Cryptocurrency

Who am I?

• Miguel Duarte

• Robotics & AI PhD Student @ ISCTE-IUL

• Geek, Hacker, Maker

• Sci-fi, Tech and Robotics enthusiast

• IEEE, NodecopterLX, GDG, IT

Outline• Context

• Transactions and the block chain

• Mining

• Issues

• Altcoins

• Discussion

What is a cryptocurrency?

Digital currency that uses cryptography for security. Cryptocurrencies are generally

anonymous and not issued by any central authority.

Why does it matter?• Transactions are irreversible, fast, and have low

fees

• Universal (within the internet)

• Decentralised, no trust necessary

• The supply of coins is regulated by software and the agreement of users of the system and cannot be manipulated by any government, bank, organization or individual

1 BTC = 100,000,000 Satoshi

Account Balance

Alice 10

Bob 20

Celso 9999

… …

Bitcoin is a public ledger, kept by every node

in the network

________________________

________________________

________________________

________________________

________________________

________________________

________________________

________________________

Addresses

• 27-34 alphanumeric characters

• Generated via public-key cryptography

• Any user can generate multiple addresses

31uEbMgunupShBVTewXjtqbBv5MndwfXhb

Private Key Public Key

Public-key Cryptography

Wallet

Digital Signature

Hello World0601d109d0d2b0fa9c4484b4a5c94ee5ecc62ccec3bd7d99e972d18994d0e2e42f6d0fcfc41216a5ab72ee7af96d213e1c314abdde40f52731ff24c

2bf8f7323Hello World

Private Key Public Key

Alice Bob

Send 20 BTC from ALICE to BOB

Address: ALICE

Address: BOB

Balance: 30 BTC

Balance: 20 BTC

Alice Bob

Send 20 BTC from ALICE to BOB

Address: ALICE

Address: BOB

Balance: 10 BTC

Balance: 40 BTC

Transaction

Transactions

Sender: Alice Receiver: Bob

Amount: 20 Digital Signature

Transactions

Previous TX: tx550 Index: 0

Sender: Alice Receiver: Bob

Amount: 20 Digital Signature

tx550: Celso->Alice(20) status: unspent

Transactions

Previous TX: tx550 Index: 0

Sender: Alice Receiver: Bob

Amount: 20 Digital Signature

tx550: Celso->Alice(20) status: spent

Transactions

Previous TX: tx550,tx1600 Index: 0

Sender: Alice Receiver: Bob

Amount: 20 Digital Signature

Previous TX: tx550,tx1600 Index: 1

Sender: Alice Receiver: Alice

Amount: 2 Digital Signature

tx550: Celso->Alice(15) status: unspent

tx1600: Bob->Alice(7) status: unspent

Transactions

Previous TX: tx550,tx1600 Index: 0

Sender: Alice Receiver: Bob

Amount: 20 Digital Signature

Previous TX: tx550,tx1600 Index: 1

Sender: Alice Receiver: Alice

Amount: 2 Digital Signature

tx550: Celso->Alice(15) status: spent

tx1600: Bob->Alice(7) status: spent

Account Balance

Alice 10

Bob 20

Celso 9999

… …

Blocks

Alice -> Bob (20) Alice -> Celso (10)

… Bob -> Marley (33)

!Previous Block Hash Current Block Hash

Block chain

Alice -> Bob (5) Alice -> Celso (10)

… Bob -> Marley (33)

……hash_block100

… hash_block101

Bob -> Alice (20) hash_block99

… hash_block100

…

The public ledger contains transactions, not balances.

block 100

Block chain

Alice -> Bob (5) Alice -> Celso (10)

… Bob -> Marley (33)

……hash_block100

… hash_block101

Bob -> Alice (50) hash_block99

… hash_block100

…

block 100

Block chain

Alice -> Bob (5) Alice -> Celso (10)

… Bob -> Marley (33)

……hash_block100

… hash_block101

Bob -> Alice (50) hash_block99

… hash_block100

…

block 100

Block chain forks

………

…

… …

Block chain forks

………

…

… …

Mining• Mining is the process of adding blocks to the block

chain, thereby confirming a set of transactions

• It uses a proof-of-work algorithm

• The text of the block + a nonce are hashed using SHA256

• A block is considered valid when the resulting hash starts with a certain number of 0s

Mining

"Hello, world!0" 1312af178c253f84028d480a6adc1e25e81caa44c749ec81976192e2ec934c64

"Hello, world!1" e9afc424b79e4f6ab42d99c81156d3a17228d6e1eef4139be78e948a9332a7d8

...

"Hello, world!4249" c004190b822f1669cac8dc37e761cb73652e7832fb814565702245cf26ebb9e6

"Hello, world!4250" 0000c3af42fc31103f1fdc0151fa747ff87349a4714df7cc52ea464e12dcd4e9

The difficulty (number of zeros) varies depending on the hashrate of the network, which

approximates the block time to 10 minutes

Mining

• Miners that generate valid blocks are rewarded

• The rewards halves every 4 years (geometric progression) — current reward is 25 BTC

• Max number of BTC: 21 million

• After 2033, rewards will be based on transaction fees

Mining

• CPU (< 0.04GH/s)

• GPU (< 1GH/s)

• FPGA (< 1GH/s)

• ASIC (< 1,000GH/s)

• Pool mining1 G = 1,000,000,000

(1 billion)

Issues

• Potential loss/theft of private keys

• Not truly anonymous

• Double spending and the 51% attack

Double Spending

Previous TX: tx551 Sender: Trudy!Receiver: Alice!

Amount: 20

tx551: Bob->Trudy(20) status: unspent

Previous TX: tx551 Sender: Trudy!

Receiver: Trudy!Amount: 20

Altcoins

Litecoin

• One of the first Bitcoin forks (2011)

• Introduced the scrypt proof-of-work algorithm

• Block time: 2.5 minutes, limited to 21 million LTC like BTC

• Currently #2 cryptocurrency

Dogecoin• A fork of Litecoin

• Made as a joke, features the famous Doge meme with the friendly Shiba Inu

• No coin limit (100 billion until 2014 + 5 billion per year afterwards)

• much fast (1 minute block time)

• Amazing community that loves to tip and fund charities (/r/dogecoin)

$30k

$55k

$30k

Ɖ30M

$30k

ping @miguelduarte42

10k giveaway