Blockchain and Cryptocurrency

Cryptocurrency
• Cryptocurrency is an internet-based medium of exchange which uses
cryptographic functions to conduct financial transactions.

• Cryptocurrencies are classified as a subset of digital currencies,

alternative currencies and virtual currencies.

• Popular cryptocurrency till date are:Bitcoin,Ethereum,Tether ,XRP

etc.
History
• In 1998, Wei Dai Published a Description of “B-Money”, an
anonymous, distributed electronic cash system.

• Nick Szabo created "bit gold" Like bit-coin and other crypto
currencies.

• The first crypto-currency to capture the public imagination was Bit-

coin, which was launched in 2009 by an unknown person or group
known under the name Satoshi Nakamoto.
BlockChain
• A blockchain is basically a distributed database which records
information that have been verified by all the participants in a
network.
• Information of every transaction is stored in a block and with every
transaction a new block gets added.
• Every new block created is dependent upon the previous block thus
forming a chain of block.
• Each block includes the hash of the prior block in the blockchain,
ensuring all data in the overall “blockchain” has not been tempered.
History of Blockchain
• The idea of blockchain was introduced in 1991 by research scientists
Stuart Haber and W.Scott Stornetta where they described a
computational method to timestamp documents so they could not be
tampered.
• This technology went unused and the patent expired on 2004.
• Bitcoin was invented in January 2009 which followed an article
entitled ‘Bitcoin: Peer-to-Peer Electronic Cash System’ published by a
person or a group of people using the alias Satoshi Nakamoto.
• Thus, blockchain technology was revamped and it became what we
know it to be today.
Blockchain Architecture

Fig. : A simple example of blockchain

 Internals of Blockchains
• Block version
• Proof of Work(PoW)
• Timestamp: Current time in UTC.
• Parent Hash:SHA256 hash key belongs to parent key.
• Hash:SHA256 hash key of the current block
• Transactions
Block version
• called private key and public key.
• The private key is confidential and used to sign the transactions.
• The signed transactions are broadcaster into the network where each
node listens to it and add the transaction to their own block.
• Before adding the transaction to their own block, nodes verify the
transaction by decrypting and validating using the public key of the
broadcaster to check if the transaction has been tampered with.
Proof of Work
• It is consensus algorithm used to verify a transaction.
• If a node wants to publish a block of transactions, it cannot be simply
broadcasted into the network. The node needs to do a lot of work to
prove that the block being broadcasted does not tamper with the
existing blockchain
• Each node in the network is continuously calculating hash value of the
block header.
• Each node that calculates the hash value after reaching a certain level
of computation and broadcasts the block in the hopes of being added
into the block chain is call Miner and the process is called Mining.
Advantages of blockchain
• Dcentralized
• Transparncy
• Persistence/Immutability
• Anonymity
• Traceability
Disadvantage of blockchain
• Scalability
• High energy consumption
• Security
• Cost and capacity constraints
Queries ?