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Sunday, September 29, 2013

Scrypt

What is Scrypt exactly, you may wonder? Scrypt is a password-based key derivation function (or algorithm).

This may not say much to you right now, but i’m pretty sure the next sentence will explain some of the mystery : it was originally designed to perform large scale custom hardware attacks. Now now, don’t give me that frown. It comes down to this : Scrypt was designed to decipher, or decrypt, encrypted messages.

If you paid close attention yesterday, you may remember that SHA-256 was designed to ENCRYPT messages and data, while Scrypt was designed to DECRYPT messages and data. Now, of course, if you have an encrypted piece of data, and there is absolutely no way to decrypt it, the data isn’t of much use to anyone, is it? But, as we all know, once you can decrypt things, you can use the algorithm to decrypt in a not-so legitimate way aswell.

I’ll throw some hacker lingo in here as well for you, because i know you’re on the edge of your seat by now. We have another term for large hardware attacks, that you may be familiar with : brute-forcing. See, i can tell by your smile that you’re getting it now. Or are you? Maybe the entire picture isn’t clear to you yet. Every one who mines Scrypt coins is basically brute forcing data blocks. Yes, i went there and dropped that pipe-bomb. Take a deep breath , then read on.

Ok, you’ve got a chance to calm down. I’m not accusing anyone of anything illegal here, you have to understand that. Mining Scrypt coins is basically brute forcing (or attacking) a huge chunk of data. We solve shares (pieces of data) , but to be able to solve the shares , the data has to be decrypted first, so we can see if it matches the details of our shares. Kind of like an employer looking at the work you’ve done all day, and then looking deeper to see if you actually did it properly.

Scrypt mining, or brute forcing, depending on how you look at it, means you submit a lot of data in the hopes of finding something that matches with the actual data we are trying to solve (or decrypt). As this is a very intensive process, it requires a LOT of memory. I’m not talking about RAM here, i’m talking about the actual memory on your CPU or graphics card.

Why a lot of memory, you wonder? Well, that’s simple to explain. As the data we send is being matched up to the big chink of data, the memory has to keep a constant flow of data going to the target. You can’t throw 100 possible combinations of shares at a block and then twiddle your thumbs for minutes, that’s not how it works. You have to keep pushing, and pushing, and pushing. Brute-forcing works in the same way : you try to flood the system and create a vulnerability which you can use. Each share we solve when Scrypt mining is a tiny chink in the armor of the actual block. The more chinks we can chip away, the better our chances of being successful in solving the block.

The ideal setup to start mining Scrypt coins, includes having one (or several) piece(s) of hardware with a lot of memory. This is where graphics cards will, for now at least, out perform any CPU. If you’re looking at purchasing one (or more) graphics card(s) to start mining Scrypt coins, you’ll have to look at Radeon video cards.

Nvidia cards are sadly under-performing in this area, but they sure make great cards for video gaming. You can’t be great at everything unfortunately.

In the end it comes down to this : SHA-256 and Scrypt both do the same thing on the surface : we solve shares in the hopes of getting a big payday , or if you’re pool mining, several smaller payouts which add up nicely over the course of the day. They do take different approaches though : SHA-256 relies more on the engine core of your hardware, the higher the engine, the better your chances with SHA-256. Scrypt, on the other hand, requires a lot of memory. The more memory you have, the better your chances with Scrypt.

To conclude, we need to talk some Scrypt coin examples of course! The best known one is Litecoin, but there are many others, including Feathercoin, Digitalcoin, Realcoin, and many , many more.

source: http://www.cryptonerd.co/

Scrypt

Friday, September 27, 2013

SHA-256

So what exactly is SHA-256? Well, as i said before, it’s an algorithm. To be more specific, a cryptographic hash function, which has been designed by your friends and mine, the NSA. Wait, wait, don’t freak out yet, there is nothing to worry about. Bear with me for this, you won’t be bored, I promise.

What this hash function does, is it transforms (or hashes) a set of data elements into a fixed length value. This length value will then be compared against copies of the original data, without the ability to derive the original data. That’s the official Wikipedia explanation, which is all fine and dandy, but i don’t speak that language. I am pretty sure most of you don’t either, so allow me to explain what this means for us “commoners”.

As we all know, when mining SHA-256 coins, we are solving shares with our CPU or GPU. These shares are displayed in your mining program as something along the lines of “Accepted 0aef41a3b”. That value, 0aef41a3b, is a hash. It represents the data element we have solved, converted to a hash value. In very simple terms : it’s a short line of data we have solved, while the main chunk (or block) of data consists of several thousands, if not millions, lines of data.

Which also explains why you (usually) need to solve a lot of shares before finding a block of your coin. You have a one in a thousand, ten thousand, hundred thousand, or one in a million chance of solving THE line that identifies the EXACT value required to unlock, or mine the data (or block). It’s kind of like playing the lottery, but using machinery, which can perform calculations to the winning combination way faster and better than any of us humans can do. This does not include humans who luckily guess a winning combination!

So, for solving SHA-256 hashes, you would need some powerful hardware, you say? Well, yes, you do. The more computational power you can throw at it, the better, and the bigger your chance of getting a big payday. However, keep in mind, you aren’t the only person fighting for a piece of the data pie, and there are people who have more and better resources than you. Don’t get discouraged when you appear unlucky. Like playing the lottery, you never know when your moment may come!

But now let’s go back to the actual SHA-256 algorithm. Crypto-currency isn’t the only example of where SHA-256 is used. There are several protocols you may have heard of which implement the same algorithm. Protocols like SSL, SSH, PGP, and many more. Every time you visit a secure website with an SSL certificate, SHA-256 is involved. I bet you didn’t think of it that way, did you? See, we are all learning here today!

So let’s talk some SHA-256 then! You’ve got, of course, Bitcoin, which is probably the most famous in this category. But it doesn’t stop there, of course. Lately, there has been a surge of new SHA-256 coins, including, but not limited to : Zetacoin, Ocoin, Tekcoin, and more. But we also can’t forget the coins that launched before the new SHA-256 coins, such as NameCoin and others.

As you can see, there’s plenty of SHA-256 going around inside and outside the crypto world. Should you wish to learn more about the exact workings of SHA-256, or learn a bit more about it’s history and implementations, head on over to Wikipedia.

SHA-256

Winklevosses for, Peter Thiel against bitcoin.

It is quite evident that when influential people talk about bitcoin, the masses listen. Strike up a conversation about virtual currencies with an everyday person in your life, and they will recall information received from major news outlets.

Mainstream media likes to put things in a neat package so they’re easily understood.

The PRISM surveillance program, for example, will forever be linked to Edward Snowden because it is difficult to contemplate a secret monitoring program operated by secret people.

Snowden represents PRISM, and it could be argued that right now the Winklevoss twins, Cameron and Tyler, are a representation of bitcoin to the public.

Hedge funds and bitcoin?

At the New York Value Investing Congress, the Winklevoss twins held court regarding the prospect of bitcoin.

It’s important to keep in mind that the Value Investing Congress is an annual meeting of hedge fund managers, a group of investors that err on the side of caution because they are investing other people’s money.

It’s intriguing why Tyler and Cameron chose such a conference to speak about bitcoin; it’s not something that could be considered a stable investment in the hedge fund world.

The fact that they are trying to bring a bitcoin exchange traded fund (ETF) to market might bear some reasoning behind the move.

The Winklevoss Bitcoin Trust ETF is a notable attempt to bring access to bitcoin investing to the masses. It is still somewhat difficult to invest in bitcoins.

Sure, there are a number of exchanges available, but the fact that bitcoin operates outside of normal investment brokerages can make the majority of traditional investors wary.

winklevossbtcetf Winklevosses for, Peter Thiel against bitcoin. — The SEC filing for the Winklevoss Bitcoin Trust EFT by Math-Based Asset Services LLC occurred on July 1, 2013. Major sell-offs in bitcoin that week led to a low of $65 per BTC on Mt. Gox. Source: Bitcoin Charts

Confidence

Are the Winklevoss twins really the best representatives for bitcoin? That’s up for debate.

Anyone familiar with their history could suggest perhaps the twins were very fortunate to obtain a $65 million portion of the Facebook pie because of their early association with founder Mark Zuckerberg.

As it turns out, the Winklevoss siblings believe that they are owed more money from Zuckerberg, and have filed an additional suit against him.

But with that being said, they are wealthy and have put their money where their mouth is by investing in bitcoin. That’s something virtual currency investors can get behind.

Recently, the twins have been in the news about bitcoin again with some interesting concepts. They seem optimistic and prepared for mass media consumption to get people interested in trading in their fiat for BTC.

One idea is that the logical evolution of bitcoin will involve a nation adopting it as its currency.

“The next step for bitcoin is potentially becoming the currency of a country,” Tyler told the audience. “With bitcoin there are no bail-ins like in Cyprus”.

Could it become the currency of a country?

It would be interesting to know just what country might feel comfortable switching from government-controlled currency to a digital one that is decentralized.

While there are countries that have a money supply that is less than that of the total value of bitcoin, those numbers don’t factor in the economic realities of a nation in terms of Gross Domestic Product (GDP).

How would a country with bitcoin-denominated banknotes conduct trade with other countries?

The idea is a good one to pronounce, but the reality is that bitcoin lacks the structure to conduct any sort of economic policy.

It sounds like a total loss of control for a country. Yet it is possible a nation-state that utilizes something like the euro to trade might be able to make it work as an experiment.

What might be a more agreeable statement is that bitcoin is a new version of gold, which was another comment the twins made. “It’s gold 2.0,” said Tyler.

Someone can pay for a number of things with bitcoin at this point that you cannot do comparably with gold. So perhaps as a new store of value that could be more liquid, that makes a lot of sense.

Peter Thiel bearish on bitcoin

If you’re not familiar with Peter Thiel, it’s important to point out that the PayPal cofounder and BitPay investor is a contrarian.

That’s not to say he’s incorrect in what he says, but when he does say something it is because he believes in something different.

Take, for instance, his initiative to take smart young entrepreneurs and pay them not to go to college, but to build a company instead. The idea is that to Thiel, college is a drag on the economy; putting energy into building businesses and thus potential job creation is a better alternative.

Thiel told a German audience recently that he believes bitcoin has a “20% chance of success”.

Those who regularly read the news on CoinDesk might disagree. But the bigger picture is that despite the ultimate fate of bitcoin, digital currencies are here to stay.

transactionschartbtc Winklevosses for, Peter Thiel against bitcoin. — Could Peter Thiel’s skepticism about bitcoin come from volatile data points such as its total transaction volume? Source:Blockchain.info

While there may not ever be a bellwether virtual currency that we all transact in, there will always be digital payment systems that appeal to subsets of the population.

Take Ven, for example, which is a digital payment system that is built upon sustainable principals like carbon offsets. Does Thiel really think that people are going to stop creating these new concepts for money?

Belief and trust

It’s easy to take statements that are said by successful people at face value. Yet the fact of the matter is that it will always be the people who lift up decentralized currencies.

Think about it like this: If the people trust, then they will transact. Without that, any payment method will fail.

These new ideas for money are not backed by a financial system, and they are not guaranteed by a government. If an economy can be built upon them, then so be it.

Does it matter what Tyler and Cameron Winklevoss say? Does it matter what Peter Thiel thinks will happen?

source: http://www.coindesk.com/figures-come-out-for-against-bitcoin/

Winklevosses for, Peter Thiel against bitcoin.