Types of Blockchain Applications
Cryptocurrency
Problems of Trusted Third Party
- Financial Institute highly relies on trusted third parties
- A third party became a single point of failure
- Delay leaves customers at risk, temporarily unsure about the state
- Attacks on concentrated data
- Third Parties' monopolies
Blockchain can reduce the risk of the trusted third-party authority in a situation where multiple entities
AltCoin (= Alternative cryptocurrency)
- any cryptocurrency alternative to Bitcoin
- Bitcoin market is extremely competitive and difficult & expensive for beginners to get into.
- Bitcoin has some problems and challenges: too slow, consume a lot of energy, not very sustainable.. etc.
LiteCoin
- fork of the Bitcoin Core client, having a dicreased block generation time(2.5 min), an increased maximum number of coins, a different hahsing algorithm(Scrypt)
- faster than Bitcoin
- FPGA and ASIC devices made for mining Litecoin are more complicated and more expensive than they are for Bitcoin.
Dash (previously, DarkCoin)
- has additional functions unlike LiteCoin
- Anonymous transaction
- Dash hides the transaction records by mixing coins using a master node
- Instant transaction
- reduces the block generation time to 1 sec and allows real-time transaction
Assset Centric Technology
Asset Centric Technology
- focus on the exchange of digital representations of existing asssets in combination with a shared ledger but not on a public ledger (some data are hidden)
- participants in the network commit to 'publishing' digital assets on the network and some of these participants are responsible for convrting these assets at the same time.
Ripple
- designed for bank settlement and networking - intrabank transactions
Stellar
- forked from Ripple and became totaly independent now
Stable Coin
- cryptocurrencies that attempt to peg their value to some external reference(U.S. dollar, price of gold..)
- purse price stability by maintaining reserve assets or through algorithmic formulas
Asset Registration Technology (e.g. NFT)
Asset Registry
- use public ledgers to register assets other than the 'coins' (== uploading assets to the blockchain system)
- the ownership of asset is publicly registered without the need for a central authority.
- the owner of private key is the owner of that asset
Colored Coins
- a class of methods for representing and managing real world assets on top of the Bitcoin Blockchain
- Bitcoin's scripting language can store small amounts of metadata which can be used to represent asset manipulation instructions.
- immutability, non-counterfeitability, ease of transfer, robustness and transparency(decentralization)
- Open Asset: Colored Coins implementation. Metadata is linked from the Blockchain and stored on the Web
Meta Coin (also called Embedded consensus system)
- Similar to Colored Coins, but it uses address for registhry although Colored Coins uses UTXO(unspent transaction output). -> reduce the burden on the network and bloating of the blockchain & UTXO
- e.c. Omni(= Mastercoin), CounterParty, Meta Coins
- built using Bitcoin's blockchain = on-chain / built with their own blockchain = off-chain
Blockchain Bloat
- Assset registries include additional data in the blockchain -> affects the underlying network performance in negative way and require addition procesing power
- It causes concers with regard to the scalability of applications.
Limitations of Colored Coins
- Dynamics btw Bitcoin and Colored Coins: if asset values in Bitcoin become more expensive than Bitcoin, the processing power to protect Bitcoin may not enough to protect the value of the assets.
- Validators: because Colored Coins is a public coin, all transactions can be accessed by public which is not suitable for legal asset
- Cost to Storage: blockchain bloat cause inefficient in the system
- Scalability Problem: not scalable enough for high frequent transactions
Application Stack
Application Stack
- Bitcoin allows a script language but it has limit
- Application stacks such as Ethereum, Nxt, EOS for non-currency applications of blockchain technologies
- Platform for the development and execution of complete applications: decentralized version of Cloud Services
Smart Contract
- computer protocol intended to digitally facilitate, verfiy, or enforce the negotiation or performance of a contract
- Contract can be any program
- Self-enforcing language: enforces an execution when the execution conditions are met.
Ethereum
- Turing Complete Language for a script languages
- Vyper (similar to Python)
- Solidity (similar to C++)
- provides a lot of degree of implementation freedom -> however, more uncertainty from a security perspective
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