Introduction to Cryptography with Coding Theory, 3rd Edition

16.4 Cryptocurrencies

In this section, we give a general discussion of issues related to digital cash, using Bitcoin as an example.

The Brands digital cash system from Section 16.2 gives insight into how difficult it can be to re-create the benefits of cash using just cryptography and, even with all its cryptographic sophistry, the Brands scheme is still not able to allow for the cash to be transferred to others or for the digital money to be divided into smaller amounts. Up until the 2000s, almost all digital cash protocols faced many shortcomings when it came to creating digital objects that acted like real-world money. For example, in order to allow for anonymity and to prevent double spending, it was necessary to introduce significant complexity ...