The document discusses cryptocurrency and blockchain technology. It begins by asking whether people like or dislike cryptocurrency. It then provides explanations of key concepts related to blockchain like how blockchain batches transactions into blocks and uses cryptography to securely link blocks together in a distributed ledger. It provides an analogy comparing transactions, blocks, and the blockchain to lines, chapters, and a book. It discusses why someone may want to reverse transactions and explains the process of mining blocks for verification and rewards. Finally, it summarizes some terms related to cryptocurrency and blockchain and asks if the reader understands.
5. • Blockchain is the underlying technology platform that makes Bitcoin work as digital
currency.
• A distributed ledger that batches transactions into groups (blocks) that are linked together
(chained) using cryptography to secure them.
• A ledger is a record of transactions.
• If there are 100 transactions (100 people bought or sold something) they will be added to
the ledger.
• A continuously updated record of who holds what.
Blockchain
6. Analogy
• A transaction is like a line in a book.
• A block is like a chapter in the book.
• The blockchain is like the entire book.
• Each chapter (block) has multiple lines (transactions).
• When you have multiple chapters (blocks) you get a book which
is a blockchain.
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12. Why would someone want to go back in the blockchain to reverse
transactions?
• Let’s say I send Arjun 100 bitcoin to buy me a car.
• Arjun pays for the car using bitcoin, and he gives the car to me.
• This transaction goes on the blockchain.
• What if I could go back and reverse that transaction?
• Then I would have the car and I would have 100 bitcoin again.
13. Mining
• MINERS DO NOT MINE BITCOIN.
• They create the blocks in a blockchain.
• The blocks need to be created so transactions can be recorded and verified.
• As a reward for mining a block, they are paid in bitcoin(cryptocurrency).
• Essentially, miners try to solve a puzzle that will allow them to publish the next block.
• To “mine” a block, miners’ computers work to find a number (nonce) that solves a
mathematical equation.
• Once solved, a block will be released onto the blockchain.
14. Terms
Transaction: Exchange of currency between two or more people.
Block: Where a transaction goes to get verified on a blockchain. Transactions cannot be reversed or changed once put on a
block.
Blockchain: The digital record of all the transactions that happen using a cryptocurrency.
Node: A computer that is on the blockchain network. It verifies transactions with all the other nodes.
Mining: Creating blocks on a blockchain and verifying transactions.
Nonce: The number miners solve to create a block on the blockchain.
Golden Nonce: A golden nonce results in a hash value that is lower than the target difficulty, meaning it satisfies the
requirement of the next block.
Cryptocurrency: Encrypted digital currency. (Cryptography + Currency = Cryptocurrency)
Fiat Currency: A government-issued currency that is not backed by a commodity such as gold.
Decentralization: NO MIDDLEMEN or use of a central party. Control and decision-making is on a distributed network.
17. Cryptocurrency:
• Everything we pay for today has to go through a bank or credit card company.
• These middlemen take a cut of the transaction and rely on our trust that they will do everything right.
• Without middlemen, how do you prove you paid for something or have that money at all?
• This is the double spending problem:
• I have a bitcoin and buy something from seller A.
• Seller A has to be assured that I can’t turn around and use the same
bitcoin to buy something from person B.
• Blockchain and Cryptocurrency solve these problems.
• Instead of a bank or credit card company recording everything on
one central ledger, all the users record all the transactions at the
same time.
18. Cryptocurrency:
• Cryptocurrency is a peer-to-peer payment network.
• Cryptocurrency is not controlled by one main party like a bank, government,
or credit card company.
• It is controlled by everyone and is distributed across a large number of
computers.
• This is called decentralization.
• ICO: Initial Coin Offering
19. Trading Cryptocurrency:
• When you set up an account on the Bitcoin network (wallet), you are given
seed words, which act like a password.
• Never give your seed words to anyone. Never lose your seed words.
• Your account gives you two keys.
• A public key: This is the address you give to the public so they can send you
cryptocurrency.
• A private key: This is used to unlock cryptocurrency transactions when you
receive cryptocurrency.
• Your wallet manages your private key automatically.
20. Addresses and Wallets
• An address is like a bank account, created and signed cryptographically, and owned by the entity that can unlock it.
• A wallet is software that holds all your addresses. Use it to send cryptocurrencies and manage your keys.
• Each currency has its own address system.
• A Bitcoin wallet, similar to a credit card, does not contain any bitcoins.
• Bitcoins are stored on the ledger on the blockchain.
• Only the private/public key-pairs that allow you to access your funds.
• Cold Wallet: Not connected to the internet.
• Hot Wallet: Connected to the internet.
• Functions of Wallets:
• Store private and public keys.
• Send/Receive crypto.
• Monitor crypto balances.
21. Tokens vs. Coins:
• Coin: Coins are just a method of payment, they and are used to store and exchange value. (Bitcoin is used as money)
• Coins have their own blockchain.
• Token: A digital representation of an asset that can be exchanged on a blockchain.
• More functionality than a coin.
• Tokens are built on top of another blockchain.
• Security Tokens: Something of value is attached to it (digital bonds, equities, securities).
• Utility Tokens: Give access to a network’s service the way an arcade’s tokens
provide access to its games and prizes.
• Utility tokens are tokens that promise the future use of a product or service.
They aren’t meant to be an investment, they have a utility.
• Stablecoins: Price-stable cryptocurrency that is pegged to a real-world currency.
• Stablecoins let you move in and out of assets while keeping your money in
the cryptocurrency network.
22. Non-Fungible Tokens (NFTs):
• Represent unique items, which could be real or virtual.
• Used primarily for digital art.
• Bitcoin is fungible – trade for another bitcoin and you have the exact same thing.
• A trading card is non-fungible – If you traded it for another card, you would have a completely different thing.
• CryptoKitties: Trade virtual kittens
• Like Pokémon cards except they have characteristics that make them rare, and you can breed them.
23. Impacts of Cryptocurrency
● For countries with weak economies, crypto provides a solution to the decline of a country’s currency due to
poor political decisions.
● Governments will pay a premium in their country to get out of their fiat currency.
● Countries such as Nigeria, Vietnam, and the Philippines are using cryptocurrencies the most.
● Governments can transfer money safely.
● The primary reason behind Nigeria’s adoption of cryptocurrency is the high cost associated with traditionally
sending money across borders.
27. Example
● You are a doctor in Nigeria, and you get paid in Nigerian currency.
● The Nigerian currency gets devalued from the US dollar.
● If you make 200,000 Nigerian dollars and you want to buy a car, it may convert to 20,000 US dollars.
● If the currency goes down, that 200,000 Nigerian dollars may go down to 10,000 US dollars.
● Using a decentralized cryptocurrency will allow that same doctor to transfer his or her income to crypto,
where it will not be affected by a government’s/politician’s economic problems.
28. Impacts of Cryptocurrency
● Proof of Work and Proof of Stake enable better trust for currency
rather than government currencies.
● Proof of Work ensures miners don’t lie about transactions.
● Proof of Stake allows miners to mine or validate block transactions
based on the amount of coins a miner holds.
● Politicians and governments will be able to increase citizens’ trust in
currency if crypto is more widely used.
● Right now, fiat currencies only have value because the government
says they do.
● To an increasing amount of people, this means nothing.
● Fiat currencies are not backed by any tangible assets.
29. 1. Bitcoin
- Launched in 2009, bitcoin is the world's largest cryptocurrency by
market capitalization.
- Unlike fiat currency, bitcoin is created, distributed, traded, and
stored with the use of a decentralized ledger system, known as a
blockchain.
- As the earliest virtual currency to meet widespread popularity and
success, bitcoin has inspired a host of other cryptocurrencies in its
wake
Value added:
- low banking/transaction fees and fast transactions
- censorship resistance/pseudonymity
- the ability to transact electronically/peer-to-peer focus
- decentralised system/user autonomy
- accessibility
30. 2. Ethereum
- Ethereum is an open-source blockchain-based platform
used to create and share business, financial services, and
entertainment applications.
- Ethereum users pay fees to use dapps. The fees are called
"gas" because they vary depending on the amount of
computational power required.
- Ethereum has its own associated cryptocurrency, Ether or
ETH.
- Its cryptocurrency is now second only to Bitcoin in market
value.
31. 3. Cardano
- Cardano is a blockchain platform that aims to be a decentralized application (DApp)
development platform with a multi-asset ledger and verifiable smart contracts.
- Cardano is being built in five stages: foundation, decentralization, smart contracts, scaling, and
governance.
- Cardano runs on the proof-of-stake Ouroboros consensus protocol and developments are
informed by scholarly academic research.
- The primary cryptocurrency of Cardano is called "ADA"
- Aims to solve three main problems
- Scalability
- Proof of stake
- Epochs, slots & slots leaders
- Data storage
- Interoperability
- Metadata for transactions
- Opt-in
- Sustainability
- Treasury
- Improvement proposals
32. Please Sam. How do I get my hands on this
very volatile digital currency thing that is
going to make me rich?
33. What to do:
• Bitcoin and Ethereum: You can use
a WealthSimple account or
Shakepay.
• For more options, you can open a
Newton Account.
• If you really wanna go wacky, you
can set up a Binance account.
• You must use a Newton account to
transfer your money into Binance.
• Binance has the lowest fees.
Newton and Shakepay are slightly
higher.
• Coinbase is the highest (10% fees).
Offers cheaper transaction rates internationally than western union or paypal, no banking fees (account maintenance, minimum balance fees, no overdraft charges and no returned deposit fees etc.. Not faster than alibaba’s payment system soon to be introduced, yet fast and free payments are not currently available to everyone in the world so Bitcoin can still fill a useful niche.
the ability to use the system without seeking permission,the inability of the government or other authorities to block payments,the inability of the authorities to reverse payments, and resistance against the entire system being shut down (as it is decentralised and supported by nodes all across the world). Cash has these same properties, but one thing cash doesnt have is: the censorship resistance of the rules of the monetary system as a whole. Bitcoin end users may have the ability to enforce all the rules of the system, which cannot be said for physical cash. This ensures some interesting properties, such as the supply cap of 21 million or preventing other inflationary policies — not available as options for physical cash. Explain pseudonyms
Which many banks offer but not with the other factors (low fees etc.). Peer -> users can send and receive payments to or from anyone on the network without requiring approval from any external source reducing hassle.
More autonomy than fiat currencies, educated many on the possibility to be autonomous with financial and personal information (no third party to offer advice, to collect data, no personal data stores to sell your data to companies. Decentralised means system cant be shut down by attacking one place, it is distributed across many nodes, no denial of services possible.
Available to populations of users without access to traditional banking systems, credit cards etc. j need smartphone or computer to send and receive.
