Lecture 1 - Introduction to Cryptography and Cryptocurrencies

Question 1

Why would you want to use Blockchain technologies?

Answer 1

Applications can run:
* In a decentralized fashion, by eliminating /limiting the need for a central authority
and Achieve the same functionality with the same amount of certainty

Question 2

What is Blockchain?

Answer 2

Blockchain is decentralized distributed data structure that is replicated and shared among the members of a network.

It uses cryptographic methods (Hash functions), peer-to-peer networks and a distributed consensus protocol

Question 3

What is meant by trust-less networks?

Answer 3

Blockchain enables trust-less networks since parties can transact even though they do not trust each other

Question 4

What is the result of using cryptography in blockchain?

Answer 4

Use of cryptography in blockchain brings authoritativeness/proofs behind all the interactions

Question 5

What makes smart contracts smart?

Answer 5

Smart contracts which are self-executing scripts over blockchain allow for distributed and heavily automated workflows

Question 6

What are the five properties of blockchain?

Answer 6

• Decentralization
• Immutability
• Chronology
• Transparency
• Pseudonymity

Question 7

Explain Immutability

Answer 7

Data written to database cannot be changed or deleted without consensus leading to data integrity

Question 8

Explain the Decentralization property

Answer 8

No single point of failure/control achieved by decentralized architecture and a distributed database

Question 9

Explain the Transparency property

Answer 9

All data sent through the blockchain is visible to all network participants

Question 10

Explain the pseudonymity property

Answer 10

The identity of data senders and receivers is unknown

Question 11

Explain the Chronology property

Answer 11

Every transaction is time-stamped and can be traced back

Question 12

What is a hash function?

Answer 12

You take an input, parse it through a cryptographic hash function, then the output will be a digest(string) of fixed length (256 bits for example)

Question 13

Two identical inputs to the same hash function will produce identical hash digests. True or False

Answer 13

TRUE

Question 14

Two different inputs to the same hash function will produce identical hash digests. True or False

Answer 14

FALSE

Question 15

What are the three security properties of hash functions?

Answer 15

1. Collision-free
2. Hiding
3. Puzzle-friendly

Question 16

Explain the Collision-Free hash security property

Answer 16

Nobody can find two different inputs that give the same digest

Question 17

Do collisions in hash properties exist?

Answer 17

Yes, but it is very very(infeasible) difficult to find one!

Question 18

Explain the Hiding hash security property

Answer 18

It’s very difficult to find the input of the hash function based on the output.

Question 19

Explain the Puzzle-friendly hash security property

Answer 19

If a hash function is puzzle friendly, then there is no
solving strategy for this type of puzzle that is much
better than trying random values of x

Question 20

What is a hash pointer?

Answer 20

A hash pointer is:

* A pointer to where some info is stored and a cryptographic hash of the info

Question 21

If we have a hash pointer we can ____

Answer 21

1. Ask to get the info back

2. Verify that the info hasn’t changed

Question 22

Explain the concept of linked lists.

What does a linked list contain? What does it enable?

Answer 22

A linked list is a list of objects(blocks) that contain two different things

1. Previous hash value
2. A block of data

If anything changes in the chain of blocks, then you can see exactly where, as all of the hashes before the change will be different than the old one

Question 23

Explain a Merkle tree

Answer 23

A merkle tree is like linked lists, but can hold more items, and is treated not like a linear list, but a tree that branches out

Question 24

What are the advantages of a Merkle tree

Answer 24

1. Tree holds many items
2. You just need to remember the root hash to confirm whether there has been any changes/tampering
3. Can verify membership in O(log n) time/space

Variant: A sorted Merkle tree can verify non-membership in O(log n)

Question 25

In broad terms, explain encryption

Answer 25

Encryption is a process of encoding information

It converts plain/original information into ciphertext/encrypted blob

Associated with keys for encrypting/decrypting

Question 26

There are two types of encryption methods (Not sha256 etc). What are they?

Answer 26

Symmetric = Use same key
Asymmetric = Use different keys

Question 27

Explain symmetric encryption

Answer 27

Symmetric uses the same key encrypt and decrypt
- Both parties need to know the key

Algorithms: AES(Advanced Encryption Standard)

Question 28

Explain asymmetric encryption

Answer 28

Asymmetric uses a key pair

• Public key
• Private/secret key

If we use one key to encrypt, then we can only decrypt with the other key

Algorithms: RSA (Rivest-Shamir-Adleman)

Question 29

If Bob wants to encrypt a message that only Alice can open, how would he do this using Asymmetric cryptography?

Answer 29

Bob encrypts the message using Alice’s public key

Alice can then decrypt the message using her PRIVATE key

Question 30

If Bob wants to verify that Alice sent a message what would be the steps of this using Asymmetric Cryptography?

Answer 30

Alice writes a message to Bob. She signs it using her PRIVATE key.

Bob can then verify it using Alice’s PUBLIC key

Question 31

Explain what is meant by a Digital Signature

Answer 31

1. Only you can sign, but anyone can verify
2. Signature is tied to a particular document
3. Using pair of keys (private and public)

Question 32

What is meant by public key == an identity

Answer 32

To speak as a public key, you must know the matching secret key.

Therefore, you can treat a public key as an identity

if you see sig such that verify(pk, msg, sig)==true, think of it as
pk says, “[msg]”.
to “speak for” pk, you must know matching secret key sk

Question 33

Anyone can make a new identity at any time, and they can make as many as they want. True or False

Answer 33

True!

Question 34

What are the implications of public keys/addresses in relation to privacy?

Answer 34

Addresses are not directly connected to real-world identities

Observers can link together an address’s activities over time, make inferences

Question 35

What is meant by “Double-spending attack”/”Double spending problem”

Answer 35

The double-spending problem is the main design challenge in digital currency

The double-spending problem is a phenomenon in which a single unit of currency is spent simultaneously more than once.

Question 36

What is a solution to the Double-spending problem?

Answer 36

Coins cannot be transferred, subdivided or combined.

But you can get the same effect by using transactions.

To subdivide:

1. Create new transaction
2. Consume the coin
3. Pay out two new coins to yourself