Lecture 5 - Mining Schemes and Anonymity in Blockchain

Question 1

What are the two types of consumer-level hardware that can mine cryptocurrencies?

Answer 1

GPU/CPU

Question 2

What is the “Evolution” of hardware that is in use in crypto mining?

Answer 2

CPU -> GPU -> FPGA (Field Programmable Gate Area) -> -> ASICS

Question 3

What is a general major disadvantage of cryptocurrency mining?

Answer 3

High energy consumption

Question 4

What is the difference between pseudonymity and anonymity?

Answer 4

Pseudonymity: You have a pseudonym. User actions are linked to eachother through name.

Anonymity: User actions cannot be linked to one another. You are fully anonymous

Example:
Reddit: pick a long-term pseudonym vs.
4Chan: make posts with no attribution at all

Question 5

How can we protect anonymity in blockchains?

Answer 5

To protect anonymity, use an intermediary

Online wallets do this

Question 6

What is a mixing service?

Answer 6

A cryptocurrency tumbler or cryptocurrency mixing service is a service offered to mix potentially identifiable or “tainted” cryptocurrency funds with others, so as to obscure the trail back to the fund’s original source.

Question 7

The conjoin algorithm is a proposal for implementing decentralized mixing. Describe this algorithm.

Answer 7

1. Find peers who want to mix
2. Exchange input/output addresses
3. Construct transaction
4. Send it around, collect signatures
   (Before signing, each peer checks if her output is present)
5. Broadcast the transaction