Opinions on the topic of cryptocurrencies range from them being the greatest scam in history to a revolutionary innovation of such depth and power so as to rival the invention of the internet itself. Warren Buffet famously described them as ‘rat poison’ and they have been compared to tulips as in the investment bubble which took hold in the late 1500s in Europe around the newly discovered flowers. Technologists familiar with the technology point to its potential benefits in relation to the creation of efficiencies and increase in security features in relation to transactions in financial markets and supply chains. Bulls on cryptocurrency also point to the power of having an immutable distributed ledger which cannot be controlled by any one person or organisation but is instead verified and secured by a distributed network of independent computers.
To truly understand the technology of cryptocurrencies is a monumental task requiring an in depth knowledge of cryptography and the associated mathematics. There are however a number of elements of the technology which are unique and do serve a purpose to society in a way that could never have been achieved before. It also requires an in depth knowledge of computer science and networking including distributed systems. Understanding the social and economic implications of the development of cryptocurrencies and blockchain technology requires a knowledge of economics and even political science.
Bitcoin, for example, relies on a form of encryption known as elliptical curve encryption which is based on the mathematical properties of elliptical curves. This form of encryption is far more secure than the algorithms which more traditional cryptography is based on. The verification of transactions is achieved through the solving of extremely hard mathematical problems which is done by powerful computers around the world that receive a small reward each time that they solve a problem. If you are interested to learn more about cryptocurrencies, there are number of excellent books appearing on the topic, but the one at the moment we most recommend is listed below.