Crypto-currencies

De Organic Design

Crypto-currencies are digital online currencies that exhibit that use cryptographic algorithms to control the supply to create "virtual scarcity" and to overcome the counterfeiting and double spending problems. The first was Bitcoin, and then many more began to arise with their own unique properties, strengths and weaknesses such as Namecoin, Litecoin and Ethereum. Crypto-trading is now becoming very popular which is the idea of making money by transferring value between the various crypto-currencies as their value changes with respect to one-another. Usually Bitcoin is used as the base currency since all exchanges that offer multiple crypto-currencies allow them all to be bought or sold with Bitcoins.

Exchanges offering multiple crypto-currencies

Decentralised exchanges

Trustless banking

see Trustless banking

Sites with charts/stats/info for multiple crypto-currencies

Interesting cryptocurrencies & crypto-projects

Cryptocurrency news sites

Proof of work

This is the original method of securing blockchains introduced by Satoshi Nakamoto and is explained in detail in the Hash article.

Proof of stake

Quote.pngImagine 100 people sitting around a circular table. One person has a bundle of papers, each with a different transaction history. The first participant picks up a pen and signs one, then passes it onto the next person, who makes a similar choice. Each participant gets $1 if they sign the transaction history that most of the participants sign in the end. Oh and btw - if you sign one page and later sign a different page, your house burns down... this is probably a good incentive to sign the right piece of paper.
— Vitalik's simple Casper analogy

Rather than requiring the prover to perform a certain amount of computational work, a proof of stake system requires the prover to show ownership of a certain amount of money. The reason why Satoshi could not have done this himself is simple: before 2009, there was no kind of digital property which could securely interact with cryptographic protocols. Paypal and online credit card payments have been around for over ten years, but those systems are centralized, so creating a proof of stake system around them would allow Paypal and credit card providers themselves to cheat it by generating fake transactions. IP addresses and domain names are partially decentralized, but there is no way to construct a proof of ownership of either that could be verified in the future. Indeed, the first digital property that could possibly work with an online proof of stake system is Bitcoin (and cryptocurrency in general) itself.

Proof of retrievability

This is an awesome idea! Permacoin solves two major problems with bitcoin in one elegant solution. The problem of the huge waste of resource that mining occupies, and the problem that the bitcoin network has no mechanism for large-scale data storage.

Permacoin flips the mining paradigm on its orthogonal axis by saying that instead of time=money (i.e. processing power to mine coins with proof of work), they make space=money! "Miners" offer space to the network in a proof of retrievability system resulting in a usable distributed storage system instead of teraflops of unusable processing :-)

This effort is backed by Microsoft so may end up with some closed-source soul-selling strings attached, but the idea of proof-of-retrievability is sure to be an up and coming concept in the crypto future!

Other proof-of ideas

Mining

Regulation

No wonder a bunch of bitcoin companies are bailing from NY! (BitLicense) but the reality is that this kind of heavy-handed "regulation" is likely to spread more as the fiat system declines and crypto becomes more popular. But this has a good side as well - it will help to speed up truly anonymous solutions and fully distributed organisations (DAO's / DAC's).

News & views

See also

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