Slide from CU Boulder Cryptocurrency Club meeting 12/5/17

1. CU Cryptocurrency
Club
December 5th, 2017

2. What is a Blockchain
A secured protocol enabling peer-to-peer exchanges on a distributed network in
a secured, public, and non-repudiable way. (A decentralized ledger)
Why is it significant?
● Eliminates the need for third parties in the transfer of value
○ Ex. Banks, PayPal
● No central authority makes decisions about a blockchain
○ Cannot “print” money or drive up inflation
● Governments can’t control it - borderless
● Takes power away from large entities and gives it back to the people

3. Mining (Proof of Work)
Miners of the network provide the computing power for processing and
validating transactions (avoid double spending), securing the network,
synchronizing the nodes.
They compete to process a new block of transactions by cracking encrypted
algorithms. The “winner” is rewarded with the issue of new coins.
Mining is intentionally designed to be resource intensive and difficult so that the
number of blocks found each day by miners remains steady.

4. Mining Cont.
Transactions are bundled in blocks, sequentially chained, about one new block
every 10 minutes (Bitcoin)
Computing power is measured in hash/s, hash being the basic operation needed
for validation.
These digitally recorded blocks of data are stored in a linear chain.
Each block includes the hash of the prior block in the blockchain, linking the two,
ensuring all data in the overall blockchain has not been tampered with and
remains unchanged.

5. Illustrating a transaction
1. A user wants to pay another user some bitcoins, he broadcasts a
transaction to the network.
2. Miners add the transaction as they receive it to their current block
3. Randomly, one of the miners may crack the algorithm and mine the block.
a. More computing power = higher chance of mining a given block
4. At that moment, this new block is broadcasted to the network added to
everyone's copy of the blockchain.

6. What is Bitcoin?
The first decentralized digital currency, not backed by any government or
organization, instantaneous peer-to-peer transactions, no need for trusted third
party, cryptographic security, low cost and low barrier to entry banking.
Tokens can be exchanged but never duplicated & the blockchain keeps a record
of each and every transaction, forever.
Created by “Satoshi Nakamoto” in 2009
Bitcoin Whitepaper: https://bitcoin.org/bitcoin.pdf

7. Bitcoin continued
● Decentralized - no authority
● Permissionless - no regulator
● Censorship resistant- no frozen funds
● Open access - no discrimination or limits
● Borderless - no geographic limits
● Secure - non falsifiable and non repudiable transactions,
● Bitcoin vs. Ethereum https://www.youtube.com/watch?v=0UBk1e5qnr4

8. Ethereum
Open source, public, blockchain-based computing platform that features smart
contract functionality.
Smart contracts - Apps that run exactly as programmed, with no possibility of
downtime, censorship, or third party interference.
Ether (ETH) - Token that powers the Ethereum network via gas fees. Second
most valuable cryptocurrency behind Bitcoin. Current market cap: ~$45 Billion
Sub-tokens can be created on Ethereum’s blockchain, called ERC20 tokens.
There has been an ICO (Initial coin offering) craze due to this, with companies
raising ~$3.7 Billion from token sales so far.

9. Public vs. Private key
Each user has an encrypted key that is publicly known
and a private key that is known only to that user.
Whatever is encrypted with a public key may only be decrypted by its
corresponding Private Key and vice versa.
Your private key is how you access your wallet on the blockchain, if anyone has
this they have access to all your funds.

10. Exchanges & Wallets
● Exchanges - A place to buy and sell cryptocurrencies
○ Fiat (USD) to crypto: Coinbase, GDAX, Kraken
○ Trading between cryptos: Binance, Bittrex, Bitfiniex, Liqui, Poloniex
■ All exchanges mentioned so far hold your private keys for you
○ Decentralized exchanges: EtherDelta
● Digital wallet - An online interface for accessing the blockchain
○ YOU own your private keys, not any other entity
○ If you have your private key, you can access your wallet on the blockchain
○ Public key is how you receive coins, accessible to anyone
● Cold storage (hardware or paper wallet)
○ Ledger nano s, Trezor, Ledger blue, printable paper wallets
○ Private keys are encrypted on the device, never released anywhere online
○ Hardware wallets backed up with 24 word seed phrase

11. CryptoKitties
● Slowing down Ethereum’s network
● Accounted for >10% of all transactions on the blockchain at one point
● Lots of pending transactions waiting to be mined
● First dApp to see widespread adoption
● However, highlights the need of a scaling solution for Ethereum blockchain

12. Musicians accepting Monero
https://www.forbes.com/sites/laurashin/2017/12/05/cryptocurrency-monero-to
-be-accepted-by-45-musicians-such-as-mariah-carey-g-eazy-sia-for-holidays/#4b
ce7f747885