Cryptocurrencies

What are they?

And what they are good for

• A digital currency

• Decentralized

• Based on cryptography

• Uses 'blockchain' technology

• Few examples: BitCoin(BTC), Ethereum(ETH), LiteCoin(LTC), etc.

Short history

• The idea was first conceived by David Chaum in 1983 and implemented in 1995 as Digicash
• Electronic currency technology further developed in the 90's, thanks to the work of Wei Dai and Nick Szabo
• The first cryptocurrency as we know it today was BitCoin, released in 2009
• Soon followed NameCoin, LiteCoin and PeerCoin in 2011
• Today there are over 4000 'altcoins'

How it works

• Distributed ledger
• Digital signatures
• Proof of work
• Cryptographic hash functions
• Block chain

Distributed ledger

aka block-chain

• A platform where all transactions are recorded
• In the case of cryptocurrencies, this is the internet
• Everyone has a copy of this ledger, hence the name distributed
• Old ledgers don't get deleted, instead newer ones are added  ->blockchain
• Always the longest blockchain ought to be trusted, because that contains the most computational work (proof of work)

Digital signatures

• Every transaction needs to be signed by both parties
• In our case these are really just bitstrings (256 bits long)
• Transactions themselves have their unique code
• Every user has a private and public key
• Private key + transaction code -> signature
• Signature + public key -> transaction code
• Private key cannot be traced back
• This is ensured by special cryptographic functions called hash functions

Rates of exchange

as of 4/20/19

Thank you for your attention!

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