Blockchain: where to start

People often contact me to ask about “the blockchain”—where the definite article ‘the‘ tells a lot about their experience with c̶r̶y̶p̶t̶o̶ blockchains. My answer will depend on what you’re up to; are you interested in investing and only want to know which exchange and which wallet to use? Do you want to find the best news and analysis sources? Are you a researcher and want to learn about the theory and protocols? or do you just want to understand how this works? This post is about the latter class of questions, and will essentially be a list of references and recommendations, which you can share with your friends asking you about THE blockchain.

Whatever cryptocurrency or application you’re interested in, I think it’s important to start with the basis, Bitcoin. Nakamoto’s original bitcoin.pdf is a must-read and is surprisingly accessible, but it will be difficult to follow as a first exposure to Bitcoin. I suggest instead to start with the book Bitcoin and Cryptocurrency Technologies by Narayanan, Bonneau, Felten, Miller, Goldfeder, and Clark. This provides a comprehensive and clear introduction to Bitcoin, discussing technical as well as economic aspects, if you’re interested in these. A PDF draft of the book is available for free, as well as a number of video lectures by the authors. I particularly recommend Bonneau’s Mechanics of Bitcoin lecture, which is the best explanation of Bitcoin transactions I’ve ever seen.

Once you’ve understood how Bitcoin works and related notions—what is a consensus protocol, a proof-of-work; how money is created and spent; decentralized vs. distributed; and so on—you can move to Ethereum, which can be seen as an extension of Bitcoin from basic receive-and-spend-money transactions to arbitrary operations on the blockchain. It’s important to already have a good understanding of how Bitcoin scripts work before studying Ethereum’s complex transaction system.

Like with Bitcoin, the foundational paper is not the best way to approach Ethereum; Woods’ “yellow paper” is a specification, not an explanation. The so-called white paper isn’t much better for beginners. Instead, I will again recommend Bonneau’s lectures, and the following video recording (see these slides, and part II):

 

 

Besides smart contracts, you also learn about other unique aspects of Ethereum, such as its proof-of-work or the GHOST protocol. To learn about Ethereum internals, the wiki is the official reference and is (mostly) up-to-date.

But the killer feature of Ethereum is decentralized apps, a.k.a. ÐApps. Before reading smarts contracts of complex ÐApps, you want to familiarize your self with Solidity, the most common language used to write smart contracts, by looking at tutorials and simple examples. You can then debug and test your own contracts using the Remix online IDE.

Perhaps the most popular type of decentralized Ethereum app is an “ERC20 token”, or a new cryptocurrency running on the Ethereum blockchain, and implemented by following the ERC20 standard interface. Many cryptocurrencies are actually just ERC20 tokens. (If you create a new currency, however, you should consider the newer ERC223 standard instead.)

Bitcoin and Ethereum are the most popular blockchain platforms, but there are many other experimental blockchain technologies—that are not mere ERC20 tokens or simple forks of Bitcoin. For example, Monero and Zcash created anonymous and untraceable currencies and continuously deploy innovative techniques ; platforms such as Cardano and Waves are based on proof-of-stake systems rather than proof-of-work, and keep experimenting with state-of-the-art research for security and performance improvements.

Would you like to learn more about blockchain and cryptocurrency? Read our related articles here.

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