Digital Currency

Cryptocurrency: A New Kind of

Money in the Modern Epoch
History of Currency
 What is cryptocurrency?
Cryptocurrency is a digital currency in which
transactions are verified and records maintained
by a decentralized system using cryptography,
rather than by a centralized authority.
Cryptography is a method of storing and
transmitting data in a particular form so that only
those for whom it is intended can read and
process it. In other words: a secret code!!

[Shhhh…“Crypto” means hidden or secret].

What is the medium of exchange?
The first decentralized cryptocurrency, bitcoin, was created in
2009 by a Japanese developer, Satoshi Nakamoto (a pseudonym;
many people have claimed to be Satoshi Nakamoto).

You buy Bitcoins through apps like Zebpay, UnoCoin, CoinSecure.

They will issue you a wallet.

Today one Bitcoin costs you somewhere around 18 lakhs. But

you can start with buying a part of a Bitcoin. The minimum
amount that is needed to begin investing in Bitcoins is around
Rs.500.
 How does cryptocurrency work?
It works as a medium of
exchange wherein a payment
is made and individual
coin ownership records are
stored in a ledger existing in
the form of computerized 
database, using strong cryptography to
• secure transaction records,
• control the creation of additional coins
• verify the transfer of coin ownership
 Could you put that into
plainer English?
It means buying and selling and trading with
“virtual money” on the Internet, person to
person, as someone in between keeps records.
 What are the pros and cons?
• Speed
• Convenience
• Global reach
• Decentralized control

• Hacking
• Power failure
• Unregulated global person-to-person economy
 How does the actual exchange work?

•Centralized bitcoin exchanges act as

intermediaries between a buyer (taker) and
seller (maker), for a fee.
•Decentralized bitcoin exchanges are user-to-
user, direct transactions.
•Bitcoin wallets are where a user can store
bitcoins with a private “key”
to authorize transactions.
 How are the records kept?
A blockchain is the mechanism for keeping track of cryptocurrency
exchanges.

A blockchain is a distributed ledger that serves as a public financial

transaction database.

It is a chain of records stored in the form of blocks which are controlled by

no single authority across a computer network. Each block of data comes
from an individual.
 The languge of the blockchain
The blockchain or continuously growing list
of records called blocks is linked and secured
using cryptography, or code.
 Who maintains the blockchain?
In cryptocurrency networks, mining is a validation of transactions. The “miners”, or
“nodes” on the network, are people running
purpose-built computers that are actually competing to solve complex
mathematical problems in order to make a transaction go through.

For this effort, successful miners obtain new

cryptocurrency as a reward. 

Cryptocurrencies use various timestamping schemes

to"prove" the validity of transactions added to the
blockchain ledger, without the need for a trusted
third party.
Are bitcoins the only virtual currency used?

There are other digital currencies, with various

advantages. They are called “Altcoins” .
Litecoin aims to process a block every 2.5
minutes, rather than bitcoin's 10 minutes which
allows Litecoin to confirm transactions faster
than bitcoin.
 Another example is Ethereum, which is cheaper
to use, harder to fake and the most-actively
used blockchain in the world.
 Want to know more?
Ask your Mathematics teacher!

Or your Computer teacher!

Or your Economics teacher!