CS 101

Cryptocurrency and Privacy


  • Final is in 200-203 on Monday, December 10 at 8:30AM

Plan for Today

  • Cryptocurrencies and Bitcoin
  • Privacy concerns

What is a Cryptocurrency?

  • Currency; you can use it to buy things
  • Only has value because people agree it has value
  • Not run by a government or any other organization (decentralized)
  • Key component to work: need to have a way to prevent "duplication" (can't use the same dollar or bitcoin twice)
  • Secured by cryptography instead of government or people
  • Focus on bitcoin, but there are others (Ethereum)


  • Helpful analogy
  • Bitcoin stored in a wallet
  • Sender signs intent using public-key encryption
  • Processed using cryptography - computers "mine" by helping the transactions
    • First computer to solve the puzzle (Proof of Work) gets some bitcoin (how new BTC are created)
    • 21 million bitcoin will be created (through 2140), then shift to fees
  • Optional transaction fees determine speed at which transaction is processed


  • Goal: prevent double (fraudulent) transactions
  • Decentralized = no master list of each bitcoin
  • 200,000 computers in the cryptocurrency network must agree (consensus) and keep a list
  • Block: file that records transactions
  • Idea: information once recorded can't be changed (prevent fraud)
  • Blocks are connected together to form the blockchain
  • Removes trust from the transaction
  • Other uses of blockchain
    • Ethereum allows smart contracts: contracts (like a bet) that don't require a third party to enforce

Bitcoin Goals

  • Decentralized, so no inflation or gatekeeping
  • No more fraud
  • Independent of local economy
  • Easy to transfer funds
  • Anonymous (used to be used for criminal activity)

Problems with Bitcoin

Source: Google
  • Energy involved with mining
  • Volatility as a currency
  • Transactions take hours/days
  • Transaction fees ($20-30)
  • Used as an investment instead of a currency
  • Potential for deflation


  • Companies keep data on how you use their services
  • Data leads to more targeted ads (more money)
  • In an age of "big data" - super valuable
  • Allows many services to be free (but data collected even when you pay)
  • Data leads to a massive competitive advantage for companies

Privacy Concerns

  • Should companies get to keep information on you?
  • Company employees?
  • Your government (Snowden)? Foreign governments (why Google pulled out of China)?
  • Other companies?
  • Criminals through data breaches?

Privacy in the US

  • Companies must comply with their posted privacy policies (Federal Trade Commission Act)
  • Financial and health information are strongly regulated
  • Control over collection/use of phone numbers and email addresses
  • In the US, the only way (by law) to control what data is collected about you is to not use websites
  • Know privacy controls (especially Facebook)


  • European Law (nothing similar in the US)
  • Ask how data is stored and used
  • Request data not be used for certain purposes (such as marketing)
  • Ask companies to delete information
  • Notify agency and/or users within 72 hours of a data breach


  • Cryptocurrencies use blockchains secured by cryptography to verify transactions
  • Companies collect data to better target ads - the data is super valuable
  • Privacy laws protect users' data and information