CryptoCurrencies

&
Introduction to Bitcoin

by
Vivek Mall
Scholar No: 141112205
 What is a CryptoCurrency?

A cryptocurrency (or crypto currency) is

a digital asset designed to work as a medium of
exchange using cryptography to secure the
transactions, to control the creation of
additional units, and to verify the transfer of
assets. Cryptocurrencies are classified as a
subset of digital currencies and are also
classified as a subset of alternative
currencies and virtual currencies.
 Cryptographic Hash Function
A cryptographic hash function is a special class of hash
function that has certain properties which make it suitable for use
in cryptography. It is a mathematical algorithm that maps data
of arbitrary size to a bit string of a fixed size (a hash function)
which is designed to also be a one-way function, that is, a
function which is infeasible to invert. The only way to recreate the
input data from an ideal cryptographic hash function's output is
to attempt a brute-force search of possible inputs to see if they
produce a match, or use a rainbow table of matched
hashes. Bruce Schneier has called one-way hash functions "the
workhorses of modern cryptography".[1] The input data is often
called the message, and the output (the hash value or hash) is
often called the message digest or simply the digest.
Cryptographic Hash Function
 Cryptographic Hash Function
Features of Hash Functions

1.Fixed Length Output (Hash Value)

Hash function coverts data of arbitrary length to a fixed length. This process
is often referred to as hashing the data.

In general, the hash is much smaller than the input data, hence hash
functions are sometimes called compression functions.
Since a hash is a smaller representation of a larger data, it is also referred
to as a digest.

Hash function with n bit output is referred to as an n-bit hash function.

Popular hash functions generate values between 160 and 512 bits.

2. Efficiency of Operation
Generally for any hash function h with input x, computation of h(x) is a fast
operation.
Computationally hash functions are much faster than a symmetric
encryption.
Some Examples
Message Digest (MD)
MD5 was most popular and widely used hash function for quite some
years.
The MD family comprises of hash functions MD2, MD4, MD5 and MD6. It
was adopted as Internet Standard RFC 1321. It is a 128-bit hash function.

Secure Hash Function (SHA)

Family of SHA comprise of four SHA algorithms; SHA-0, SHA-1, SHA-2, and
SHA-3. Though from same family, there are structurally different.
What is a Digital Signature?
A digital signature (not to be confused with a digital certificate) is a
mathematical technique used to validate the authenticity and integrity
of a message, software or digital document.

How Does it Work?

Digital signatures are based on public key cryptography, also known as asymmetric
cryptography. Using a public key algorithm one can generate two keys that are
mathematically linked: one private and one public. To create a digital signature, signing
software (such as an email program) creates a one-way hash of the electronic data to be
signed. The private key is then used to encrypt the hash. The encrypted hash -- along with
other information, such as the hashing algorithm -- is the digital signature. The reason for
encrypting the hash instead of the entire message or document is that a hash function can
convert an arbitrary input into a fixed length value, which is usually much shorter. This saves
time since hashing is much faster than signing.
How do Digital Signatures in
Bitcoin Work?
 How do Digital Signatures in Bitcoin Work?

A Bitcoin digital signature and its verification is one of the main key secrets
behind the Bitcoin protocol.
It allows non-repudiation as it means the person who sent the message had
to be in possession of the private key and so therefore owns the Bitcoins
anyone on the network can verify the transaction as a result.
The private key creates the public key, which in turn creates the address
and due to some clever mathematics using elliptic curves and modular
arithmetic in finite fields the process is achieved.

The sender generates a private key and public key. They then sign the message with
the signature and send their public key, the signature and the message to the
network (as the network is peer to peer each full node in the network validates each
transaction) The node or receiver then checks using the verification algorithm that
the message has been signed by the sender, which can only be done by the holder
of the private key to the public key that is sent.
 What is a Bitcoin?
Bitcoin is a worldwide cryptocurrency and digital payment system called
the first decentralized digital currency, as the system works without a
central repository or single administrator.[8]:1[9] It was invented by an
unknown person or group of people under the name Satoshi
Nakamoto[10] and released as open-source software in 2009.[11] The system
is peer-to-peer, and transactions take place between users directly,
without an intermediary.[8]:4 These transactions are verified by
network nodes and recorded in a public distributed ledger called
a blockchain.
What has Bitcoin Help us
Achieve?
We do have an existing way of sending payments on the Web. The
problem is that they all involve inefficient legacy systems like Automated
Clearing House (ACH) that were designed before the Internet. These
traditional payment systems are painfully slow because they require a
centralized clearing house.

Machines shouldnt have to wait days for a payment to clear; they are
constantly communicating with one another. They should be able to
send billions of micropayments to each other to meter resources like
electricity and storage space and not have to worry about the hefty
transaction fees of a middleman. Bitcoin helps solve this problem.
Moreover
With the advent of Bitcoin, instant, decentralized, pseudonymous value
transfer is finally possible.

Bitcoin and other cryptocurrencies will help define the fifth protocol
layer of the Internet, letting machines transfer value as fast and
efficiently as data. Bitcoin is a useful tool for online value transfer, but its
most valuable innovation is its underlying technology, the blockchain,
that for the first time in history made decentralized consensus possible.
What is BlockChain & what does
it do?
The blockchain is a massively replicated database of all transactions in the Bitcoin
network. It uses a consensus mechanism called proof-of-work which prevents
double-spending in the networka problem that had plagued cryptographic
researchers for decades. Double-spending meant a bad actor could spend the
same funds twice, denying the first transaction happened.

Proof-of-work solves this problem by having miners in the network solve

cryptographic proofs using their hardware.

Miners are Bitcoin nodes that verify a transaction and check it via its blockchain
history, a timestamped record of all transactions ever made in the network.

Someone could theoretically alter their blockchain history, but with proof-of-work,
they would also need to have the majority of computational power in the
network to verify it.

Because the Bitcoin network has much more computation power at this point
than all of the worlds supercomputers combined, an attacker would have an
extremely difficult time trying to break the network.
Difference between Centralized,
Decentralized, & Distributed
Difference between Centralized,
Decentralized, & Distributed
Centralized systems are currently the most widespread model for
software applications. Centralized systems directly control the operation
of the individual units and flow of information from a single center. All
individuals are directly dependent on the central power to send and
receive information and to be commanded

Distributed means computation is spread across multiple nodes

instead of just one.

Decentralized means no node is instructing any other node as to

what to do.
Does that mean Bitcoin is both
Distributed and Decentralized?

Yes, it can. Bitcoin is distributed because its

timestamped public ledger, the blockchain, resides
on multiple computers. Its also decentralized
because if one node fails, the network is still able to
operate. That means that any app that uses a
blockchain alongside other peer-to-peer tools can be
distributed and decentralized.
What is Bitcoin Mining?

Bitcoin mining is the process by which transactions are

verified and added to the public ledger, known as the
block chain, and also the means through which new
bitcoin are released. Anyone with access to the internet
and suitable hardware can participate in mining. The
mining process involves compiling recent transactions into
blocks and trying to solve a computationally difficult
puzzle.

This is how new Bitcoins are created.

How to store your Bitcoins?

Bitcoin wallets store the private keys that you need to access a bitcoin
address and spend your funds. They come in different forms, designed
for different types of device. You can even use paper storage to avoid
having them on a computer at all. Of course, it is very important to
secure and back up your bitcoin wallet.

Bitcoin wallets come in a variety of forms. There are five main

types of wallet: desktop, mobile, web, paper and
hardware.
Present Value of Bitcoin

Cant Be Said It Changes approximately every minute..

Some Other
CryptoCurrecies
Thank YOU