Discussion about Primecoin and its infra. Primecoin is a very innovative cryptocurrency, being the 1st non Hash-Cash PoW crypto, naturally scarce (not artificially), with very fast confirmations (1min), elastic readjusting reward & a useful mining (byproducts are primes). Primecoin is sustainable (miners are guaranteed to have revenues), and decentralized (ASIC/FPGA are not particularly advantaged). Sidechain for decentralized data applications (e.g. Storj) currently in development.
u/Maximus_no submitted by
and me spent some time at work collecting and analyzing learning material for blockchain development. The list contains resources for developers, as well as business analysts/consultants looking to learn more about blockchain use-cases and solutions.
Certifications and Courses
Link to course: IIB council : Certified Blockchain Professional
C|BP is an In-Depth, Industry Agnostic, Hands-On Training and Certification Course specifically tailored for Industry Professionals and Developers interested in implementing emerging technologies in the Data-Driven Markets and Digitized Economies.
The IIB Council Certified Blockchain Professional (C|BP) Course
was developed to help respective aspiring professionals gain excessive knowledge in Blockchain technology and its implication on businesses.
WHO IS IT FOR:
C|BP is developed in line with the latest industry trends to help current and aspiring Professionals evolve in their career by implementing the latest knowledge in blockchain technology. This course will help professionals understand the foundation of Blockchain technology and the opportunities this emerging technology is offering.
If you are a Developer and you are willing to learn blockchain technology this course is for you. You will learn to build and model Blockchain solutions and Blockchain-based applications for enterprises and businesses in multiple Blockchain Technologies.
This exam is designed for non-technical business professionals who require basic knowledge about Blockchain and how it will be executed within an organization. This exam is NOT appropriate for technology professionals seeking to gain deeper understanding of Blockchain technology implementation or programming.
A person who holds this certification demonstrates their knowledge of:
· What is Blockchain? (What exactly is it?)
· Non-Technical Technology Overview (How does it work?)
· Benefits of Blockchain (Why should anyone consider this?)
· Use Cases (Where and for what apps is it appropriate?)
· Adoption (Who is using it and for what?)
· Future of Blockchain (What is the future?)
A person who holds this certification demonstrates their ability to:
· Architect blockchain solutions
· Work effectively with blockchain engineers and technical leaders
· Choose appropriate blockchain systems for various use cases
· Work effectively with both public and permissioned blockchain systems
This exam will prove that a student completely understands:
· The difference between proof of work, proof of stake, and other proof systems and why they exist
· Why cryptocurrency is needed on certain types of blockchains
· The difference between public, private, and permissioned blockchains
· How blocks are written to the blockchain
· Where cryptography fits into blockchain and the most commonly used systems
· Common use cases for public blockchains
· Common use cases for private & permissioned blockchains
· What is needed to launch your own blockchain
· Common problems & considerations in working with public blockchains
· Awareness of the tech behind common blockchains
· When is mining needed and when it is not
· Byzantine Fault Tolerance
· Consensus among blockchains
· What is hashing
· How addresses, public keys, and private keys work
· What is a smart contract
· Security in blockchain
· Brief history of blockchain
· The programming languages of the most common blockchains
· Common testing and deployment practices for blockchains and blockchain-based apps
A person who holds this certification demonstrates their ability to:
· Plan and prepare production ready applications for the Ethereum blockchain
· Write, test, and deploy secure Solidity smart contracts
· Understand and work with Ethereum fees
· Work within the bounds and limitations of the Ethereum blockchain
· Use the essential tooling and systems needed to work with the Ethereum ecosystem
This exam will prove that a student completely understands how to:
· Implement web3.js
· Write and compile Solidity smart contracts
· Create secure smart contracts
· Deploy smart contracts both the live and test Ethereum networks
· Calculate Ethereum gas costs
· Unit test smart contracts
· Run an Ethereum node on development machines
Basic course with focus on Bitcoin. After this course, you’ll know everything you need to be able to separate fact from fiction when reading claims about Bitcoin and other cryptocurrencies. You’ll have the conceptual foundations you need to engineer secure software that interacts with the Bitcoin network. And you’ll be able to integrate ideas from Bitcoin in your own projects.
· A mid / basic understanding of blockchain technology and its long-term implications for business, coupled with knowledge of its relationship to other emerging technologies such as AI and IoT
· An economic framework for identifying blockchain-based solutions
to challenges within your own context, guided by the knowledge of cryptoeconomics expert Christian Catalini
· Recognition of your newfound blockchain knowledge in the form of a certificate of completion
from the MIT Sloan School of Management — one of the world’s leading business schools Orientation Module:
Welcome to Your Online Campus Module 1:
An introduction to blockchain technology Module 2:
Bitcoin and the curse of the double-spending problem Module 3:
Costless verification: Blockchain technology and the last mile problem Module 4:
Bootstrapping network effects through blockchain technology and cryptoeconomics Module 5:
Using tokens to design new types of digital platforms Module 6:
The future of blockchain technology, AI, and digital privacy
· A mid / basic understanding of what blockchain is and how it works, as well as insights into how it will affect the future of industry and of your organization.
· The ability to make better strategic business decisions by utilizing the Oxford Blockchain Strategic framework, the Oxford Blockchain Regulation framework, the Oxford Blockchain Ecosystem map, and drawing on your knowledge of blockchain and affiliated industries and technologies.
· A certificate of attendance from Oxford Saïd as validation of your newfound blockchain knowledge and skills, as well as access to a global network of like-minded business leaders and innovators. Module 1:
Understanding blockchain Module 2:
The blockchain ecosystem Module 3:
Innovations in value transfer Module 4:
Decentralized apps and smart contracts Module 5:
Transforming enterprise business models Module 6:
Resources and Articles Introduction to Distributed Ledger Technologies (DLT) https://www.ibm.com/developerworks/cloud/library/cl-blockchain-basics-intro-bluemix-trs/ Tomas’s Personal Favourite: 150+ Resources for going from web-dev to blockchain engineer https://github.com/benstew/blockchain-for-software-engineers Hyperledger Frameworks
Hyperledger is widely regarded as the most mature open-source framework for building private & permissioned blockchains.
Tutorials: https://www.hyperledger.org/resources/training R3 Corda
Open-source developer frameworks for building private, permissioned blockchains. A little better than Hyperledger on features like privacy and secure channels. Used mostly in financial applications. Ethereum, Solidity, dApps and Smart-Contracts
Ethereum & Solidity Course (favourite): https://www.udemy.com/ethereum-and-solidity-the-complete-developers-guide/
An Introduction to Ethereum’s Token Standards: https://medium.com/coinmonks/anatomy-of-an-erc-an-exhaustive-survey-8bc1a323b541
How To Create Your First ERC20 Token: https://medium.com/bitfwd/how-to-do-an-ico-on-ethereum-in-less-than-20-minutes-a0062219374
Ethereum Developer Tools [Comprehensive List]: https://github.com/ConsenSys/ethereum-developer-tools-list/blob/masteREADME.md
CryptoZombies – Learn to code dApps through game-development: https://cryptozombies.io/
Intro to Ethereum Development: https://hackernoon.com/ethereum-development-walkthrough-part-1-smart-contracts-b3979e6e573e
Notes from Consensys Academy Participant (free): https://github.com/ScottWorks/ConsenSys-Academy-Notes
AWS Ethereum Templates: https://aws.amazon.com/blogs/aws/get-started-with-blockchain-using-the-new-aws-blockchain-templates/
Create dApps with better user-experience: https://blog.hellobloom.io/how-to-make-a-user-friendly-ethereum-dapp-5a7e5ea6df22
Solidity YouTube Course: https://www.youtube.com/channel/UCaWes1eWQ9TbzA695gl_PtA
[UX &UI] Designing a decentralized profile dApp: https://uxdesign.cc/designing-a-decentralized-profile-dapp-ab12ead4ab56
Scaling Solutions on Ethereum: https://media.consensys.net/the-state-of-scaling-ethereum-b4d095dbafae Different Platforms for dApps and Smart-Contracts
While Ethereum is the most mature dApp framework with both the best developer tools, resources and community, there are other public blockchain platforms. Third generation blockchains are trying to solve Ethereum’s scaling and performance issues. Here is an overview of dApp platforms that can be worth looking into: NEO
The second most mature dApp platform. NEO has better scalability and performance than Ethereum and has 1’000 TPS to ETH’s 15 by utilizing a dBFT consensus algorithm. While better infrastructure, NEO does not have the maturity of Ethereum’s developer tools, documentation and community.
A writeup on why a company chose to develop on NEO and not Ethereum: https://medium.com/orbismesh/why-we-chose-neo-over-ethereum-37fc9208ffa0 Cardano
While still in alpha with a long and ambitious roadmap ahead of it, Cardano is one of the most anticipated dApp platforms out there. IOHK, the research and engineering company that maintains Cardano, has listed a lot of great resources and scientific papers that is worth looking into.
An Intro to Cardano: https://hackernoon.com/cardano-ethereum-and-neo-killer-or-overhyped-and-overpriced-8fcd5f8abcdf
IOHK Scientific Papers - https://iohk.io/research/papers/ Stellar
If moving value fast from one party to another by using smart-contracts is the goal, Stellar Lumens is your platform. Initially as an open-source fork from Ripple, Stellar has become one of the mature frameworks for financial applications. Stellar’s focus lies in interoperability with legacy financial systems and cheap/fast value transfer. It’s smart-contract capability is rather limited in comparison to Ethereum and HyperLedger, so take that in consideration. Ripple
Ripple and its close cousin, Stellar, is two of the most well-known cryptocurrencies and DLT frameworks meant for the financial sector. Ripple enables instant settlement between banks for international transactions.
Consensus Algorithms [Proof of Work]
- very short, cuz it's well-known.
 Bitcoin - to generate a new block miner must generate hash of the new block header that is in line with given requirements.
Others: Ethereum, Litecoin etc. [Hybrid of PoW and PoS]
 Decred - hybrid of “proof of work” and “proof of stake”. Blocks are created about every 5 minutes. Nodes in the network looking for a solution with a known difficulty to create a block (PoW). Once the solution is found it is broadcast to the network. The network then verifies the solution. Stakeholders who have locked some DCR in return for a ticket* now have the chance to vote on the block (PoS). 5 tickets are chosen pseudo-randomly from the ticket pool and if at least 3 of 5 vote ‘yes’ the block is permanently added to the blockchain. Both miners and voters are compensated with DCR : PoS - 30% and PoW - 60% of about 30 new Decred issued with a block. * 1 ticket = ability to cast 1 vote. Stakeholders must wait an average of 28 days (8,192 blocks) to vote their tickets. [Proof of Stake]
 Nxt - The more tokens are held by account, the greater chance that account will earn the right to generate a block. The total reward received as a result of block generation is the sum of the transaction fees located within the block. Three values are key to determining which account is eligible to generate a block, which account earns the right to generate a block, and which block is taken to be the authoritative one in times of conflict: base target value, target value and cumulative difficulty. Each block on the chain has a generation signature parameter. To participate in the block's forging process, an active account digitally signs the generation signature of the previous block with its own public key. This creates a 64-byte signature, which is then hashed using SHA256. The first 8 bytes of the resulting hash are converted to a number, referred to as the account hit. The hit is compared to the current target value(active balance). If the computed hit is lower than the target, then the next block can be generated.  Peercoin (chain-based proof of stake)
- coin age parameter. Hybrid PoW and PoS algorithm. The longer your Peercoins have been stationary in your account (to a maximum of 90 days), the more power (coin age) they have to mint a block. The act of minting a block requires the consumption of coin age value, and the network determines consensus by selecting the chain with the largest total consumed coin age. Reward - minting + 1% yearly.  Reddcoin (Proof of stake Velocity)
- quite similar to Peercoin, difference: not linear coin-aging function (new coins gain weight quickly, and old coins gain weight increasingly slowly) to encourage Nodes Activity. Node with most coin age weight have a bigger chance to create block. To create block Node should calculate right hash. Block reward - interest on the weighted age of coins/ 5% annual interest in PoSV phase.  Ethereum (Casper) - uses modified BFT consensus
. Blocks will be created using PoW. In the Casper Phase 1 implementation for Ethereum, the “proposal mechanism" is the existing proof of work chain, modified to have a greatly reduced block reward. Blocks will be validated by set of Validators. Block is finalised when 2/3 of validators voted for it (not the number of validators is counted, but their deposit size). Block creator rewarded with Block Reward + Transaction FEES.  Lisk (Delegated Proof-of-stake)
- Lisk stakeholders vote with vote transaction (the weight of the vote depends on the amount of Lisk the stakeholder possess) and choose 101 Delegates, who create all blocks in the blockchain. One delegate creates 1 block within 1 round (1 round contains 101 blocks) -> At the beginning of each round, each delegate is assigned a slot indicating their position in the block generation process -> Delegate includes up to 25 transactions into the block, signs it and broadcasts it to the network -> As >51% of available peers agreed that this block is acceptable to be created (Broadhash consensus), a new block is added to the blockchain. *Any account may become a delegate, but only accounts with the required stake (no info how much) are allowed to generate blocks. Block reward - minted Lisks and transaction fees (fees for all 101 blocks are collected firstly and then are divided between delegates). Blocks appears every 10 sec.  Cardano (Ouroboros Proof of Stake)
- Blocks(slots) are created by Slot Leaders. Slot Leaders for N Epoch are chosen during n-1 Epoch. Slot Leaders are elected from the group of ADA stakeholders who have enough stake. Election process consist of 3 phases: Commitment phase: each elector generates a random value (secret), signs it and commit as message to network (other electors) saved in to block. -> Reveal phase: Each elector sends special value to open a commitment, all this values (opening) are put into the block. -> Recovery phase: each elector verifies that commitments and openings match and extracts the secrets and forms a SEED (randomly generated bytes string based on secrets). All electors get the same SEED. -> Follow the Satoshi algorithm : Elector who have coin which corresponded to SEED become a SLOT LEADER and get a right to create a block. Slot Leader is rewarded with minted ADA and transactions Fee.  Tezos (Proof Of Stake)
- generic and self-amending crypto-ledger. At the beginning of each cycle (2048 blocks), a random seed is derived from numbers that block miners chose and committed to in the penultimate cycle, and revealed in the last. -> Using this random seed, a follow the coin strategy (similar to Follow The Satoshi) is used to allocate mining rights and signing rights to stakeholders for the next cycle*. -> Blocks are mined by a random stakeholder (the miner) and includes multiple signatures of the previous block provided by random stakeholders (the signers). Mining and signing both offer a small reward but also require making a one cycle safety deposit to be forfeited in the event of a double mining or double signing.
· the more coins (rolls) you have - the more your chance to be a minesigner.  Tendermint (Byzantine Fault Tolerance
) - A proposal is signed and published by the designated proposer at each round. The proposer is chosen by a deterministic and non-choking round robin selection algorithm that selects proposers in proportion to their voting power. The proposer create the block, that should be validated by >2/3 of Validators, as follow: Propose -> Prevote -> Precommit -> Commit. Proposer rewarded with Transaction FEES.  Tron (Byzantine Fault Tolerance
) - This blockhain is still on development stage. Consensus algorithm = PoS + BFT (similar to Tendermint): PoS algorithm chooses a node as Proposer, this node has the power to generate a block. -> Proposer broadcasts a block that it want to release. -> Block enters the Prevote stage. It takes >2/3 of nodes' confirmations to enter the next stage. -> As the block is prevoted, it enters Precommit stage and needs >2/3 of node's confirmation to go further. -> As >2/3 of nodes have precommited the block it's commited to the blockchain with height +1. New blocks appears every 15 sec.  NEO (Delegated Byzantine Fault Tolerance)
- Consensus nodes* are elected by NEO holders -> The Speaker is identified (based on algorithm) -> He broadcasts proposal to create block -> Each Delegate (other consensus nodes) validates proposal -> Each Delegate sends response to other Delegates -> Delegate reaches consensus after receiving 2/3 positive responses -> Each Delegate signs the block and publishes it-> Each Delegate receives a full block. Block reward 6 GAS distributed proportionally in accordance with the NEO holding ratio among NEO holders. Speaker rewarded with transaction fees (mostly 0). * Stake 1000 GAS to nominate yourself for Bookkeeping(Consensus Node)  EOS (Delegated Proof of Stake)
- those who hold tokens on a blockchain adopting the EOS.IO software may select* block producers through a continuous approval voting system and anyone may choose to participate in block production and will be given an opportunity to produce blocks proportional to the total votes they have received relative to all other producers. At the start of each round 21 unique block producers are chosen. The top 20 by total approval are automatically chosen every round and the last producer is chosen proportional to their number of votes relative to other producers. Block should be confirmed by 2/3 or more of elected Block producers. Block Producer rewarded with Block rewards. *the more EOS tokens a stakeholder owns, the greater their voting power [The XRP Ledger Consensus Process]  Ripple - Each node receives transaction from external applications
-> Each Node forms public list of all valid (not included into last ledger (=block)) transactions aka (Candidate Set) -> Nodes merge its candidate set with UNLs(Unique Node List) candidate sets and vote on the veracity of all transactions (1st round of consensus) -> all transactions that received at least 50% votes are passed on the next round (many rounds may take place) -> final round of consensus requires that min 80% of Nodes UNL agreeing on transactions. It means that at least 80% of Validating nodes should have same Candidate SET of transactions -> after that each Validating node computes a new ledger (=block) with all transactions (with 80% UNL agreement) and calculate ledger hash, signs and broadcasts -> All Validating nodes compare their ledgers hash -> Nodes of the network recognize a ledger instance as validated when a 80% of the peers have signed and broadcast the same validation hash. -> Process repeats. Ledger creation process lasts 5 sec(?). Each transaction includes transaction fee (min 0,00001 XRP) which is destroyed. No block rewards. [The Stellar consensus protocol]  Stellar (Federated Byzantine Agreement)
- quite similar to Ripple. Key difference - quorum slice. [Proof of Burn]
 Slimcoin - to get the right to write blocks Node should “burn” amount of coins. The more coins Node “burns” more chances it has to create blocks (for long period) -> Nodes address gets a score called Effective Burnt Coins that determines chance to find blocks. Block creator rewarded with block rewards. [Proof of Importance]
 NEM - Only accounts that have min 10k vested coins are eligible to harvest (create a block). Accounts with higher importance scores have higher probabilities of harvesting a block. The higher amount of vested coins, the higher the account’s Importance score. And the higher amount of transactions that satisfy following conditions: - transactions sum min 1k coins, - transactions made within last 30 days, - recipient have 10k vested coins too, - the higher account’s Important score. Harvester is rewarded with fees for the transactions in the block. A new block is created approx. every 65 sec. [Proof of Devotion]
 Nebulas (Proof of Devotion + BFT) - quite similar to POI, the PoD selects the accounts with high influence. All accounts are ranked according to their liquidity and propagation (Nebulas Rank) -> Top-ranked accounts are selected -> Chosen accounts pay deposit and are qualified as the blocks Validators* -> Algorithm pseudo-randomly chooses block Proposer -> After a new block is proposed, Validators Set (each Validator is charged a deposit) participate in a round of BFT-Style voting to verify block (1. Prepare stage -> 2. Commit Stage. Validators should have > 2/3 of total deposits to validate Block) -> Block is added. Block rewards : each Validator rewarded with 1 NAS. *Validators Set is dynamic, changes in Set may occur after Epoch change. [IOTA Algorithm]
 IOTA - uses DAG (Directed Acyclic Graph) instead of blockchain (TANGLE equal to Ledger). Graph consist of transactions (not blocks). To issue a new transaction Node must approve 2 random other Transactions (not confirmed). Each transaction should be validate n(?) times. By validating PAST(2) transactions whole Network achieves Consensus. in Order to issue transaction Node: 1. Sign transaction with private key 2. choose two other Transactions to validate based on MCMC(Markov chain Monte Carlo) algorithm, check if 2 transactions are valid (node will never approve conflicting transactions) 3. make some PoW(similar to HashCash). -> New Transaction broadcasted to Network. Node don’t receive reward or fee. [PBFT + PoW]
 Yobicash - uses PBFT and also PoW. Nodes reach consensus on transactions by querying other nodes. A node asks its peers about the state of a transaction: if it is known or not, and if it is a doublespending transaction or not. As follow : Node receives new transaction -> Checks if valid -> queries all known nodes for missing transactions (check if already in DAG ) -> queries 2/3 nodes for doublepsending and possibility -> if everything is ok add to DAG. Reward - nodes receive transaction fees + minting coins. [Proof of Space/Proof of Capacity]
 Filecoin (Power Fault Tolerance) - the probability that the network elects a miner(Leader) to create a new block (it is referred to as the voting power of the miner) is proportional to storage currently in use in relation to the rest of the network. Each node has Power - storage in use verified with Proof of Spacetime by nodes. Leaders extend the chain by creating a block and propagating it to the network. There can be an empty block (when no leader). A block is committed if the majority of the participants add their weight on the chain where the block belongs to, by extending the chain or by signing blocks. Block creator rewarded with Block reward + transaction fees. [Proof of Elapsed Time (POET)]
 Hyperledger Sawtooth - Goal - to solve BFT Validating Nodes limitation. Works only with intel’s SGX. PoET uses a random leader election model or a lottery based election model based on SGX, where the protocol randomly selects the next leader to finalize the block. Every validator requests a wait time from an enclave (a trusted function). -> The validator with the shortest wait time for a particular transaction block is elected the leader. -> The BlockPublisher is responsible for creating candidate blocks to extend the current chain. He takes direction from the consensus algorithm for when to create a block and when to publish a block. He creates, Finalizes, Signs Block and broadcast it -> Block Validators check block -> Block is created on top of blockchain.  Byteball (Delegated Byzantine Fault Tolerance)
- only verified nodes are allowed to be Validation nodes (list of requirements https://github.com/byteball/byteball-witness
). Users choose in transaction set of 12 Validating nodes. Validating nodes(Witnesses) receive transaction fees.  Nano - uses DAG, PoW (HashCash).
Nano uses a block-lattice structure. Each account has its own blockchain (account-chain) equivalent to the account’s transaction/balance history. To add transaction user should make some HashCash PoW -> When user creates transaction Send Block appears on his blockchain and Receive block appears on Recipients blockchain. -> Peers in View receive Block -> Peers verify block (Double spending and check if already in the ledger) -> Peers achieve consensus and add block. In case of Fork (when 2 or more signed blocks reference the same previous block): Nano network resolves forks via a balance-weighted voting system where representative nodes vote for the block they observe, as >50% of weighted votes received, consensus achieved and block is retained in the Node’s ledger (block that lose the vote is discarded).  Holochain - uses distributed hash table (DHT).
Instead of trying to manage global consensus for every change to a huge blockchain ledger, every participant has their own signed hash chain. In case of multi-party transaction, it is signed to each party's chain. Each party signs the exact same transaction with links to each of their previous chain entries. After data is signed to local chains, it is shared to a DHT where every neighbor node validate it. Any consensus algorithms can be built on top of Holochain.  Komodo ('Delegated' Delayed Proof of Work (dPoW
)) - end-to-end blockchain solutions. DPoW consensus mechanism does not recognize The Longest Chain Rule to resolve a conflict in the network, instead the dPoW looks to backups it inserted previously into the chosen PoW blockchain. The process of inserting backups of Komodo transactions into a secure PoW is “notarization.” Notarisation is performed by the elected Notary nodes. Roughly every ten minutes, the Notary nodes perform a special block hash mined on the Komodo blockchain and take note of the overall Komodo blockchain “height”. The notary nodes process this specifc block so that their signatures are cryptographically included within the content of the notarized data. There are sixty-four “Notary nodes” elected by a stake-weighted vote, where ownership of KMD represents stake in the election. They are a special type of blockchain miner, having certain features in their underlying code that enable them to maintain an effective and cost-efcient blockchain and they periodically receives the privilege to mine a block on “easy difculty.”
Source: https://www.reddit.com/CryptoTechnology/comments/7znnq8/my_brief_observation_of_most_common_consensus/ Whitepapers Worth Looking Into:
Ethereum Plasma (Omise-GO) -https://plasma.io/plasma.pdf
Cardano - https://eprint.iacr.org/2016/889.pdf
A (live/editable) timeline of historical events directly or indirectly related to the creation of Bitcoin and Cryptocurrencies
*still workin' on this so check back later and more will be added, if you have any suggested dates/events feel free to lemme know...
This timeline includes dates pertaining to:
- Forms of money
- Banking models
- Bank Bailouts
- Widely accepted economic systems
- Widely accepted forms of government
- Inventions which advanced FinTech
- Inventions in computer science and related technology
- Inventions which connected the world via transportation, communication and information
- Development of cryptography and cyberwar
- Notable Social Movements
- Hyperinflation and National Debts
Ancient Bartering – first recorded in Egypt (resources, services...) – doesn’t scale
Tally sticks were used, making notches in bones or wood, as a form of money of account
9000-6000 BC Livestock considered the first form of currency
c3200 BC Clay tablets used in Uruk (Iraq) for accounting (believed to be the earliest form of writing)
3000 BC Grain is used as a currency, measured out in Shekels
3000 BC Banking developed in Mesopotamia
3000 BC? Punches used to stamp symbols on coins were a precursor to the printing press and modern coins
? BC Since ancient Persia and all the way up until the invention and expansion of the telegraph Homing Pigeons were used to carry messages
2000 BC Merchants in Assyria, India and Sumeria lent grain to farmers and traders as a precursor to banks
1700 BC In Babylon at the time of Hammurabi, in the 18th century BC, there are records of loans made by the priests of the temple.
1200 BC Shell money first used in China
1000-600 BC Crude metal coins first appear in China
640 BC Precious metal coins – Gold & Silver first used in ancient Lydia and coastal Greek cities featuring face to face heads of a bull and a lion – first official minted currency made from electrum, a mixture of gold and silver
600-500 BC Atbash Cipher
A substitution Cipher used by ancient Hebrew scholars mapping the alphabet in reverse, for example, in English an A would be a Z, B a Y etc.
400 BC Skytale used by Sparta
474 BC Hundreds of gold coins from this era were discovered in Rome in 2018
350 BC Greek hydraulic semaphore system, an optical communication system developed by Aeneas Tacticus.
c200 BC Polybius Square
??? Wealthy stored coins in temples, where priests also lent them out
??? Rome was the first to create banking institutions apart from temples
118 BC First banknote in the form of 1 foot sq pieces of white deerskin
100-1 AD Caesar Cipher
193 Aureus, a gold coin of ancient Rome, minted by Septimius Severus
324 Solidus, pure gold coin, minted under Constantine’s rule, lasted until the late 8th century
600s Paper currency first developed in Tang Dynasty China during the 7th century, although true paper money did not appear until the 11th century, during the Song Dynasty, 960–1279
c757–796 Silver pennies based on the Roman denarius became the staple coin of Mercia in Great Britain around the time of King Offa
806 First paper banknotes used in China but isn’t widely accepted in China until 960
1024 The first series of standard government notes were issued in 1024 with denominations like 1 guàn (貫, or 700 wén), 1 mín (緡, or 1000 wén), up to 10 guàn. In 1039 only banknotes of 5 guàn and 10 guàn were issued, and in 1068 a denomination of 1 guàn was introduced which became forty percent of all circulating Jiaozi banknotes.
1040 The first movable type printer was invented in China and made of porcelain
? Some of the earliest forms of long distance communication were drums used by Native Africans and smoke signals used by Native Americans and Chinese
1088 Movable type in Song Dynasty China
1120 By the 1120s the central government officially stepped in and produced their own state-issued paper money (using woodblock printing)
1150 The Knights Templar issued bank notes to pilgrims. Pilgrims deposited their valuables with a local Templar preceptory before embarking, received a document indicating the value of their deposit, then used that document upon arrival in the Holy Land to retrieve their funds in an amount of treasure of equal value.
1200s-1300s During the 13th century bankers from north Italy, collectively known as Lombards, gradually replace the Jews in their traditional role as money-lenders to the rich and powerful. – Florence, Venice and Genoa - The Bardi and Peruzzi Families dominated banking in 14th century Florence, establishing branches in many other parts of Europe
1200 By the time Marco Polo visited China they’d move from coins to paper money, who introduced the concept to Europe. An inscription warned, "All counterfeiters will be decapitated." Before the use of paper, the Chinese used coins that were circular, with a rectangular hole in the middle. Several coins could be strung together on a rope. Merchants in China, if they became rich enough, found that their strings of coins were too heavy to carry around easily. To solve this problem, coins were often left with a trustworthy person, and the merchant was given a slip of paper recording how much money they had with that person. Marco Polo's account of paper money during the Yuan Dynasty is the subject of a chapter of his book, The Travels of Marco Polo, titled "How the Great Kaan Causeth the Bark of Trees, Made Into Something Like Paper, to Pass for Money All Over his Country."
1252 Florin minted in Florence, becomes the hard currency of its day helping Florence thrive economically
1340 Double-entry bookkeeping - The clerk keeping the accounts for the Genoese firm of Massari painstakingly fills in the ledger for the year 1340.
1397 Medici Bank established
1450 Johannes Gutenberg builds the printing press – printed words no longer just for the rich
1455 Paper money disappears from China
1466 Polyalphabetic Cipher
1466 Rotating cipher disks – Vatican – greatest crypto invention in 1000 yrs – the first system to challenge frequency analysis
1466 First known mechanical cipher machine
1472 The oldest bank still in existence founded, Banca Monte dei Paschi di Siena, headquartered in Siena, Italy
1494 Double-entry bookkeeping system codified by Luca Pacioli
1535 Wampum, a form of currency used by Native Americans, a string of beads made from clamshells, is first document.
1553 Vigenere Cipher
1557 Phillip II of Spain managed to burden his kingdom with so much debt (as the result of several pointless wars) that he caused the world's first national bankruptcy — as well as the world's second, third and fourth, in rapid succession.
1577 Newspaper in Korea
1586 The Babington Plot
1590 Cabinet Noir was established in France. Its mission was to open, read and reseal letters, and great expertise was developed in the restoration of broken seals. In the knowledge that mail was being opened, correspondents began to develop systems to encrypt and decrypt their letters. The breaking of these codes gave birth to modern systematic scientific code breaking.
1600s Promissory banknotes began in London
1600s By the early 17th century banking begins also to exist in its modern sense - as a commercial service for customers rather than kings. – Late 17th century we see cheques slowly gains acceptance
The total of the money left on deposit by a bank's customers is a large sum, only a fraction of which is usually required for withdrawals. A proportion of the rest can be lent out at interest, bringing profit to the bank. When the customers later come to realize this hidden value of their unused funds, the bank's profit becomes the difference between the rates of interest paid to depositors and demanded from debtors.
The transformation from moneylenders into private banks is a gradual one during the 17th and 18th centuries. In England it is achieved by various families of goldsmiths who early in the period accept money on deposit purely for safe-keeping. Then they begin to lend some of it out. Finally, by the 18th century, they make banking their business in place of their original craft as goldsmiths.
1605 Newspaper in Straussburg
c1627 Great Cipher
1637 Wampum is declared as legal tender in the U.S. (where we got the slang word “clams” for money)
1656 Johan Palmstruch establishes the Stockholm Banco
1661 Paper Currency reappears in Europe, soon became common - The goldsmith-bankers of London began to give out the receipts as payable to the bearer of the document rather than the original depositor
1661 Palmstruch issues credit notes which can be exchanged, on presentation to his bank, for a stated number of silver coins
1666 Stockholms Banco, the predecessor to the Central Bank of Sweden issues the first paper money in Europe. Soon went bankrupt for printing too much money.
1667 He issues more notes than his bank can afford to redeem with silver and winds up in disgrace, facing a death penalty (commuted to imprisonment) for fraud.
1668 Bank of Sweden – today the 2nd oldest surviving bank
1694 First Central Bank established in the UK was the first bank to initiate the permanent issue of banknotes
Served as model for most modern central banks.
The modern banknote rests on the assumption that money is determined by a social and legal consensus. A gold coin's value is simply a reflection of the supply and demand mechanism of a society exchanging goods in a free market, as opposed to stemming from any intrinsic property of the metal. By the late 17th century, this new conceptual outlook helped to stimulate the issue of banknotes.
1700s Throughout the commercially energetic 18th century there are frequent further experiments with bank notes - deriving from a recognized need to expand the currency supply beyond the availability of precious metals.
1712 First commercial steam engine
1717 Master of the Royal Mint Sir Isaac Newton established a new mint ratio between silver and gold that had the effect of driving silver out of circulation (bimetalism) and putting Britain on a gold standard.
1735 Classical Economics – markets regulate themselves when free of intervention
1744 Mayer Amschel Rothschild, Founder of the Rothschild Banking Empire, is Born in Frankfurt, Germany
Mayer Amschel Rothschild extended his banking empire across Europe by carefully placing his five sons in key positions. They set up banks in Frankfurt, Vienna, London, Naples, and Paris. By the mid 1800’s they dominated the banking industry, lending to governments around the world and people such as the Vanderbilts, Carnegies, and Cecil Rhodes.
1745 There was a gradual move toward the issuance of fixed denomination notes in England standardized printed notes ranging from £20 to £1,000 were being printed.
1748 First recorded use of the word buck for a dollar, stemming from the Colonial period in America when buck skins were commonly traded
1757 Colonial Scrip Issued in US
1760s Mayer Amschel Rothschild establishes his banking business
1769 First steam powered car
1775-1938 US Diplomatic Codes & Ciphers by Ralph E Weber used – problems were security and distribution
1776 American Independence
1776 Adam Smith’s Invisible Hand theory helped bankers and money-lenders limit government interference in the banking sector
1781 The Bank of North America was a private bank first adopted created the US Nation's first de facto central bank. When shares in the bank were sold to the public, the Bank of North America became the country's first initial public offering. It lasted less than ten years.
1783 First steamboat
1791 Congress Creates the First US Bank – A Private Company, Partly Owned by Foreigners – to Handle the Financial Needs of the New Central Government. First Bank of the United States, a National bank, chartered for a term of twenty years, it was not renewed in 1811.
Previously, the 13 states had their own banks, currencies and financial institutions, which had an average lifespan of about 5 years.
1792 First optical telegraph invented where towers with telescopes were dispersed across France 12-25 km apart, relaying signals according to positions of arms extended from the top of the towers.
1795 Thomas Jefferson invents the Jefferson Disk Cipher or Wheel Cipher
1797 to 1821 Restriction Period by England of trading banknotes for silver during Napoleonic Wars
1797 Currency Crisis
Although the Bank was originally a private institution, by the end of the 18th century it was increasingly being regarded as a public authority with civic responsibility toward the upkeep of a healthy financial system.
1799 First paper machine
1800 Banque de France – France’s central bank opens to try to improve financing of the war
1800 Invention of the battery
1801 Rotchschild Dynasty begins in Frankfurt, Holy Roman Empire – established international banking family through his 5 sons who established themselves in London, Paris, Frankfurt, Vienna, and Naples
1804 Steam locomotive
1807 Internal combustion engine and automobile
1807 Robert Fulton expands water transportation and trade with the workable steamboat.
1811 First powered printing press, also first to use a cylinder
1816 The Privately Owned Second Bank of the US was Chartered – It Served as the Main Depository for Government Revenue, Making it a Highly Profitable Bank – charter not renewed in 1836
1816 The first working telegraph was built using static electricity
1816 Gold becomes the official standard of value in England
1820 Industrial Revolution
c1820 Neoclassical Economics
1821 British gov introduces the gold standard - With governments issuing the bank notes, the inherent danger is no longer bankruptcy but inflation.
1822 Charles Babbage, considered the "father of the computer", begins building the first programmable mechanical computer.
1832 Andrew Jackson Campaigns Against the 2nd Bank of the US and Vetoes Bank Charter Renewal
Andrew Jackson was skeptical of the central banking system and believed it gave too few men too much power and caused inflation. He was also a proponent of gold and silver and an outspoken opponent of the 2nd National Bank. The Charter expired in 1836.
1833 President Jackson Issues Executive Order to Stop Depositing Government Funds Into Bank of US
By September 1833, government funds were being deposited into state chartered banks.
1833-1837 Manufactured “boom” created by central bankers – money supply Increases 84%, Spurred by the 2nd Bank of the US
The total money supply rose from $150 million to $267 million
1835 Jackson Escapes Assassination. Assassin misfired twice.
1837-1862 The “Free Banking Era” there was no formal central bank in the US, and banks issued their own notes again
1838 First Telegram sent using Morse Code across 3 km, in 1844 he sent a message across 71 km from Washington DC to Baltimore.
1843 Ada Lovelace published the first algorithm for computing
1844 Modern central bank of England established - meaning only the central bank of England could issue banknotes – prior to that commercial banks could issue their own and were the primary form of currency throughout England
the Bank of England was restricted to issue new banknotes only if they were 100% backed by gold or up to £14 million in government debt.
1848 Communist Manifesto
1850 The first undersea telegraphic communications cable connected France in England after latex produced from the sap of the Palaquium gutta tree in 1845 was proposed as insulation for the underwater cables.
1852 Many countries in Europe build telegram networks, however post remained the primary means of communication to distant countries.
1855 In England fully printed notes that did not require the name of the payee and the cashier's signature first appeared
1855 The printing telegraph made it possible for a machine with 26 alphabetic keys to print the messages automatically and was soon adopted worldwide.
1856 Belgian engineer Charles Bourseul proposed telephony
1856 The Atlantic Telegraph company was formed in London to stretch a commercial telegraph cable across the Atlantic Ocean, completed in 1866.
1860 The Pony Express was founded, able to deliver mail of wealthy individuals or government officials from coast to coast in 10 days.
1861 The East coast was connected to the West when Western Union completed the transcontinental telegraph line, putting an end to unprofitable The Pony Express.
1862-1863 First US banknotes - Lincoln Over Rules Debt-Based Money and Issues Greenbacks to Fund Civil War
Bankers would only lend the government money under certain conditions and at high interest rates, so Lincoln issued his own currency – “greenbacks” – through the US Treasury, and made them legal tender. His soldiers went on to win the war, followed by great economic expansion.
1863 to 1932 “National Banking Era” Commercial banks in the United States had legally issued banknotes before there was a national currency; however, these became subject to government authorization from 1863 to 1932
1864 Friedrich Wilhelm Raiffeisen founded the first rural credit union in Heddesdorf (now part of Neuwied) in Germany. By the time of Raiffeisen's death in 1888, credit unions had spread to Italy, France, the Netherlands, England, Austria, and other nations
1870 Long-distance telegraph lines connected Britain and India.
c1871 Marginalism - The doctrines of marginalism and the Marginal Revolution are often interpreted as a response to the rise of the worker's movement, Marxian economics and the earlier (Ricardian) socialist theories of the exploitation of labour.
1871 Carl Menger’s Principles of Economics – Austrian School
1872 Marx’s Das Capital
1872 Australia becomes the first nation to be connected to the rest of the world via submarine telegraph cables.
1876 Alexander Graham Bell patented the telephone, first called the electric speech machine – revolutionized communication
1877 Thomas Edison – Phonograph
1878 Western Union, the leading telegraph provider of the U.S., begins to lose out to the telephone technology of the National Bell Telephone Company.
1881 President James Garfield, Staunch Proponent of “Honest Money” Backed by Gold and Silver, was Assassinated
Garfield opposed fiat currency (money that was not backed by any physical object). He had the second shortest Presidency in history.
1882 First description of the one-time pad
1886 First gas powered car
1888 Ballpoint pen
1895 System of wireless communication using radio waves
1896 First successful intercontinental telegram
1899 Nickel-cadmium battery
1907 Banking Panic of 1907
The New York Stock Exchange dropped dramatically as everyone tried to get their money out of the banks at the same time across the nation. This banking panic spurred debate for banking reform. JP Morgan and others gathered to create an image of concern and stability in the face of the panic, which eventually led to the formation of the Federal Reserve. The founders of the Federal Reserve pretended like the bankers were opposed to the idea of its formation in order to mislead the public into believing that the Federal Reserve would help to regulate bankers when in fact it really gave even more power to private bankers, but in a less transparent way.
1908 St Mary’s Bank – first credit union in US
1908 JP Morgan Associate and Rockefeller Relative Nelson Aldrich Heads New National Monetary Commission
Senate Republican leader, Nelson Aldrich, heads the new National Monetary Commission that was created to study the cause of the banking panic. Aldrich had close ties with J.P. Morgan and his daughter married John D. Rockefeller.
1910 Bankers Meet Secretly on Jekyll Island to Draft Federal Reserve Banking Legislation
Over the course of a week, some of the nation’s most powerful bankers met secretly off the coast of Georgia, drafting a proposal for a private Central Banking system.
1913 Federal Reserve Act Passed
Two days before Christmas, while many members of Congress were away on vacation, the Federal Reserve Act was passed, creating the Central banking system we have today, originally with gold backed Federal Reserve Notes. It was based on the Aldrich plan drafted on Jekyll Island and gave private bankers supreme authority over the economy. They are now able to create money out of nothing (and loan it out at interest), make decisions without government approval, and control the amount of money in circulation.
1913 Income tax established -16th Amendment Ratified
Taxes ensured that citizens would cover the payment of debt due to the Central Bank, the Federal Reserve, which was also created in 1913.The 16th Amendment stated: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
1914 November, Federal Reserve Banks Open
JP Morgan and Co. Profits from Financing both sides of War and Purchasing Weapons
J.P. Morgan and Co. made a deal with the Bank of England to give them a monopoly on underwriting war bonds for the UK and France. They also invested in the suppliers of war equipment to Britain and France.
1917 Teletype cipher
1917 The one-time pad
1917 Zimmerman Telegram intercepted and decoded by Room 40, the cryptanalysis department of the British Military during WWI.
1918 GB returns to gold standard post-war but it didn’t work out
1919 First rotor machine, an electro-mechanical stream ciphering and decrypting machine.
1919 Founding of The Cipher Bureau, Poland’s intelligence and cryptography agency.
1919-1929 The Black Chamber, a forerunner of the NSA, was the first U.S. cryptanalytic organization. Worked with the telegraph company Western Union to illegally acquire foreign communications of foreign embassies and representatives. It was shut down in 1929 as funding was removed after it was deemed unethical to intercept private domestic radio signals.
1920s Department stores, hotel chains and service staions begin offering customers charge cards
1921-1929 The “Roaring 20’s” – The Federal Reserve Floods the Economy with Cash and Credit
From 1921 to 1929 the Federal Reserve increased the money supply by $28 billion, almost a 62% increase over an eight-year period. This artificially created another “boom”.
1927 Quartz clock
1928 First experimental Television broadcast in the US.
1929 Federal Reserve Contracts the Money Supply
In 1929, the Federal Reserve began to pull money out of circulation as loans were paid back. They created a “bust” which was inevitable after issuing so much credit in the years before. The Federal Reserve’s actions triggered the banking crisis, which led to the Great Depression.
1929 October 24, “Black Thursday”, Stock Market Crash
The most devastating stock market crash in history. Billions of dollars in value were consolidated into the private banker’s hands at the expense of everyone else.
1930s The Great Depression marked the end of the gold standard
1931 German Enigma machines attained and reconstructed.
1932 Turbo jet engine patented
1933 SEC founded - passed the Glass–Steagall Act, which separated investment banking and commercial banking. This was to avoid more risky investment banking activities from ever again causing commercial bank failures.
1933 FM Radio
1933 Germany begins Telex, a network of teleprinters sending and receiving text based messages. Post WWII Telex networks began to spread around the world.
1936 Austrian engineer Paul Eisler invented Printed circuit board
1936 Beginning of the Keynesian Revolution
1937 Typex, British encryption machines which were upgraded versions of Enigma machines.
1927 Founding of highly secret and unofficial Signal Intelligence Service, SIS, the U.S. Army’s codebreaking division.
1937 Made illegal for Americans to own gold
1938 Z1 built by Konrad Zuse is the first freely programmable computer in the world.
1939 WWII – decline of the gold standard which greatly restricted policy making
1939-45 Codetalkers - The Navajo code is the only spoken military code never to have been deciphered - "Were it not for the Navajos, the Marines would never have taken Iwo Jima."—Howard Connor
1942 Deciphering Japanese coded messages leads to a turning point victory for the U.S. in WWII.
1943 At Bletchley Park, Alan Turing and team build a specialized cipher-breaking machine called Heath Robinson.
1943 Colossus computer built in London to crack the German Lorenz cipher.
1944 Bretton Woods – convenient after the US had most of the gold
1945 Manhattan Project – Atom Bomb
1945 Transatlantic telephone cable
1945 Claude E. Shannon published "A mathematical theory of cryptography", commonly accepted as the starting point for development of modern cryptography.
C1946 Crypto Wars begin and last to this day
1946 Charg-it card created by John C Biggins
1948 Atomic clock
1948 Claude Shannon writes a paper that establishes the mathematical basis of information theory
1949 Info theorist Claude Shannon asks “What does an ideal cipher look like?” – one time pad – what if the keys are not truly random
1950 First credit card released by the Diners Club, able to be used in 20 restaurants in NYC
1951 NSA, National Security Agency founded and creates the KL-7, an off-line rotor encryption machine
1952 First thermonuclear weapon
1953 First videotape recorder
1953 Term “Hash” first used meaning to “chop” or “make a mess” out of something
1954 Atomic Energy Act (no mention of crypto)
1957 The NSA begins producing ROMOLUS encryption machines, soon to be used by NATO
1957 First PC – IBM
1957 First Satellite – Sputnik 1
1958 Western Union begins building a nationwide Telex network in the U.S.
1960s Machine readable codes were added to the bottom of cheques in MICR format, which speeded up the clearing and sorting process
1960s Financial organizations were beginning to require strong commercial encryption on the rapidly growing field of wired money transfer.
1961 Electronic clock
1963 June 4, Kennedy Issued an Executive Order (11110) that Authorized the US Treasury to Issue Silver Certificates, Threatening the Federal Reserve’s Monopoly on Money
This government issued currency would bypass the governments need to borrow from bankers at interest.
1963 Electronic calculator
1963 Nov. 22, Kennedy Assassinated
1963 Johnson Reverses Kennedy’s Banking Rule and Restores Power to the Federal Reserve
1964 LAN, Local Area Networks adapters
1965 Moore’s Law by CEO of Intel Gordon Moore observes that the number of components per integrated circuit doubles every year, and projected this rate of growth would continue for at least another decade. In 1975 he revised it to every two years.
1967 First ATM installed at Barclay’s Bank in London
1968 Cassette Player introduced
1969 First connections of ARPANET, predecessor of the internet, are made. started – SF, SB, UCLA, Utah (now Darpa) – made to stay ahead of the Soviets – there were other networks being built around the world but it was very hard to connect them – CERN in Europe
1970s Stagflation – unemployment + inflation, which Keynesian theory could not explain
1970s Business/commercial applications for Crypto emerge – prior to this time it was militarily used – ATMs 1st got people thinking about commercial applications of cryptography – data being sent over telephone lines
1970s The public developments of the 1970s broke the near monopoly on high quality cryptography held by government organizations.
Use of checks increased in 70s – bringing about ACH
One way functions...
A few companies began selling access to private networks – but weren’t allowed to connect to the internet – business and universities using Arpanet had no commercial traffic – internet was used for research, not for commerce or advertising
1970 Railroads threatened by the growing popularity of air travel. Penn Central Railroad declares bankruptcy resulting in a $3.2 billion bailout
1970 Conjugate coding used in an attempt to design “money physically impossible to counterfeit”
1971 The US officially removes the gold standard
1971 Email invented
1971 First microcomputer on a chip
1971 Lockheed Bailout - $1.4 billion – Lockheed was a major government defense contractor
1972 First programmable word processor
1972 First video game console
1973 SWIFT established
1973 Ethernet invented, standardized in ‘83
1973 Mobile phone
1973 First commercial GUI – Xerox Alto
1973 First touchscreen
1973 Emails made up more than ¾ of ARPANET’s packets – people had to keep a map of the network by their desk – so DNS was created
1974 A protocol for packet network intercommunication – TCP/IP – Cerf and Kahn
1974 Franklin National Bank Bailout - $1.5 billion (valued at that time) - At the time, it was the largest bank failure in US history
1975 New York City Bailout - $9.4 billion – NYC was overextended
1975 W DES - meant that commercial uses of high quality encryption would become common, and serious problems of export control began to arise.
1975 DES, Data Encryption Standard developed at IBM, seeking to develop secure electronic communications for banks and large financial organizations. DES was the first publicly accessible cipher to be 'blessed' by a national agency such as the NSA. Its release stimulated an explosion of public and academic interest in cryptography.
1975 Digital camera
1975 Altair 8800 sparks the microprocessor revolution
1976 Bretton Woods ratified (lasted 30 years) – by 80’s all nations were using floating currencies
1976 New Directions in Cryptography published by Diffie & Hellman – this terrified Fort Meade – previously this technique was classified, now it’s public
1976 Apple I Computer – Steve Wozniak
1976 Asymmetric key cryptosystem published by Whitfield Diffie and Martin Hellman.
1976 Hellman and Diffie publish New Directions in Cryptography, introducing a radically new method of distributing cryptographic keys, contributing much to solving key distribution one of the fundamental problems of cryptography. It brought about the almost immediate public development of asymmetric key algorithms. - where people can have 2 sets of keys, public and private
1977 Diffie & Hellman receive letter from NSA employee JA Meyer that they’re violating Federal Laws comparable to arms export – this raises the question, “Can the gov prevent academics from publishing on crypto?
1977 DES considered insecure
1977 First handheld electronic game
1977 RSA public key encryption invented
1978 McEliece Cryptosystem invented, first asymmetric encryption algorithm to use randomization in the encryption process
1980s Large data centers began being built to store files and give users a better faster experience – companies rented space from them - Data centers would not only store data but scour it to show people what they might want to see and in some cases, sell data
1980s Reaganomics and Thatcherism
1980 A decade of intense bank failures begins; the FDIC reports that 1,600 were either closed or received financial assistance from 1980 to 1994
1980 Chrysler Bailout – lost over $1 billion due to major hubris on the part of its executives - $1.5 billion one of the largest payouts ever made to a single corporation.
1980 Protocols for public key cryptosystems – Ralph Merkle
1980 Flash memory invented – public in ‘84
1981 “Untraceable Electronic Mail, Return Addresses and Digital Pseudonumns” – Chaum
1981 EFTPOS, Electronic funds transfer at point of sale is created
1981 IBM Personal Computer
1982 “The Ethics of Liberty” Murray Rothbard
1982 Commodore 64
1983 Satellite TV
1983 First built in hard drive
1983 Blind signatures for untraceable payments
Mid 1980s Use of ATMs becomes more widespread
1984 Continental Illinois National Bank and Trust bailed out due to overly aggressive lending styles and - the bank’s downfall could be directly traced to risk taking and a lack of due diligence on the part of bank officers - $9.5 billion in 2008 money
1984 Macintosh Computer - the first mass-market personal computer that featured a graphical user interface, built-in screen and mouse
1984 CD Rom
1985 Zero-Knowledge Proofs first proposed
1985 300,000 simultaneous telephone conversations over single optical fiber
1985 Elliptic Curve Cryptography
1987 ARPANET had connected over 20k guarded computers by this time
1988 First private networks email servers connected to NSFNET
1988 The Crypto Anarchists Manifesto – Timothy C May
1988 ISDN, Integrated Services Digital Network
1989 Savings & Loan Bailout - After the widespread failure of savings and loan institutions, President George H. W. Bush signed and Congress enacted the Financial Institutions Reform Recovery and Enforcement Act - This was a taxpayer bailout of about $200 billion
1989 First commercial emails sent
1989 Digicash - Chaum
1989 Tim Berners-Lee and Robert Cailliau built the prototype system which became the World Wide Web, WWW
1989 First ISPs – companies with no network of their own which connected people to a local network and to the internet - To connect to a network your computer placed a phone call through a modem which translated analog signals to digital signals – dial-up was used to connect computers as phone lines already had an extensive network across the U.S. – but phone lines weren’t designed for high pitched sounds that could change fast to transmit large amounts of data
1990s Cryptowars really heat up...
1990s Some countries started to change their laws to allow "truncation"
1990s Encryption export controls became a matter of public concern with the introduction of the personal computer. Phil Zimmermann's PGP cryptosystem and its distribution on the Internet in 1991 was the first major 'individual level' challenge to controls on export of cryptography. The growth of electronic commerce in the 1990s created additional pressure for reduced restrictions. Shortly afterward, Netscape's SSL technology was widely adopted as a method for protecting credit card transactions using public key cryptography.
1990 NSFNET replaced Arpanet as backbone of the internet with more than 500k users
Early 90s Dial up provided through AOL and Compuserve
People were leery to use credit cards on the internet
1991 How to time-stamp a digital doc - Stornetta
1991 Phil Zimmermann releases the public key encryption program Pretty Good Privacy (PGP) along with its source code, which quickly appears on the Internet. He distributed a freeware version of PGP when he felt threatened by legislation then under consideration by the US Government that would require backdoors to be included in all cryptographic products developed within the US. Expanded the market to include anyone wanting to use cryptography on a personal computer (before only military, governments, large corporations)
1991 WWW (Tim Berners Lee) – made public in ‘93 – flatten the “tree” structure of the internet using hypertext – reason for HTTP//:WWW – LATER HTTPS for more security
1992 Erwise – first Internet Browser w a graphical Interface
1992 Congress passed a law allowing for commercial traffic on NSFNET
1992 Cpherpunks, Eric Hughes, Tim C May and John Gilmore – online privacy and safety from gov – cypherpunks write code so it can be spread and not shut down (in my earlier chapter)
1993 Mosaic – popularized surfing the web ‘til Netscape Navigator in ’94 – whose code was later used in Firefox
1993 A Cypherpunks Manifesto – Eric Hughes
1994 World’s first online cyberbank, First Virtual, opened for business
1994 First DVD player
1994 Stanford Federal Credit Union becomes the first financial institution to offer online internet banking services to all of its members in October 1994
1994 Internet only used by a few
1994 Secure Sockets Layer (SSL) encryption protocol released by Netscape. Making financial transactions possible.
1994 One of the first online purchases was made, a Pizza Hut pepperoni pizza with mushrooms and extra cheese
1994 Cyphernomicon published – social implication where gov can’t do anything about it
1994-1999 Social Networking – GeoCities (combining creators and users) – had 19M users by ’99 – 3rd most popular after AOL and Yahoo – GeoCities purchased by Yahoo for $3.6B but took a hit after dotcom bubble popped and never recovered – GC shut down in ‘99
1995-2000 Dotcom bubble – Google, Amazon, Facebook: get over 600M visitors/year
1995 MP3 term coined for MP3 files, the earlier development of which stretches back into the ‘70s, where MP files themselves where developed throughout the ‘90s
1995 NSFNET shut down and handed everything over to the ISPs
1995 NSA publishes the SHA1 hash algorithm as part of its Digital Signature Standard.
1996, 2000 President Bill Clinton signing the Executive order 13026 transferring the commercial encryption from the Munition List to the Commerce Control List. This order permitted the United States Department of Commerce to implement rules that greatly simplified the export of proprietary and open source software containing cryptography, which they did in 2000 - The successful cracking of DES likely helped gather both political and technical support for more advanced encryption in the hands of ordinary citizens - NSA considers AES strong enough to protect information classified at the Top Secret level
1997 WAP, Wireless Access Point
1997 NSA researchers published how to mint e cash
1997 Adam Back – HashCash – used PoW – coins could only be used once
1997 Nick Szabo – smart contracts “Formalizing and Securing Relationships on Public Networks”
1998 OSS, Open-source software Initiative Founded
1998 Wei Dai – B-money – decentralized database to record txs
1998 First backdoor created by hackers from Cult of the Dead Cow
1998 Musk and Thiel founded PayPal
1998 Nick Szabo says crypto can protect land titles even if thugs take it by force – said it could be done with a timestamped database
1999 Much of the Glass-Steagal Act repealed - this saw US retail banks embark on big rounds of mergers and acquisitions and also engage in investment banking activities.
1999 Milton Friedman says, “I think that the Internet is going to be one of the major forces for reducing the role of government. The one thing that's missing, but that will soon be developed, is a reliable e-cash - a method whereby on the Internet you can transfer funds from A to B without A knowing B or B knowing A.”
1999 European banks began offering mobile banking with the first smartphones
1999 The Financial Services Modernization Act Allows Banks to Grow Even Larger
Many economists and politicians have recognized that this legislation played a key part in the subprime mortgage crisis of 2007.
1999-2001 Napster, P2P file sharing – was one of the fastest growing businesses in history – bankrupt for paying musicians for copyright infringement
Part 1 and part 2 will give you usefull basic blockchain knowledge that is not explained in this part. Part 1 here Part 2 here Quantum resistant blockchains explained. - How would quantum computers pose a threat to blockchain? - Expectations in the field of quantum computer development. - Quantum resistant blockchains - Why is it easier to change cryptography for centralized systems such as banks and websites than for blockchain? - Conclusion
The fact that whatever is registered on a blockchain can’t be tampered with is one of the great reasons for the success of blockchain. Looking ahead, awareness is growing in the blockchain ecosystem that quantum computers might cause the need for some changes in the cryptography that is used by blockchains to prevent hackers from forging transactions. How would quantum computers pose a threat to blockchain?
First, let’s get a misconception out of the way. When talking about the risk quantum computers could pose for blockchain, some people think about the risk of quantum computers out-hashing classical computers. This, however, is not
expected to pose a real threat when the time comes.
This paper explains why: https://arxiv.org/pdf/1710.10377.pdf
"In this section, we investigate the advantage a quantum computer would have in performing the hashcash PoW used by Bitcoin. Our findings can be summarized as follows: Using Grover search, a quantum computer can perform the hashcash PoW by performing quadratically fewer hashes than is needed by a classical computer. However, the extreme speed of current specialized ASIC hardware for performing the hashcash PoW, coupled with much slower projected gate speeds for current quantum architectures, essentially negates this quadratic speedup, at the current difficulty level, giving quantum computers no advantage. Future improvements to quantum technology allowing gate speeds up to 100GHz could allow quantum computers to solve the PoW about 100 times faster than current technology.
However, such a development is unlikely in the next decade, at which point classical hardware may be much faster, and quantum technology might be so widespread that no single quantum enabled agent could dominate the PoW problem." The real point of vulnerability is this:
attacks on signatures wherein the private key is derived from the public key. That means that if someone has your public key, they can also calculate your private key, which is unthinkable using even today’s most powerful classical computers. So in the days of quantum computers, the public-private keypair will be the weak link. Quantum computers have the potential to perform specific kinds of calculations significantly faster than any normal computer. Besides that, quantum computers can run algorithms that take fewer steps to get to an outcome, taking advantage of quantum phenomena like quantum entanglement and quantum superposition. So quantum computers can run these certain algorithms that could be used to make calculations that can crack cryptography used today. https://en.wikipedia.org/wiki/Elliptic-curve_cryptography#Quantum_computing_attacks
Most blockchains use Elliptic Curve Digital Signature Algorithm (ECDSA) cryptography. Using a quantum computer, Shor's algorithm can be used to break ECDSA. (See for reference: https://arxiv.org/abs/quant-ph/0301141
and pdf: https://arxiv.org/pdf/quant-ph/0301141.pdf
) Meaning: they can derive the private key from the public key. So if they got your public key (and a quantum computer), then they got your private key and they can create a transaction and empty your wallet.
RSA has the same vulnerability while RSA will need a stronger quantum computer to be broken than ECDSA.
At this point in time, it is already possible to run Shor’s algorithm on a quantum computer. However, the amount of qubits available right now makes its application limited. But it has been proven to work, we have exited the era of pure theory and entered the era of practical applications:
So far Shor's algorithm has the most potential, but new algorithms might appear which are more efficient. Algorithms are another area of development that makes progress and pushes quantum computer progress forward. A new algorithm called Variational Quantum Factoring is being developed and it looks quite promising. " The advantage of this new approach is that it is much less sensitive to error, does not require massive error correction, and consumes far fewer resources than would be needed with Shor’s algorithm. As such, it may be more amenable for use with the current NISQ (Noisy Intermediate Scale Quantum) computers that will be available in the near and medium term." https://quantumcomputingreport.com/news/zapata-develops-potential-alternative-to-shors-factoring-algorithm-for-nisq-quantum-computers/
It is however still in development, and only works for 18 binary bits at the time of this writing, but it shows new developments that could mean that, rather than a speedup in quantum computing development posing the most imminent threat to RSA and ECDSA, a speedup in the mathematical developments could be even more consequential. More info on VQF here: https://arxiv.org/abs/1808.08927
It all comes down to this: when your public key is visible, which is always necessary to make transactions, you are at some point in the future vulnerable for quantum attacks. (This also goes for BTC, which uses the hash of the public key as an address, but more on that in the following articles.) If you would have keypairs based on post quantum cryptography, you would not have to worry about that since in that case not even a quantum computer could derive your private key from your public key.
The conclusion is that future blockchains should be quantum resistant, using post-quantum cryptography. It’s very important to realize that post quantum cryptography is not just adding some extra characters to standard signature schemes. It’s the mathematical concept that makes it quantum resistant. to become quantm resistant, the algorithm needs to be changed. “The problem with currently popular algorithms is that their security relies on one of three hard mathematical problems: the integer factorization problem, the discrete logarithm problem or the elliptic-curve discrete logarithm problem. All of these problems can be easily solved on a sufficiently powerful quantum computer running Shor's algorithm. Even though current, publicly known, experimental quantum computers lack processing power to break any real cryptographic algorithm, many cryptographers are designing new algorithms to prepare for a time when quantum computing becomes a threat.” https://en.wikipedia.org/wiki/Post-quantum_cryptography Expectations in the field of quantum computer development.
To give you an idea what the expectations of quantum computer development are in the field (Take note of the fact that the type and error rate of the qubits is not specified in the article. It is not said these will be enough to break ECDSA or RSA, neither is it said these will not be enough. What these articles do show, is that a huge speed up in development is expected.):
When will ECDSA be at risk? Estimates are only estimates, there are several to be found so it's hard to really tell.
The National Academy of Sciences (NAS) has made a very thourough report on the development of quantum computing. The report came out in the end of 2018. They brought together a group of scientists of over 70 people from different interconnecting fields in quantum computing who, as a group, have come up with a close to 200 pages report on the development, funding, implications and upcoming challenges for quantum computing development. But, even though this report is one of the most thourough up to date, it doesn't make an estimate on when the risk for ECDSA or RSA would occur. They acknowledge this is quite impossible due to the fact there are a lot of unknowns and due to the fact that they have to base any findings only on publicly available information, obviously excluding any non available advancements from commercial companies and national efforts. So if this group of specialized scientists can’t make an estimate, who can make that assessment? Is there any credible source to make an accurate prediction?
The conclusion at this point of time can only be that we do not know the answer to the big question "when".
Now if we don't have an answer to the question "when", then why act? The answer is simple. If we’re talking about security, most take certainty over uncertainty. To answer the question when the threat materializes, we need to guess. Whether you guess soon, or you guess not for the next three decades, both are guesses. Going for certain means you'd have to plan for the worst, hope for the best. No matter how sceptical you are, having some sort of a plan ready is a responsible thing to do. Obviously not if you're just running a blog about knitting. But for systems that carry a lot of important, private and valuable information, planning starts today. The NAS describes it quite well. What they lack in guessing, they make up in advice. They have a very clear advice:
"Even if a quantum computer that can decrypt current cryptographic ciphers is more than a decade off, the hazard of such a machine is high enough—and the time frame for transitioning to a new security protocol is sufficiently long and uncertain—that prioritization of the development, standardization, and deployment of post-quantum cryptography is critical for minimizing the chance of a potential security and privacy disaster."
Another organization that looks ahead is the National Security Agency (NSA) They have made a threat assessment in 2015. In August 2015, NSA announced that it is planning to transition "in the not too distant future" (statement of 2015) to a new cipher suite that is resistant to quantum attacks. "Unfortunately, the growth of elliptic curve use has bumped up against the fact of continued progress in the research on quantum computing, necessitating a re-evaluation of our cryptographic strategy." NSA advised: "For those partners and vendors that have not yet made the transition to Suite B algorithms, we recommend not making a significant expenditure to do so at this point but instead to prepare for the upcoming quantum resistant algorithm transition.” https://en.wikipedia.org/wiki/NSA_Suite_B_Cryptography#cite_note-nsa-suite-b-1
What these organizations both advice is to start taking action. They don't say "implement this type of quantum resistant cryptography now". They don't say when at all. As said before, the "when" question is one that is a hard one to specify. It depends on the system you have, the value of the data, the consequences of postponing a security upgrade. Like I said before: you just run a blog, or a bank or a cryptocurrency? It's an individual risk assesment that's different for every organization and system. Assesments do need to be made now though. What time frame should organisationds think about when changing cryptography? How long would it take to go from the current level of security to fully quantum resistant security? What changes does it require to handle bigger signatures and is it possible to use certain types of cryptography that require to keep state? Do your users need to act, or can al work be done behind the user interface? These are important questions that one should start asking. I will elaborate on these challenges in the next articles.
Besides the unsnswered question on "when", the question on what type of quantum resistant cryptography to use is unanswered too. This also depends on the type of system you use. The NSA and NAS both point to NIST as the authority on developments and standardization of quantum resistant cryptography. NIST is running a competition right now that should end up in one or more standards for quantum resistant cryptography. The NIST competition handles criteria that should filter out a type of quantum resistant cryptography that is feasable for a wide range of systems. This takes time though. There are some new algorithms submitted and assessing the new and the more well known ones must be done thouroughly. They intend to wrap things up around 2022 - 2024. From a blockchain perspective it is important to notice that a specific type of quantum resistant cryptography is excluded from the NIST competition: Stateful Hash-Based Signatures. (LMS and XMSS) This is not because these are no good. In fact they are excelent and XMSS is accepted to be provable quantum resistant. It's due to the fact that implementations will need to be able to securely deal with the requirement to keep state. And this is not a given for most systems.
At this moment NIST intends to approve both LMS and XMSS for a specific group of applications that can deal with the statefull properties. The only loose end at this point is an advice for which applications LMS and XMSS will be adviced and for what applications it is discouraged. These questions will be answered in the beginning of april this year: https://csrc.nist.gov/news/2019/stateful-hbs-request-for-public-comments
This means that quite likely LMS and XMSS will be the first type of standardized quantum resistant cryptography ever. To give a small hint: keeping state, is pretty much a naturally added property of blockchain. Quantum resistant blockchains
“Quantum resistant” is only used to describe networks and cryptography that are secure against any attack by a quantum computer of any size in the sense that there is no algorithm known that makes it possible for a quantum computer to break the applied cryptography and thus that system.
Also, to determine if a project is fully quantum resistant, you would need to take in account not only how a separate element that is implemented in that blockchain is quantum resistant, but also the way it is implemented. As with any type of security check, there should be no backdoors, in which case your blockchain would be just a cardboard box with bulletproof glass windows. Sounds obvious, but since this is kind of new territory, there are still some misconceptions. What is considered safe now, might not be safe in the age of quantum computers. I will address some of these in the following chapters, but first I will elaborate a bit about the special vulnerability of blockchain compared to centralized systems. Why is it easier to change cryptography for centralized systems such as banks and websites than for blockchain?
Developers of a centralized
system can decide from one day to the other that they make changes and update the system without the need for consensus from the nodes. They are in charge, and they can dictate the future of the system. But a decentralized
blockchain will need to reach consensus amongst the nodes to update. Meaning that the majority of the nodes will need to upgrade and thus force the blockchain to only have the new signatures to be valid. We can’t have the old signature scheme to be valid besides the new quantum resistant signature scheme. Because that would mean that the blockchain would still allow the use of vulnerable, old public- and private keys and thus the old vulnerable signatures for transactions. So at least the majority of the nodes need to upgrade to make sure that blocks which are constructed using the old rules and thus the old vulnerable signature scheme, are rejected by the network. This will eventually result in a fully upgraded network which only accepts the new post quantum signature scheme in transactions. So, consensus is needed. The most well-known example of how that can be a slow process is Bitcoin’s need to scale. Even though everybody agrees on the need for a certain result, reaching consensus amongst the community on how to get to that result is a slow and political process. Going quantum resistant will be no different, and since it will cause lesser performance due to bigger signatures and it will need hardware upgrades quite likely it will be postponed rather than be done fast and smooth due to lack of consensus. And because there are several quantum resistant signature schemes to choose from, agreement an automatic given. The discussion will be which one to use, and how and when to implement it. The need for consensus is exclusively a problem decentralized systems like blockchain will face.
Another issue for decentralized systems that change their signature scheme, is that users of decentralized blockchains will have to manually transfe migrate their coins/ tokens to a quantum safe address and that way decouple their old private key and activate a new quantum resistant private key that is part of an upgraded quantum resistant network. Users of centralized networks, on the other hand, do not need to do much, since it would be taken care of by their centralized managed system. As you know, for example, if you forget your password of your online bank account, or some website, they can always send you a link, or secret question, or in the worst case they can send you mail by post to your house address and you would be back in business. With the decentralized systems, there is no centralized entity who has your data. It is you who has this data, and only you. So in the centralized system there is a central entity who has access to all the data including all the private accessing data, and therefore this entity can pull all the strings. It can all be done behind your user interface, and you probably wouldn’t notice a thing.
And a third issue will be the lost addresses. Since no one but you has access to your funds, your funds will become inaccessible once you lose your private key. From that point, an address is lost, and the funds on that address can never be moved. So after an upgrade, those funds will never be moved to a quantum resistant address, and thus will always be vulnerable to a quantum hack.
To summarize: banks and websites are centralized systems, they will face challenges, but decentralized systems like blockchain will face some extra challenges that won't apply for centralized systems.
- Updating the signature scheme will need consensus in the sense that all nodes need to update after implementation of a quantum resistant signature scheme.
- Users of blockchain will personally need to move their funds from old addresses to new quantum resistant addresses. You won't need to move your bank funds.
- Lost addresses where people lost access to their funds will never be moved and stay vulnerable to quantum hacks. Blockchain doesn't know their users, can't communicate with them and won't be able to distinguish coins on lost addresses from coins from users who still have access but somehow have not migrated their coins after a quantum resistant update. So burning lost coins will be legally a big issue.
All issues specific for blockchain and not for banks or websites or any other centralized system. Conclusion
Bitcoin and all currently running traditional cryptocurrencies are not excluded from this problem. In fact, it will be central to ensuring their continued existence over the coming decades. All cryptocurrencies will need to change their signature schemes in the future. When is the big guess here. I want to leave that for another discussion. There are enough certain specifics we can discuss right now on the subject of quantum resistant blockchains and the challenges that existing blockchains will face when they need to transfer. This won’t be an easy transfer. There are some huge challenges to overcome and this will not be done overnight. I will get to this in the next few articles. Part 1, what makes blockchain reliable? Part 2, The two most important mathematical concepts in blockchain. Part 4A, The advantages of quantum resistance from genesis block, A Part 4B, The advantages of quantum resistance from genesis block, B Part 5, Why BTC will be vulnerable sooner than expected.
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