Programmable Money for the

API Economy
Bootcamp 2021
https://panacloud.github.io/bootcamp-2021/
 What is an Programmable Money?
⚫ Programmable money is money represented in
digital form, also known as tokens.
⚫ This digital currency is tracked with
corresponding electronic ledgers, most popularly
blockchains, enabling a transactional record that
is publicly and securely shared.
⚫ This ledger should preferably be based on open
source software to promote sound governance,
and to keep the programming interfaces equally
available to banks and other participants.
 It is Not Automated Payments
⚫ Programmable money is not the ability to write
arbitrary code that can move money using the
Banking API. Even if it includes complex
business logic and external data as part of the
decision making.
⚫ Nor is it if I instruct my bank to make an
automated monthly payment of $4,000 to my
landlord.
⚫ In each of the above cases, of course the bank
could actually hold back the payment, even
after they have received the payment
instruction.
 Then what is it?
⚫ One main characteristic of programmable
money mean that no matter what, the code’s
instructions will be carried out, and no bank
or intermediary can stop it.
⚫ Stable Coin like DAI which are controlled by
Smart Contract on Ethereum achieves this.
⚫ Stable Coin like Diem on Permissioned
blockchain do not achieve this.
 Designer Money
⚫ Now you can create money where the money
itself has control logic built into it. This is done at
the smart contract level.
⚫ A smart contract is typically a bunch of code that
is run by all participants in a blockchain network.
⚫ It defines:
1. The characteristics of the money (how many units there are,
who initially owns it, etc)
2. How users can interact with the money (ask for a balance,
make a payment, etc). The constraints are coded here.
 DAI the Ideal Currency for the API Economy
⚫ Dai (or DAI) is a stablecoin cryptocurrency which aims
to keep its value as close to one United States dollar
(USD) as possible through an automated system of
smart contracts on the Ethereum blockchain.
⚫ Dai is already powering the digital economy where
people can bypass banks and other financial firms to
transact directly with one another.
⚫ Dia can also power the API Economy where it will allow
the developers to directly transact with one another.
⚫ Dia is programmable money.
 DAI Details
⚫ The protocol allows lenders to lock up their funds in ETH
or any other crypto asset through smart contracts on
Ethereum, guaranteeing the issuance of new DAI tokens in
the form of loans.
⚫ The required deposit is greater than the value of the
token.
⚫ In contrast to other crypto assets, it minimizes price
volatility and traded on Crypto Exchanges.
⚫ Anyone can send and receive DAI without the need for
third parties, in a peer-to-peer (P2P) method.
⚫ It is decentralized, resistant to censorship, and
trustworthy.
 DAI Benefits for API Economy
⚫ Stable: Has value that is designed to be stable over
any period
⚫ Transparent: Auditable Payments to API Developers
⚫ Borderless: Allows cross-border payments globally
⚫ Faster Speed: Instant settlement
⚫ Lower Fees: after Ethereum 2 it will be even lower,
less than credit card payment of 2%
⚫ Programmable: Feathers can be added on top of Dai
which are useful for the API Economy
 DAI Benefits for API Economy
⚫ Stable: Has value that is designed to be stable over
any period
⚫ Transparent: Auditable Payments to API Developers
⚫ Borderless: Allows cross-border payments globally
⚫ Faster Speed: Instant settlement
⚫ Lower Fees: after Ethereum 2 it will be even lower,
less than credit card payment of 2%
⚫ Programmable: Feathers can be added on top of Dai
which are useful for the API Economy
Ethereum is a decentralized platform that runs
smart contracts applications that run exactly
as programmed without any possibility of
downtime, censorship, fraud or third party
interference
The Birth of Ethereum
1. A blockchain without a specific purpose, that could support a
broad variety of applications by being programmed.
2. The idea was that, a developer could program their particular
application without having to implement the underlying
mechanisms of
a. peer-to-peer networks,
b. blockchains,
c. consensus algorithms, etc.
3. The Ethereum platform was designed to abstract these details
and provide a deterministic and secure programming
environment for decentralized blockchain applications.
What Is Ethereum?
From a computer practical perspective:

Ethereum is an open source, globally

decentralized computing infrastructure that
executes programs called smart contracts. It uses
a blockchain to synchronize and store the
system’s state changes, along with a
cryptocurrency called ether to meter and
constrain execution resource costs.
How does one get gas

1. You won’t find gas on any exchanges.

2. Only be purchased as part of a transaction, and can only be
bought with ether.
3. Ether needs to be sent along with a transaction and it needs to
be explicitly earmarked for the purchase of gas, along with an
acceptable gas price.
4. Just like at the pump, the price of gas is not fixed.
5. Gas is purchased for the transaction, the computation is
executed, and any unused gas is refunded back to the sender
of the transaction.
Decentralized Applications (DApps)
DApp is a web application that is built on top of open,
decentralized, peer-to-peer infrastructure services.

A DApp is composed of at least:

● Smart contracts on a blockchain

● A web frontend user interface

In addition, many DApps include other decentralized components,

such as:

● A decentralized (P2P) storage protocol and platform

● A decentralized (P2P) messaging protocol and platform
Choosing an Ethereum Wallet

1. "Wallet" means a software application that manage your Ethereum

account.
2. It holds your keys & can create and broadcast transactions on your
behalf.
3. If you choose a wallet and don’t like you can change wallets quite
easily.
4. Make a transaction to sends your funds from the old wallet to the
new
5. Export your private keys and import them into the new one.
Types of Wallet
1. Mobile wallet,
2. Desktop wallet, and
3. Web-based wallet.

Generally the more popular a wallet application is, the

more trustworthy it is likely to be.

It is good practice to avoid "putting all your eggs in

one basket" and have your Ethereum accounts spread
across a couple of wallets.
A good starter wallet

MetaMask

1. Browser extension wallet that runs in your browser.

2. It is easy to use and convenient for testing,
3. as it is able to connect to a variety of Ethereum nodes and test
blockchains.
4. MetaMask is a web-based wallet.
Control and Responsibility

1. Open Blockchain & operate as Decentralize System

2. Each user can control their own private keys
3. That mean: control access to funds and smart
contracts.
4. We sometimes call the combination of access to funds
and smart contracts an "account" or "wallet."
With control comes a big responsibility

1. If you lose your private keys, you lose access to your

funds and contracts.
2. No one can help you regain access—your funds will be
locked forever.
3. Some users choose to give up control over their private
keys by using a third-party custodian, such as an online
exchange.
Getting Started with MetaMask

https://metamask.io
Getting Started with MetaMask
1. Once MetaMask is installed you
should see a new icon in your
browser’s toolbar.
2. Click on it to get started.
3. You will be asked to accept the terms
and conditions and then to create
your new Ethereum wallet by
entering a password
Switching Networks
1. Main Ethereum Network
a. By default, MetaMask will try to connect to the main public network.
b. Real ETH, real value, and real consequences.
2. Ropsten Test Network
a. Ethereum public test blockchain and network.
b. ETH on this network has no value.
3. Kovan Test Network
a. Ethereum public test blockchain and network using consensus protocol -
Proof of authority ETH on this network has no value. The Kovan test network
is supported by Parity only.
Switching Networks
4. Rinkeby Test Network
a. Ethereum public test blockchain and network, using consensus protocol -
proof of authority
b. ETH on this network has no value.
5. Localhost 8545
a. Connects to a node running on the same computer as the browser.
b. The node can be part of any public blockchain (main or testnet), or a private
testnet.
6. Custom RPC
a. Allows you to connect MetaMask to any node with a Geth-compatible
Remote Procedure Call (RPC) interface. The node can be part of any public
or private blockchain
Getting Some Test Ether
1. New transaction will be mined and your
MetaMask wallet will show a balance of
1 ETH.
2. Click on the transaction ID it take you to
a block explorer. MetaMask uses the
Etherscan block explorer,
3. The transaction containing the payment
from the Ropsten Test Faucet is shown
in Etherscan Ropsten block explorer.
Addresses
One of Ethereum’s foundational technologies is cryptography

Two types of Accounts

1. Externally owned Accounts (EoA)
2. Contract Account

Ownership of ether by EOAs is established through

1. Digital private keys,
2. Ethereum addresses, and
3. Digital signatures
Addresses
● An externally owned account can send messages to other
externally owned accounts OR to other contract accounts by
creating and signing a transaction using its private key.

● Unlike externally owned accounts, contract accounts can’t

initiate new transactions on their own
Keys
Private keys are not used directly in the Ethereum system.

◆ Account addresses are derived directly from private keys.

◆ Private key uniquely determines a single Ethereum address, also
known as an account.

Access and control of funds is achieved with digital signature

◆ Ethereum transactions require a valid digital signature to be included
in the blockchain.
◆ Anyone with a copy of a private key has control of the corresponding
account and any ether it holds.
◆ Contracts account are not backed by public-private key paris
Public Key Cryptography and Cryptocurrency
In Ethereum, we use public key cryptography (also known as asymmetric
cryptography) to create the public–private key pair.

Together, they represent an Ethereum account by providing, respectively, a publicly

accessible account handle (the address) and private control over access to any ether
in the account and over any authentication the account needs when using smart
contracts.

The private key controls access by being the unique piece of information needed to
create digital signatures, which are required to sign transactions to spend any funds
in the account. Digital signatures are also used to authenticate owners or users of
contracts

Ethereum transaction is basically a request to access a particular account with a

particular Ethereum address
 Wallets
● A wallet is a software application that serves
as the primary user interface to Ethereum.
● The wallet controls access to a user’s money,
managing keys and addresses, tracking the
balance, and creating and signing
transactions.
● Ethereum wallets can also interact with
contracts, such as ERC20 tokens.
● Interfaces to Ethereum-based decentralized
applications, or DApps
What are Tokens
Commonly used to refer to privately issued special-purpose
coin
- like items of insignificant intrinsic value,
- i. e. Transportation, food courts, and game tokens.

Nowadays, "tokens" administered on blockchains are

redefining the word to mean blockchain-based
abstractions that can be owned and that represent
- Assets,
- Currency, or
- Access rights.
Traditional Vs Blockchain Tokens

Traditional Tokens Blockchain Tokens

Restricted to specific these restrictions are lifted

businesses, organizations, or
locations, Many blockchain tokens
serve multiple purposes
Physical tokens are not globally &
easily exchangeable and
typically have only one Can be traded for each
function. other / for other
currencies
How are Token Used
Most obvious use of tokens is as digital private currencies

This is only one possible use, Currency is just the

first application:

Tokens can be programmed to serve many different functions

What can be those difference Functions?

Token Standards - ERC20

First standard was introduced in November 2015 by Fabian Vogelsteller

as an Ethereum Request for Comments (ERC). It was automatically
assigned GitHub issue number 20, giving rise to the name "ERC20 token."
The vast majority of tokens are currently based on the ERC20 standard.

ERC20 is a standard for fungible tokens, meaning that different units of

an ERC20 token are interchangeable and have no unique properties.

The ERC20 standard defines a common interface for contracts

implementing a token, such that any compatible token can be accessed
and used in the same way.
Token Standards - ERC20
Here’s what an ERC20 interface specification looks like in Solidity:

contract ERC20 {
function totalSupply() constant returns (uint theTotalSupply);
function balanceOf(address _owner) constant returns (uint balance);
function transfer(address _to, uint _value) returns (bool success);
function transferFrom(address _from, address _to, uint _value) returns
(bool success);
function approve(address _spender, uint _value) returns (bool success);
function allowance(address _owner, address _spender) constant returns
(uint remaining);
event Transfer(address indexed _from, address indexed _to, uint _value);
event Approval(address indexed _owner, address indexed _spender, uint _value);
}

Consists of a number of functions that must be present in every implementation of the

standard, as well as some optional functions and attributes that may be added by
developers.
ERC20 required functions and events
An ERC20-compliant token contract must provide at least the following functions
and events:

totalSupply - Returns the total units of this token that currently exist. ERC20 tokens
can have a fixed or a variable supply.

balanceOf - Given an address, returns the token balance of that address.

transfer - Given an address and amount, transfers that amount of tokens to that
address, from the balance of the address that executed the transfer.

transferFrom - Given a sender, recipient, and amount, transfers tokens from one
account to another. Used in combination with approve.
ERC20 required functions and events
approve - Given a recipient address and amount, authorizes that address to
execute several transfers up to that amount, from the account that issued
the approval.

allowance - Given an owner address and a spender address, returns the

remaining amount that the spender is approved to withdraw from the
owner.

Transfer - Event triggered upon a successful transfer (call to transfer or

transferFrom) (even for zero-value transfers).

Approval - Event logged upon a successful call to approve.

Smart Contract
When smart people hear the term “smart contracts”, their imaginations tend to
run wild

A smart contract is just a fancy name for code that runs on a blockchain, and
interacts with that blockchain’s state.

A smart contract is a piece of code that is stored on an blockchain, triggered by

blockchain transactions and which reads and writes data in that blockchain’s
database.

Each Language has its strengths and weaknesses – you’d be crazy to build a
website in C or compress HD video in Ruby.

But in principle at least, you could if you wanted to. You’d just pay a heavy price in
terms of convenience, performance, and quite probably, your hair.
 DAI Lab
1. Install Metamask (Ethereum Wallet)
https://metamask.io/

2. Select Test network for development in Metamask, we will be using

Ropsten

3. Generate Ethereum on a Facet and send it to your Metamask account

address:
https://faucet.ropsten.be/
https://faucet.dimensions.network/
https://faucet.metamask.io/
 DAI Lab
4. Generate Dai from a Dai Faucet and send it to your Metamask Account
Address:
https://app.compound.finance/
Watch this video to learn:
https://youtu.be/5GLh1_zAftk

5. To show received Dai in Matamask push Add Token button using the
following DAI contract address:
0xad6d458402f60fd3bd25163575031acdce07538d
 DAI Lab
6. Send one Dai or more to my address:
0xA31Fa5D96441645FCeD6F09743cA5703605817Ca
 Thank You

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