Here is part 3 of my 5-part series. If you missed part 1 and part 2, you can check out below:
Part 1 - Category: it is about how to categorize cryptocurrency away from other digital currencies
Part 2 - Regulations: it is about why the government wants the regulation but they cannot do so
Part 4 - Technology: it is about how technology can change the way shitcoin performs and how crypto may evolve to become
Part 5 - Detokenization: it is about speculation that if Bitcoin actually extinct and what may happen
I may change parts depending on my research but here is for you guys to enjoy reading.
Cryptocurrency is not only a money instrument, it is also a piece of technology.
There are two components: wallet and blockchain.
The core technology of the wallet is an asymmetric cryptographic with a pair of keys: a public key and a private key.
The core technology of the blockchain is timestamp server, hash algorithm, Proof of Work, network for broadcasting.
All technology is to prevent bad internal actors of double spending and bad external actors of censorship.
What is asymmetric cryptography?
To understand asymmetric cryptography, we start with symmetric cryptography.
Both systems will have a public key and a private key.
In symmetric cryptography, two people have access to the private key. You have a system to prevent an outsider from attacking the system but you can't avoid an inside traitor penetrating the security.
In asymmetric cryptography, only one person has access to the private key. It is a double-secured method to put only you in charge.
Timestamp server
It is a method to become a variable in the block hash. It kept the hash changing along the time to prevent anyone from guessing the solution of the hash result.
Hash algorithm
It is a mathematical function to turn the arbitrary length of inflation into a fixed-sized value. It is a one-way function that increases the difficulty to guess the answer.
Proof of Work
It is an implementation of using Hash and reuse it to repetitive guessing until it matches what block assigned results and get incentives.
Network for broadcasting
It is a public ledger to keep all transactions and post online for everyone to search and check.
Technology will improve
As the progress of blockchain technology progresses, a new way of blockchain technology can become more efficient.
Proof of Stake
It includes time as another factor added to the hash function. It randomly selected candidates to receive a block and distribute to everyone and let everyone participate in the mining process in order to spread the workload equally weighted.
Technology will eventually plateau
Technology may not continue rising and it will hit the plateau. We will have to develop a technology that carries the old system into the new system.
Hash the entire universe
The idea that adopts from Satoshi was his prediction about how secure hash functions are in the future. Current technology with the fastest computer speed, it will take longer than the age of the earth to guess the hash solution and crack the algorithm (SHA-256).
However, if computer speed breakthroughs in the future, it is possible that SHA-256 will be broken.
The idea is that SHA-256 will continue evolving until it is capable of hashing the information large enough to include the whole universe. It will turn all information into one fixed value that newer technology will take a longer time to solve.
It is a rat race at the end.
In conclusion
Cryptocurrency is a piece of technology that will continue evolving. However, there are other technologies catching up and potentially threatening their existence. Continuing to evolve is the only way to escape extinction.
Photo by Gaëtan Othenin-Girard on Unsplash
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Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose cryptocurrencies are mentioned in this article. This information is only for educational
