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Cryptocurrency

Cryptocurrency. Bitcoin. Dogecoin. Peter Carnesciali Marcus Rivera. Litecoin. Peercoin. What is Cryptocurrency?. A type of digital currency which relies on cryptography Uses SHA-256 hash functions or scrypt, a password based key derivation function Decentralized - no governing bank

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Cryptocurrency

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  1. Cryptocurrency Bitcoin Dogecoin Peter Carnesciali Marcus Rivera Litecoin Peercoin

  2. What is Cryptocurrency? • A type of digital currency which relies on cryptography • Uses SHA-256 hash functions or scrypt, a password based key derivation function • Decentralized - no governing bank • No physical coin. • Value by scarcity, supply and demand

  3. History • 2008 - Satoshi Nakamoto’s white paper • 2009 - Bitcoin was created • 2011 - Litecoin • 2011 to present - Many Cryptocurrencies

  4. Addresses: 27-34 alphanumeric chars

  5. How transactions work • Each address has a public key and private key • Sign the transaction, proving you are the owner of the address • Specify which address sending to, and how much

  6. Addresses • Generally disposable • Generate address for every transaction you receive • 2^160 possible addresses • 2^63 grains of sand on all beaches on earth • Wallet holds keys for every address you own • If you lose the private keys, you are screwed

  7. Traditional Bank Methods • Bank keeps a ledger • Account numbers and balances • Bank verifies all transactions • Transfers money between accounts

  8. Cryptocurrency Methods • Members of community (miners) keep a ledger • Addresses and balances • Verify transactions as they happen • Approve them if the balance exists • Transfer balance to other address • Issue Confirmation

  9. Majority Rules • If miners disagree about a balance, the majority rules, and all align to that. • Therefore, to commit fraud you would need >50% of mining power • All of Google's processing power not enough • More people mining, more secure

  10. Mining • Transactions grouped into blocks • Solve a "proof-of-work" problem for the block • Artificially difficult hash. • SHA-256 Hash of transactions has to meet certain criteria • Leading zeros, etc. • If you solve, you are rewarded with bitcoins

  11. Leading Zeros • If we need 4 leading zeros "Hello, world!0" => 1312af178c253f84028d480a6adc1e25e81caa44c749ec8197619... "Hello, world!1" => e9afc424b79e4f6ab42d99c81156d3a17228d6e1eef4139be78e9... "Hello, world!2" => ae37343a357a8297591625e7134cbea22f5928be8ca2a32aa475... ... "Hello, world!4248" => 6e110d98b388e77e9c6f042ac6b497cec46660deef75a55ebc... "Hello, world!4249" => c004190b822f1669cac8dc37e761cb73652e7832fb81456570... "Hello, world!4250" => 0000c3af42fc31103f1fdc0151fa747ff87349a4714df7cc52ea4... • Took 4251 tries to get 4 leading zeros

  12. Benefits • Anonymous • Instant (within few seconds) • For large transactions, wait 10 minutes to fully confirm • No (or very low) fees • (usually none, sometimes 0.0005 BTC) • Could send $100,000 for max fee of $0.23 • Transactions are permanent • No chargebacks like with credit cards/PayPal

  13. Struggles • Government trying to regulate • Price fluctuates a lot • Started at under 1 cent • Got above $1000 • Currently around $450 • Output Overflow Bug • August 15, 2010 • Only major security flaw found and exploited Bitcoin Price

  14. Dogecoin • One of the most popular altcoins • Based on the "doge" meme • Founded on the framework of Bitcoin • Sponsored Jamaican Bobsled team for Olympics • Sponsoring NASCAR driver this weekend

  15. Strange Donuts • In St. Louis • Accept Bitcoin and Dogecoin • Scan QR code for address • Send payment

  16. Questions?

  17. Sources "Cryptocurrency." Wikipedia. 28 Apr. 2014. Wikimedia Foundation. 29 Apr. 2014 <http://en.wikipedia.org/wiki/Cryptocurrency>. "History of Bitcoin." Wikipedia. 26 Apr. 2014. Wikimedia Foundation. 27 Apr. 2014 <http://en.wikipedia.org/wiki/History_of_Bitcoin>. Ingraham, Nathan. "Dogecoin has its day: The unlikely success of a joke cryptocurrency." The Verge. 29 Apr. 2014. 29 Apr. 2014 <http://www.theverge.com/2014/4/29/5665470/dogecoin-has-its-day-the-unlikely-success-of-a-joke-cryptocurrency>. "What's the History of Cryptocurrency?" Cryptocurrency. 30 Apr. 2014 <https://www.coinpursuit.com/articles/whats-the-history-of-cryptocurrency.140/>. "Quantitative Analysis of the Full Bitcoin Transaction Graph" The Weizmann Institute of Science, Israel. 1 May. 2014. <http://eprint.iacr.org/2012/584.pdf>

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