cryptocurrency : The New Palgrave Dictionary of Economics

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Cryptocurrency is the name given to a system that uses cryptography to allow the secure transfer and exchange of digital tokens in a distributed and decentralised manner. These tokens can be traded at market rates for fiat currencies. The first cryptocurrency was Bitcoin, which began trading in January 2009. Since then, many other cryptocurrencies have been created employing the same innovations that Bitcoin introduced, but changing some of the specific parameters of their governing algorithms. The two major innovations that Bitcoin introduced, and which made cryptocurrencies possible, were solutions to two long-standing problems in computer science: the double-spending problem and the Byzantine Generals Problem.

Until the invention of Bitcoin, it was impossible for two parties to transact electronically without employing a trusted third party intermediary. The reason was a conundrum known to computer scientists as the double spending problem, which has plagued attempts to create electronic cash since the dawn of the Internet.

To understand the problem, first consider how physical cash transactions work. The bearer of a physical currency note can hand it over to another person, who can then verify that he is the sole possessor of that note by simply looking at his hands. For example, if Alice hands Bob a $100 bill, Bob now has it and Alice does not. Bob can easily verify his possession of the $100 bill and, implicitly, that Alice no longer has it. Physical cash transfers are also final, in the sense that to reverse a transaction the new bearer must give back the currency note. In our example, Bob would have to hand the $100 bill back to Alice. Given all of these properties, cash makes it possible for different parties, including strangers, to transact without trusting each other.

Now, consider how electronic cash might work. Obviously, paper notes would be out of the picture. There would have to be some kind of digital representation of currency. Essentially, instead of a $100 bill, we might imagine a $100 computer file. When Alice wants to send $100 to Bob, she attaches a $100 file to a message and sends it to him. The problem, as anyone who has sent an email attachment knows, is that sending a file does not delete it from ones computer. Alice will retain a perfect digital copy of the $100 she sends Bob, and this would allow her to spend the same $100 a second time, or indeed a third and fourth. Alice could promise to Bob that she will delete the file once he has a copy, but Bob has no way to verify this without trusting Alice.

Until recently, the only way to overcome the double spending problem was to employ a trusted third party intermediary. In our example, both Alice and Bob would have an account with a third party that they each trust, such as PayPal. Trusted intermediaries like PayPal keep a ledger of all account balances and transactions. When Alice wants to send $100 to Bob, she tells PayPal, which in turn deducts the amount from her account and adds it to Bobs. The transaction reconciles to zero. Alice cannot spend the same $100, and Bob relies on PayPal, which he trusts, to verify this. At the end of the day, all transfers among all accounts reconcile to zero. Note, however, that unlike cash, transactions that involve a third party intermediary are not final, as we have defined it, because transactions can be reversed by the third party.

Like PayPal, the Bitcoin system employs a ledger, which is called the block chain. All transactions in the Bitcoin economy are recorded and reconciled in the block chain. However, unlike PayPals ledger, the block chain is not maintained by a central authority. Instead, the block chain is a public document that is distributed in a peer-to-peer fashion across thousands of nodes in the Bitcoin network. New transactions are checked against the block chain to ensure that the same bitcoins have not been previously spent, but the work of verifying new transactions is not done by any one trusted third party. Instead, the work is distributed among thousands of users who contribute their computing capacity to reconcile and maintain the block chain ledger. In essence, the whole peer-to-peer network takes the place of the one trusted third party.

Bitcoins solution to the double spending problem distributing the ledger among the thousands of nodes in a peer-to-peer network presents another problem. If every node on the network has a complete copy of the ledger that they share with the peers to which they connect, how does a new node connecting to the network know that she is not being given a falsified copy of the ledger? How does an existing node know that she is not getting falsified updates to the ledger? The difficult task of reaching consensus among distributed parties who do not trust each other is another longstanding problem in the computer science literature known as the Byzantine Generals Problem, which Bitcoin also elegantly solved.

The Byzantine Generals Problem posits that a number of generals each have their armies camped outside a city that they have surrounded. The generals know that their numbers are large enough that if half their combined force attacks at the same time they will take the city, but if they do not attack at the same time they will be spread too thinly and will be defeated. They can only communicate via messenger, and they have no way of verifying the authenticity of the messages being relayed. They also suspect that some of the generals in their ranks are traitors who will send fake messages along to their peers. How can this large group come to a consensus on the time of attack without employing trust and without a central authority, especially when there will likely be attempts to confuse them with fake messages?

In essence, this is the same problem faced by Bitcoins miners, the specialised nodes that verify new transactions and add them to the distributed ledger. Bitcoins solution is to require additions to the ledger to be accompanied by the solution to a mathematical problem that is very difficult to solve but simple to verify. (This is much like calculating prime factors; costly to do, but easy to check.) New transactions are broadcast in a peer-to-peer fashion across the network by parties to those transactions. Miners look at those transactions and confirm by checking their copy of the ledger (the block chain) that they are not double-spends. If they are legitimate transactions, miners add them to a queue of new transactions that they would like to add as a new page in the ledger (a new block in the block chain). While they are doing this, they are simultaneously trying to solve a mathematical problem in which all previous blocks in the block chain are an input. The miner that successfully solves the problem broadcasts his solution to the problem along with the new block to be added to the block chain. The other miners can easily verify whether the solution to the problem is correct, and if it is they add that new block to their copy of the block chain. The process begins anew with the new block chain as an input of the problem to be solved for the next block.

The mathematical problem in question takes an average of 10 minutes to solve. This is key because the important thing is not the solution itself, but that the solution proves that the miner has expended 10 minutes of work. On average, a new block is added to the block chain every 10 minutes because the problem that miners must solve takes on average 10 minutes to solve. However, if more miners join the network, or if computing power improves, the average time between blocks will decrease. To maintain the rate at which blocks are added to six per hour, the difficulty of the problem is adjusted every 2016 blocks (every two weeks). Again, the key here is to ensure that each block takes about 10 minutes to discover.

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cryptocurrency : The New Palgrave Dictionary of Economics

FinCen Clarifies — Bitcoin Futures Grow — MadBitcoins Major Announcement! – Video

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FinCen Clarifies -- Bitcoin Futures Grow -- MadBitcoins Major Announcement!
Donate: https://blockchain.info/address/1LAYuQq6f11HccBgbe6bx8DiwKwzuYkPR3 Subscribe: http://patreon.com/madbitcoins Sponsor: http://MadBitcoins.com October 28th, 2014 -- MadBitcoins, the...

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FinCen Clarifies -- Bitcoin Futures Grow -- MadBitcoins Major Announcement! - Video

Comets Orbiting Distant Star Might Show How Our Solar System Began – Video

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Comets Orbiting Distant Star Might Show How Our Solar System Began
Researchers from the Paris Institute of Astrophysics have been observing the Beta Pictoris star as an example of a relatively young solar system for almost thirty years. They have published...

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Comets Orbiting Distant Star Might Show How Our Solar System Began - Video

Missouri Comets start season with huge win

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Kansas City is often referred to as the Soccer Capital of America. Last season, both FC Kansas City and Sporting KC became champions in their respective leagues, and so did the Missouri Comets.

The Comets are Kansas Citys professional indoor soccer team, which reemerged in 2010 after playing in the original Major Indoor Soccer League from 1981-1991. The Comets play home games at the Independence Events Center.

Last season, the Comets won its first championship in club history after defeating the Baltimore Blast in three games at the championship series in March.

UMKC and the Comets have worked together throughout the years. After playing four years for UMKC mens soccer, Bryan Perez and John Sosa were recruited by the Comets and played important roles in last years season.

UMKC mens soccer Head Coach Rick Benben, who has remained the teams head coach for 17 straight seasons, served as the Comets Head Coach from 1984-1987, with an overall record of 47-57.

This year, Head Coach Vlatko Andonovski boasts not one, but two championship winning teams. He led FC Kansas City to the National Womens Soccer League Championship only three months after clinching the Major Indoor Soccer League title with the Comets.

After the Comets won last season, the MISL announced its fusion with the Professional Arena Soccer League (PASL) to form the new Major Arena Soccer League, which features 23 teams from the U.S. and Mexico.

The 2014-15 MASL season kicked off this past weekend with the Comets crushing former PASL powerhouse, the Dallas Sidekicks, 13-4 at the Allen Events Center.

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Missouri Comets start season with huge win

Daniel Magin century puts ACT Comets back in the Futures League hunt

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It took ACT Comets all-rounder Daniel Magin just 94 balls to smash his team back into the Futures League contest before Queensland's Michael Philipson responded with his second century to give the visitors the upper hand at Manuka Oval on Wednesday.

Queensland goes into the final day leading by 317 runs with five wickets in hand after Philipson (109) cancelled out the earlier good work of Magin (112) and Comets captain David Dawson (143 not out).

Novocastrian Magin scored a scorching century in the opening session to become the fifth Comet to make a ton on debut, whichincluded a hook shot for six that landed on the roof of the Menzies Stand.

The 25-year-old said he was just glad to help his team get back into the contest.

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"I've never been the type to hang around," Magin said. "I like to play my shots and I guess today it just came off.

"It was just good to get us back in the match. We were sort of struggling overnight and then a good first session by me and 'Dawso' was good."

Comets coach Mark Higgs said he'd been trying to lure Magin to Canberra for a couple of years.

He hoped Queensland would set a reasonable target to make it a contest on the final day, especially after itopted to declare while still 69 runs behind.

Higgs was confident the wicket was still good enough to give them a realistic chance of going for the win provided Queensland made a game of it.

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Daniel Magin century puts ACT Comets back in the Futures League hunt

New online psoriasis resource launched

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Living with psoriasis can affect many aspects of your daily life including your overall physiological and emotional health1. To coincide with World Psoriasis Day (29 October) and help people understand and manage their condition more effectively, a new educational website, mypsoriais.co.nz has been launched by AbbVie.

In New Zealand there has been a real need for information specifically for Kiwis, as a survey- by AbbVie revealed many New Zealanders (57% of survey participants) have never accessed any type of online psoriasis support.2 mypsoriasis.co.nz specifically addresses this need by providing a range of support materials including a useful My Journey tab to help patients map their psoriasis journey and learn some of what they can expect as part of living with psoriasis in New Zealand.

Psoriasis is a relatively common autoimmune disease that affects one in 50 New Zealand adults. It is caused by over-activity of the immune system in the skin. It most frequently develops in young adults and continues throughout their life. The most common form of psoriasis causes raised, inflamed, scaly, red skin lesions, known as plaques.1

Dermatologist Dr Steven Lamb says World Psoriasis Day is a really important event in helping raise awareness of an often overlooked condition.

"World Psoriasis Day provides a good opportunity to educate the public about psoriasis and highlights what its like living with the condition. It also helps those living with psoriasis realise that there are effective treatments and that they don't have to put up with the symptoms and psychological effects that come with having psoriasis."

The online quantitative survey completed by 492 New Zealanders also found there was a lack of available information on the likely prognosis and implications of psoriasis at diagnosis, with nearly half of survey respondents (49%) indicating that they did not feel they were given sufficient information about the condition and what their diagnosis meant for them.2

Feedback such as this from patients and a lack of awareness in the community about psoriasis were the driving forces behind creating the educational website.

"We have a greater understanding now of the psychological and social effects of psoriasis on the individual patients who live with the condition having significant impaired quality of life. Patients have social isolation issues, difficulty maintaining relationships, avoidance of social situations and higher rates of stress and anxiety.

"There is also good evidence now that psoriasis is more than just a skin disease with up to 30% having arthritis symptoms and other comorbidities such as obesity, hypertension, high cholesterol, excessive alcohol intake and cardiovascular disease. Consequently psoriasis patients have a reduced life expectancy as well as a poorer quality of life," adds Dr Lamb.

Mike Jones, from Christchurch, developed psoriasis when he was in his early twenties. At the time he had a large social network, swam 4.5km a day and travelled extensively overseas.

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New online psoriasis resource launched