Comment
Author: Admin | 2025-04-27
Possession—you have proof that somebody in the past sent you those bitcoins,” says Nicolas Christin, an associate professor of computer science, engineering, and public policy at Carnegie Mellon University. You can then tap some of the unspent value in your wallet, and send it to someone else’s public key. When you sign to verify that you want to send the bitcoins, you generate a small personalized piece of code attached to the transaction, and the system creates a mathematical puzzle that locks up that value and scrambles the code. When the recipient is ready to spend the money, they will put a corresponding piece of code into the transaction. Everybody in the network can verify that the two pieces of code fit together (through a process called transaction confirmation, also known as mining—more on that later). This entire operation is called signature verification. [Related: Bitcoin is having a bumpy rollout as an official currency in El Salvador]“It’s impossible for someone to find a missing piece if they don’t have the right information, but it’s super easy for anybody to verify that two pieces fit,” Christin explains. “Bitcoin has very little additional computational abilities beyond signature verification. Satoshi Nakamoto’s [the pseudonym of the alleged creator of Bitcoin] vision was to have programmable money, initially. The problem is Bitcoin became very popular very quickly and the developers decided to freeze the features where they were.” However, a new upgrade released last week could open up the possibility for supporting expanded functions beyond signature verification. So how are other cryptocurrencies different from Bitcoin?Many modern cryptocurrencies derive from the Bitcoin model. For example, Litecoin is in many respects similar to Bitcoin, but the puzzle component was slightly altered. They replaced the mining algorithm (called SHA-256) that’s used in Bitcoin with a function called Scrypt, which they claim takes less energy to run. On the other hand, the creators of Bitcoin Cash branched off from a team that was working on Bitcoin to make a Bitcoin-esque cryptocurrency that can process more transactions per second. Ethereum, however, takes a different approach. Its blockchain has an added feature called “loops,” which allows it to repeatedly run a piece of code, and engineers can program on top of it. Ethereum uses a mechanism called a “gas” that charges the person who initiated the transaction a fee to run a programming instruction. The program burns up the “gas” as it runs, and when it’s out of gas, the program either completes or terminates. [Related: NFTs are blowing up the digital art and collectibles worlds. Here’s how they work.] Developers can build a cryptocurrency on top of Ethereum (like the stablecoin DAI), create mortgages, or unique non-fungible tokens, since they’re all pieces of code (NFTs are links that point to digital assets within the blockchain, or to objects that sit off the blockchain). “All of those are pieces of code that are extensions of Ethereum transactions,” says Christin.Ethereum is also credited with the nifty innovation of integrating smart contracts onto
Add Comment