rules that sway value. At any point, coins or tokens may be remove from existence in what is called a ‘burn’ of assets. This could come from in-built mechanics like Proof-of-Burn, that is required in consensus building, or it may be a choice taken by the community or development team. When burns do occur, the amount of available coins drops by however many are removed from the ecosystem. On paper, this decreases the availability of the asset and therefore makes it ‘rarer’. In terms of investment, this should make the asset more valuable, although many factors effect this fact, not simply the action of burning the token or coin. These kinds of issues do not only affect smaller coins, as we have seen with ‘whale dumps’ in Bitcoin earlier. Plus token144 is a classic example of how the market is moved not by technology, nor by economics but sheer human greed. In 2019, marketers around Eastern Asia set up elaborate promotional events talking up Bitcoin and other coins. Many traditional investors interested in getting into the crypto trading space were drawn into this opportunity only to find out later on that it was in fact a Ponzi scheme. To this day, the founder and main associates of the scheme have still not been caught and made off with around 1% of the total share of available Bitcoin. The Bitcoin slump of 2019 is generally seen as direct result of this scheme with the main actors leaving investors without any contact and with their wallets completely devoid of value. As an outsider who may have not been involved in Plus token, this devaluation of Bitcoin would have still had a huge impact on your portfolio. This is why another point to make for anyone getting involved in trading would be to have a diversified portfolio of coins. From a trading standpoint this is clearly a better strategy than simply sticking with one option; that said, we are looking at this from a point of how it addresses the system. The holding of coins in a general sense is good for the health of the systems running on those coins. It means that active trading has occurred, there are incentives for others to get involved and creates the potential for competition and increased interest in mining and staking. These are purely economic concepts, despite of this, as coins directly influence the ecosystem of the protocol, these concepts extend likewise into the technology as well. Active trading, or day trading, is an outlier in all of this, the consequences of such activities can be detrimental to the crypto market as a whole. Too much trading can cause rapid shifts in the coin’s value and creates the sense that coin trading is only as good as the profits it bring. This is harmful to the atmosphere for serious coin holders, especially those involved in their actual use for whatever purpose. This is particularly true in systems for buying, selling, or services provided in exchange of coins. If it is in fact true that the eventual goal of developers is to bring blockchain to the masses as an everyday tool, rapid shifting in value and overzealous trading holds this ambition back. On the opposite side of the spectrum we find what is called ‘hodling’145 coins. The actual meaning of this expression is vague, however, it is the idea of holding coins and sometimes abbreviated as ‘holding on for dear life’, to ‘hodl’. That being said, hodling is the act of keeping coins until their value has appreciated substantially. This could take months and more commonly years. From an economic position and considering what we have just mentioned, it should be easy to understand how this is damaging to the blockchain landscape. In an economy, the movement of funds from one place to another is a natural and essential part of daily maintenance, in cryptocurrency where the relationship with the currency is far more diverse, it is fair to say that simply sitting on coins waiting for them to appreciate, does not do anyone any favors. When coin hording happens it creates less space for flexibility through consensus, miners can’t mine transactions and forgers don’t have as much access to coins as they could to stake. The larger majority of people do not engage in coin hording, and the issues mentioned above are not big problems within the blockchain space. However, within trading and the understanding of liquidity, ‘hodling’ is not a suggested practice. At least not indefinitely. Trends When you get into the trading game, you may hear of things like catching falling knives, buying the curve and the fear of missing out. All things that make buying and selling cryptocurrency somewhat daunting and distant from the average person. These are all simply trading jargon to describe different developing trends and attempt to give an idea of what is a better or worse choice of action to take.

As you would imagine, trading in crypto follows many of the same concepts that drive stocks and other exchange based options. It is a matter of appreciation and depreciation, ups and downs in the markets. For this reason, the trends that are often referred to by investors would be with relation to these same ups and downs. For example, someone may say that in approaching the recent spike in interest in Bitcoin that you should consider whether or not you’re simply going through ‘FOMO’. And you may reasonably concern yourself over what this expression actually means. The ‘Fear of Missing Out’ refers to the feeling one may get as they watch the value of a coin appreciate and suddenly start wondering whether it is still worth getting into. It is easy to feel feverish if you were just thinking of getting invested in Ilcoin, for example, and then see it shoot up before your eyes. However, if you get into an investment only for it to stall and lose some value, you may just end up with an expensive crutch. Unlike ordinary economic theory, even the biggest coins don’t follow a linear upward trajectory. It is never the case that a coin will simply settle at newer heights time after time. It is far more likely to have moments of great excitement followed by plateau, stall or regression. For this reason, FOMO is a far bigger problem among the crypto-investment crowd than for those on Wall Street. It is important to not get caught up in a big wave of cryptocurrency interest. Coins can be extremely volatile jumping in value and dropping down just as quickly without much space to make any profits or even buy at a worthwhile price. What can be seen as the opposite of FOMO is catching the falling knife. In this circumstance, as the price of a coin begins to fall, an investor must be weary of how low the coin is likely to fall. When trying to optimize profits on a given coin, or at least in attempting to utilize that value for what you buy it, you must get it at as good a price as you possibly can. If you wait too long, the coin may recover losing you some potential and if you buy it too fast, the price may continue to fall. Even at a smaller investment like $1,000, between transaction fees and percentage points dropping, that initial investment starts to diminish quickly. If you are intending to use that investment in any way, especially to pay for something, you may find yourself in a tough position if you try to catch the knife as it falls; it cuts on either side.

The idea of ‘buying the curve’, looks at the ideal in terms of investment, what we may also know as buy low and sell high. If you manage to get in at the right price and watch the coin you bought suddenly grow substantially, that would be great, right? That’s what it means to buy the curve, make maximum profit from a good investment. People who buy the curve are the ones who get in just as the asset begins to rise, making for optimum profits. This could refer to short, mid, or long term investments. A false peak is a term that comes up from time to time and can be a real headache for novice investors. Getting caught up in FOMO as a coins suddenly begins its climb could bring you a sudden and substantial increase to your portfolio’s value, but if a false peak hits, you could lose all that built up value as quickly as you gained it. False

peaks grow very quickly and to some very high highs, but dip down, usually as far if not further than it started with.

Finally, if you have ever been involved in investments before, you will have undoubtedly have heard of bears and bulls. This is simple really, bears refer to assets going on a downward turn, while bulls go up in chart reading. Now that we have looked into some of the jargon behind the trends, it is useful to talk about some patterns that have become apparent in the markets. Reading charts The ability to read charts and predict trends accurately are fundamental to a successful investor. Along with strategy and choosing the right coin, there are certain things that can be taken from a chart that will help you make the most profit. An investment chart is the history of people’s analysis of value, what they have bought and sold the coin for. Starting off with the candle wick, the usually red and green bars that span the charts, we can understand what is happening in the moment of trading. At any point these bars may become larger or smaller and change from green to red. These changes indicate the real-time purchases of coins and their values. So if a bar is getting longer while in the green color, that means people are buying at higher and higher prices. From this we can assess that the general feeling in the moment would be that the coin is more sought after and therefore more valuable. Conversely, if a bar should turn red, or in other cases purple, then the value of the coin is decreasing due to increased selling off of the coin. These follow the rules of supply and demand and can be giveaways of trends to come. Accompanying any good chart would be a log of who wants to buy certain amounts of coins and at what prices. A buying/ selling wall could indicate where an asset is likely to stop. This is because the amount that is required to fill that order would be particularly large and would need many smaller investors to fill it. These make up the support and resistance margins that appear on the charts themselves. Wicks are colored according the distance in price that a particular asset has reached within a certain period of time. As a buyer you always want to get the best price for your purchase, and when selling, you always want to make the most profit. Understanding the support and resistance is key to doing just that. If examplecoin has traded at its highest point for $12, then within reason, that is its

resistance level; the level at which it is unlikely to rise above. Support is the opposite of that. Examplecoin may have fallen to $8.50 within the last twenty four hours, so it is reasonable to believe that $8.50 is around the price you want to buy it to get the most profit146. If you look deeply enough into the history of the asset you are investing in, you can get an idea of how to play the market in the long, as well as short term. The 24hr highs and lows are usually indicated on the coins page in an exchange platform. When setting up your exchange, it is good to understand some basic terms. The buy/sell limit is a marker of the price that you would be willing to buy or sell coins. If you think that a coin you are holding is going to start rising in value, you can set a pre-determined sell limit. This will have the assets you want to sell in place to be sold as soon as buyers are willing to bid at that price. This could be half your coins, all of them, or any amount you wish to sell at said price. If you place too many coins to sell at a high price, you might create a bottleneck in the exchange that could stagnate the growth of the value of the coin. This would have to be particularly large amounts of coins, or a particularly high price. The buy limit is the reverse of this. Setting a price to buy coins at a lower price could take some pressure off the mind while you go about your daily life, the rest is down to whether or not it will reach the limit. Another aspect of this kind of trading is the stop-limit order147. What this does is set up parameters in which a trade will be made. This advanced trading feature mitigates loss and maximizes profits by identifying key points for an investor. If you are getting ready to go to bed while the market is on the move, you may be tempted to stay up all night just to sell at that right price. What can be done instead is set up a stop, a point which identifies the start of your key trading point, and the limit, the furthest point at which you are willing to trade. As the coin’s value moves within these limits, the exchange system knows that you want to make your trades within these margins. This isn’t to say that you will definitely be fortunate enough to find a buyer, but in many cases, it executes trades that could be vital to optimizing profits, or saving from heavy losses. Knowing when to buy is crucial to making decisions on your trading but can also help you develop an intuition as to when to sell. It is also important to understand what to look for in the day to day progression of trade to sell at a good rate when the moment comes and avoid sudden dips or at worst a crash. We refer to this as a bullish or bearish market depending on where the value is headed. Bulls always run up the price and are a good indication that you should buy. Bears see depreciation of value in a stock or coin, when the price goes down in this direction, it is usually a good time to sell off.

Trends are the signs of what is likely to happen in the coming trading period, in some cases that being the next few hours and with others it’s the coming days. These trends work in a sequence of peaks and valleys that grow in

either direction. It is common for example to see a coin suddenly rise, peak and then fall before gradually rising again. This trend, the ascending triangle148, shows positive signs of healthy growth without their being too much indication of sudden volatile moves. In the descending case, it is much the same and heading for a slump in coin value. This fluctuation is an indicator of investor action in the coin with many buying and selling in either direction. This is beneficial as it points to liquidity and investor interest, which for you is an opportunity to make some money. Patterns that break the resistance lines are often times good signals for continued bullish activity.

The head and shoulders trend149 is slightly different to the triangular patterns. In this trend a sudden rise and plateau means that demand has peaked and investors are actively trading at the plateaued price. This stability is usually short lived as demand wears off and the price drops again soon after. On the other hand, a sudden sink into depreciation could also be temporary and show that sudden interest may be only a short way away. Finally, when the price of a coin begins to narrow within a trading session, with slight rises and falls coming over a longer period of time, it is to be assumed that a coin is stabilizing and settling at that rate.

It is important to keep in mind that trading of any kind, especially in cryptocurrency, is not a practical science. There are always ways of trying to predict what an asset might do, but the markets are always going to be volatile

to a large degree. That being said, here we have looked at the ways that a chart can be read and analyzed so that you can come up with your own trading strategy. It is essential to understand how the markets work and what trends can be identified, both as a trader and as a user of coins. Why? In a volatile economic environment as cryptocurrency, a lot could be at stake. It is very true that you may get lucky and suddenly have a thirty per cent rise in value before making a sale and shaving off some extra money, but it is just as likely to happen in the opposite direction too. This aspect of blockchain affects everything, how we interact and how we can imagine a future where people around the world use blockchain as common practice. Volatility is an engrained part of cryptocurrency and understanding it is a key part to successful usage of it.

Use cases The development of blockchain technology has led to some interesting new uses for it in business and in our personal lives. In this section we will be looking at how blockchain can function today, particularly in a business setting and how it can help us live better and more productive lives. It is important to note that because blockchain is a relatively new tool, many of the examples we are going to look at are still in an experimental stage of use and are likely to become more mainstream in the years to come. That being said, we will start with a fully functional, albeit still novel, use within the financial sector. In finance Naturally, the first major use that was found for blockchain in a large scope was within the financial world150. We have already mentioned how banks like Santander and American Express use Ripple and Hyperledger for banking in a more streamlined fashion. If you look into this a little deeper we can start to understand why blockchain is the choice of system when creating future banking infrastructure.

Using the blockchain can reduce costs of transferring money because it cuts out much of the work that is connected to traditional banking. Geography plays a big part in all of this, the usual method of wire transfer requires a lot of information to be sent back and forth which comes with charges at each step. Banks under the same company in different countries have fees for transfers and usually take a couple days to complete as a result of office processing. Blockchain automates much of this and creates a space where verification and authentication of data can be done simply and easily, regardless of borders. Ripple is particularly effective at this as its hybrid system can send money back and forth across different banks in separate countries instantly. This makes banking and remittance easier151, cheaper and more secure. Bringing down the cost of banking is a key priority in the minds of many bank clients and therefore makes using banks with blockchain capabilities far more attractive. Using a decentralized system means that exchange of value, whether local or across borders, goes through less processes and can be done at faster speeds. However, for most within the banking sector, this benefit is far outweighed by an even larger advantage in blockchain technology. In terms of security, blockchain brings its immutable nature to the forefront and displays exactly how effective it can be in keeping funds safe. Wallet addresses can easily be tracked and verified to keep funds in transit safe, using Ripple’s destination tags, codes that are necessary for sending and receiving funds. Users can be sure that the destination money is being sent to, is legitimate and will arrive securely. So the security that blockchain brings to individual users, namely the immutable distributed ledger system, is simply being implemented on a broader scale. In the case of Ripple, in a more centralized way as well. Users of Ripple banking systems which include HSBC, American Express and Santander152 have seen an increase in simplicity in the user experience with a decrease in fees. Banks are also seeing an upsurge in streamlining of their processes, creating a more efficient and better experience overall for users.

Centralization plays a role in all of this as well. In banking, information is sent back and forth through a multitude of departments and office personnel. This means that should a malicious actor wish to gain access to a piece of information traveling around a bank office, they have multiple places they can attempt to retrieve it from, many computers which don’t have the security of the distributed ledger. Above that, a single server can be hacked relatively easily by a skilled hacker, wreaking havoc on customers of banks not only in a single location but potentially around the world153. The distributed ledger keeps data spread out across all nodes and can identify when a third party is attempting to breach it, sounding the alarm to any potentially dangerous actors. In this way, DLT (Distributed Ledger Technology) can ensure that all confidential information regarding customers and clients can be maintained and stored in a way that is appropriate and sound. We have talked about Ripple, which is largely still a system used independently, that is to say on a personal rather than a professional level, now we can look at a fully enterprise specific system used in a similar way. American Express has used blockchain technology to implement a new loyalty system based off of the blockchain for enterprise of Hyperledger154; the function needed for these kinds of operations do not necessarily need the kind of state-of-the-art security that blockchain itself brings but rather a system that can work within a tiered scheme. As we have already spoken of previously Hyperledger maintains a business hierarchy within its system that can cater to clients in a more traditional way. For its loyalty program, this kind of structure is important for maintaining this kind of interaction. Within the Hyperledger system, client data is held privately from outside parties but is easily accessible and traceable for authorized staff and clients alike, to help identify information and implement rewards based off of this information. As there is no transfer of monetary value within the system, blockchain concepts are inbuilt to the system for the security and ease of use of the client and to reduce workload on the side of the bank workers. Of course, finance doesn’t stop at banks and is a far wider sector than Amex and HSBC. Big business and even stock exchanges internationally have started to open up to the technology for their daily trade too. Along with the main benefits that blockchain brings to banks, within fintech blockchain can go that much further. Privacy in bookkeeping for example is increased exponentially through blockchain technology. Keeping records of trades and exchanges of value and stock can all be automatically uploaded to the ledger and remain anonymous until required otherwise. This also makes it easier for a person to keep an exact and up-to-date file of any and all financial decisions, thus bringing together the security of immutability, the anonymity in saving transactions and the guarantee of traceability in making trades hourly, daily or otherwise. Privacy with increased transparency, as alien a concept it may sound, can be achieved through the use of security keys. In previous section we referred to the use of public and private keys as the cryptographic method of having access to information on the chain. In business blockchain this can also be applied to give necessary personnel the information that may be important, for compliance purposes for example, when needed. It also guarantees increased transparency for a particular wallet and the privacy from any other party. This can increase the confidence in any financial institution to grow and increase client base without the need for excessive hiring or scaffolding for financial crimes prevention. So in terms of the financial industry, an increase in overall security with an optimization of profits can be achieved through blockchain. Less people are needed through automation of some of the technical office work and therefore more money can be saved while the system becomes safer for users of the services. Now in moving on, we will be looking at a particular financial service which is unique in terms of its blockchain usage but is still gaining huge ground with the implementation of the technology.

In insurance In recent years the costs related to running an insurance brokerage have been steadily increasing. This has become a problem within the sector that needs to be reckoned with155. Compliance, as with all other financial services has cost companies ever increasing amounts which is then passed on to the consumer as time goes on. As a result the insurance sector is looking more and more to blockchain technology as a result, to lower costs and make providence of insurance cheaper and easier. If insurance companies can stop the growth of these costs they can pass those savings on to their customers, realigning insurance companies’ needs and creating a better B2C relationships as a whole. Unlike in banking where Ripple works both outside of and within the banking system, in insurance blockchain requires the hierarchical structure that can only come with enterprise blockchain. This is because compliance and checking of claims requires levels of authority to confirm and check client data within the system. As with Amex and its loyalty program, enterprise blockchain vastly improves the speed and efficiency of data storage and retrieval. One of the most onerous parts of dealing with insurance is large quantity of bureaucracy in making a claim; dealing with staff and filling in forms. With blockchain many of these processes are removed due to information being stored and uploaded. Making a claim is a lengthy process on both sides of the story, for customers and for insurance workers. Blockchain brings down the overall cost of buying insurance and claims handling, which winds up back in the pockets of customers in the form of lower premiums and cheaper insurance costs. Another big issue that the insurance industry faces is that of the risk assessment. In this regard, smart contracts and communication between insurance companies can make claims handling a lot easier156. Putting claims funds from both sides into a contract until all information has been analyzed could make for faster processing of information with automated dispersal of insurance money once verified. Conversely, this could also help future premium calculation and come into play when new claims are made thereafter. Blockchain technology has had a profound effect on the insurance industry and is only likely to keep growing within the sector. If the tech proves that it can reduce costs by removing a lot of the extra paperwork related to the business, it is likely that blockchain will be a staple of the insurance industry in the years to come.

An example of how blockchain has helped insurance companies grow can be seen in Blue Cross, a Hong Kong based insurance company157. Providing medical insurance to its clients, Blue Cross can cross reference client information in real time to give greater ease of use, which is extremely convenient in already difficult times. The system used by Blue Cross to achieve these aims is Hyperledger, which we have already discussed previously. What has been seen for certain is that partners of Blue Cross have enjoyed faster processing times and a notable cost reduction as a result of its implementation. For Blue Cross, the use of Hyperledger has also brought down the threat of fraud through its cross referencing capacity. Fraudulent clients seeking to make claims at various companies can easily be caught out through the blockchain. Active communication between brokers help understand and catch any party attempting to defraud companies through multiple insurance claims. Blockchain can play a big part in record keeping and identity management. Companies like Blue Cross use this fact to maintain a trustworthy and easily navigated system in an industry which is already daunting to engage with. Medical records, personal information and previous transactions are all things that can be uploaded to the distributed ledger in a way that is safe and easily retrievable; making it a godsend for insurance and other B2C companies. Next we will be looking in a bit more depth at how blockchain is being used for record keeping for identity and other sensitive information outside of the business arena. In digital identity Identity, identity theft and identity fraud have become huge problems in our ever digitalized world. This is because more and more information is readily available through the web. Equally, our system for storing and holding proof of identity is antiquated and in need of reform158, blockchain can once again be a response to the necessities required by the institutions of identification. Primarily, this could be a governmental tool for storing citizen’s data and can function for things as far ranging as voting and national statistics collection, but more on that later. For now we are going to look at what DLTs can do for the secure and consistent storage of people’s personal data. As previously mentioned, the paper based identity storage method of birth certificates and driver’s licenses is compromised by the nature of the world today. We are becoming increasingly more digitalized, and identity management needs to keep up with this trend to remain relevant. In terms of what is being done in digital data collection, we are seeing huge efforts being put in by the tech companies of the world, however this serves more to the detriment of the user rather than to their benefit. Unlike these businesses, blockchain can be used in a way that is not focused around the profiteering off this information but rather as a distributed and decentralized network of private information. The two common themes that surround blockchain are, of course, central to this use case as well, traceability and anonymity. Using blockchain technology, information can be added to the chain at any time without the possibility of being changed. That means that any new information, change of address or marriage status for example, would require new additions to the chain without any previous information being changed, simply overwritten by new info. Going back to the original concept of blockchain, if a malicious actor does attempt to gain access into or manipulate information on the chain, it is easily recognized and counteracted. This means that all data that is uploaded to the blockchain can be consistently confirmed as true and valid, which leaves users secure and confident. As a non-monetary system for data storage, the application and distribution of these kinds of networks could be far more widespread and diverse than average chains. A person could receive an address to record their important data from birth and simply add onto it as they get older. Things like medical records, especially in the cases of universal healthcare, can be added into the ledger to be retraced and used whenever necessary. In times of crisis, as we have seen in the last couple of years, this could be extremely useful in the tracing and tackling of issues, as we have seen with the COVID-19 pandemic. For example, in the case of a natural disaster, an affected person could provide the details from the chain to insurance or government assistance to prove residency or loss of property. Considering that this could primarily be a government service, the platform could be accessible for various sectors which could cover most of a person’s societal needs. Using security keys as well as zero knowledge proofing for authentication, data can be shared whenever it may be needed without giving a person access to unnecessary information. In providing employers with personal information about yourself, in an interview situation for example, a person could grant access to certain aspects of their personal file instantly, to ensure validity without needing to provide the information directly. This traceability aspect can help to fight against fraud and theft in the same way that Blue Cross insurance displayed in the previous use case. So traceability and security can work hand in hand while also providing the necessary

anonymity that is required when passing along detailed information within society. Government confirmed digital signatures work in place of consensus built ones, giving information the hybrid, centralized/ decentralized format that can be both instantly verifiable, but also totally private. There is no need in this case for fees related to block production because of the non-monetized enterprise style which would be most likely to be adopted for this use case. LifeID159 is a blockchain project that focuses on making digital identity through blockchain a reality. Creating on chain databases of personal information. LifeID is a project focused around web2.0 technology. Blockchain, in this case, can help store your data privately for your online and real world life. Using zero-knowledge-proofing (zkSnarks), the questions relating to identity and permissions change entirely. For example, a website that may have an age requirement will no longer ask, how old are you? But rather, are you old enough to use this page? The blockchain can maintain that the answer can be given accurately and consistently, without providing any personal information to a centralized platform. LifeID recognizes the essential importance of privacy and the value that exists within our data and seeks to secure it for our individual protection. Self-Sovereign Identity160 has been of interest to blockchain developers ever since it was theorized that blockchain could work beyond finance. Taking the inherent safety and anonymity of blockchain technology it was easy to see that in an increasingly digitalized world, the right to our own information and how that information is processed and stored, would be paramount in forward movement. Digital Identity and the value in our data are quickly coming to the forefront of the blockchain conversation, not simply as a method of keeping a record of ourselves in whatever form, but in far wider ways too. Producing content online and monetizing off of it is another hugely important aspect of keeping a digital identity safe. The next use case that we are going to look at relates very much to this aspect of blockchain technology but flips it on its head to keep our persons completely unidentifiable, but maintain that our opinion is heard. In voting With all that we have come to learn and understand about blockchain so far, the idea of using it in voting comes as a natural one if you think about it. Given that digital identity can be maintained as we have seen in the last use case, and information can be sent and stored immutably, voting can become safer and better for a more equal democracy. Before we delve into the details of how blockchain can work in this way, let’s look at the core components of fair elections.

It is essential in fair and equal elections that every eligible voter has one unchangeable, and most importantly, anonymous vote. Some degree of centralization is key to keeping all of these things in check as a vote must be granted to a person based on the validity and right of that individual. It is important to make sure that whomever is voting is still alive and is eligible to cast a vote, this requires an institution to identify that person as a valid actor. It is important also that a vote cannot be changed or amended after it has been cast, this is true whether you

yourself want to change it or someone else entirely. This destroys the concept of voting as it goes back to the one vote for one person value of voting. The trust in an election and its results are the whole crux of the procedure, without which people wouldn’t have faith in their elected officials or the process in total. Finally, to keep an election fair and free from manipulation, we must ensure that all voting is anonymous and unhampered by intimidation or coercion. Bringing these ideas together within a decentralized and functional system is a lot to ask for, but it is far from impossible. Some projects around the world are already experimenting with this technology as a means for voting, with some very promising results. Blockchain technology above all else is a digital record keeper that is unchangeable. This foundation gives a perfect place to start for the future of digital voting. We can rely on blockchain as being virtually un-hackable and immutable, we can send and receive data in seconds, and we can do so with complete anonymity should we choose. What holds back blockchain voting in our everyday lives are a few caveats that need to be overcome before it can be implemented en masse. Starting with digital identity and the secure validation of one’s identification we can already start to see some of the problems that need to be dealt with. To validate your identification, a government body or an institution that authorizes you to vote, must first identify you as an eligible person. This would primarily require a degree of centralization to confirm that you are who you are. Driver’s licenses, passports or ID cards would first need to be confirmed and established to be valid before you can be admitted into the voting process. This would create the need for outside inclusion of central authorities but ultimately does not create an issue within the voting itself. This is because a randomized address can be created for every user to store their ballot until they are ready to cast. To some degree, the cooperation between centralized and decentralized systems will be needed for the process to work correctly. Or at least until a fully decentralized identification database can be amassed and created efficiently. This brings us to our next big issue relating to blockchain for voting, scalability.

The last U.S election had a record turnout of over 160 million voters161 involved in the electoral process. This is a staggering number, even considering how many Bitcoin transactions go back and forth every day. To accommodate this trend and consider the security and validity of all of those votes would take a blockchain system that outperforms anything available today. This degree of scaling, security and decentralization may be compromised in the process. Employing a hybrid system may also be difficult as this may create issue with the anonymity of the persons casting their votes and therefore render it unusable. What has been promoted as a reasonable method for dealing with this issue is tokenization and the use of smart contracts162. In this way, smart contracts would drive the protocol for election tokens and the tokens themselves would count

as ballots. So if a contract were to stipulate that only persons with a valid digital ID can use one token from a verified address by a certain time and date, then that person could use their given token to send to their chosen representative to be counted in real time. The token themselves would have no intrinsic value other than for the voting process and would be burned once the electoral procedure has been completed. In this way we can ensure that voters must be verified as eligible from before the election, have a set amount of time to cast their vote before it expires and assures that voter’s identities are truly anonymized. On the other side of the argument, votes are tallied immediately and without the need for human interaction, creating an exact and fast acting system to show results. One project that showed the first results of blockchain voting in the real world was Luxoft in the canton of Zug, Switzerland163. Blockchain in this small Swiss town is a part of everyday life, the government there has embraced it and people are very much aware of the benefits of decentralized technology. This is true to the extent that a trial run of blockchain voting systems were largely seen as a success in the town’s local elections in 2018. Mixing the ideas of e-IDs, which already existed within the town, and an intuitive blockchain system that allowed for roughly a week of voting, a fair election was had through blockchain. The company Luxoft, which is based in Zug, created the technology to have a more transparent and secure system for direct voting, which is a staple of Swiss democracy. What this technology conveyed was a greater sense of security in the voting process and a new safeguard against outside manipulation in the voting process. This is all well and good in a municipality of just over 30,000 people, but can it be scaled to take on entire nations?

Some U.S counties have piloted mobile voting through the use of blockchain too. Voatz164 has already shown some progress on a local level, with Utah County being the first county to use the app in the 2020 presidential election165. The main aim of the app, as said by the company themselves, is to leverage the use of blockchain technology to make voting more accessible, secure and auditable. With all of the controversy surrounding elections, especially in the United States today, blockchain could be a game changer. With local elections having their own dispersal of votes on a smaller scale, a compilation of tallies could be a good way to scale up, while not compromising the system or creating bottleneck. Despite of the good press that Voatz has gotten since its launch, critics have pointed out that there are still many flaws in the technology. They argue that blockchain has a long way still to go until it can be considered seriously for a national election. Time will tell. In property rights and ownership On a similar note, blockchain can make a huge difference in impoverished areas with property ownership166. Something that to us here in the western industrialized world may seem so basic, is not so in foreign nations that struggle with infrastructure or basic government accountability. We tend to get so carried away in all the hype of soaring cryptocurrency prices and advanced technology used in multi-million dollar sectors that we don’t see the world beyond it. The fact is that some of the original uses of blockchain technology were to iron out some of the inherent inequalities in the world and it is time that we return to these considerations.

The issue with land ownership around the world is that the records are held within centralized databases, databases that can be hacked, corrupted or lost over time. Of course, for the majority of us, holding our own notarized copies can easily confirm the legitimacy of a deed or document, but many in poorer areas of the world do not have that kind of luxury. As a result, many countries have begun to look to blockchain technology as a means of creating an inalterable and affordable collection of data on land rights. Some of these countries include Rwanda, Honduras and even in larger countries like Russia. Working in much the same way as digital identification, farmers and land owners in poorer countries, may soon have a method of registering and keeping their land without fear of corruption or external involvement. The success of these projects always relies on multi-party cooperation; governments who do not wish to grant land ownership rights are less likely to be receptive to these kinds of projects. But many countries are open and willing to pursuit them. As a result we have seen some clear progress made, with Ghana gaining a collaboration of Bitland and FoodCoin167. This project aims to not only provide land registration but also create open markets for food production and distribution. It is ultimately down to who is willing to help in the step forward towards a more ethical and equal future and those who are stuck in the old ways. This division of world view is what holds back the development of humanitarian projects like these. Immutability and record keeping on chain could change the lives of millions of people and drastically improve the financial situation of those who rightfully own crop producing land. This has to come as a decentralized/ centralized push otherwise there is no way of truly solving some of the engrained social issues that plague these under-developed communities. In copyright and content production

It is not so farfetched to say that the music industry is one of the hardest hit by the digitalization of the world. Torrent and document sharing programs like Napster in the past, and websites like Piratebay today have made music virtually free. This of course comes to the detriment of music producers and indie artists the world around. On the flip side, sites like YouTube have created a space where people can share their production and maybe even be discovered. With the largely corporate world that has enveloped the music industry though, musicians are earning less now than in the past in general168. But apps like Napster and sites like YouTube have also played a large role in the development of the same technologies that are now making the music industry more lucrative and more attractive to content producers.

Distributed ledger technology has brought artists closer to their audiences, and budding artists are starting to take notice. Functional chains, many based off of the Ethereum virtual machine, are showing promise to artists of all ilk, from well-known touring artists like Grammatik and Pitbull to new artists that are just coming into the music scene169. There are some obvious reasons that this shift is happening, but some of the more subtle benefits of blockchain technology are the real attraction in this regard. So why are musicians looking to join the blockchain revolution to share their music? This is why. Digital signature technology and public/private key cryptography secure data to ensure ownership. This applies across board with musicians, writers and any kind of content produces; the process of copyrighting data in today’s world can be time consuming and pricey, blockchain takes away these hurdles at the times when young artists need it the most. Selling the rights to your music after recording can be an intimidating step and comes with many difficulties. Notarizing the content as your own is one that many new artists may not think about in their busy schedule. Blockchain’s timestamp and digital signature technology does this automatically upon publishing items to the chain. The information that is uploaded and saved is unalterable and saved indefinitely as yours until you update the chain. This can be extremely handy when showing off your material to producers and higher ups in music companies. As convenient and useful as that may be, there is an even greater benefit to artists than that. Security keys allow users to share their content while maintaining their ownership of it. Mediachain170 for example allows users peer-to-peer sharing of data through smart contract technology. What this means for content creators is that they can share their data directly with the consumer and make royalties fairly, without the need for third party involvement. Consumers can discover new artists through Mediachain and get fair rates while being true to the creators. This barrier within the music industry is a big one when trying to make it in the industry. With blockchain systems like Mediachain, music producers can create a name for themselves without getting caught in the usual hassles of distribution and ‘middle man’ fees, meaning more profits as well as more control over your content. Proof-of-Authority and Proof-of-Engagement created a new dimension in content creation, with both artists and their followers being able to make money off of their activities. Rewards in the form of native cryptocurrency can be used for an easier and more streamlined experience in the process of sharing data. Similarly to how YouTube works but without the centralized aspect of it. All of the rights remain safe under the private key, while smart

contracts take care of ownership, and more importantly, copyright. This system of internal storage and proofing creates an ideal circumstance to share production and build your name as a new artist.

Finally, we must look at NFTs. Smart contract technology has created a new dimension for value holding items within blockchain infrastructure. You can now produce an item digitally and hold it within a contract as proof of ownership and authenticity. This can be traded as the contract itself holding value external to its own code. This makes the contracts themselves valuable for what they represent, in most cases JPEGs or other computer files. As we have discussed already, the gaming industry are using these types of contract to stand in as value holders within games themselves. Developers like the Enjin171 team have created whole ecosystems using ERC-1155 contracts for game makers to use in-universe. These kinds of projects get a lot of attention, just as applications like Spotify and Soundcloud, because of what they are and what they mean to the user. Now, pulling in all the great strengths of blockchain, immutability, security and an independent financial network, musicians and artists can take back control and have an easier time in an already difficult industry. It is easy to see just how far blockchain has come and what it is doing within society. From a simple ledger that helped people send money back and forth, it is now a buzz word in offices around the world from Korean stock exchanges to the board rooms of WalMart. Blockchain technology is pushing the envelope and allowing people of all kinds to do things differently and the results are staggering. Blockchain is a tool, it is diverse and ingenious; if you were to ask any developer today what the most interesting thing about blockchain is, the likely answer would be the potential it has to be used and developed further. Next, we are going to look at the Ilcoin network and what it can be used for. As a system that is gaining traction in contemporary blockchain circles, it is important to understand what it can do for you.

How Ilcoin is changing blockchain

The Ilcoin network is a diverse and resilient ecosystem largely focused on transaction based exchange. We can provide quantities of space that are unparalleled by any other chain. The personal and business applications of this transaction speed is limited only by the intentions and requirements of the user. With our state-of-the-art block creation system, we can afford our users more than the average chain and give businesses a leg up over the competition. Using our unique consensus system, the RIFT protocol, you can be part of over twenty million transactions being processed every second in a dynamic and varied capacity. Dealing with financial exchange in this quantity means that there is no limit to what you can get done with our technology. It is up to you, the user, to adapt it to your needs. The original idea behind Ilcoin was as a financial instrument; an improvement off of the old and outdated ledgers that started off the crypto golden age. As a result, Ilcoin has many of its main functions still based in the financial sector. What we bring to the table are two advancements that cater directly to the business world. A hybrid system for private and public chain access, and the increase of block capacity for far greater quantities of transaction.

A hybrid system

Understanding now, that people, especially business owners, are looking to blockchain as a tool for enterprise, we aim to give those who expect these services every advantage they require. For this reason, we have a dual system that allows users the security and block size in a dynamic setting, seeing to needs of any for-profit business. Using Ilcoin as a private chain can boost a company’s overall gains in the same way that has been seen with systems like Corda, Hyperledger or Ripple. The RIFT system can keep track of your transactions and communication in a layered setting. Though there are no smart contracts built into the RIFT protocol as of yet, we are working on a solid foundation which allow for free tokenization for full freedom on our chain through the DCB. Transactions in this sense, both within the company and with clients, can be optimized and secured so that your business can use the blockchain infrastructure at a far faster pace than any other system. This dynamic aspect of the chain separates us from other systems for the simple reason that using the chain for business processes is completely secure and reliably stored on chain, all with the necessary capacity that your business may require. This is where some similarities between the RIFT protocol and systems like Ripple can be found; the intertwining of public and private chains. With instant transaction capabilities, at a far lower cost and improved security, the RIFT protocol is attractive in a far wider sense than other networks dealing in finance. Our future plans will build on our current smart contract technology to gain ground for deal making and smoother dApp creation with the potential for business becoming a more attractive aspect of the RIFT protocol than ever before. Future smart contracts will be built off of the standard concepts in the protocol and will be far more versatile and adaptable. Until that day, the feasibility of the RIFT protocol lies within its unbeatable speed of transaction, out-pacing any system available today, centralized or otherwise. For the modern business, this aspect of the chain, with its inbuilt security system, makes it a real solution for both medium sized and large corporations. Unbeatable transaction capacity Our team built this technology with the future in mind. We wanted a machine that would outperform any other system available for years to come. We based it off of tried and tested methods that people know they can trust. As a result, we have created a novel solution for block creation that does not expand block size, nor does it shard, but rather creates a harmonious synchronization of information while mining. In doing this we have managed to

maintain the reliable security system of the SHA-256 encryption while speeding up the process of block creation. This encryption method and a specialized SDAO keep input on a constant roll, giving higher rewards to miners, reducing the overall need for block verification and speeding up all processes. Our philosophy is that security needs to be at the forefront of any system, users have come to rely on the secure nature of blockchain; when dealing with money, no security level is too high. The C2P/C3P security system allows for blocks to be created along a single thread of data collection, meaning that all information correlates to the last block in a way that is inductive to the logic of the chain. This connective tissue between smaller blocks of data creates a space where information is instantly verifiable and can be held as evidently true until proven otherwise. Consensus building of the larger blocks will weed out any double spend or faulty blocks. As a result of the relationship within the RIFT protocol, the C3P and common mining pools, 25Mb blocks are added to larger blocks as transactions accumulate. Consensus is built around these blocks and added to the chain as necessary, making for a streamlined system without bottleneck. Any malicious transactions are identified in the process and discarded before any large blocks are validated. Mathematics takes care of the proofing so users won’t even realize that the parts are moving at all. This gives users the chance to transact on our chain with virtually no limitations. The RIFT protocol can cater to over twenty million transaction per second, far out-scaling any modern blockchain system that is currently available. In the case of banks and other financial institutions, compounding data and interexchange of funds can reach millions of clients internationally in real time. Remittance, storing and loaning funds can all be safely serviced to customers in the same way that some more well-known chains do today, but on a global scale. The implications of these two improvements on the standard blockchain infrastructure are widespread and will change the blockchain industry for years to come. Ilcoin and the business world Now that you have an understanding of technological features that other chains have, we can see that many of the core benefits of other chains apply to the RIFT as well. Data stored on our chain is immutable and can be referenced at any time. Immutability also secures coins allowing them to proceed safely through the ledger without fear of loss or hacking. The main advantage of using the RIFT is its usability and its practically scalable protocol, its adaptability makes it unique. The RIFT protocol lays the groundwork for the futuristic Decentralized Cloud based Blockchain (DCB) system. The DCB, more than being an everyday blockchain system, is a file storage tool; similar in some ways to the IPFS and Brave networks. Users can upload files, have plain text and encrypted conversations and send and receive Ilcoin using our specialized blockchain network. It is an all-round business technology. Secure transaction of funding is core to a company; for client confidentiality, for accounting and above all else, the smooth running of business. This is what can be seen as the true basis of the Ilcoin network. Just as with Ethereum, future implementation of smart contracts will allow users to work within the chain for processing of transactions and security in deal making. All this while cutting down on everyday costs that take away from the bottom line. For whatever business you may be in, these kinds of tools could propel your profits and give you a greater chance of success going forward. In industries that rely on various lines of communication, as in food distribution, the RIFT can be of use too. With the intimate communication system that we have already spoken of, companies that pass products from one place to another can have detailed and accurate recordings of where the product is and has been. This can identify the quality, the time taken in processing, and assure that it is well sourced. It also helps customers understand where a product originates and increases transparency at all levels of distribution. Though this is not a new trait of blockchain technology, our chain achieves these goals with far greater efficiency and at a much faster rate.

Other industries, such as manufacturing and aviation, fall within these same parameters. Instant and accurate relay of information has become an increasingly important facet of modern day business. Ilcoin brings this to your business within the blockchain framework. Interexchange of information with the security and enhanced record keeping of blockchain technology. Being that our system builds blocks that are split between information storage and transaction, keeping an open and fast stream of communication is easily acheived while also maintaining a base in the original concepts of the technology. Our infrastructure allows even the least technical businesses a solution of backend software to instantly reap the rewards of modern blockchain for business. Partnering up with other companies to use the same program for a more immersed and connected business relationship can build trust easily and expand business in ways that were not possible until now. Our dApp and smart contract technology is being built to work around the modern workplace. We understand what is essential to our clients, because they are the same needs as your clients. Speed, efficiency and a setup that you can trust to improve your standards. We have researched tirelessly into what enterprise blockchain can do for businesses of all sizes and we have brought that to the center of our system. We want to work alongside you to prove the true potential of our technology and that of your ingenuity. The Decentralized Cloud based Blockchain is the tool to get there. The modern technological world can be a difficult landscape to navigate and it is true that not everyone has the time and money to invest in understanding things like blockchain. That is why we have designed our system to be complex internally but simple to use. Security that relies on methods of cryptography and anti-hacking mechanisms which can set your mind at rest while you focus on growing your company. You can join the conversation in business blockchain now, even if you don’t know much about it. This is the modern work space and it is time for your business to take the next step too. Ilcoin for personal use It should already be clear that many of the business oriented attributes of the RIFT protocol also affect the personal user too. However, it could also be argued that the RIFT system creates a user centered experience which far-outweighs the business applications. People of all kinds can build their digital profile in a safe environment with plenty of space to grow. Users can experience transaction at the speed of light, where interaction with anyone else on chain is unbounded. Digital marketplaces free from fraud and wallets that are all connected on a single, secure network. It has been said that the RIFT protocol is the next generation of blockchain, for the personal user this changes everything. Whether it is strictly the basic investment opportunity of the coin or a system that works to the needs of huge numbers of people, this is what the RIFT was made for. A blockchain is only ever as valuable as the potential it has for growth in the everyday world, this is foundation that the RIFT is setting up for the future. As a second layer system, building out of this fertile ground will be the next reasonable steps for any serious enthusiast. Developers too have unlimited space to work from and it is not hard to see that this system could be a more scalable basis than the Ethereum network has ever been. We cannot mention the untapped potential of this layer of our chain without also mentioning the DCB. The DCB builds off of all of the foundational qualities of the RIFT protocol but adds on key functionality, giving the user more control. This brings the world of blockchain and the internet together in a synthesis of innovative web

3.0 design. All the great functions of the internet, without the ads and with greater autonomy. Communication, transaction and data security all exist within the code of this exceptional machine, bringing the internet back to the audience at home. Complete decentralization on the public chain gives the sense of individuality and personal experience that is hard to find in our day to day now. With the development and usage of the DCB’s security key and data upload capacity, people from all around may soon be finding themselves using it in a similar way to the internet. Chatting, sending documents or finding new communities. With so many tens of millions of transactions verifiable per second, you will never be caught in the traffic of the web again. The third layer developments off of the RIFT protocol create endless possibilities for anyone, including in DeFi and NFTs, for financiers and artists alike. It all comes from the solution of the scalability problem, which at its core, the RIFT aims to define itself by. You too can become an early bird to the decentralized future and be there from day one when the DCB is released for the world. With smart contracts for your own chains and agreements and a space that goes out endlessly, all of the world’s interactions can be stored in the next generation of blockchain, the DCB. The plans for the DCB are still under development, the roadmap for it can be found on our website, but we hope to have the project at a functional level by the end of 2021. This way we can build up the system through 2022 and see the various machinations that come from it. Who knows what dApps will be founded and what projects soar from the base of this incredible system? It is unquestionable that at this moment the Ilcoin network is the most undervalued of all the major altcoins. This is why we have released this guide book, so that non-blockchain users could get an idea of the ins and outs of the technology. It stands to educate and bring in as many new users as possible. Everyone should have the basics of this system as it continues to build the future. We lay the facts out straight so that you can have an unbiased opinion. We feel that it is clear after which, that the RIFT protocol has the most to offer and we hope that you will realize this in your own time. You have the knowledge and the power to make that decisions now and we are happy to supply it to you. The future is yours now, use this information as you may need. We have built the RIFT protocol off of years of research and an understanding of the needs of the community. We work in unique and innovative ways to come up with creative solutions that don’t require periodical updates, at least not in terms of your data storage. We always push for greater safety on chain and the autonomy of the community that drives it. These ideas are the basis of the philosophy of blockchain and we want to make sure that this philosophy resonates through our chain. We bring it to the people, rather than simply a tool for business because we want to involve the greater world in this conversation. It is a system run by the community for outreach, to make the world a better, more decentralized place, and to bring freedom back to the online world. A shifting landscape

We are trying to bring blockchain back to the people and give an opportunity at a truly decentralized planet. With so much of our lives revolving around an online presence, we believe that it is time to gain more control over what we do on the web. The RIFT is a tool that aims to provide that security when engaging with each other online. We want to bridge the gap created in the last decade and go back to a world of truly autonomy. We want to turn the conversation about blockchain on its head, grant people the opportunity to purchase and receive money online, securely and instantly. Security, decentralization and a platform where people can work free of external intrusion. No payments to companies and no one trying to make gains off of your personal data. This is what the internet was meant to be. Our hope is that other developers will pick up the mantle from here and continue to progress the technology from what the RIFT teaches us; aiming always higher and for greater things, which is what blockchain was always meant to be. The financial aspect which has underscored the commentary about blockchain from the start remains of deep interest to us. We imagine that even in this way, we may learn a lot about the nature of digital finance from what the RIFT brings, and yield further results within it too. We can only imagine that with time Ilcoin will only become more competitive and more attractive to users. This will help anyone working within our network make the most out of their usage, both within the universe of the chain and in making money off of it. When it comes to the business side of things, our guiding vision is to make blockchain solutions accessible. We do this with the idea that the distributed ledger technology continues to be a mover a shaker in industry around the world. We want to make something that can really make the difference in profits and in daily processes. This is what blockchain means to us, progression and innovation. These ideals are the backbone of any company worth its salt, and these same values are built into the mechanics of our chain. In adopting blockchain into your workspace, it is essential that gaining an understanding, our implementing the tool is seamless and quick. This is something that we have kept in mind throughout development of the RIFT protocol. For you to find out, you’ll have to try it out for yourself. Whether you want to excel your business, or want a place to share and enjoy community interaction without intrusion, the Ilcoin network is open to you.

Conclusion It is without argument that blockchain has made some monumental developments, both within computing and in the greater world. Blockchain systems now bear little resemblance to the original protocol at its genesis, but if you look deep enough you can find threads going back as far as you can imagine. It is the search for consensus ultimately. From the times when direct democracy was in its infancy, people have wanted to agree on how things should be done. Now we are finding ways to make coming to agreement easier and more adapted to our times. Through complex and intricate programming, using algorithmic logic as its base, we have access to a truly trustless world. A place where we can exist within a system that has no CEO or president driving it forward. You are as much part of this as we all are, the expansion of any network is only limited by users keeping them thriving and diverse. If you have never before considered using blockchain technology, I would hope that this has changed your mind. As much as the concepts behind it are a vital though complicated fact of the subject, this does not mean that its comprehension is out of reach. You don’t need to be a developer to join in this conversation. In the modern day, blockchain has started a debate on how our elections can be safer and fairer. It has built a financial point of exchange that reaches across the globe. Most importantly it has connected people in a way that we have never seen before. Now, we look forward at how it can allow us to communicate and interact together in a manner that is free and without limitation. From the humble beginnings of bitcoin as a novel financial instrument, people have seen the potential and possibilities of this program. At first creating freedom from the old ways of holding and using money and then as a system for greater independence worldwide. Now we have systems that can help us connect to each other, make a living and store large quantities of data safely. The development of these systems gives new hope in a world that is becoming increasingly corporate. As a person who exists on the web today, you should make the most of your data too. Blockchain has shown us that all the potential of the web, and indeed beyond that, can be done within the decentralized framework. That means no intrusion, no policy changes and no excessive charges from subscriptions. This is true consensus, collaborating with others towards a common goal, and that is what our team have been working to improve on. The RIFT system is unique in an industry that is becoming ever more saturated. We provide solutions to the complicated issues that have always been a part of this technology. Scalability without limits and an unbeatable security system that can hold off even the most contemporary cyber-attacks. Above all else, we have created a functional chain that invites users of all kinds to become part of blockchain for whatever they may need. This protocol helps us interact and transact safely and in near unlimited amounts online. Naturally, we have not forgotten our roots, Ilcoin can stand in for any transaction necessary to you with ease. We bring our storage capacities to this aspect of blockchain and give faster exchange of crypto than any other chain. It all comes back to the argument of consensus. By speeding up the process through mini-block technology, we can give an unmatched experience for just about anything. This development brings all of the discussions relating to blockchain to the fore. With the trilemma solved and then improved upon, now we can look forward and continue to imagine what blockchain will look like beyond this point. What lies in store for blockchain? It is impossible to tell but this step in the evolution of it is undoubtedly a substantial one and will forever change the way we look at blockchain. Imagine how far we have come in just over a decade; it has been just short of twelve years since the bitcoin protocol offered us a glimpse into the future of computing. Now we look forward again and try to perceive what may come next and how this technology will further change the world we live in. We have found use for blockchain in some of the largest corporations of the world. A technology that aimed to return equity to people through distributed ledger technology has been received by the establishment too. Making a full revolution, as these things always do, but also beyond that. Into the world of decentralized finance for a greater share of the cryptocurrency wealth and a new financial instrument. These developments are evidence of the thriving field of study on the subject and the interest involved in its continuous improvement. Things are moving at a rapid rate. We are moving ever further into the digital world. And in a digital future we will need to consider the individual rights and privileges of people; rights which include privacy and anonymity within reasonable degree. As much as blockchain offers the advancement of the modern day business through its usage, we mustn’t forget that blockchain is a technology for all. Now that you have come to understand the details of blockchain technology and have an intimate understanding

of how it works, it is time for you to try it out for yourself. You too have the opportunity to incorporate the RIFT protocol into your daily life, for whatever situation blockchain can assist. Ilcoin is sold on various exchanges including Bitz and STEX. You can also buy WILC, our DeFi token on Uniswap and exist within two systems simultaneously. Whatever the case may be, we implore anyone to try out our system and see for yourself the usefulness and simplicity of use it brings. With a team dedicated to building the future of blockchain, you can become part of a conversation that is quickly becoming the mainstream. With near limitless transaction speed and a security network that defends against hacking and quantum computing, we can say with confidence that you won’t be disappointed. For more information on how you can join our community, look at our websites www.ilcoincrypto.com and wilc.finance or join our Telegram and Reddit groups online!

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