Hands-On Smart Contract Development with Solidity and Ethereum

Chapter 2. Decentralized Applications

In this chapter we will take a look at a few sample use cases for building applications on the Ethereum blockchain. For each case we will take a look at what characteristics of the blockchain lend themselves well to supporting these applications and, where applicable, we will take a look at a few production examples. We will then conclude this chapter with a few questions to ask yourself when starting your next project to make sure the blockchain is the right technology to use.

Let’s jump into our first and likely most common use, tokens.

Tokens

Tokens are an abstraction that represents ownership. Ownership implies certain privileges such as the right to use or sell an item like a vehicle or a house. In these cases the token, or proof of ownership, is represented by a title or deed. It can also provide the right to access something such as software or a movie. Here the tokens may be represented by a license key or a physical ticket. With ownership being something that can change often, tracking these changes on a cryptographically secured platform makes a lot of sense.

To assist developers in the creation of tokens, the Ethereum community has developed several different types of token standards through the Ethereum Improvement Proposal (EIP) process. Let’s take a look at two of these standards, ERC-20 and ERC-721.

ERC-20

The ERC-20 standard is used when creating a fungible, or mutually interchangeable token. These tokens would be ideal replacements ...