Bitcoin 3 Flashcards
what’s an ICO
initial coin offering:
-new projects, startups, and companies sell their underlying crypto tokens in exchange for investor money
what’s a difference between ICO and IPO
- owning a new token does not mean you own a piece of the company
- it just enables you to use the new project when it becomes available and incentivizes others by signaling that the project will probably be widely used
- IPOs require you to be qualified by the SEC before you can take part (more than 5 million in net worth?); anyone can get in on an ICO
what’s a crypto hash function
it operates like a fingerprint; a one-way function that takes some input and produces a pseudorandom output
what is the crypto hash function’s output called
the image
what is the crypto hash function’s input called
the pre-image
what are the properties of a crypto hash function
1) pre-image and second pre-image resistance
2) collision resistance
what does pre-image mean
input
what does resistance mean
difficulty
what does pre-image resistance mean
difficulty of finding an input given some output; given some hash function H and some output of the function H of x, it is computationally difficult to find x, i.e. you can’t easiy figure out the input that created the output
what’s the point of pre-image resistance
to make sure that no one can reverse engineer your “fingerprint”
what’s the point of second pre-image resistance
it helps prevent anyone from stealing your fingerprint; keeps anyone from generating your fingerprint with a different input; given some hash function H and some output H of x, it is computationally difficult to find a different input x such that H of x equals H of x
what is collision resistance
it’s something that prevents two arbitrary inputs from mapping to the same output; given some hash function H, it is computationally difficult to find two different inputs x and y such that H of x equals H of y
what’s the avalanche effect
when any change in an input results in a pseudorandome change in output; prevents the ability to guess the output based on the inputs
what hash function does Bitcoin use in many scenarios
SHA-256. designed by NSA. stands for secure hash algorithm producing a 256-bit output; usually Bitcoin uses this hash once on the original message you want to hash and a second time on the the output of the first hash
what are the components of a blockchain
- block header: the metadata necessary to understand the components of the block
- block size: tells how large the block is
- transaction counter: how many transactions are in the block
- transactions: the actual transaction data
what are the the components of a block header
The block header is simply the hash of all of the following fields combined into a chain:
- prev block hash: represents the chaining
- merkle root: summary of transactions
- nonce: represents the proof-of-work
- timestamp
- target
- version
what is the merkle root
the top of a merkle tree, which is a cryptographic data structure
what is a tree in computer science
a data structure that has some root node and some children, which may also be the roots of other trees
what’s a binary tree
a data structure in which every node has two children
what’s a merkle tree
a very specific version of a binary tree in which there is a power of two children on the bottom-most level and the lowest level is made of the hashes of the information that you would like to summarize
