Ethereum for Dummies

Dive into a secure future

Professionals look to Ethereum as a blockchain-based platform to develop safe applications and conduct secure transactions. It takes a knowledgeable guiding hand to understand how Ethereum works and what it does — and Ethereum For Dummies provides that guidance. Written by one of the leading voices in the blockchain community and best selling author of Blockchain For Dummies, this book demystifies the workings of Ethereum and shows how it can enhance security, transactions, and investments. 

As an emerging application of blockchain technology, Ethereum attracts a wide swath of professionals ranging from financial pros who see it as a way to enhance their business, security analysts who want to conduct secure transactions, programmers who build apps that employ the Ethereum blockchain, or investors interested in cashing in on the rise of cryptocurrency. Ethereum For Dummies offers a starting point to all members of this audience as it provides easy-to-understand explanation of the tools and techniques of using Ethereum.

• Understand the fundamentals of Ethereum
• Build smart contracts
• Create decentralized applications
• Examine public and private chains 

If you need to get a grip on one of the biggest applications of blockchain technology, this book makes it easier.

Michael G. Solomon, PhD, is a full-time security, privacy, blockchain, and data science expert. An active speaker, consultant, and author, Michael is a professor of cybersecurity and global business with blockchain technology at the University of the Cumberlands. He has written more than 20 books on IT, security, and the PMP exam.

Introduction 1

About This Book 1

Foolish Assumptions 2

Icons Used in This Book 2

Beyond the Book 2

Where to Go from Here 3

Part 1: Getting to Know Blockchain and Ethereum 5

Chapter 1: Introducing Ethereum 7

Describing Blockchain Technology 8

Introducing Ethereum 10

Exploring Ethereum’s Consensus, Mining, and Smart Contracts 11

Buying, Spending, and Trading Ether 13

Getting Started with DAO and ICO 16

Exploring the Ethereum Ecosystem 17

Delving into Development Tools 18

Building Blockchain Apps 18

Chapter 2: Learning about Blockchain 21

Exploring Distributed Applications 22

Digging into distributed processing 22

Exploring problems with distributed processing 24

Presenting some solutions to distributed processing problems 27

Examining the Bitcoin Solution to the Distributed Dilemma 28

Describing Blockchains 30

Examining blockchain details 30

Protecting blockchain visibility 31

Building Blockchains 33

Agreeing to add blocks 33

Making blocks immutable 34

Reviewing the building process 35

Keeping all blockchains consistent 35

Understanding How Blockchains and Databases Store Data Differently 36

Storing data in a traditional database 36

Storing data in a blockchain 38

Effectively Using Blockchains 39

Transferring value without trust 39

Reducing transaction costs by eliminating middlemen 39

Increasing efficiency through direct interaction 40

Maintaining complete transaction history 40

Increasing resilience through replication 41

Providing transparency 41

Chapter 3: Exploring Use Cases for Ethereum 43

Diving Into Ethereum Applications 44

Exploring Financial Services 45

Banking 46

Creating Ethereum escrow applications 48

Examining ICOs 48

Establishing Digital Identity Management 49

Managing individual and device identities 50

Reducing fraud and identity theft 50

Examining the ERC-725 standard and beyond 51

Examining Industry Applications 51

Healthcare 52

Energy 52

Supply chain 53

Enabling Effective Governance 54

Tax payment 54

Government spending 55

Voting 55

Policy development 55

Notary 56

Part 2: Setting Up Your Ethereum Development Environment 57

Chapter 4: Examining the Ethereum Ecosystem and Development Lifecycle 59

Exploring the Ethereum Blockchain Block Structure 60

Describing Smart Contracts 64

Introducing Solidity, the Language of Smart Contracts 66

Working with the Ethereum Virtual Machine 67

Fueling Your Code with Gas 68

Surveying Tools for Developing, Testing, and Deploying Ethereum Apps 69

Ethereum blockchain client 70

Development and testing blockchain 71

Compiler and testing framework 72

Source code editor/IDE 72

Describing the Ethereum Development Lifecycle 73

Introducing Smart Contract Development Tools 74

Chapter 5: Getting and Configuring Ethereum Development Tools 77

Examining Why Multiple Ethereum Development Tools are Available 78

Downloading, Installing, and Configuring All the Pieces 79

Installing the blockchain client 79

Installing the test blockchain 83

Installing the testing environment 86

Installing the IDE 91

Chapter 6: Establishing an Ethereum Wallet 95

Unlocking the Secrets of an Ethereum Wallet 96

Examining the Types of Ethereum Wallets 96

Sorting out software wallets 97

Handling hardware wallets 99

Perusing paper wallets 99

Choosing an Ethereum Wallet 100

Software wallets 100

Hardware wallets 102

Paper wallets 103

Installing MetaMask, an Ethereum Wallet 104

Part 3: Building Ethereum Distributed Blockchain Apps 107

Chapter 7: Building Your First Ethereum Apps 109

Validating Your Ethereum Development Environment 110

Creating a Truffle project 110

Editing the Truffle config file 111

Exploring the Ganache Test Environment 113

Designing Simple Smart Contracts 115

Coding Your First Smart Contract 116

Running Your First Smart Contract 118

Writing your code 118

Compiling your code 119

Deploying your code 120

Invoking your code’s functions 122

Paying as You Go 124

Chapter 8: Learning about Smart Contracts 125

Introducing Supply Chain and Common Challenges 126

Describing supply chain 126

Explaining difficulties when implementing a supply chain 127

Examining How Blockchain Can Help Resolve Supply Chain Problems 128

Describing a Blockchain Supply Chain Solution 129

Paying for supply chain services 129

Managing assets on the supply chain 130

Digging into Solidity 132

Describing Basic Smart Contract Syntax 133

Declaring valid compiler version 134

Commenting your code 134

Importing external code 135

Defining your smart contracts 135

Handling Data in Solidity 136

Learning about Computation and Gas 140

Exploring Access Modes and Visibility of Smart Contract Functions and Data 142

Controlling Execution Flow 144

Handling Errors and Exceptions 145

Chapter 9: Writing Your Own Smart Contracts with Solidity 147

Reviewing Supply Chain Design Specification 148

Payment token smart contract 149

Supply chain smart contract 150

Creating New Smart Contracts 151

ERC-20 token interface 153

ERC-20 token smart contract 154

Supply chain smart contract 155

Coding Primary Functions 157

ERC-20 token functions 157

Supply chain functions 160

Using Events 163

Defining events 165

Triggering events 166

Introducing Ownership 168

Designing for Security 170

Implementing Minimal Functionality 171

Part 4: Testing and Deploying Ethereum Apps 173

Chapter 10: Testing Ethereum Apps 175

Understanding Ethereum dApp Testing 176

Writing tests from the beginning 176

Choosing the right test blockchain 176

Learning the steps in the testing lifecycle 177

Testing for software quality 177

Deploying a dApp to a Test Ethereum Blockchain 178

Telling Truffle to use the Ganache blockchain 178

Deploying your code to the Ganache blockchain 180

Writing Tests for Ethereum dApps 181

Testing using the command line 181

Writing test cases in JavaScript 185

Logging and Handling Errors 187

Handling errors in Solidity 188

Logging activity in smart contracts 189

Fixing Bugs in a dApp 190

Chapter 11: Deploying and Maintaining Ethereum Apps 191

Test Blockchain Options versus Live Blockchains 192

Testing with the Ganache blockchain 192

Deploying your code to other test blockchains 193

Anticipating Differences in Live Environments 195

Preparing Your Configuration for Deploying to Different Networks 196

Deploying a dApp 198

Getting enough ether 199

Compiling your code 203

Deploying your code 203

Chapter 12: Integrating Non-Blockchain Apps with Ethereum 205

Comparing Blockchain and Database Storage 206

Locating control 207

Imposing data format 207

Updating data 207

Optimizing performance 208

Protecting confidentiality 208

Paying for storage 208

Providing integrity and transparency 209

Protecting resilience 209

Contrasting Execution and Flow in Blockchain dApps and Traditional Applications 210

Designing Goals for Incorporating Blockchain into an Existing Application 211

Using existing smart contracts 213

Developing your own smart contracts 213

Identifying Interface Data and Transaction Requirements 214

Creating or Modifying Contracts to Provide Data Interface 215

Testing Integrated dApps 215

Deploying Integrated dApps 216

Part 5: The Part of Tens 219

Chapter 13: Ten Free Ethereum Resources 221

Exploring Alternative Ethereum Development Frameworks 222

Managing you development with Populus 222

Exploring Ethereum blockchain containers with Cliquebait 222

Selecting a Free Integrated Development Environment 223

Developing Solidity code with Atom 223

Going online with Remix 224

Keeping it simple with EthFiddle 224

Exploring Ethereum Clients and APIs 226

Swapping your Ethereum client to Parity 226

Interacting with Ethereum by using Web3.js 226

Focusing on Wallets and Security 227

Protecting your crypto-assets in Mist 227

Securing your dApps with OpenZeppelin 228

Learning More About Developing Ethereum dApps 228

Chapter 14: Ten Design Principles for Distributed Blockchain Apps 229

Designing for Trust 230

Enforcing Consistency 230

Removing Doubt through Transparency 232

Providing Feedback, Guidance, and Setting Expectations 233

Handling Mistakes with Class 233

Designing Functions that Focus on User Actions, Not Data 234

Storing Data Based on User Actions, Not Data Structures 235

Keeping It Simple 236

Expecting Blockchain Access to Be Expensive 236

Staying Out of the User’s Way 237

Chapter 15: Top Ten Ethereum Projects 239

Predicting Future Events with Gnosis 240

Crowdsourcing Event Predictions in Augur 240

Managing Decentralized Organizations with Aragon 241

Breeding and Collecting Cryptokitties 241

Exchanging Tokens with IDEX 242

Creating Your Digital Identity with uPort 243

Sharing Your Thoughts on the Blockchain with EtherTweet 243

Searching for Jobs with EthLance 244

Using TenX to Pay with Cryptocurrency 245

Buying and Selling Computing Power with Golem 246

Index 247