Steemit Crypto Academy | Season 4 Homework Post for Task 3 (THE GENESIS BLOCK)
Question 3
What is a cryptocurrency?
What is cryptography. How does cryptography secure cryptocurrencies?
Explore the Steemit genesis block and sign in as proof of completion?
3a. WHAT IS A CRYPTOCURRENCY ?
A cryptocurrency is a digital asset which is not controlled or governed by a central authority. It does not have any physical currencies like banknotes or coins and does not any denominations. It runs on a decentralized platform called a blockchain and can be used in the payment of goods and services.
The first of this digital currencies was called Bitcoin and was launched and mined by an anonymous person or group of people called Satoshi Nakamoto who are believed to be from Japanese descent on January 3rd, 2009. Satoshi wanted to establish bitcoin as a payment method and also means of exchange.
By making bitcoin transactions paperless and high secured through the use of blockchain technology, satoshi wanted to get rid of banks and the centralized financial institutions as a whole as he saw them to be outmoded and not of the future.
These financial institutions still entailed long queues and constant delays in order to perform transactions and also constant financial issues like the use of counterfeit currencies. Satoshi’s launch of bitcoin sought to eliminate all this problems by making transactions very fast and also employ the use of validation in the blockchain to prevent cryptocurrency duplication.
Coincidentally the first block of bitcoin was mined as a result of a financial bank crisis which appeared on a London newspaper. The headlines read “Chancellor on the brink of bailout for banks”. This compelled satoshi to launch and mine the first blocks of bitcoin.
Advantages of cryptocurrencies over FIAT currencies
Anonymous
Transactions involving cryptocurrencies do not demand users personal information in order to process. Users identities are therefore hidden, which gives them security in their physical lives against robbery attacks, should they have valuable assets.
Highly secured
Cryptocurrencies run on blockchain technology with is highly secured against third parties and hackers. The bitcoin blockchain for example uses hashing technology in its blockchain to mark transactions, these hashes can only be interpreted by the parties involved in the transaction.
Low transaction fees
Cryptocurrency transactions cost less compared to bank transactions. Transaction fees involving cryptocurrencies can cost as little as $0.01, unlike banks which charge huge percentages on transactions.
Faster Transactions
Transactions involving cryptocurrencies take seconds or less to complete. The Bitcoin blockchain for example process about 4.6 transactions per second , Bank transfer can sometimes take a few hours to even days, depending on the characteristics of the transaction.
Types of Cryptocurrencies
Apart from Bitcoin, we have a wide range of cryptocurrencies. Some of which are;
Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH) and Cardano (ADA)
3b WHAT IS CRYPTOGRAPHY?
Cryptography is the act or process of concealing contents or encrypting files through the use of codes or softwares in order to protect the contents of these files from hackers or other third party applications.
The contents of these files can only be accessed using a key. This keys are therefore given to users they intended to have access to the content of the file. Cryptography is made up of mainly two processes; which is encryption and decryption, the act of hiding and the act of decoding the hiding information.
There are three types of cryptography namely;
Hash function, Secret key and Public key cryptography
3b HOW DOES CRYPTOGRAPHY MAKE CRYPTOCURRENCIES SECURE
Since cryptography entails the encryption of files or information, cryptocurrency transactions are highly secured. Since only the parties involved in a transaction can decode the encrypted information.
This prevents the activities of hackers since they cannot eavesdrop on important information which would facilitate their activities.
Let’s take the Hash function type of cryptography as an example.
The hash function is made up of alphanumeric characters: which means it consists of both letters and numbers.
Hashes generate these alphanumeric codes which are used to encrypt information, the length of an information will determine the number of values in a hash function.
The SHA-256 hash is mostly used in this regard. What makes this hash function technique very secure is that a slight change in the same piece of information will result in a different hash altogether.
For example Two Bitcoins and two bitcoins will result from in different hash functions. Let’s confirm this from the screenshot below
From the screenshots we can see that even the same words but different spellings results in different hashes.
Hence cryptography employed this technique and other cryptographic techniques to make it impossible for hackers to guess key information they need to run their illicit activities.
3c EXPLORE THE STEEM GENESIS BLOCK AND SIGN AS A PROOF OF COMPLETION.
- I visited steemitworld.org website.
- I clicked on block explorer
- The block number dialog box appeared with number 1 as default, I clicked on ok.
- The details of the first or genesis block of Steemit appeared.
It had the following parameters:
Timestamp
2016-03-24, 16:05:00
Block ID
0000000109833ce528d5bbfb3f6225b39ee10086
Previous ID
0000000000000000000000000000000000000000
Witness
initminer
Witness Signature
204f8ad56a8f5cf722a02b035a61b500aa59b9519b2c33c77a80c0a714680a5a5a7a340d909d19996613c5e4ae92146b9add8a7a663eef37d837ef881477313043
- I signed in as a proof of completion.
Conclusion
In conclusion cryptocurrencies since it’s launch has played a huge role in the finance market as a whole. It has provided people with jobs as investors and traders. It’s fast and secure transactions has led to a massive increase in its user base.
This has been a very educative task by professor @awesononso. Looking forward to be part of your next class.
Warm regards to all professors and members of this wonderful community.
Thanks you for your time.
