Blockchain is a highly overvalued area right now. These prices are not sustainable, and a crash is inevitable. This has happened many times before, and it will happen again. If you want to work in this industry for a long time, you will learn to ignore the price tags. Emin Gun Sier said that prices are the least fascinating part of cryptocurrency. These technologies are hugely important and will irrevocably alter the world.
I cannot tell you if you should jump in if you are unsure, but five reasons convinced me to do so.
#1 It’s still early
Although Bitcoin was created 10 years ago, innovation has slowed to a crawl in the past few years, with the advent of Ethereum in 2015. Many innovative companies and new ideas in this sector have been built on Ethereum, which is still very young. British Bitcoin Profit says that getting in early can increase traders’ profitability.
Even if it’s not the best time to start, you can become a top-notch expert in several years. It won’t take long to catch up with most people who haven’t done it for many years. It would be similar to deep learning specialists studying the topic in the late 2000s.
#2 The talent pipeline for this space is not yet strong
The best and brightest university students are focused on game development, machine learning, and web programming. Although blockchains may be becoming more popular in public discourse, they are still a strange and subversive topic on which you can stake your career.
Blockchain was a domain reserved for cypherpunks and paranoids at the beginning. This has only recently changed. You can bring a lot to the space by being curious and open-minded developers.
#3 A lot of innovation happens outside of academia.
As far as we know, Satoshi Nakamoto wasn’t an academic. No institution or university has a cohesive blockchain concentration. Aficionados, entrepreneurs, and independent researchers have led most of the innovation. White papers, blog posts, and public Slack channels provide you with the necessary information. It takes nothing more than to get out there and start working.
#4 Talent demand is far greater than supply.
This space is not populated with enough developers, and getting enough training is difficult for them. Everybody is trying to recruit blockchain talent. Projects are feeling the effects of this talent crunch. Because there are so many opportunities, many top companies cannot pay their employees enough to stay, it’s easy to get a job if you have some experience.
#4 Cryptocurrencies can be very cool.
You won’t find anywhere else where you can build sci-fi stuff such as cryptographically secure, decentralized money. This is the wild west, and it brings both good and bad. This space could use more transparency. Regulation will eventually follow. However, cryptocurrencies are a highly innovative area in which you should work.
Prerequisites
Before diving into the details, I recommend you have a solid understanding of the fundamentals. Blockchains were built on decades of cryptography, computer science, and economics research. Although Satoshi Nakamoto was an outlaw, he knew the history of those who came before him. Understanding the building blocks of blockchains is key to understanding why they work. What happened before them, and why did those things fail. You should know these top prerequisites, ranked in order of importance.
These links are only a starting point. You’ll want to explore many of the topics.
Computer science
Data structures: It is essential to understand the features and guarantees of major data structures, such as linked lists, binary search trees, hash maps, and graphs. This includes directed acyclic diagrams, which are prominent in blockchains. Building them from scratch helps to better understand their functions and properties.
Cryptography: Cryptography is the name and foundation of all cryptocurrencies. All cryptocurrencies use public/private key cryptography as the basis for identity and authentication. It’s very easy to learn and does not require a strong math background. Then, look into ECDSA. Elliptic curve cryptography is more complex—you don’t need to know all the details—but it is the cryptography used in most cryptocurrencies, including Bitcoin.
Distributed systems
There are a few good textbooks on distributed systems, but it’s a sprawling and difficult area of study. You need a solid foundation to understand blockchains.
You can no longer live on one machine, and you need to think about consistency, consensus, and other issues. It is important to understand the differences between eventual consistency and linearizable models. It is also important to know the guarantees provided by fault-tolerant consensus algorithms such as Paxos or RAFT. Know the difficulties of reasoning about time in a distributed system. Appreciate the tradeoffs between safety and liveness.
With that background, you’ll be able to understand the difficulties around Byzantine fault-tolerant consensus, the primary security requirement of public blockchains. You’ll want to learn about PBFT, one of the first scalable algorithms to deliver Byzantine fault-tolerant consensus. PBFT is the foundation for many other non-proof-of work blockchain consensus algorithms. You don’t have to know all the details about PBFT, but you can get the basic idea and security guarantees.
It’s also very useful to understand the traditional methods of distributing databases (at its core, blockchains are databases after all). Learn about sharding, such as leader-follower replication and quorum-based commitments. Consider distributed hash tables (DHTs) such as Chord and Kademlia.
Networking
Peer-to-peer network topology is a major factor in the decentralization of blockchains. Blockchains are, therefore, direct descendants of P2P networks in the past.
Understanding the fundamentals of computer networking is necessary to fully understand the blockchain communication model. This includes understanding TCP vs UDP and the packet model. It also means understanding what IP packets are like and how Internet routing works.
Public blockchains are known to use flooding and gossip protocols to spread information. It is instructive to read the history of P2P network design from Napster to Gnutella to BitTorrent and Tor. While blockchains are their own thing, they can draw from the lessons learned and how they were built.
Economics
Cryptocurrencies are multidisciplinary in nature—this is what makes them so exciting and revolutionary. They are deeply interwoven with economics, computer science, cryptography, and networking. Cryptocurrencies can derive many security properties through their economic structures, which is often termed crypto economics. Understanding cryptocurrencies requires an understanding of economics.
Game theory
The most important branch of economics that plays into cryptocurrencies is game theory, the study of payoffs and incentives among multiple agents. You don’t have to get very technical here. However, you must be familiar with the basics of game theory analysis and how to use them to analyze incentives in iterated and one-shot games.
Schelling points and Nash equilibria should be key concepts in your arsenal, as they are prominent in crypto-economic analysis.
Macroeconomics
Cryptocurrencies can be thought of as more than protocols. They are also money forms. As such, they respond to the laws of macroeconomics (if they can be called laws). Different monetary policies are applied to cryptocurrencies. They respond to inflation and deflation in predictable ways. These processes and their effects on saving, spending, and so forth should be understood.
Another valuable economic concept is the velocity of money, especially as it corresponds to valuing a currency.
Microeconomics
Cryptocurrencies are also deeply interwoven with markets, which requires an understanding of microeconomics. You’ll need a strong intuition for supply and demand curves. You should also be able to reason about competition and opportunity costs (which apply frequently to cryptocurrency mining). Auction theory features prominently in many coin distributions and cryptoeconomic systems.
Many of these topics should be familiar to you. If not, you can skip or skim them. Now that you have a solid foundation, or maybe you missed some, who knows? Now that your theory is down, let’s move on to blockchain development.
The Theoretical Basis of Bitcoin
Satoshi Nakamoto published a whitepaper in October 2008 that described a protocol for creating a digital currency, which he called Bitcoin.
You must start with Bitcoin to understand the fundamental ideas behind blockchains.
You can build a blockchain by yourself
Once you have high-level intuition, it is time to create your own proof-of-work-based blockchain. It’s not as difficult as it sounds.