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What is Cryptocurrency and Blockchain Technology?

Cryptocurrency:

A digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authorities like banks.
  • It’s peer-to-peer network that enables anyone can send or receive payments from anywhere.
  • Crypto works like Distributed public ledger (blockchain plays the vital role here) which stores all transaction details held by the currency holders.
  • Cryptocurrencies are created through a process called mining, which involves using computer power to solve complicated mathematical problems that generate coins.

Blockchain Technology:

Blockchain technology is a structure that stores transactional records, also known as the block, of the public in several databases, known as the “chain,” in a network connected through peer-to-peer nodes.
It uses Hash function to generate a non-readable and non-understandable value.

Hash function:

  • We can send data of any size but the output is fixed.
  • Hash(data) -- > fixed size output (random string)
  • If we send the same data again and again it will output the same random.
  • Those random numbers are like half are 1s and other halves are 0s.
  • It’s more like Avalanche effect: if we made a small change in the input data, it will change the whole output data.

Drawbacks:

  • Preimage Resistance: for given Y a hash value, you can’t able to find X input data Such that hash(X) == Y. But you can able to find that it would take 2256 times to achieve.
  • Collision Resistance: there are two different input data which is X and Z,  X is not equals Z but hash(X) == hash(Z). Its not happens frequently its happens when we try 2128 times. But this type of collision not happens in today’s modern world computers.
For example: sha-256, md-5
  1. md-5: Collision resistance happens at the iteration 264, So its easily broken by the modern computers within a second. Because md-5 output size is 16 bytes.
  2. Sha-256: Collision resistance happens at the iteration 2256, So its harder broken by the modern computers but it can be broken. Because sha-256 output size is 256 bytes.

History of Blockchain Technology:

2008 - Bitcoin whitepaper by satoshi Nakamoto.
2009 - Bitcoin(BTC) First decentralized currency
2011 - More Cryptocurrencies clones and specialized projects
2014 - Bitcoin adoption more businesses uses bitcoin
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