Cryptocurrencies
What are we going to cover today:
- Definition of a crypto currency
- Main concepts
- Main features
Cryptocurrency
A digital or virtual currency that uses cryptography mechanisms for ensuring its security
...but it is not much more than a big database
Blockchain
The "database" of a cryptocurrency
Blockchain
- Public ledger
- Decentralised and distributed network of nodes
- Very similar to P2P network
Mining
The process of confirming transactions and permanently recording them on the blockchain
Miner
- Confirms transactions and spreads them across the network
- Records transactions in the blockchain
- In order to record transactions miner needs to solve a cryptographic puzzle
Crypto Puzzle
- Calculating cryptographic hash function (proof-of-work problem)
- It helps to secure the network against fraud
- Reward is given to the first miner who solves the crypto puzzle and adds transactions (block) to the blockchain
Keys
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Cryptocurrencies make use of public-private key cryptography principles
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Just the owner of the private key can send the funds
Cryptocurrency features
- Low cost
- Irreversibility an immutability
- Security
- No single point of failure
- Speed