Please complete an advanced written paper on Bitcoin. The length, subject, and stance you take on this is completely your prerogative.
“Consensus-Currencies” in Kraken’s Currency Trading Platform
In this short essay, I argue that Kraken should err in favor of including crypto- currencies based on “decentralized consensus protocols” into its currency-trading platform. For the sake of brevity, I will refer to these crypto-currencies as “consensus-currencies” (e.g. Stellar, Ripple etc.). In making this argument, I am seeking to strike a balance between illustrating my understanding of crypto- currencies, and also presenting the argument without including unnecessary or tangential exposition.
My primary argument is that it is, at least in…show more content… The Blockchain is “decentralized” in the sense that you are not trusting one “central” third party to secure the ledger, you are, instead, relying on the nodes of the network to secure the ledger. Hence the Blockchain is often described as “trustless” (perhaps “distributed trust” would be better).
How is the Blockchain secured? Generally speaking, there are three different ideas about how to secure a network: voting, proof of work and proof of stake. The goal of each of these methods is to make it too costly or difficult for nefarious actors to change or fabricate the transaction history of the network, i.e., the ledger. The Blockchain relies on the proof-of-work method to secure the ledger. This works as follows: Individual transactions, when completed, are broadcast to the nodes on the peer-to-peer Bitcoin network. The nodes (which are either individual miners or pools of miners) then collate these transactions into transaction blocks (effectively, “pages” in the Blockchain ledger). They do this by hashing pairs of transactions (i.e. applying the SHA-256 algorithm to the pairs) to obtain a digest – this is a unique identifying number associated with these transactions. Pairs of digests are likewise hashed. This is carried out until the node has encoded all of the transactions it has received (this yields the data structure known as the “Merkle Tree”) and then has a hash that is a representative identifier of all of the transaction history. A