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Regulation of Cryptocurrencies and Blockchain Technologies pp 29–56Cite as

Palgrave Macmillan

Technology Underlying Cryptocurrencies and Types of Cryptocurrencies

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Part of the book series: Palgrave Studies in Financial Services Technology ((FST))

Abstract

This chapter explores the advent of blockchain technology which is the basis for almost all of the many types and formats of virtual currencies. We review the types, uses, and the many ways in which blockchain is transforming the world of business as well as society. Among them are management tools, financial services, tourism, legal and accounting services, and the innumerable other uses due to blockchain’s impenetrability to hacking, its protection of privacy, and many other advantages afforded.

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Notes

  1. 1.

    David Mills, Kathy Wang, Brendan Malone, Anjana Ravi, Jeff Marquardt, Clinton Chen, Anton Badev, Timothy Brezinski, Linda Fahy, Kimberley Liao, Vanessa Kargenian, Max Ellithorpe, Wendy Ng, and Maria Baird (2016). Distributed ledger technology in payments, clearing, and settlement, Finance and Economics Discussion Series 2016-095. Washington: Board of Governors of the Federal Reserve System, at p. 8. https://doi.org/10.17016/FEDS.2016.095

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  3. 3.

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  4. 4.

    Tunku Varadarajan, The Blockchain Is The Internet of Money, Wall Street Journal Opinion, Sept. 23–24, 2017, quotes from an interview with Balaji S. Srinivasan, https://www.wsj.com/articles/the-blockchain-is-the-internet-of-money-1506119424

  5. 5.

    Manav Gupta, IBM Blockchain for Dummies, at 13–14. https://bertrandszoghy.files.wordpress.com/2017/05/ibm-blockchain-for-dummies.pdf

  6. 6.

    Tunku Varadarajan, supra, note 4.

  7. 7.

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  8. 8.

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  9. 9.

    Nadaline Webster, A Brief History of Blockchain in Trademarks, Trademark Now, https://www.trademarknow.com/blog/brief-history-of-blockchain-in-trademarks

  10. 10.

    Come Jean Jarry and Romain Rouphael, From Julius Caesar to the Blockchain: A Brief History of Cryptography, https://cib.bnpparibas.com/documents/6-From_Julius_Caesar_to_the_blockchain_a_brief_history_of_cryptography.pdf. The authors are the co-founders of the cryptocurrency Belem.

  11. 11.

    Stuart Haber and W. Scott Stornetta, How to time-stamp a digital document, Journal of Cryptology 3(2), 99–111, Jan, 1991, cited in Wikipedia, Blockchain, https://en.wikipedia.org/wiki/Blockchain

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  13. 13.

    Vinay Gupta, A Brief History of Blockchain, Harvard Business Review, Feb. 28, 2017, https://hbr.org/2017/02/a-brief-history-of-blockchain

  14. 14.

    Tunku Varadarajan, The Blockchain Is the Internet of Money, The Wall Street Journal, at A11, Sept. 23–24, 2017.

  15. 15.

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  17. 17.

    Digiconomist, Ethereum Energy Consumption Index(beta), https://digiconomist.net/ethereum-energy-consumption

  18. 18.

    Mike Orcutt, Highjacking Computers to Mine Cryptocurrency Is All the Rage, MIT Technology Review, Oct. 5, 2017, https://www.technologyreview.com/s/609031/hijacking-computers-to-mine-cryptocurrency-is-all-the-rage/

  19. 19.

    Blockchains & Distributed Ledger Technologies, BlockchainHub, https://blockchainhub.net/blockchains-and-distributed-ledger-technologies-in-general/

  20. 20.

    Hawaii House Bill 1481, 2017, https://legiscan.com/HI/text/HB1481/id/1481334

  21. 21.

    Jonathan Camhi, UPS joins blockchain initiative, Business Insider, Nov. 13, 2017, http://www.businessinsider.com/ups-joins-blockchain-initiative-2017-11

  22. 22.

    What Are the Applications and Use Cases of Blockchains?, Coindesk, https://www.coindesk.com/information/applications-use-cases-blockchains/ and Andrew Meola, The growing list of applications and use cases of blockchain technology in business & life, Business Insider, Sept. 28, 2017, http://www.businessinsider.com/blockchain-technology-applications-use-cases-2017-9

  23. 23.

    Yessi Bello Perez, 8 Banking Giants Embracing Bitcoin and Blockchain Tech, Coindesk, July 27, 2015, https://www.coindesk.com/8-banking-giants-bitcoin-blockchain/

  24. 24.

    For a discussion, Gaurang Torvekar, 7 blockchain technologies to watch out for in 2017, Medium, Jan. 23, 2017, https://medium.com/@gaurangtorvekar/7-blockchain-technologies-to-watch-out-for-in-2017-4b3fc7a85707. A comparison of several of these cryptocurrencies may be found in Bigger Than Bitcoin: Cryptocurrency Statistics, https://bitinfocharts.com/

  25. 25.

    P2P Foundation, Satoshi Nakamoto’s Page, http://p2pfoundation.ning.com/profile/SatoshiNakamoto. The site states he is from Japan and is aged 42. There is no confirmation and commentators reiterate that the comment and the name are fictitious.

  26. 26.

    Rob Price, The man everyone thinks is the creator of bitcoin gave a speech discussing the history of the technology, Business Insider, Nov. 13, 2015, http://www.businessinsider.com/nick-szabo-ethereum-bitcoin-blockchain-history-satoshi-nakamoto-2015-11

  27. 27.

    Zahraa Alkhalisi, You can buy a new Dubai apartment for 50 Bitcoin, CNN Tech, Sept. 6, 2017, http://money.cnn.com/2017/09/06/technology/dubai-bitcoin-apartments/index.html

  28. 28.

    For a discussion, see U.S. Federal Deposit and Insurance Corporation, Who is the FDIC?, https://www.fdic.gov/about/learn/symbol/

  29. 29.

    U.S. Government Accountability Office, Virtual Currencies: Emerging, Law Enforcement, and Customer Protection Challenges, Report to the Committee on Homeland Security and Governmental Affairs, U.S. Senate, May, 2014, GAO-14-496, https://www.gao.gov/assets/670/663678.pdf

  30. 30.

    Bitcoin, Stack Exchange, https://bitcoin.stackexchange.com/questions/9078/what-is-proof-of-work

  31. 31.

    Mining, Bitcoin Wiki, https://en.bitcoin.it/wiki/Mining and Bitcoin Mining, Investopedia, https://www.investopedia.com/terms/b/bitcoin-mining.asp

  32. 32.

    For a definition and equipment that can be purchased for mining, see What is Bitcoin Mining?, https://www.bitcoinminibng.com/

  33. 33.

    Erik Fair, What’s the difference between a CPU and a GPU? When I Switch on my computer, it shows GPU information. What does it mean?, Quora, Jan. 16, 2017, https://www.quora.com/Whats-the-difference-between-a-CPU-and-a-GPU-When-I-switch-on-my-computer-it-shows-GPU-information-What-does-it-mean

  34. 34.

    Jordan Tuwiner, What is Bitcoin Mining? (/mining/), Buy Bitcoin Worldwide, June 28, 2017, https://www.buybitcoinworldwide.com/mining/profitability/

  35. 35.

    Tulipmania is a reference to the events in the Netherlands that took place when tulip bulbs became extraordinary in demand in Europe causing the prices of the bulbs to escalate dramatically and which then led to perhaps the first major financial crash in February, 1637. Andrew Beattie, Market Crashes: The Tulip and Bulb Craze (1630s), Investopedia, https://www.investopedia.com/features/crashes/crashes2.asp

  36. 36.

    Kari S. Larsen and Michael Selig, SEC Investor Advisory Committee Considers Blockchain Technology and Securities Markets, Reed Smith Client Alerts, Oct. 13, 2017, https://www.reedsmith.com/en/perspectives/2017/10/sec-investor-advisory-committee-considers-blockchain-technology

  37. 37.

    Palwasha Saaim B.Sc., Bitcoin Crash Fears Rise:Will Bitcoin Crash in 2018?, Profit Confidential Dec. 15, 2017, https://www.profitconfidential.com/cryptocurrency/bitcoin/will-bitcoin-btc-crash-2018/

  38. 38.

    Who Created Ethereum?, Bitcoin Magazine, https://bitcoinmagazine.com/guides/who-created-ethereum/

  39. 39.

    Gavin Wood, Ethereum: A Secure Decentralised, Generalized Transaction Ledger, Ethereum, Aug. 7, 2017, https://ethereum.github.io/yellowpaper/paper.pdf

  40. 40.

    Enterprise Ethereum Alliance, https://entethalliance.org/

  41. 41.

    Samantha Radocchia, How is Ethereum Different from Bitcoin?, Quora, Forbes, Sept. 9, 2017, https://www.forbes.com/sites/quora/2017/09/14/how-is-ethereum-different-from-Bitcoin/#1a765248502b

  42. 42.

    Vincent Briatore, What is Ethereum and how is it different from Bitcoin?, Quora, https://www.quora.com/What-is-Ethereum-and-how-is-it-different-from-Bitcoin

  43. 43.

    What are Mining Rewards in Ethereum? Cryptocompare, https://www.cryptocompare.com/mining/guides/what-are-mining-rewards-in-ethereum/

  44. 44.

    Vangie Beal, hashing, Webopedia, https://www.webopedia.com/TERM/H/hashing.html; and JP Buntinx, Bitcoin Cash Hashrate Surpasses 2.4 Exohash per second, Bitcoin Interest, Dec. 20, 2017, http://www.livebitcoinnews.com/bitcoin-cash-hashrate-surpasses-2-4-exohash-per-second/

  45. 45.

    How do Ethereum’s Transaction fees compare to Bitcoin?, Ethereum, https://ethereum.stackexchange.com/questions/11/how-do-ethereums-transaction-fees-compare-to-bitcoin

  46. 46.

    Antonio Madeira, Why is Ethereum different to Bitcoin? Cryptocompare, Sept. 27, 2017, https://www.cryptocompare.com/coins/guides/why-is-ethereum-different-to-bitcoin/

  47. 47.

    What is Litecoin? A Basic Beginner’s Guide, Blockgeeks, Inc. (Ca), https://blockgeeks.com/guides/litecoin/

  48. 48.

    What is Scrypt?, Cryptocompare, https://www.cryptocompare.com/coins/guides/what-is-scrypt/

  49. 49.

    The Backbone of IOT Is Here, IOTA, https://iota.org/

  50. 50.

    Serguei Popov, The Tangle, IOTA, Oct. 1, 2017, https://iota.org/IOTA_Whitepaper.pdf

  51. 51.

    Wayne Duggan, Meet IOTA: The Cryptocurrency For The Internet-Of-Things, Benzinga, Dec. 26, 2017, https://www.benzinga.com/general/education/17/12/10946936/meet-iota-the-cryptocurrency-for-the-internet-of-things

  52. 52.

    Worldwide Supercomputer, GOLEM, https://golem.network/

  53. 53.

    Frisco d’Anconia, Golem Is 10th Most Valuable Crypto, The Cointelegraph, Apr. 28, 2017, https://cointelegraph.com/news/golem-is-10th-most-valuable-crypto

  54. 54.

    Whitepaper: The future of commerce: A decentralized network for payment requests, Request Network, Oct. 25, 2017, https://request.network/assets/pdf/request_whitepaper.pdf

  55. 55.

    Id., at pp. 10–11.

  56. 56.

    Analysis of Request Network – Decentralized Network for Payment Requests, Crushcrypto, https://crushcrypto.com/analysis-of-request-network/

  57. 57.

    Dash, https://www.dash.org/2017/12/22/ceoofdash.html

  58. 58.

    Kailey Leinz, Ripple’s 53% surge makes it the second-biggest cryptocurrency, Moneyweb, https://www.moneyweb.co.za/news/markets/ripples-53-surge-makes-it-the-second-biggest-cryptocurrency/

  59. 59.

    Ripple News, The Coin Telegraph, https://cointelegraph.com/tags/ripple

  60. 60.

    Ripple, https://ripple.com/

  61. 61.

    Nathaniel Popper, Rise of Bitcoin Competitor Creates Wealth to Rival Zuckerberg, New York Times, Jan. 4, 2018, https://www.nytimes.com/2018/01/04/technology/bitcoin-ripple.html?ref=todayspaper

  62. 62.

    Monero, https://getmonero.org/

  63. 63.

    Joan Ian Wong, The new cryptocurrency gold rush: digital tokes that raise millions in minutes, Quartz, June 5, 2017, https://qz.com/994466/the-new-cryptocurrency-gold-rush-digital-tokens-that-raise-millions-in-minutes/

  64. 64.

    Gertrude Chavez-Dreyfuss, U.S. venture capital’s digital coin quandary: cash-rich startups, Reuters, July 24, 2017, http://www.reuters.com/article/us-usa-venturecapital-digitalcurrency/u-s-venture-capitals-digital-coin-quandary-cash-rich-startups-idUSKBN1A90CR

  65. 65.

    Evelyn Cheng, This hot digital currency trend is minting millions but U.S. investors aren’t allowed to play, CNBC, July 18, 2017, https://www.cnbc.com/2017/07/18/hot-digital-currency-trend-minting-millions-off-limits-to-us-investors.html

  66. 66.

    For a summary, see Aziz, Coins, Tokens & Altcoins: What’s the Difference?, https://masterthecrypto.com/differences-between-cryptocurrency-coins-and-tokens/

  67. 67.

    Sergi Dromo, ICOs Raised Bln in 2017, What 2018 Has in Store, The Cointelegraph, Dec. 31, 2017, https://cointelegraph.com/news/icos-raised-4-bln-in-2017-what-2018-has-in-store

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    Cryptocurrency Market Capitalizations, Coin Market, Jan. 19, 2018, https://coinmarketcap.com/

  69. 69.

    Initial Coin Offerings (ICOs), BlockchainHub, https://blockchainhub.net/ico-initial-coin-offerings/

  70. 70.

    Jason Teutsch, Vialik Buterin, and Christopher Brown, Initial coin offerings, Dec. 11, 2017, https://people.cs.uchicago.edu/~teutsch/papers/ico.pdf

  71. 71.

    What Are Forks? World Crypto Index, https://www.worldcryptoindex.com/what-are-forks/, and The Differences Between Hard and Soft Forks, WeUseCoins, https://www.weusecoins.com/hard-fork-soft-fork-differences/

  72. 72.

    For a listing of Altcoin offering, see Altcoins, http://altcoins.com/

  73. 73.

    Ofir Beigel, What are Altcoins?, Bitcoins, Aug. 31, 2016, https://99bitcoins.com/altcoins/

  74. 74.

    What is an Altcoin?, CCN, Sept. 12, 2014, https://www.ccn.com/altcoin/

  75. 75.

    Jeff John Roberts, Beyond Bitcoin: Overstock Lets Customers Pay With More Than 40 Alt Coins, Fortune, Aug. 8, 2017, http://fortune.com/2017/08/08/overstock-digital-currency/

  76. 76.

    Counterparty – Pioneering Peer-to-Peer Finance, Bitcoin Forum, Jan. 2, 2014, https://bitcointalk.org/index.php?topic=395761.0. An excellent summary of the diverse platforms is discussed by Peter Van Valkenburgh, What are Forks, Alt-coins, Meta-coins, and Sidechains?, Coin Center, Dec. 8, 2015, https://coincenter.org/entry/what-are-forks-alt-coins-meta-coins-and-sidechains

  77. 77.

    Joseph Krug and Jack Peterson, Sidecoin: a Snapshot Mechanism for Bootstrapping a Blockchain/Sidecoin: The sidecar to Bitcoin’s motorcycle, http://www.sidecoin.net/

  78. 78.

    Id.

  79. 79.

    Ethereum, What is a sidechain?, https://ethereum.stackexchange.com/questions/379/what-is-a-sidechain

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  1. Lubin School of Business, Pace University, Pleasantville, NY, USA

    Rosario Girasa

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Girasa, R. (2018). Technology Underlying Cryptocurrencies and Types of Cryptocurrencies. In: Regulation of Cryptocurrencies and Blockchain Technologies. Palgrave Studies in Financial Services Technology. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-78509-7_2

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