== Alternative chains, currencies, and applications
== Alternative Chains, Currencies, and Applications
Bitcoin was neither the beginning nor the end of the digital currency evolution. It came from twenty years of research in distributed systems and currencies and brought a revolutionary new technology into the space: the de-centralized consensus mechanism based on Proof-of-Work. The invention at the heart of bitcoin has ushered a wave of innovation in currencies, financial services, economics, distributed systems, voting systems, corporate governance, and contracts.
Bitcoin was neither the beginning nor the end of the digital currency evolution. It came from twenty years of research in distributed systems and currencies and brought a revolutionary new technology into the space: the de-centralized consensus mechanism based on Proof-of-Work. This invention at the heart of bitcoin has ushered a wave of innovation in currencies, financial services, economics, distributed systems, voting systems, corporate governance, and contracts.
In this chapter we'll examine the many offshoots of the bitcoin and blockchain inventions, the alternative chains, currencies, and applications built since the introduction of this technology in 2009.
@ -11,7 +11,7 @@ With new coins introduced every day, it would be impossible not to miss some imp
=== A taxonomy of alternative currencies and chains
Bitcoin is an open source project and its code has been used as the basis for many other software projects. The most common form of software spawned from bitcoin's source code are alternative de-centralized currencies, or _alt-coins_, which use the same basic building blocks to implement digital currencies.
Bitcoin is an open source project, and its code has been used as the basis for many other software projects. The most common form of software spawned from bitcoin's source code are alternative de-centralized currencies, or _alt-coins_, which use the same basic building blocks to implement digital currencies.
There are a number of protocol layers implemented on top of bitcoin's blockchain. These _meta-coins_, _meta-chains_, or _blockchain apps_ use the blockchain as an application platform or extend the bitcoin protocol by adding protocol layers. Examples include Colored Coins, Mastercoin, and Counterparty.
@ -25,7 +25,7 @@ Finally, there are a number of bitcoin contenders that offer digital currency or
=== Meta-Coin Platforms
Meta-coins and meta-chains are software layers implemented on top of bitcoin, either implementing a currency-inside-a-currency, or a platform/protocol overlay inside the bitcoin system. These function layers extend the core bitcoin protocol and add features and capabilities by encoding additional data inside bitcoin transactions and bitcoin addresses. The first implementations of meta-coins used various "hacks" to add meta-data to the bitcoin blockchain, such as using bitcoin addresses to encode data or using unused transaction fields (e.g. the transaction sequence field) to encode meta-data about the added protocol layer. Since the introduction of the OP_RETURN transaction scripting opcode, the meta-coins have been able to record meta-data more directly in the blockchain and most are migrating to using that instead.
Meta-coins and meta-chains are software layers implemented on top of bitcoin, either implementing a currency-inside-a-currency, or a platform/protocol overlay inside the bitcoin system. These function layers extend the core bitcoin protocol and add features and capabilities by encoding additional data inside bitcoin transactions and bitcoin addresses. The first implementations of meta-coins used various "hacks" to add meta-data to the bitcoin blockchain, such as using bitcoin addresses to encode data or using unused transaction fields (e.g. the transaction sequence field) to encode meta-data about the added protocol layer. Since the introduction of the OP_RETURN transaction scripting opcode, the meta-coins have been able to record meta-data more directly in the blockchain, and most are migrating to using that instead.
==== Colored Coins
@ -229,7 +229,7 @@ Gridcoin was introduced in October 2013. It supplements scrypt-based Proof-of-Wo
Bitcoin is often mistakenly characterized as "anonymous" currency. In fact, it is relatively easy to connect identities to bitcoin addresses and, using big-data analytics, connect addresses to each other to form a comprehensive picture of someone's bitcoin spending habits. Several alt-coins aim to address this directly by focusing on strong anonymity. The first such attempt is most likely _Zerocoin_, a meta-coin protocol for preserving anonymity on top of bitcoin, introduced with a paper in the 2013 IEEE Symposium on Security and Privacy. Zerocoin will be implemented as a completely separate alt-coin called Zerocash, currently in development. An alternative approach to anonymity was launched with _CryptoNote_ in a paper published in October 2013. CryptoNote is a foundational technology that is implemented by a number of alt-coin forks discussed below. In addition to Zerocash and Cryptonotes, there are several other independent anonymous coins, such as Darkcoin that use stealth addresses or transaction re-mixing to deliver anonymity.
Bitcoin is often mistakenly characterized as "anonymous" currency. In fact, it is relatively easy to connect identities to bitcoin addresses and, using big-data analytics, connect addresses to each other to form a comprehensive picture of someone's bitcoin spending habits. Several alt-coins aim to address this issue directly by focusing on strong anonymity. The first such attempt is most likely _Zerocoin_, a meta-coin protocol for preserving anonymity on top of bitcoin, introduced with a paper in the 2013 IEEE Symposium on Security and Privacy. Zerocoin will be implemented as a completely separate alt-coin called Zerocash, currently in development. An alternative approach to anonymity was launched with _CryptoNote_ in a paper published in October 2013. CryptoNote is a foundational technology that is implemented by a number of alt-coin forks discussed below. In addition to Zerocash and Cryptonotes, there are several other independent anonymous coins, such as Darkcoin that use stealth addresses or transaction re-mixing to deliver anonymity.
Minh T. Nguyen
10 years ago