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Some style and grammar edits in chapter-01-introduction.adoc
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chapters/chapter-01-introduction.adoc

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@@ -9,26 +9,26 @@ The past few years have seen many claims that blockchain(((blockchain))), distri
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This book aims to demystify these technologies and provide readers with a starting point to use them, develop their own decentralized applications (DApps) and smart contracts/scripts, run infrastructure, or take part in the Cardano ecosystem.
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[[where-it-all-started]]
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=== Where it all started, Bitcoin.
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=== It all started with Bitcoin
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We start with the first proposal that sprouted this decentralized movement, Bitcoin, the first cryptocurrency(((cryptocurrency))). Bitcoin was proposed by Satoshi Nakamoto(((Nakamoto, Satoshi))) (who remains unknown to date) in a paper released in late 2008. The paper described a novel architecture built using a collection of techniques to solve the double-spending problem(((double-spending)))—a problem which had previously limited digital currency systems to those that required a centralized server or service provider. We now refer to systems that make use of these techniques as blockchains, which are a type of distributed ledger technology.
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We start with the first proposal that sprouted this decentralized movement, Bitcoin, the first cryptocurrency(((cryptocurrency))). Bitcoin was proposed by Satoshi Nakamoto(((Nakamoto, Satoshi))) (who remains unknown to date) in a paper released in late 2008. The paper described a novel architecture built using a collection of techniques to solve the double-spending problem(((double-spending))). This problem had previously limited digital currency systems to those that required a centralized server or service provider. We now refer to systems that make use of these techniques as blockchains, which are a type of DLT.
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Bitcoin's aim was to provide a digital currency system that did not rely on a centralized service provider. This would enable individuals to send and receive digital currency without any intermediary, service provider, or authority that could intervene or would be required to approve transactions.
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Bitcoin aimed to provide a digital currency system that did not rely on a centralized service provider. This would enable individuals to send and receive digital currency without any intermediary, service provider, or authority that could intervene or would be required to approve transactions.
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[[blockchain-and-smart-contracts]]
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=== Blockchain and smart contracts
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Blockchain, the collection of techniques that solves the double-spending problem(((double-spending))), also provides a way of creating digital systems that can execute code in a decentralized manner, where no single administrator, company, entity, owner, or other centralized party has control over the digital system upon which that code executes. Similar to how various software applications can be downloaded and run on computers to allow them to be used for many different tasks, code can be uploaded to a blockchain and run in a decentralized manner for many different purposes. Programs that are uploaded to a blockchain for decentralized execution are called smart contracts or on-chain code/scripts (we’ll cover them in more detail later).
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Blockchain, the set of techniques that solves the double-spending problem(((double-spending))), also enables creating digital systems that can execute code in a decentralized manner, where no single administrator, company, entity, owner, or other centralized party has control over the digital system upon which that code executes. Similar to how various software applications can be downloaded and run on computers for multiple tasks, code can be uploaded to a blockchain and executed in a decentralized manner for numerous purposes. Programs uploaded to a blockchain for decentralized execution are called smart contracts or on-chain code/scripts (which we’ll cover in more detail later).
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Since smart contracts execute on a blockchain, this means that code can be executed in a manner that is tamper-proof and provides guarantees to all users that the system will do exactly what that code is written to do, without anyone having the ability to tamper with the systemincluding its code and associated data. Smart contracts allow blockchains to be used for much more than just sending and receiving digital currency. This use case alone can bring positive change to many, through the democratization of and access to financial services to anyone with an internet-connected digital device (5 billion people at the time of writing), including 600 million people who are unbanked. But it is not just about financial services. Other applications are being proposed such as decentralized property registries. Such systems would ensure that individuals cannot lose their property just because a paper goes missing, or a database record is deleted.
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Since smart contracts execute on a blockchain, this means that code can be executed in a tamper-proof manner, guaranteeing that the system will do exactly what the code is written to do, without anyone having the ability to tamper with the system, including its code and associated data. Smart contracts allow blockchains to be used for much more than just sending and receiving digital currency. This alone can bring positive change to many, through the democratization of and access to financial services to anyone with an internet-connected digital device (five billion people at the time of writing), including 600 million unbanked people. But it is not just about financial services. Other applications, such as decentralized property registries, are being proposed. Such systems would ensure that individuals cannot lose their property just because a paper goes missing or a database record is deleted or tampered with.
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Other notable use-cases that blockchain is facilitating progress in include:
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Other notable use cases that blockchain is facilitating progress in include:
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* **Supply chain management** — by enabling transparent tracking of goods from origin to consumer, thereby enhancing trust and efficiency
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* **Digital identity solutions** — by empowering individuals to have control over their personal data
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* **Digital communities** — by ensuring that decisions are made in a transparent and open manner, and by allowing automated actions to follow community decisions.
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* **Digital communities** — by ensuring that decisions are made transparently and openly, and by allowing automated actions to follow community decisions.
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Being decentralized, blockchain promotes openness and transparency, yet also privacy—achieved through cryptography(((cryptography))) (which is a building block of cryptocurrencies, as the name implies). Personal details are not required for sending and receiving funds or to interact with other blockchain-based processes. At the same time, anonymous business relationships can be built and promises can be guaranteed and automated through code. For example, investors who back a project could be guaranteed to receive a percentage of income generated. Payments to backers could start automatically once the smart contract receives incoming revenues, without human interventionall while preserving privacy.
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Being decentralized, blockchain promotes openness and transparency, yet also privacy—achieved through cryptography(((cryptography))) (which is a building block of cryptocurrencies, as the name implies). Personal details are not required for sending or receiving funds, or for interacting with other blockchain-based processes. Simultaneously, blockchain enables the building of business relationships and the delivery of promises through automated code. For example, investors backing a project could be guaranteed to receive a percentage of the income generated. Payments could start automatically once the smart contract receives incoming revenues, without human interventionall while preserving privacy.
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=== Overview of a blockchain system
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A high-level overview of a blockchain system is presented in <<img_bcoverview>>. Elements of the system include:
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* **Users** typically interact with a blockchain in one of two ways: by sending or receiving funds, or when using decentralized applications(((decentralized application))) (DApps).
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* **Wallets** are used to store cryptocurrency(((cryptocurrency))) and other types of assets, and to authenticate other users. A wallet typically has two core elements. The first is a public address(((public address))) that uniquely identifies the wallet and is used when specifying to which account a transfer is to be made. The second element is a private key(((private key))), which can be thought of as a password that is used to authorize transfers or any other interaction with the wallet. Wallets are implemented using asymmetric cryptography(((cryptography))) (see the xref:chap-crypto[Cryptography] chapter).
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* **Nodes** are computers and other computational devices that work together across the internet to keep the blockchain intact. They ensure that the rules of the blockchain system are not violated, so, for example, a user cannot spend more cryptocurrency than they have.
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* **Smart contracts** allow blockchains to be used for much more than just transferring cryptocurrency. In a similar way to software applications on traditional computers, developers (and users) can write and run smart contracts on the blockchain as they deem necessary.
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* **Users** typically interact with a blockchain in one of two ways: by sending or receiving funds, or when using DApps.
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* **Wallets** are used to store the user's private and public keys while providing a frontend for managing the cryptocurrency assets, which are stored on the blockchain. A wallet typically has two core elements. The first is a public address(((public address))) that uniquely identifies the wallet and is used when specifying to which account a transfer is to be made. The second element is a private key(((private key))), which can be thought of as a password used to authorize transfers or any other interaction with the wallet. Wallets use asymmetric cryptography(((cryptography))) (see the xref:chap-crypto[Cryptography] chapter).
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* **Nodes** are computers and other computational devices that work together across the internet to keep the blockchain secure. They ensure that the rules of the blockchain system are not violated, so, for example, a user cannot spend more cryptocurrency than they have.
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* **Smart contracts** allow blockchains to be used for much more than just transferring cryptocurrency. In a similar way to software applications on traditional computers, developers (and users) can write and run smart contracts on the blockchain.
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The blockchain can be seen as an append-only ledger where new transactions, such as transfers and any interaction with smart contracts, are stored permanently and cannot be changed—they are immutable. At the same time, the blockchain must ensure that certain rules are upheld to ensure integrity of the ledger. Such rules typically include:
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The blockchain can be viewed as an append-only ledger, where new transactions, such as transfers and interactions with smart contracts, are stored permanently and cannot be altered —they are immutable. At the same time, the blockchain must ensure that certain rules are upheld to ensure the integrity of the ledger. Such rules typically include:
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* no one can spend more funds than they have
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* no one can spend another person’s funds (unless authorization has been granted)
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* old transactions cannot be removed or edited
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* all smart contract code executes exactly as written
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* the ledger, which includes all the history and the current state of the system and smart contracts, is kept intact and ensures only one version of truth exists.
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* No one can spend more funds than they have
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* No one can spend another person’s funds (unless authorization has been granted)
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* Old transactions cannot be removed or edited
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* All smart contract code executes exactly as written
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* The ledger, which includes all the history and the current state of the system and smart contracts, is kept intact and ensures only one version of the truth exists.
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include::chapter-01-introduction/formal-methods.adoc[]
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