README

• Good website to learn smart contract security - https://scsfg.io/hackers/signature-attacks/

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Blockchain

• A distributed ledger operated on via a decentralized network of nodes
• Some properties
  • Immutable
  • Untamperable
  • Used to make cryptocurrency, computing machines

Bitcoin Cryptocurrency

• Satoshi Nakamoto and his bitcoin whitepaper
• Laid the foundation of cryptocurrency
• What crypto is:
  • A system of economic exchange not controlled by a centralized entity (banks)
  • Instead managed by thousands of decentralized nodes on a peer-to-peer decentralized basis
• Bitcoin is essentially a digital currency payment network

Etherum

• Idealized in 2014 and its inception in 2015
• A decentralized computing infrastructure witha built in Turing Complete programming language (Solidity)
• Programs called "Smart Contracts"
• The "blocks" in blockchains store all changes performed in the computing infrastructure
• Foundation of Decentralized Applications

The core components of blockchain

Decentralized Network

• A blockchain implementation always involves decentralized network of nodes
• Two types:
  • Permissioned (Requirement of permission for participation)
  • Permissionless (Anyone can participate)
• All of the nodes have a copy of the blockchain
• When a new block is attached, the change is communicated across all these nodes.

Cryptography

• One of the core ideas used by blockchain
• Used for encryption, keys, hashing and so on
  • Digital signature are used for signing transactions, identity verification, to maintain integrity
  • Hashing is used to create the immutable chain of blocks.

Immutable Ledger

• The database of blockchain
• What it stores
  • Transactions made by the users on the network
• In case of bitcoin (Any change in the balance of the involved users is recoreded)
• In case of ethereum (Much more complex changes in the state of the blockchain are recorded)

Consensus

• What let's users be able to do transactions between themselves without any intermediary controlling parties involved
• A set of rules and processess which the senders and receivers in the network, agree upon, to complete a certain transaction
• The transaction is attached to the block, and updated to all nodes on the decentralized network

Smart Contracts

• Web3, divided into

  • Client (Frontend)
  • Smart Contract (Backend)
  • Blockchain

• Smart Contracts can

  • Read data on the blockchain
  • Write new data to the blockchain

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Practical Demo

• https://andersbrownworth.com/blockchain/hash
  • Key Learning:-
  • Nonce and data need to be changed multiple times to achieve the hash in a block.
  • the prev hash of the previous block is linked and the current hash is used as a pervios hash in the next block making a chain that's why its called blockchain.
  • Due to of this blockchain is considered tamper proof because if any data is changed the current hash will be changed which results in breaking the on-going blockchain.

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Ethereum

• To understand ethereum better, we can divide it into parts.
  • The Blockchain
    • An integral part of ethereum, the same as any other blockchain
    • A General purpose programmable blockchain that runs a virtual machine capable of executing code
  • The nodes and the miners
    • Nodes
      • Nodes hold a copy of the blockchain
      • When a new block is attached to the chain, it gets updated across all the nodes in the network.
    • Miners
      • Miners run ethereum nodes that validate, execute and combine transactions into blocks, that go onto the blockchain
      • Validation, a process involving miners spending computational power
      • 'Proof of Work'
      • Miners are rewarded for blocks attached
  • The smart contracts
    • What holds executable code on the blockchain
    • Can execute specific pieces of said code
    • Some properties
      • Smary contracts have their own balance of ether and storage to keep track of variables.
      • Enable developers to build amazing Decentralized Applications
      • Once deployed, is immutable, that is, the code can never be changed

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Smart Contracts

• Pieces of code written in solidity and other language (Rust, Go, Python etc...), programs that are stored on the blockchain and executed by EOAs or other smart contracts.
• Just as Javascript executes in a web browser, Solidity code is always executed on the Ethereum blockchain.

Important Terms: Address

• Address
  • Last 20 bytes of the hash of a given public key
  • How accounts and smart contracts are represented on the blockchain
• Two Types of addresses
  • Externally Owned Accounts (EOAs)
  • Contract Accounts

Important Terms: Bytecode

• Object code that is converted into binary machine code, which can be read by a machine
• Smart Contracts written in High Level Language, converted into bytecode that can be executed by the EVM

Important Terms: Gas Fees

• Gas Fees
  • Unit that measures the amount of computation required to do any transaction on the blockchain (Write something to blockchain data)
  • Comensation for computation resources used for the transaction to be completed.
  • Paid in Ethereum's Native currency, Ether (ETH)
  • Gas denoted in gwei such that ---> 1 gwei = 0.0000000001 ETH

Why gas fees?

• Prevent someone trying to overload the network and try DOS Attacks.
• Also compensation for computation resources, of all the miners that keep the network running.

Interacting with smart contracts

• User initiates a transaction using a wallet
• The transaction is verified and approved
• It includes code that defines what type of transaction is to be executed
• The transaction is added as a block to the blockchain
• Using
  • Web3 js Library
  • Ethers js
  • Web3 py

Metamask

• Its an crypto wallet which is used to connect with web3 application
• It stores crypto assets.
• https://metamask.io
• Secret Recovery Phrase -> its an 12 word phrase which is linked to your wallet and is used to recover or import the wallet

Decentralized Application Dapps

• Decentralized Applications are apps that are built on decentralized networks and are essentially a system that combines smart contracts (As Backend) and User Interface (As Frontend)

Dapp Examples

• Decentralized Exchanges (Uniswap, Sushiswap)
• Decentralized Finances
• Games (CryptoKitties)
• Marketplace (Opensea)

Decentralized Autonomous Organization DAO

What's a DAO?

• Like any other organization, has participants, offers services
• Traditional Organizations
  • Decision are made by higher authorities like a board of directors or Executives
  • Centralized Entity makes decision for all members
• Decentralized Autonomous Organization
  • The members create the decision (Proposals) and other members vote on whether said decision should be taken or not
  • Members themselves are involved in decision making

Advantages of DAO

• More power to the people (True Democracy)
• Autonomy (Independent of any other orgs, Governments etc.)
• Everyone is involved in running the organization

Decentralized Exchanges

• Blockchain based applications
• Enable large scale trading of crypto assets between users
• Different types of Decentralized Exchanges
  • Order Book DEX
  • AMM DEX

Order Book DEX

• The traditional assets trading method
• Uses an Order Book that keeps track of buy orders and sell orders
• When a buyer uploads a buy order, the order book organizes suitable sell orders that match the buyers price.
• On Chain and Off Chain Order Books

Automated Market Makers

• AMM stands for Automated Market Maker
• The goal : remove the middleman between crypto asset exchange
• Achieved using smart contracts
• Aggregates a pool of assets that is to be exchanged, eg ETH/SOL
• Uses Algorithm to determine an exchange price based on the assets that are available in the liquidity pools

Exchanging Crpyto assets

• User A has some ETH
• They want to trade their ETH for some Token
• User goes to the exchange
• Exchange gives the user the amount of Token that can be exchanged according to the ETH/Token Pair's Liquidity Pool
• User A accepts, signs a transaction to trade.
• User A now has Token for the ETH he traded.

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Test network for dapps

• You can use test networks to interact with smart contracts with no real money value present for this in metamask extension go to Advance => show test network
• ropsten faucet
• upon sending ether or making any transaction some gas fees is charged for the miners who are minning

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The core concept of mining in crypto transactions

• so there any mutliple ledgers and minining means finding the perfect hash which matches the blockchain to continue
• and then that hash is put on to the records of all the decentralized copies of the cryptonetwork
• and the person who is minning actually gets paid with the gas fees of the transaction

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Etherscan

What's etherscan?

• Blockchain is a public ledger
• Anyone can view all transactions at any point of time
• Using etherscan
• It's a tool to view all the transactions on blockchain

Etherscan.io

• A Block explorer and analysis tool
• Lets you view any and all transactions on the blockchain
• Available for both the mainnet and testnet => net means networks

Etherscan for testnet

• ropsten.etherscan.io
• rinkeby.etherscan.io
• goerli.etherscan.io

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Remix IDE

• remix.etherium.org

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Solidity programming language

How to start

contract MyContract {
	// Your smart contract
}

Primitive Datatypes

• int : integer (signed integer)
• uint : unsigned integer => it does not store any negative values
• bool : Boolean (True or False)
• address : Ethereum address

Address

contract MyContract {
	// 20 byte value that holds Ethereum Address
	address public myAddress; // public keyword is a visibility modifier
}

• Visibility Modifier
  • public any contract can access the variable , private the contract itself is able to access variable , internal functions internally can access this variable , external the variable can only be accessed externally

Variables

• Three types of variables
  • Local Variables
    • Declared inside a function
    • Not stored on the blockchain
  • State Variables
    • Declared outside a function
    • Stored on the blockchain
  • Global Variables
    • Global variables provide information about the blockchain
    • Some examples of global variables
      • msg.sender : address of the called of the function
      • msg.value : Ether sent by the caller
      • msg.data : Any data sent in the call
      • block.timestamp : Current block timestamp

Example

Contract myContract {
// Stored on the blockchain
uint num;
string myString;
function myFunction() public {
	// Not stored on the blockchain
	uint num2;
	}
}

Playing with Global Variables

...
function newFunction() public returns (address) {
	address myAddress = msg.sender;
	return myAddress;
}
...

Read and Write Operation

• Reading variables is for free without any fees
• To write a state variable, you have to send transactions with gas fees

contract Storage {
	uint256 number;

	function get() public view returns (uint256) {
		return number;
	}

	function set(uint256 num) public {
		number = num;
	}
}

Functions

• Functions are sets of reusable code that can be called anywhere in the program
• Used to avoid writing the same code again and again
• Syntax

function function-name(argument) scope returns(return-values) {
	//code
}

Example

function addNumber(uint a,uint b) public returns(uint) {
	uint c = a + b;
	return c;
}

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Global Variables in Solidity

pragma solidity ^0.6.0;

contract MyContract {
	uint public number1;

	function myFunction() public {
		uint num;
	}

	function newFunction() public returns (uint, address) {
		uint num1 = 12;
		uint num2 = 13;
		number1 = num1 + num2;
		address myAddress = msg.sender;
		returns(number1,myAddress);
	}
}