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ledger phenomenon. This hinders external interference and remains that prior to Bitcoin, none of the earlier versions of exploitation of cryptocurrencies’ realm. cryptocurrencies could truly make it to a global scale. Matchless Speed: In terms of transaction processing speed, By January 2009, the first version of Bitcoin was introduced (Bitcon cryptocurrency supersedes the fiat money transfer via conventional v0.1) via public announcement, with its source code made public, banking system by a huge margin. In cryptocurrency, transactions turning it into an open source project. Almost everyone believes are updated almost instantaneously across the whole network. that this is one of the biggest reasons behind the true success and longevity of Bitcoin compared to its predecessors. Unparalleled Privacy Protection: Since cryptocurrency model is based on cryptographic keys, requiring both private and For one reason or the other, it was able to grab people’s attention public keys to carry out a transaction, the likelihood of a person and its price rose much quickly than anyone ever anticipated, and tempering both to exploit a transaction, are almost equal to none. by February 9, 2011, it stood equal to US $1. As of early 2017, This ensures unparalleled privacy protection in a cryptocurrency Bitcoin market cap has escalated to a staggering US $ 18 billion based system. and currently a bitcoin is being traded at US $1230. Evolution of Cryptocurrencies – A Brief Being an open source, Bitcoin also paved way for others to come up with their own variations of cryptocurrency, and now there Chronology are around 700 different types of cryptocurrencies being used Chaum’s Contribution – The Foundation Stone of worldwide, collectively referred to as alternative coins or 'altcoins.' Contemporary Digital Currencies While most of them fail to make some real impact, 12/13 are Most experts believe that the buzz about currently existing forms faring quite well and many more progressive versions continue of cryptocurrencies started back in 1982 when Dr. David Chaum to surface, such as Dogecoin, Litecoin, Goldime, Abundeum, published his paper titled, ‘Untraceable Electronic Mail, Return Hedgenickel to name a few. Addresses, and Digital Pseudonyms,’ where he gave the idea of using cryptography to secure online communication or exchange Cryptocurrency Mining, Blockchain and of data between any two entities. Let’s have a look at the actual excerpt from his paper: other Important Concepts Blockchain Mining “A technique based on public key cryptography is presented With all the buzz and hype around cryptocurrency mining, the that allows an electronic mail system to hide who a participant concept can be simply explained as the ability to make limited communicates with as well as the content of the communication entries in a particular database, which no one can change unless – in spite of an unsecured underlying telecommunication system. specific conditions are fulfilled. Unbelievably simple, but this is the The technique does not require a universally trusted authority.” true essence of the concept of blockchain mining. (Chaum, 1982) Perhaps relating this concept to that of your banking account can The key elements of his publication, setting the foundation of help you understand it better. Isn’t that just like the entries of a cryptocurrencies can be summarised as: database, which can only be altered under specific conditions? ▪ Use of public key cryptography. In fact, all that is to a banking transaction is a verified and ▪ Concealment of the content as well as the participants in authenticated entry in a specific database of accounts. communication among different entities. ▪ Non-reliance on a universally trusted authority to carry out any Miners such activity. The important question, however, is who verifies and authenticates such entries in the absence of a centralised regulatory authority in In fact, these are the same basic underlying principles found in a cryptocurrency mining network? Well, the process responsible cryptocurrencies in existence today. That’s why Chaum’s work for this is termed as ‘mining,’ and individuals carrying out the is regarded as the foundation stone of contemporary digital process are referred as the ‘miners.’ currencies. Transaction e-Gold: The Next Step Bitcoin is the most famous and reliable cryptocurrency so far and Inception of ‘e-gold’ in 1996, brainchild of Doug Jackson, the is also the pioneer in cryptocurrencies. Using it as an example, we founder and director of the online payment service e-Gold is seen will try to explain a transaction. In a network of a cryptocurrency, a as the next major landmark in evolution of cryptocurrencies. The file saying, ‘Randy gives X Bitcoins to Nancy’ is what a transaction distinguishing feature of e-gold was that it was backed by actual would look like. It would only be deemed authentic if it is signed gold and a number of special cryptocurrency exchanges were set with Randy’s private key, comprised of basic cryptography. Once up to facilitate and encourage people to promote and use it. signed, this transaction would be broadcasted through whole network and once it is approved by majority of the systems, the Bitcoin: The True Game Changer entire chain of transactions would be updated, passed onto all of However, what truly turned the concept of cryptocurrency into the systems on the internet. one of the biggest internet phenomena is a paper titled, ‘Bitcoin: A Peer-to-Peer Electronic Cash System,’ by Satoshi Nakamoto Confirmation published in 2008. The character of Satoshi Nakamoto has been This is how the whole network is updated almost instantaneously shrouded in deep mystery, with no authentic record or proof about a transaction, but it gets confirmation only after a very of who actually this person is or was. Some also believe it’s a short period of time and it is this confirmation that’s the most pseudonym used to hide the identities of not a single person, critical part of the whole transaction mechanism through a but a whole team. Mysteries and controversies aside, the fact cryptocurrency network. A April-June 2017 The Pakistan Accountant 29pril-June 2017 The Pakistan Accountant 29