1.
Cryptocurrency
Academic Presentation - AKTU by Sameer Satyam
C.S.E

2.
Outline
1. What is cryptocurrency?
2. The Difference
3. Why use cryptocurrency
4. Evolution of cryptocurrency
5. Categories of cryptocurrency
6. Major cryptocurrencies
7. Bitcoin
8. Technology
9. Transaction Process
10. Benefits
11. Risks

3.
What is cryptocurrency?
• Cryptocurrency is a digital currency in which cryptography techniques
are used to regulate the generation of units of currency and verify the
transfer of funds.
• Decentralized i.e. operates independent of any central authority or
individual.
• The supply of money is regulated by software and the agreement of
users of the system.
• Trust based on peer to peer consensus.
• Transactions are irreversible.

4.
The Difference
Fiat or conventional
currency
Cryptocurrency
Type Real Virtual
Intermediates Yes No (Peer-to-Peer)
Portability Yes (except heavy cash) Highly portable
Durable Moderate Highly durable
Acceptance National Global (throughout the internet)

5.
Fiat or conventional
currency
Cryptocurrency
Secure
(cannot be counterfeited)
Moderate High
Scarce
(Predictable Supply)
Low High
Sovereign
(Government Issued)
Yes No
Decentralized No (Central bank control) Yes (controlled by complex math)
Smart
(Programmable)
No Yes

6.
Why use cryptocurrency?
• Fast and cheap.
• Easy to use.
• Free to transfer and hold.
• Decentralized control- users are the only owner of cryptocurrency.
• Central government can’t take it away and there are no chargebacks.
• Privacy and Security – Anonymous payments

7.
• Due to no intermediary (such as Bank or Credit Card company) users
have freedom to transact.
• Transparency is maintained through public ledger system.
• Reduced Fraud – eliminates cases of credit card frauds.

8.
Evolution of cryptocurrency
YEAR NAME DESCRIPTION
2009 Bitcoin First cryptocurrency and used SHA-256d as
hashing function.
April 2011 Namecoin Decentralized DNS
Oct 2011 Litecoin First successful Scrypt cryptocurrency
2012 Peercoin First use of POW and POS functions
Early 2014 Monero Uses CryptoNote protocol. 2G of cryptocurrency
2015 Capricoin Improved and more user friendly

9.
Categories of cryptocurrency

10.
Major cryptocurrencies
• Bitcoin
• Litecoin
• Ripple
• Peercoin
• Mastercoin
• NXT
• Namecoin
• Quarkcoin
• Worldcoin
• Megacoin

11.
Bitcoin
• First decentralized peer to peer payment network powered by its
users (no central authority involved).
• Payments recorded in public ledger using unit of currency ‘BTC’.
• 1 BTC = 100,00,000 Satoshi
• 21 Million Bitcoin’s will be created or mined until year 2140 hence it is
protected from inflation.
• Completely Open source.

12.
Technology
• Distributed ledger technology
• Mining
• Mining hardware
• Mining Software
• Blockchain
• Bitcoin wallets

13.
Transaction Process
• Every transactions ever happened recorded on one global ledger in
cryptocurrency.
• Sender initiate a bitcoin payment using "wallet" software. This and
other pending transactions are broadcast on the global bitcoin network.
• Once every ten minutes or so, miners specialized computers (or groups
of computers) on this network, collect a few hundred transactions and
combine them in a "block".
• In order to mine a block and validate the transaction, miners compete
to solve a difficult mathematical equation (a "hash function"). The
miner that solves the equation first further processes the block and
broadcasts this "proof-of-work" to the bitcoin network.

14.
• The other miners check the proof-of-
work and the validity of the
transactions. If they approve, the
winning miner gets a reward (25
bitcoins), which is the incentive for
miners to provide computing power.
Adjusting the difficulty of the problem
ensures that the supply of new bitcoins
remains steady.
• The mined block is added to the
"blockchain", the unbreakable ledger
and serves as a record of all
transactions.
• Receiver can use his wallet software to
see whether the bitcoin have arrived.

15.
Since each transaction includes its previous transaction and blocks become
buried in the blockchain making it is nearly impossible to remove or modify
any of these transactions. And hence prevents double spending.
Transaction
Block (chain)

16.
Benefits
• Fast, Safe and cheap
• Ease of use and highly portable
• Untraceable (pseudo-anonymous transactions)
• Transparent and neutral
• Decentralized nature
• Active involvement of users
• Fewer risks for merchants
• Freedom to transact
• Low inflation and collapse risk

17.
Risk and Failures
• Problems in implementation
 Hardware restrictions (Computational inefficiency)
 Instability
 Deflation
 Lack of Replicability
 Growing centrality

18.
• Risk and failure in policy
• Money Laundering
• Purchase of illegal goods
• Supporting criminal activity- BTC Theft, Malware, Scams
• Risk for consumers
• Fewer Protections
• Cost
• Lack of awareness and understanding
• Still Developing

19.
References
[1.] https://bitcoin.org/bitcoin.pdf
[2.] http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2544331
[3.] http://en.wikipedia.org/wiki/Proof-of-work_system
[4.] https://en.bitcoin.it/wiki/Proof_of_work
[5.] https://bitcoin.org/en/developer-guide#payment-processing
[6.] http://alphapixel.com/sites/default/files/download/BitCoinPresentation.pdf
[7.] https://www.stlouisfed.org/~/media/Files/PDFs/DWTF/Bitcoin-3-31-14.pdf
[8.] http://www.imponderablethings.com/2013/07/how-bitcoin-works-under-hood.html
[9.] https://www.tbs-certificates.co.uk/FAQ/en/sha256.html
[10.] www.khanacademy.org/economics-finance-domain/core-finance/money-and-
banking/bitcoin
[11.] http://www.coindesk.com/price/

20.
Thank You