Mastering Bitcoin, 2nd Edition

Chapter 12. Blockchain Applications

Let’s now build on our understanding of bitcoin by looking at it as an application platform. Nowadays, many people use the term “blockchain” to refer to any application platform that shares the design principles of bitcoin. The term is often misused and applied to many things that fail to deliver the primary features that bitcoin’s blockchain delivers.

In this chapter we will look at the features offered by the bitcoin blockchain, as an application platform. We will consider the application building primitives, which form the building blocks of any blockchain application. We will look at several important applications that use these primitives, such as colored coins, payment (state) channels, and routed payment channels (Lightning Network).

Introduction

The bitcoin system was designed as a decentralized currency and payment system. However, most of its functionality is derived from much lower-level constructs that can be used for much broader applications. Bitcoin wasn’t built with components such as accounts, users, balances, and payments. Instead, it uses a transactional scripting language with low-level cryptographic functions, as we saw in Chapter 6. Just as the higher-level concepts of accounts, balances, and payments can be derived from these basic primitives, so can many other complex applications. Thus, the bitcoin blockchain can become an application platform offering trust services to applications, such as smart contracts, far surpassing ...