Pedro Franco

Understanding Bitcoin

Cryptography, Engineering and Economics

• Gebundenes Buch

Produktbeschreibung

Discover Bitcoin, the cryptocurrency that has the finance world buzzing
Bitcoin is arguably one of the biggest developments in finance since the advent of fiat currency. With Understanding Bitcoin , expert author Pedro Franco provides finance professionals with a complete technical guide and resource to the cryptography, engineering and economic development of Bitcoin and other cryptocurrencies. This comprehensive, yet accessible work fully explores the supporting economic realities and technological advances of Bitcoin, and presents positive and negative arguments from various economic schools regarding its continued viability.

This authoritative text provides a step-by-step description of how Bitcoin works, starting with public key cryptography and moving on to explain transaction processing, the blockchain and mining technologies. This vital resource reviews Bitcoin from the broader perspective of digital currencies and explores historical attempts at cryptographic currencies. Bitcoin is, after all, not just a digital currency; it s a modern approach to the secure transfer of value using cryptography. This book is a detailed guide to what it is, how it works, and how it just may jumpstart a change in the way digital value changes hands.

Understand how Bitcoin works, and the technology behind it
Delve into the economics of Bitcoin, and its impact on the financial industry
Discover alt-coins and other available cryptocurrencies
Explore the ideas behind Bitcoin 2.0 technologies
Learn transaction protocols, micropayment channels, atomic cross-chain trading, and more
Bitcoin challenges the basic assumption under which the current financial system rests: that currencies are issued by central governments, and their supply is managed by central banks. To fully understand this revolutionary technology, Understanding Bitcoin is a uniquely complete, reader-friendly guide.

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Produktdetails

• Wiley Finance Series .1
• Verlag: Wiley & Sons
• 1. Auflage
• Seitenzahl: 288
• Erscheinungstermin: 3. November 2014
• Englisch
• Abmessung: 251mm x 174mm x 25mm
• Gewicht: 658g
• ISBN-13: 9781119019169
• ISBN-10: 1119019168
• Artikelnr.: 41417267

Autorenporträt

PEDRO FRANCO holds an MSc in Electrical Engineering from ICAI, a BSc in Economics and an MBA from INSEAD. He has been a consultant with McKinsey and Boston Consulting Group, as well as a researcher with IIT, prior to gaining more than 10 years of experience in financial markets, holding Quant and Trading positions in Credit, Counterparty Risk, Inflation and Interest Rates. He has created various mathematical libraries for financial derivatives, and managed teams of software developers. He can be contacted at [e-mail].

Inhaltsangabe

About the Author xi
Acknowledgments xiii
Foreword xv
Prologue xvii
Preface xix
PART ONE: INTRODUCTION AND ECONOMICS 1
CHAPTER 1 Foundations 3
1.1 Decentralized 4
1.2 Open Source 6
1.3 Public Asset Ledger 8
1.4 It's Not Only the Currency, It's the Technology 9
CHAPTER 2 Technology (Introduction) 11
2.1 Centralized Database 11
2.2 Addresses, Transactions 13
2.3 Distributed Database, the Blockchain 15
2.4 Wallets 17
2.5 The Different Meanings of Bitcoin 18
CHAPTER 3 Economics 21
3.1 Medium of Exchange 22
3.1.1 Pros 25
3.1.2 Cons 26
3.2 Store of Value 27
3.2.1 Bitcoin as Investment 29
3.2.2 Pros 30
3.2.3 Cons 31
3.3 Unit of Account 32
3.4 Deflation 32
3.5 Volatility 33
3.6 Effect on the Financial Industry and Monetary Policy 35
3.7 Regulation 37
CHAPTER 4 Business Applications 39
4.1 Money Transfer 39
4.2 Exchanges 40
4.3 Payment Processors 43
4.4 Web Wallets 43
4.5 Multisignature Escrow Services 45
4.6 Mining 46
4.7 ATMs 48
PART TWO: BITCOIN TECHNOLOGY 49
CHAPTER 5 Public Key Cryptography 51
5.1 Public Key Encryption 53
5.2 Digital Signatures 56
5.3 RSA 59
5.4 Elliptic Curve Cryptography 62
5.4.1 Elliptic Curve Summary 63
5.4.2 Elliptic Curve Theory 64
5.5 Other Cryptographic Primitives 71
5.5.1 Blind Signatures 71
5.5.2 Shamir Secret Sharing 72
5.6 Bitcoin Addresses 73
CHAPTER 6 Transactions 77
6.1 Transaction Scripts 80
6.2 Pay-to-address and Pay-to-public-key Transactions 82
6.3 Multisignature (m-of-n) Transactions 84
6.4 Other Transaction Types 85
6.5 Transaction Signature 86
6.6 Pay-to-script-hash (P2SH) 89
6.7 Standard Transactions 92
CHAPTER 7 The Blockchain 95
7.1 Hash Functions 95
7.2 Time-stamp 99
7.3 Proof-of-work 101
7.4 The Blockchain 105
7.5 Double-spend and Other Attacks 113
7.5.1 Race Attack 115
7.5.2 Finney Attack 116
7.5.3 Transaction Spamming 116
7.6 Merkle Trees 117
7.6.1 Transaction Malleability 119
7.7 Scalability 120
CHAPTER 8 Wallets 123
8.1 Symmetric-key Cryptography 125
8.2 Offline Wallets 126
8.2.1 External Storage Media 127
8.2.2 Paper Wallets 127
8.2.3 Offline Devices 129
8.2.4 Hardware Wallets 130
8.3 Web Wallets 131
8.4 Brain Wallets 132
8.5 Deterministic Wallets 132
8.5.1 Message Authentication Code (MAC) 134
8.5.2 Hierarchical Deterministic Wallets 135
8.6 Multisignature Wallets 136
8.7 Vanity addresses 137
8.8 Simplified Payment Verification (SPV) 139
8.9 The "Payment Protocol" (BIP 70) 141
CHAPTER 9 Mining 143
9.1 Mining Technology 146
9.2 Pooled Mining 149
9.3 Transaction Fees 154
9.4 Selfish Mining 156
PART THREE: THE CRYPTOCURRENCIES LANDSCAPE 159
CHAPTER 10 The Origins Of Bitcoin 161
10.1 David Chaum's Ecash 162
10.2 Adam Back's Hashcash 163
10.3 Nick Szabo's bit gold and Wei Dai's b-money 164
10.4 Sander and Ta-Shma's Auditable, Anonymous Electronic Cash 165
10.5 Hal Finney's RPOW 167
10.6 Satoshi Nakamoto 168
CHAPTER 11 Alt(ernative) Coins 171
11.1 Litecoin 172
11.2 PeerCoin 173
11.3 Namecoin 174
11.4 Auroracoin 175
11.5 Primecoin 175
11.6 Dogecoin 176
11.7 Freicoin 177
11.8 Other Alt-coins 177
11.9 The Case For/Against Alt-coins 178
CHAPTER 12 Contracts (the Internet of Money or Cryptocurrencies 2.0) 183
12.1 Digital Assets 183
12.2 Smart Property 185
12.3 Micropayments 186
12.4 Autonomous Agents 187
12.5 Other Applications 189
12.5.1 Crowd-funding 189
12.5.2 External State Contract 190
12.5.3 Contract for Differences 190
12.5.4 Distributed Exchange 191
12.5.5 Deposits 191
12.5.6 Saving Addresses 192
12.6 Inserting Data into the Blockchain 192
12.7 Meta-coins 194
12.7.1 Colored Coins 196
12.7.2 Counterparty 197
12.7.3 Ethereum 199
12.7.4 Mastercoin 202
12.7.5 Nxt 203
12.7.6 Ripple 204
CHAPTER 13 The Privacy Battle 209
13.1 Network Analysis 209
13.2 Laundry Services 212
13.3 Greenlisting 213
13.4 Privacy-enhancing Technologies 214
13.4.1 CoinJoin 214
13.4.2 CoinSwap 215
13.4.3 Stealth Addresses 217
13.4.4 Merge Avoidance 219
13.4.5 Committed Transactions 220
13.5 Fully Anonymous Decentralized Currencies 221
13.5.1 Zero-knowledge Proofs 221
13.5.2 Zero-knowledge Proof of Graph 3-colorability 221
13.5.3 Zero-knowledge Proof for the Discrete Logarithm 223
13.5.4 Non-interactive Zero-knowledge Proofs 224
13.5.5 Accumulators 225
13.5.6 Zerocoin 226
13.5.7 Zerocash 228
CHAPTER 14 Odds and Ends 231
14.1 Other Transaction Protocols 231
14.1.1 Micropayment Channels 231
14.1.2 Atomic Cross-chain Trading 232
14.2 Alternatives to Proof-of-work 233
14.2.1 Proof-of-stake 234
14.2.2 Proof-of-burn 236
14.3 Merged Mining 237
14.4 Side-chains 238
14.5 Open Transactions 240
14.6 Quantum Computing 242
14.7 Recent Advances in Cryptography 244
14.7.1 Homomorphic Encryption 244
14.7.2 Obfuscation 245
Bibliography 247
Index 259