WELCOME TO WBI CRYPTO UNIVERSITY
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WHAT ARE CRYPTOCURRENCIES?
Here are some basics...
- A cryptocurrency is a medium of exchange, just like US Dollars ($)!
- Designed from the beginning to be exchanged 100% digitally
- All based on code written by the individual coin creators/developers
- For the most part they are decentralized, and not backed up by commodity
- Those that are commodity backed, generally are used to raise start up capital
- Each coin was designed with a particular goal in mind
Definition from Wikipedia:
A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. [1] [2] Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies.
Bitcoin became the first decentralized cryptocurrency in 2009. [3] Since then, numerous cryptocurrencies have been created.[4] These are frequently called altcoins, as a blend of bitcoin alternative. [5] [6] Bitcoin and its derivatives use decentralized control[7] as opposed to centralized electronic money/centralized banking systems. [8] The decentralized control is related to the use of bitcoin's blockchain transaction database in the role of a distributed ledger. [9]
A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. [1] [2] Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies.
Bitcoin became the first decentralized cryptocurrency in 2009. [3] Since then, numerous cryptocurrencies have been created.[4] These are frequently called altcoins, as a blend of bitcoin alternative. [5] [6] Bitcoin and its derivatives use decentralized control[7] as opposed to centralized electronic money/centralized banking systems. [8] The decentralized control is related to the use of bitcoin's blockchain transaction database in the role of a distributed ledger. [9]
The future of money is digital currency." ~ Bill Gates
(co-founder of Microsoft)
THE CRYPTOCURRENCY BASICS
Here are some basics...
In order to understand how cryptocurrency works, you’ll need to understand a few basic concepts. Specifically:
Public Ledgers: All confirmed transactions from the start of a cryptocurrency’s creation are stored in a public ledger. The identities of the coin owners are encrypted, and the system uses other cryptographic techniques to ensure the legitimacy of record keeping. The ledger ensures that corresponding “digital wallets” can calculate an accurate spendable balance. Also, new transactions can be checked to ensure that each transaction uses only coins currently owned by the spender. Bitcoin calls this public ledger a “transaction block chain“.
Transactions: A transfer of funds between two digital wallets is called a transaction. That transaction gets submitted to a public ledger and awaits confirmation. When a transaction is made, wallets use an encrypted electronic signature (an encrypted piece of data called a cryptographic signature) to provide a mathematical proof that the transaction is coming from the owner of the wallet. The confirmation process takes a bit of time (ten minutes for bitcoin) while “miners” mine (ie. confirm transactions and add them to the public ledger).
Mining: In simple terms, mining is the process of confirming transactions and adding them to a public ledger. In order to add a transaction to the ledger, the “miner” must solve an increasingly-complex computational problem (sort of like a mathematical puzzle). Mining is open source, so anyone can confirm the transaction. The first “miner” to solve the puzzle adds a “block” of transactions to the ledger. The way in which transactions, blocks, and the public blockchain ledger work together ensures that no one individual can easily add or change a block at will. Once a block is added to the ledger, all correlating transactions are permanent and a small transaction fee is added to the miner’s wallet (along with newly created coins). The mining process is what gives value to the coins and is known as a proof-of-work system.
In order to understand how cryptocurrency works, you’ll need to understand a few basic concepts. Specifically:
Public Ledgers: All confirmed transactions from the start of a cryptocurrency’s creation are stored in a public ledger. The identities of the coin owners are encrypted, and the system uses other cryptographic techniques to ensure the legitimacy of record keeping. The ledger ensures that corresponding “digital wallets” can calculate an accurate spendable balance. Also, new transactions can be checked to ensure that each transaction uses only coins currently owned by the spender. Bitcoin calls this public ledger a “transaction block chain“.
Transactions: A transfer of funds between two digital wallets is called a transaction. That transaction gets submitted to a public ledger and awaits confirmation. When a transaction is made, wallets use an encrypted electronic signature (an encrypted piece of data called a cryptographic signature) to provide a mathematical proof that the transaction is coming from the owner of the wallet. The confirmation process takes a bit of time (ten minutes for bitcoin) while “miners” mine (ie. confirm transactions and add them to the public ledger).
Mining: In simple terms, mining is the process of confirming transactions and adding them to a public ledger. In order to add a transaction to the ledger, the “miner” must solve an increasingly-complex computational problem (sort of like a mathematical puzzle). Mining is open source, so anyone can confirm the transaction. The first “miner” to solve the puzzle adds a “block” of transactions to the ledger. The way in which transactions, blocks, and the public blockchain ledger work together ensures that no one individual can easily add or change a block at will. Once a block is added to the ledger, all correlating transactions are permanent and a small transaction fee is added to the miner’s wallet (along with newly created coins). The mining process is what gives value to the coins and is known as a proof-of-work system.
Below was a write up from www.3blue1brown.com on July 11, 2017
"I don't know about you, but I used to think of the prefix "crypto" as applying mainly to secret messages. One of the neatest takeaways from the study of cryptography as a whole is just how much more widely applicable the mathematical tools at its core are. Really this prefix serves more as an antonym for "trust" than it does as a synonym for "secrecy". One of the first times this really sank in for me was upon reading the Bitcoin white paper.
I decided to cover this topic now partially in light of the recent rise in attention towards other cryptocurrencies; a level of attention which is not always accompanied with a real understanding of what these currencies actually are. While there are a handful of really good explanations of the blockchain I've seen out there, it seems that the more prominent search results one will get when trying to learn about them lean too heavily on vague analogies with gold-mining, and the more technical ones don't always motivate why the system works the way that it does. (An excellent exception, by the way, is this post by Michael Nielsen).
Here I try to frame things in the context of you stumbling into inventing your own cryptocurrency, which hopefully helps clarify why the various technical constructs involved come into play the way that they do."
I decided to cover this topic now partially in light of the recent rise in attention towards other cryptocurrencies; a level of attention which is not always accompanied with a real understanding of what these currencies actually are. While there are a handful of really good explanations of the blockchain I've seen out there, it seems that the more prominent search results one will get when trying to learn about them lean too heavily on vague analogies with gold-mining, and the more technical ones don't always motivate why the system works the way that it does. (An excellent exception, by the way, is this post by Michael Nielsen).
Here I try to frame things in the context of you stumbling into inventing your own cryptocurrency, which hopefully helps clarify why the various technical constructs involved come into play the way that they do."
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MODULE 2:
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Copyright © 2017
WBI CRYPTO UNIVERSITY
All Rights Reserved.
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of WBI Crypto University.
WBI CRYPTO UNIVERSITY
All Rights Reserved.
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of WBI Crypto University.