# the bitcoin algorithm <!-- Put the link to this slide here so people can follow --> slide: https://hackmd.io/@amirulabu/thebitcoinalgorithm --- ## Who am I? - a guy - bitcoin hodler (a story for another time) --- # what is bitcoin? --- - bitcoin: virtual currency - Bitcoin: decentralised network and systems that manages bitcoin - decentralised ledger - transactions linked by blockchain - incentive for people maintaining the network --- # what is a ledger? ---  ---  --- # what is blockchain? --- a system that link blocks of data using their hash Hashes are cryptographic codes created by special algorithms. demo 1: https://xorbin.com/tools/sha256-hash-calculator --- ``` data: Epstein didn't kill himself previous hash: 0000 ``` ## block 1 --- ``` data: Area 51 contains cat girls previous hash: d11f69bfc9457b4b768511c73fec8e3fd240aec47e36088ed4416dbc86554505 ``` ## block 2 --- ``` data: Antarctica is where they store the aliens previous hash: 9c6bab6c7bc1f7f63a2631eab2caae78f9df0eed0d5f2dbe123649454872f4bf ``` ## block 3 ---  ---  ---  --- # what is a bitcoin mining? --- - a way to incentivise people maintaining the network --- remember this? ``` data: Antarctica is where they store the aliens previous hash: 9c6bab6c7bc1f7f63a2631eab2caae78f9df0eed0d5f2dbe123649454872f4bf ``` --- now you need to answer a quiz to submit the block ``` data: Antarctica is where they store the aliens quiz-answer: 12312 previous hash: 9c6bab6c7bc1f7f63a2631eab2caae78f9df0eed0d5f2dbe123649454872f4bf ``` --- # what is a SHA-256? --- - A one-way hash can be generated from any piece of data, but the data cannot be generated from the hash. <a href="https://imgbb.com/"><img src="https://i.ibb.co/3cCfdrP/9604874-orig.jpg" alt="9604874-orig" border="0"></a> --- # what is exactly bitcoin mining? --- to answer the quiz, is to find what alphanumeric combination to produce the hash with n-zeros in front demo 2: https://xorbin.com/tools/sha256-hash-calculator ``` data: Antarctica is where they store the aliens quiz-answer: 12312 previous hash: 9c6bab6c7bc1f7f63a2631eab2caae78f9df0eed0d5f2dbe123649454872f4bf ``` --- - https://analysis.null.place/how-do-the-bitcoin-mining-algorithms-work/#form4 --- # what are other applications using cryptographic hash function? ---  --- # how is password stored in the database? --- demo 3: https://xorbin.com/tools/sha256-hash-calculator ``` hunter2 ``` --- # why can't we store the password as-is? --- - in case that a person gets access to the database, they can get the password https://security.blogoverflow.com/2011/11/why-passwords-should-be-hashed/ --- # end 🎉 --- ### Wrap up - bitcoin uses cryptographic hash function as a way to make transactions immutable - bitcoin also uses cryptographic hash function as a way to identify people doing work algorithmically - saving password in a database also uses cryptographic hash function to encrypt password --- ### Thank you! :sailboat: --- # bonus: why SHA-256 is not preferred for passwords anymore --- https://security.stackexchange.com/questions/133239/what-is-the-specific-reason-to-prefer-bcrypt-or-pbkdf2-over-sha256-crypt-in-pass