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DESIGN AND IMPLEMENTATION OF CRYPTO CURRENCY A STUDY OF BLOCKCHAIN

Dept: COMPUTER SCIENCE File: Word(doc) Chapters: 1-5 Views: 1

Abstract

Cryptocurrencies and blockchain are a monstrous topic. There are several hundreds of cryptocurrencies and the applications of blockchain technology are also numerous. To make this research a useful and focused one, we have to narrow it down. To do this, the research attaches to multiple connecting factors, defining its scope. Firstly, the research is limited to cryptocurrencies and blockchain. This means that other types of assets than cryptocurrencies, such as tokens or crypto securities, are not within the scope of this research. We will explain how these assets differ from cryptocurrencies further on. We will also not elaborate on derivatives of cryptocurrencies, which are essentially investment instruments. Blockchain will be scrutinized to the extent cryptocurrencies run on this technology. Therefore, blockchain technology will not be looked at outside of the context of cryptocurrencies, such as it being used as a technique to eliminate intermediaries in the financial, public o

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

A cryptocurrency is a digital medium of exchange that uses encryption to secure the processes involved in generating units and conducting transactions. Cryptocurrencies are a subset of digital currencies and, as such, have no physical representation. They may be used for online or in-person transactions with any vendors who accept payment usually via a digital wallet.  There are hundreds of cryptocurrencies around the world. Among them, Bitcoin is the most prominent example -- in fact, other cryptocurrencies are sometimes referred to as altcoins, as in alternatives to Bitcoin. The Bitcoin protocol enables peer-to-peer (P2P) exchange in a decentralized system that, unlike conventional currencies, is not associated with any financial institution or government. Bitcoin-to-Bitcoin transactions are conducted through anonymous, heavily encrypted hash codes across a peer-to-peer network. User’s wallet stores all addresses the user sends and receives Bitcoins from, along with a private key known only to the user. The P2P network monitors and verifies Bitcoin transfers. Other cryptocurrencies include Litecoin, primecoin, Namecoin and Feathercoin etc. Most cryptocurrencies are designed to gradually decrease production of currency, placing an ultimate cap on the total amount of currency that will ever be in circulation, mimicking precious metals. Compared with ordinary currencies held by financial institutions or kept as cash on hand, cryptocurrencies can be more difficult for seizure by law enforcement. This difficulty is derived from leveraging cryptographic technologies.