Cryptocurrency and Society Flashcards
What is a fiat currency?
A fiat currency is any money declared by a government to be legal tender.
It is rather hard to forge or double-spend the metals or tokens that constitute physical money.
What is a cryptocurrency?
Replaces traditional notes or coins.
A cryptocurrency is a decentralised digital medium of
exchange, governed by cryptography.
It is rather easy to forge or double-spend the binary numbers that constitute electronic money.
Its strength is it doesnβt depend on a central bank.
What are the 3 properties of hash functions?
A hash function must be:
1) one-way;
2) leakage free;
3) collision free
What does a one-way function mean?
Given M, it is easy to find H(M),
but given H(M), it is hard to find M
You cannot track the bytes as the process is not reversable
What does a leakage free function mean?
Given M, it is hard to deduce any information about π from π»(π).
It must not leak any information.
What does a collision free function mean?
Given M, it is hard to find a W, such that H(W) = H(M).
Two elements cannot hash to the same string.
What 3 things is the block chain algorithm based on?
The block chain algorithm is based on:
1) transactions;
2) extension;
3) mining.
What does a hash function do?
Takes a string sequence of bytes and returns a number
Elements of a block chain transaction
Source
Destination
Amount
What does a block chain transaction do?
Records who you are who they are and the amount. Then it broadcasts a transaction through the nodes
How does a block chain extension work ?
A node extends the blockchain with a block of transactions. New blocks are flooded to nodes throughout the network β nodes choose to add the blocks that make the longest chain
What does mining do?
slowes down a batch extension to stop double spending
How does mining work?
The block is hashed continuously till the had is less than the current threshold
How does a cryptocurrency wallet work?
It is identified by a public key(which allows other wallets to make payments to it ) and a private key
(Which allows it to make payments to other wallets)
Advantages of cryptocurrency
Allows to store wealth
Allows to make payments without devaluation
