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Cryptocurrency

Cryptocurrency, or just crypto, is a digital virtual (non-physical) currency used on the Internet which uses cryptographic methods (electronic signatures etc.) to implement a decentralized system in which there is no authority to control the currency (unlike e.g. with traditional currencies that are controlled by the state or systems of digital payments controlled by the banks that run these systems). Cryptocurrencies traditionally use so called blockchain as the underlying technology and are practically always implemented as FOSS. Example of cryptocurrencies are Bitcoin, Monero or Dogecoin.

NOTE: In English the word "crypto" now has at least two different meanings that are likely to cause confusion, so let's clear this up. Both meanings come from Greek kryptos, meaning hidden. In context discussed here it's just short for cryptography, i.e. it means association with cryptography. The other meaning is "keeping something secret", as in for example cryptofascism, which means being a fascist while trying to keep it hidden from the public. This may be confusing e.g. in terms such as cryptoanarchism where both interpretations make sense. So just be aware of this.

The word crypto in crpytocurrency doesn't imply that the currency provides or protects "privacy" -- it rather refers to the cryptographic algorithms used to make the currency work -- even though thanks to the decentralization, anonymity and openness cryptocurrencies actually are mostly "privacy friendly" (up to the points of being considered the currency of criminals).

LRS sees cryptocurrencies as not only unnecessary bullshit, but downright as an unethical technology because money itself is unethical, plus the currencies based on proof of work waste not only human effort but also enormous amount of electricity and computing power that could be spent in a better way. Keep in mind that cryptocurrencies are a way of digitizing harmful concepts existing in society. Crypto is just an immensely expensive game in which people try to fuck each other over money that have been stolen from the people.

History

As always, the concepts used to implement cryptocurrencies aren't very new, many date back to 80s and beyond, but what brought cryptocurrencies to practice and started the crypto age was bitcoin, created at the beginning of 2009 by a guy who on the Internet calls himself Satoshi Nakamoto, but whose real identity is still not known. He wrote a paper about bitcoin and implemented it. Bitcoin became huge, many people who initially invested in it (including Nakamoto) became millionaires overnight, and many other cryptocurrencies came to existence to try to compete with and/or improve on bitcoin. This includes even semi humorous cryptocurrencies such as Dogecoin, but mainly Monero, a crypto created around 2014 that improves on the "privacy" issues with bitcoin and which became quite popular.

TODO: moar

How It Works

Cryptocurrency is build on top of so called blockchain -- a kind structure that holds records of transactions (exchanges of money or "coins", as called in the crypto world). Blockchain is a data structure serving as a database of the system. As its name suggests, it consists of blocks. Each block contains various data, most important of which are performed transactions (e.g. "A sent 1 coin to B"), and each block points to a previous one (forming a linked list). As new transactions are made, new blocks are created and appended at the end of the blockchain.

But where is the blockchain stored? It is not on a single computer; many computers participating in the system have their own copy of the blockchain and they share it together (similarly to how people share files via torrents).

But how do we know which one is the "official" blockchain? Can't just people start forging information in the blockchain and then distribute the fake blockchains? Isn't there a chaos if there are so many copies? Well yes, it would be messy -- that's why we need a consensus of the participants on which blockchain is the real one. And there are a few algorithms to ensure the consensus. Basically people can't just spam add new blocks, a new block to be added needs to be validated via some process (which depends on the specific algorithm) in order to be accepted by others. Two main algorithms for this are:

Can't people just forge transactions, e.g. by sending out a record that says someone else sent them money? This can be easily prevented by digitally signing the transactions, i.e. if there is e.g. a transaction "A sends 1 coin to B", it has to be signed by A to confirm that A really intended to send the money. But can't someone just copy-paste someone else's already signed transactions and try to perform them multiple times? This can also be prevented by e.g. numbering the transactions, i.e. recording something like "A sent 1 coin to B as his 1st transaction".

But where are one's coins actually stored? They're not explicitly stored anywhere; the amount of coins any participant has is deduced from the list of transactions, i.e. if it is known someone joined the network with 0 coins and there is a record of someone else sending him 1 coin, it is clear he now has 1 coin. For end users there are so called wallets which to them appear to store their coins, but a wallet is in fact just the set of cryptographic keys needed to perform transactions.

But why is blockchain even needed? Can't we just have a list of signed transactions without any blocks? Well, blockchain is designed to ensure coherency and the above mentioned consensus.


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