Blockchain: Blueprint for a New Economy

10 minutes for the transaction to confirm

and be inscribed in the blockchain per

blockchain miners. So, for large

purchases such as a car or real estate,

you would want to wait to see the

transaction confirmed, but you wouldn’t

bother to do so for a coffee purchase.

Public/Private-Key

Cryptography 101

When the wallet is initialized or set up

for the first time, an address, public key,

and private key are automatically

generated. Bitcoin is based on public-

key encryption, meaning that you can

give out the public key freely but must

keep the private key to yourself.

Bitcoin addresses are created by the

software picking a random number and

creating a public/private key pair (per

the current standard, Elliptic Curve

Digital Signature Algorithm, or ECDSA)

that is mathematically related, and

confirmed at the time of spending the

Bitcoin. This startup operation generates

the private key, but additional steps are

required to generate the Bitcoin address.

The Bitcoin address is not simply the

public key; rather, the public key is

further transformed for more effective

use. It is cycled through additional

encryption protocols (like SHA-256 and

RIPEMD-160), a hashing operation

(transforming a string of characters into

a shorter fixed-length value or key that

represents the original string), and

administrative operations (removal of

similar-looking characters, like

lowercase L and uppercase I, and 0 and

O; adding a checksum to the end; and

adding an identifying number to the

beginning of the address—for most

Bitcoin addresses, this is a 1, indicating

it is a public Bitcoin network address).

It is infeasible though technically

possible that two different people could

generate the same Bitcoin address. In

such a case, both would be able to spend

the coins on that particular address. The

odds of this happening are so small,

however, that it is almost

99.9999999999 percent impossible. A

Bitcoin wallet can contain multiple

addresses (one security procedure is

using or generating a new address for

each transaction), and one or more

private keys, which are saved in the

wallet file. The private keys are

mathematically related to all Bitcoin

addresses generated for the wallet.

In Bitcoin, a private key is usually a

256-bit number (although some wallets

might use between 128 and 512 bits),

which can be represented in one of

several ways. Here is one example of a

private key in hexadecimal format (256

bits in hexadecimal is 32 bytes, or 64

characters in the range 0–9 or A–F):

E9 87 3D 79 C6 D8 7D C0 FB 6A 57 78

63 33 89 F4

45 32 13 30 3D A6 1F 20 BD 67 FC 23

3A A3 32 62

Here is another example of a private key

and its corresponding public address:

Private key:

79186670301299046436858412936420417076660923359050732094116068951337164773779

Public address:

1EE8rpFCSSaBmG19sLdgQLEWuDaiYVFT9J

Doing some sort of back calculation to

derive the private key from the public

key is either impossible (per the hashing

operation, which is one-way only, or

other techniques) or prohibitively

expensive (tremendous computing power

operating over a longer time than would

be necessary to confirm the transaction).

Only the address is needed to receive

Bitcoins, whereas the public/private key

pair is required to send Bitcoins.

Appendix B. Ledra Capital

Mega Master Blockchain List

New York–based venture capital firm

Ledra Capital has an ongoing attempt to

brainstorm and enumerate the wide

range of potential uses of blockchain

technology. Some of these categories

include financial instruments; public,

private, and semipublic records;

physical asset keys; intangibles; and

other potential applications:

I. Financial instruments, records, and

models

1. Currency

2. Private equities

3. Public equities

4. Bonds

5. Derivatives (futures,

forwards, swaps, options,

and more complex

variations)

6. Voting rights associated with

any of the preceding

7. Commodities

8. Spending records

9. Trading records

10. Mortgage/loan records

11. Servicing records

12. Crowdfunding

13. Microfinance

14. Microcharity

II. Public records

15. Land titles

16. Vehicle registries

17. Business license

18. Business

incorporation/dissolution

records

19. Business ownership records

20. Regulatory records

21. Criminal records

22. Passports

23. Birth certificates

24. Death certificates

25. Voter IDs

26. Voting

27. Health/safety inspections

28. Building permits

29. Gun permits

30. Forensic evidence

31. Court records

32. Voting records

33. Nonprofit records

34. Government/nonprofit

accounting/transparency

III. Private records

35. Contracts

36. Signatures

37. Wills

38. Trusts

39. Escrows

40. GPS trails (personal)

IV. Other semipublic records

41. Degree

42. Certifications

43. Learning outcomes

44. Grades

45. HR records (salary,

performance reviews,

accomplishment)

46. Medical records

47. Accounting records

48. Business transaction records

49. Genome data

50. GPS trails (institutional)

51. Delivery records

52. Arbitration

V. Physical asset keys

53. Home/apartment keys

54. Vacation home/timeshare

keys

55. Hotel room keys

56. Car keys

57. Rental car keys

58. Leased cars keys

59. Locker keys