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Cyber Currency – part 5/5 – Summary

SUMMARY A Market example: (our friendly neighborhood farmers market) Barter – direct exchange of goods works well at a small scale, but has limits Limited to a specific time and place No means for deferred payments Dividing some items is difficult or impossible No means for storing value Market example: we decide to create our […]

Cyber Currency – part 4/5 – Mining and Coins

MINING The purpose of mining Production of a cryptographic journal Time delay and proof of work that serves to prevent counterfeiting Currency expansion by creating new coin as mining rewards Process A request for a new block is issued There is a block calculation competition by miners After a competition has been won, the new […]

Cyber Currency – part 3/5 – Blockchain

Cyber Currency - part 3/5 - Blockchain

BLOCKCHAIN A digital ledger or journal of transactions (database) Cryptographic in nature (encrypted) A shared database with write permissions for everybody Validity of transactions is determined cryptographically instead of by a central authority Cryptographic nature Each transaction is combined with the hash value from the previous transaction and a new hash value is calculated Tamper […]

Cyber Currency – part 2/5 – Hashing Algorithms

Cyber Currency - part 2/5 - Hashing Algorithms

HASHING ALGORITHMS Hash = one way encryption Uses a mathematical formula (or algorithm) Maps data of variable size to a unique fixed length string Outputs a string called the “hash” or “digest” The same input always produces the same output It cannot be reversed (cryptographic) There are no collisions (no duplicates from different inputs) Hashing […]

Cyber Currency – part 1/5 – Currency Basics

CURRENCY BASICS Barter systems: Involve direct exchange of goods and services Have no intermediate token like money There are some difficulties: The barter process needs a coincidence of two exchange partners (same time, same place) Some trading goods cannot be easily divided into small parts Deferred payments are problematic Storing wealth is not practical Establishing […]

Journal Signatures Use Merkle Trees of Hashes

In the world of business transactions, there is a constant need to maintain logs or journals of transaction history. These journals need to be able to be validated for their integrity over time and they often need to be publicly available. Here are some examples of common transaction journals: Monthly bank statement for checking or […]

History of Crypto-Currency

In October of 2008, Satoshi Nakamoto (presumably a psuedonym) published a paper proposing the use of a peer to peer network doing “proof-of-work” calculations to establish a form of electronic cash. This became known as BITCOIN. All fiat currencies rely on some form of trust to maintain stability. This trust is often based on a […]

Bitcoin Virtual Money

Bitcoin is a virtual currency that is both established and safeguarded by mathematical techniques. We understand that most common currencies in use today are no longer backed by something like the gold standard. This means they maintain their value through a level of trust in the national economy that they represent. Bitcoin attempts to establish […]