Professional Documents
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! ! ! ! ! ! ! 25.3.2014
Cryptography
wallet = le (public & private key pair) address = public key (1FBXz6pKKhdyg5CwT38mFW2oi6xM7uVQe7) Everyone who has private key is owner of the wallet
- Bitcoin core wallet www.bitcoin.org - Multibit www.multibit.org - Electum www.electrum.org - Bitcoin Armory www.bitcoinarmory.com
P2P network
Every node has downloaded every transaction since the beginning ( Blockchain ) so that it is easy to check if that public key (address) has amount of bitcoins which user wants to send (by checking all transactions..)
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Once the wallet is created user just need to connect to the network, create a transaction, sign it with his private key (so that everyone can verify its authenticity) and then just broadcast it to the network
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Transaction is then added to the new block with all new (unconrmed) transactions created within 10 minutes
P2P network
New block contain previous block hash, timestamp, every new transaction and nonce
Proof of work
Creating hashes is computationally trivial, but Bitcoin requires that the new hash value have to be in particular form:
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! It has to start with certain number of zeros by ! to current difculty adjusted by current hashrate Nodes connected to the network are forced to try as many nonces as it is needed to create right hash => mining
Proof of work
Right after right hash is computed, coinbase transaction is created and miner is rewarded by 25 BTC which are added to his wallet (after coinbase transaction is conrmed) New transactions are then broadcasted to the network in new block and stored in the blockchain forever
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No additional changes cant be made because it would change consistency of every block hash
Mining
25 BTC ~ 300 000 CZK every 10 minutes? solo mining
Mining
Solo mining is now impossible so that only option to mine is by mining in the pool and reward is divided
51% attack
If bitcoin node (pool) reaches 51% and more hashrate it can create (and conrm by mining) 2 block in sequence and create double spending transactions
2. Community
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3. Protocol
Satoshi Nakamoto?
Paper
November 2008
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3. Protocol
Bitcoin foundation?
Github repository
January 2009
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3. Protocol
Security?
Major vulnerability
August 2010
Attack can create an indenite number of bitcoins 184 billion bitcoins were generated in a transaction, and sent to two addresses on the network => Within hours, the transaction was spotted and erased from the transaction log. The bug was xed and the network forked (only major security aw ever found and exploited)
3. Protocol - today
Bitcoin foundation?
3. Protocol - today
Satoshi Nakamoto?
Remains anonymous, but we can clearly see that he has mined BTCs worths ~ 400 000 000 $
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2. Cryptocurrency
Virtual money?
Reward of the genesis block was 50 bitcoins. The value of the rst bitcoin transactions were negotiated by individuals on the bitcointalk forums with one notable transaction involving a 10 000 BTC pizza (121"167"000 CZK today)
2. Cryptocurrency
Trading?
2. Cryptocurrency
Security?
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Heavy DDOS attacks on trading web server due to poorly coded security - XSS, SQL injection..
11.11.2013 7. 2. 2014 14. 3. 2014
2. Cryptocurrency
Security?
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Secure Bitcoins
www.blockchain.info - online wallet 1. Encrypted backed-up (!!) ofine created wallet 2. Printed wallet public & private keys as QR codes
www.truecrypt.org
www.bitaddress.org
Altcoins
1. SHA-256: ! ! - Mazacoin ! ! -
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2. SHA-3: ! ! - Maxcoin
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Mazacoin
First sovereign national crypto coin in history
based on Zetacoin two phase pre-mine block reward 5000 MZC www.mazacoin.org
Auroracoin
Icelandic krona has lost over 99.5% of its value in $
Auroracoin
330,000 Icelanders will get 31.8 auroracoin EACH over the following year by the initiation called Airdrop
www.auroracoin.org
Cryptocurrency 2.0
. Mastercoin - Distributed exchange protocol layer with network security of Bitcoin, Distributed Applications, Distributed Exchange
. Nextcoin - rst 100% Proof-of-Stake currency written from scratch, completely decentralized, eliminates risk of a 51% attack, forging instead of mining
. Ethereum - Decentralized Autonomous Corporations Turing-complete scripting language, user-issued ! ! currencies, smart property, smart contracts, !! ! ! decentralized exchange, easy to scale
Questions?
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