Flashcards in Basics of Crypto Deck (19):
Bitcoin is a collection of concepts and technologies that form the basis of a digital money ecosystem, including
Decentralized peer to peer network,(public ledger) blockchain, Proof of work concept/distributed mining, verification system
How is ownership of bitcoin established
Through digital keys,Bitcoin addresses and digital signatures
How are digital keys stored
Digital keys are created and stored offline and consist of a mathematically-related Private-Public key-pair, created using the Elliptic Curve Digital Signature Algorithm (ECDSA).
What is a private Key
The Private key (Privkey) is initially generated at random, and is kept secret at all times. It is used by the current owner of bitcoins to digitally sign a Bitcoin transaction, when he authorizes the transfer to the new owner. A transaction’s digital signature confirms ownership, and can be used to verify that the transaction is authentic.
What is a public key
It is generated from the Private Key using a one-way cryptographic hash function. It is used by the new owner to validate a transaction’s digital signature.
How does the blockchain work? How are bitcoins stored?
All Bitcoin transactions are stored in blocks, which are linked (or “chained”) together in sequence to form the blockchain.
What is a cryptographic hash function
is a mathematical function commonly used to verify the integrity of data, by transforming identical data to a unique, representative, fixed-size code. See the diagram for better understanding
What are nodes?
peer-to-peer (P2P) network of computers
How are nodes treated?
All nodes are treated equally, and no single node is trusted. However, the system is based on the assumption that the majority of computing power (i.e. at least 51%) will be honest nodes
What are the steps in Mining
Bundling transactions,verifying,selecting the most recent block, and solving the proof of work problem
How long does it take to create a block
What is the incentive to mine?
Bitcoin provides a reward in each successfully mined block (plus the transaction fees of the transactions contained in the new block
Bitcoin is based on cryptographic technologies such as
Cryptographic hash functions (i.e. SHA-256 and RIPEMD-160) Public Key Cryptography (i.e. ECDSA – the Elliptic Curve Digital Signature Algorithm)
Cryptographic has functions are generally used to?
verify block integrity, and establish the chronological order of the blockchain
What is the purpose of a public key?
Its main use is for digital signatures
What is a bitcoin wallet
Similarly to a credit card, does not contain any bitcoins, but only the Private-Public key-pairs as mechanisms that allow you to access your funds
Why is the relationship of private and public keys asymmetric?
Because the public key can be derived from the private key, while the opposite is computationally infeasible
Mining pool distribution schemes
PPS, (Paypershare,)PPNS (PayperLast number of shares), Proportional