Alternative forms of currency aren’t a novel concept. In fact, the process of sharing currency alternatives is quite ancient. Usually in the form of a mutually agreed upon credit. That is both parties agree what the form of payment should be. It’s not legal tender. Legal tender is state-established and must be accepted as payment. But when independent parties come to some sort of agreement, only the parties have to agree.

So credit could be extended in gold, silver, or some other commodity, a credit note or some sort of bartering agreement. I’ll put my silo of grain up against your 50 cattle, for example. That kind of thing. And so currency as an alternative form is and has been essentially any currency that’s not channeled through a financial institution.

  • Cryptocurrency is a digital form of currency whose exchange is facilitated electronically and secured by encryption.
  • The exchange itself, the body issuing the currency, is responsible for the creation of new currency units.

  • Nations print new money. The exchange creates new currency at a rate determined by its own system. And in the case of Bitcoin, the amount of currency that can be created is capped. It will never go beyond 21 million Bitcoins. And that’s not unlike printed currency in the real world where nations determine how much currency they want to produce
  • Bitcoin was the first decentralized cryptocurrency, meaning that there wasn’t a central authority controlling its issue and pricing.
  • Today there are more than 700 forms of cryptocurrency. But it should be noted that fewer than 10 have a market cap of more than $10 million. he notable forms of the cryptocurrency are 
    • Bitcoin
    • Litecoin
    • Ripple
    • Auroracoin
    • Namecoin 
    • Ethereum.
  • All modern decentralized cryptocurrencies are based on Satoshi Nakamoto’s technology called BlockChain.
Introduction to Cryptography

Cryptography can be a daunting concept, so let’s start with some terminology that might help demystify things a bit. Cryptography itself is the science of securing information through encryption, making information impossible to be seen by unauthorized eyes. Encryption means the act of converting plaintext into ciphertext, ciphertext being encrypted information. In the graphic on the right, what you’re seeing is plaintext, and some of that text’s actually encrypted data next to it. And Decryption is the reverse process of converting ciphertext back into understandable plaintext.The ultimate goal of cryptography is to ensure that information can’t be viewed by just anyone.

Examples of common uses of encryption in the real world include

  • Password-protected data
  • Digital signatures
  • Secure web browsing through SSL and TLS
  • Chip cards
  • Wireless encryption.The common wireless encryption methods are WEP, WPA, WPA2, TKIP, and AES.
How Encryption Works.

I’ll provide a basic understanding of how encryption works. The two most common methods of encryption are public key, known as asymmetric, and private key, known as symmetric encryption. All encryption begins with plaintext, readable content. And to encrypt anything you need to use a password, the stronger the better. The more complex the password the more difficult it will be to crack. And there’s often confusion over the terms key and password, both used in the encryption process.

A key is not equal to a password, although passwords can be keys. Keys are measured by the number of bits they use. And basically, the more bits you use the stronger the encryption and the more difficult it is to crack. Modern methods of cracking use something known as brute force. Which is the use of sheer computer processing power to cycle through all the possible combinations. So generally speaking, the more complex the key and password, the more exponentially difficult it is to crack the encryption. There are different types of encryption, beginning with the earliest example using 40-bit encryption. 40-bits gives you 2 to the 40 possible keys or more than 1 trillion possibilities.

And while that may sound like a lot, modern computers can brute force crack a 40-bit encryption in a matter of hours or days. So that’s not good. DES, short for Data Encryption Standard, uses 56-bit encryption, or 2 to the 56 possible keys, or 72 quadrillion possibilities. It was developed in the early 1970s, and in 1998, a DES encrypted file was cracked in 55 hours. Again, not very useful if you absolutely need to protect data. AES, or Advanced Encryption Standard, also known as Rijndael encryption, uses three different key lengths. 128, 192, or 256 bits, with a block size of 128 bits. This is the current encryption standard, and it was adopted by the US government in 2002. Regardless of the encryption method used, the process of encryption is basically the same.

You start with plaintext which is your input text, the information you want encrypted.  So could be a text file or it could be a binary file like a software application. You choose an encryption method, let’s say AES. And the number of bits for the key, for example 256. You choose a password and the encryption algorithm converts the plaintext into ciphertext using either a private or public key. And the encryption algorithm converts the plaintext into ciphertext using either a private or public key. And to decrypt, the process acts in reverse using the key and password provided.

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