CBP
Study material Certified Bitcoin Professional (CBP) Exam 2016
Contents
- 1 Study material Certified Bitcoin Professional (CBP) Exam 2016
- 1.1 Tips & Tricks
- 1.2 History of Money and Ledgerbased Economics
- 1.3 Basic Cryptography
- 1.4 Bitcoin Basics
- 1.5 Mining
- 1.6 Wallets, Clients and Key Management
- 1.7 Bitcoin Commerce
based on CBPStudyGuide
This list is meant to focus your preparation, not provide an exhaustive list of all possible test materials.
For CBP purposes, you don’t need to know how to implement the tech but you will need to understand the basic features, what problems those features solve, and what problems they don’t solve.
Tips & Tricks
What you need to know in Italic
What we offer as links to study material in normal caption
History of Money and Ledgerbased Economics
Centralized Ledgers
Understand what a centralized ledger is and how money has been organized on centralized ledgers in the modern digital economy.
Functions of Currency
Functions of Currency
Distinguish between functions of currencies such as unit of account, store of value, and medium of exchange.
If our 15 million currently available Bitcoins needed to cover 1% of the current world wide money supply then 1 bitcoin would cost $75.000.
Wake up little Suzie.... wake up: Future of blockchain
Wat is macro-economy
- 1. Government
- 2. Consumers
- 3. Producers
- 4. Financial sector
What is money?
- 1. means of transfer
- 2. pricing of value
- 3. stock
- 4. a creditor - debtor relationship
- 5. money is not a thing, a thing can not pop up out of thin air, however a relationship can. (Dirk Bezemer)
How does money arise: Because a new debt relationship had been established (Dirk Bezemer)
FIAT Money
fail, fail and fail again
Distributed Consensus
Define “distributed consensus” and explain what makes bitcoin’s ledger different from centralized ledgers.
What is Bitcoin: 1. It is a money system (capital 'B'), 2. it is a currency (Lowercase 'b'), 3. a family of protocols that makes the system operate
In comprihensable wording
History of Bitcoin
Read the bitcoin protocol white paper. Know about major events affecting bitcoin since its creation such as the failures of early exchanges (who and why) and the birth of altcoins.
PROBLEMS
Of any kind:
- COUNTERPARTY RISK
- THEFT
- FRAUD
- EMBEZZLEMENT
- PHYSICAL LOSS
Exchanges
- Exmo
- Mtgox 750.000BTC 2014
- Mtgox2 750.000BTC 2014
- Mtgox3 750.000BTC 2014
- BitFloor exchange suffered its own break-in in September 2012, losing 24,000 bitcoins when a hacker “accessed an unencrypted backup of wallet keys“. 24.000 BTC 2012
- BTER 2014
- BTER2 & Jua.com 7000BTC 2015
- Bitcoinica had already been hacked in March 2012, and lost thousands of bitcoins. But the hack wasn’t enough to bring the company down, and Bitcoincia promised that it would pay back users in full. In May that year, the company was hacked again; that time, it was a killing blow. x000 BTC, 2012
- Bitcurex, a Polish bitcoin exchange, closed its doors temporarily after a hack brought down its Zloty and Euro exchanges. The company lost “between 10 and 20%” of funds. 2014
- Poloniex admitted that 12.3% of its reserves had been stolen due to an unbelievable error in coding (the site failed to check whether users had a negative balance, letting them withdraw more bitcoins than they had). 2014
- Flexcoin a bitcoin bank, lost almost 1000 bitcoins in a hacking attack. 2014
- Canadian Bitcoins, a Canadian bitcoin exchange, revealed it had lost almost $100,000 in the currency when a fraudster opened a chat session with the exchange’s hosting provider. “He claimed to have a problem with a server and asked the attendant to reboot it into recovery mode, allowing him to bypass security on the server,” according to the Ottawa Citizen. At no point in the two-hour session was he asked to prove his identity.
Other hacks and losses
- Allinvain 25.000 BTC 2011
- [Inputs.io] 4.100 BTC 2012
- [BIPS] 1295 BTC 2013
- Picostocks 6000 BTC 2013
- James Howells hard drive on landfill site 7500BTC 2013
- Buy Pizza by Laszlo Hanyecz 10.000BTC 2010
- [Illegal drug bazaar Sheep Marketplace was plundered, either by hackers or insiders, and about $100 million worth of the currency was stolen from customers. 25000BTC 2013
- Silk Road: US DEA officer steals $800.000 2013
Having gained access to the online bazaar, Bridges stole the online currency and tried to pin it on a witness who was cooperating with the investigation, prompting Silk Road founder Ross Ulbricht to take out hits on the witness' life, prosecutors said at Monday's hearing.
Ponzi schemes and frauds
- Bitcoin Savings and Trust was a bitcoin-based Ponzi scheme, that posed as a virtual hedge fund promising to pay high rates of interest to investors. In classic pyramid style, only the first people to invest ever saw those rates of return, as the money of later investors was used to pay off early ones. 150.000BTC 2012
Leocoin
- after research and personal experience:
Onecoin
- after research:
- http://behindmlm.com/companies/onecoin-investment-warning-issued-by-bank-of-hungary/
- http://hotmlmcompanies.com/onecoin-review/
- http://ethanvanderbuilt.com/2015/05/08/onecoin-scam-yes-opinion/ solid research i.m.o.
- https://www.reddit.com/domain/onecoin.eu/ homepage on reddit. Little happens there.
- http://cointelegraph.com/news/one-coin-much-scam-onecoin-exposed-as-global-mlm-ponzi-scheme
Other scam coins
Footnote
- The ICO of Proof of stake public blockchains is sometimes assessed as a Ponzi scheme. That is not true. You could say they are centralized, that could be true. New consensus mechanisms and ways of spreading coins equally in the world are under constant development, e.g. Casper
ALT coins
- Most altcoins are little more than Bitcoin clones, changing only minor characteristics such as its transactions speed, distribution method, or hashing algorithm. Most of these coins do not survive for very long. One exception is Litecoin, which was one of the first altcoins.
Price Derivation
Understand how the price of bitcoin is derived.
Bitcoins are like any other currency: they fluctuate in value relative to other currencies. The value of a bitcoin is constantly changing, and there is no centralised exchange for it. Think of it this way: each time a bitcoin changes ownership from seller to buyer, the two parties need to agree on its price. There is no 'fixed' price. Usually, it's the seller's responsibility to give a fair price to the buyer based on what rate bitcoins are being traded in elsewhere. The difference between bitcoins and other currencies is that there is no centralised bank that prints the currency and sets relative values. Through transactions, the value of bitcoin fluctuates through supply and demand.
Basic Cryptography
Terms and Definitions
Define and accurately use basic cryptographic terms such as cryptography, encryption algorithm, decryption algorithm, symmetric vs. asymmetric encryption, cipher vs. plain text.
Basic Terminology
- Encryption is the process of turning a clear-text message (Plaintext) into a data stream which looks like a meaningless and random sequence of bits (ciphertext). The process of turning ciphertext back into plaintext is called decryption.
- Cryptography deals with making communications secure. Cryptoanalysis deals with breaking ciphertext, that is, recovering plaintext without knowing the key. Cryptology is a branch of mathematics which deals with both cryptography and cryptoanalysis.
- A cryptographic algorithm, also known as a cipher, is a mathematical function which uses plaintext as the input and produces ciphertext as the output and vice versa.
- All modern ciphers use keys together with plaintext as the input to produce ciphertext. The same or a different key is supplied to the decryption function to recover plaintext from ciphertext. The details of a cryptographic algorithm are usually made public. It is the key that the security of a modern cipher lies in, not the details of the cipher.
- Symmetric algorithms use the same key for encryption and decryption. These algorithms require that both the sender and receiver agree on a key before they can exchange messages securely.
- Some symmetric algorithms operate on 1 bit (or sometimes 1 byte) of plaintext at a time. They are called stream ciphers. Other algorithms operate on blocks of bits at a time. They are called block ciphers. Most modern block ciphers use the block size of 64 bits.
- Public-key algorithms (also known as asymmetric algorithms) use two different keys (a key pair) for encryption and decryption. The keys in a key pair are mathematically related, but it is computationally infeasible to deduce one key from the other. These algorithms are called "public-key" because the encryption key can be made public. Anyone can use the public key to encrypt a message, but only the owner of the corresponding private key can decrypt it.
- Some public-key algorithms such as RSA allow the process to work in the opposite direction as well: a message can be encrypted with a private key and decrypted with the corresponding public key. If Alice (or anyone else) can decrypt a message with Bob's public key she knows that the message must have come from Bob because no one else has Bob's private key. Digital signatures work this way.
Hash Functions
Explain the purpose of hash functions, how they are used in bitcoin, and how their inputs are related to their outputs.
Symmetric and Asymmetric Encryption
Distinguish between symmetric and asymmetric encryption algorithms. Understand the principles of asymmetric encryption and the impact it has on key exchange.
Digital Signatures
Understand the basics of digital signatures, why and how they are used in bitcoin. Understand the relationship between digital signatures and asymmetric keys.
- DuckDuckGo - Digital Signatures
- Public Key Encryption and Digital Signature: How do they work? by CGI
Bitcoin Basics
Bitcoin Community
Understand how users, advocates, developers, businesses, and governments impact the Bitcoin Protocol. Explain what types of institutions are actively involved in promoting, maintaining, or lobbying on behalf of the industry.
Governance
Government
Business
Developers
Bitcoin Addresses and Keys
Understand how bitcoin addresses and keys are generated. Explain the relationship between bitcoin addresses, public keys, and private keys; distinguish between them and describe the primary use of each. In terms of addresses and keys, describe how funds are accessed and transferred on the bitcoin network.
Bitcoin Addresses and Keys
- bitcoin.it - Address
- Bitcoin Magazine - What is an Address and how do you sign it?
- Keys, Addresses and Wallets
- Derive Public Key from Private Key
Video instruction
Bitcoin Transactions
Describe a bitcoin transaction in terms of inputs and outputs. Explain why a simple bitcoin transaction is irreversible. Understand the basics of transaction fees.
Bitcoin Blockchain Ledger
Explain how bitcoin’s blockchain functions as a public ledger. What information is public?
bitcoin the Unit
Know and understand the denominations of bitcoin and their relation to one another (e.g. millibit, satoshi). Explain the difference between Bitcoin (capitalized B) and bitcoin. Recognize other commonly used symbols referring to bitcoin as a digital currency.
Bitcoin the Network
Understand network basics such as how the network is connected and the importance of independent nodes in the structure. Explain common network attacks (such as DDoS) and how the network is secured from these types of attacks.
Bitcoin Improvement Proposals (BIPs)
What is a BIP? Explain the basic process of submitting, evaluating, and implementing a BIP. Review Github Bitcoin Improvement Proposals.
Buying and Selling bitcoin
What are the different ways users can buy and sell bitcoin? What is a bitcoin exchange? Who uses bitcoin exchanges and why? Understand the risks of storing bitcoin on exchanges and identify best practices for storing bitcoin.
Middleman resellers
Exchanges
Craigslist for bitcoins
Blockchain Explorers
What is a blockchain explorer? How can they be used to trace payments?
Block_chain_browsers
Bitcoin blockchain
Ethereum blockchain
Ethereum CLASSIC
Old
UTXOs
What is an Unspent Transaction Output? How do these affect transactions you send and the change that is leftover from your transaction?
- Mark Erhardt Milan 2016 about his research on UTXO's in Bitcoin
- UTXO made simple on Reddit
Change addresses
- ways to lose money with bitcoin change addresses
- Restoring the backup only restored empty addresses
Miscommunication example
Why is this explanation wrong and why? -> UTXO explanation
Mining
Purpose and Function
Explain the basic value that miners provide to the bitcoin network. How are new bitcoins created?
Algorithm
For Bitcoin mining algorithm, define and describe the following: difficulty adjustment, hashing algorithm, coinbase transaction, coinbase transaction size, nonce, and block reward.
- Escape Velocity - Bitcoin Mining Explained Like You're Five: Part 1
- Escape Velocity - Bitcoin Mining Explained Like You're Five: Part 2
Mining Pools
What is a mining pool? What is a centralized mining pool? What is a P2P pool? Compare and contrast. From the perspective of the network: what are the advantages and disadvantages of pools compared to single miners? From the perspective of a miner: what criteria should I consider when choosing a mining pool?
Mining Hardware
What is the most popular hardware used today for bitcoin mining? Describe the differences between CPU, GPU, and ASIC hardware.
Security and Centralization
Under what conditions is a 51% attack feasible? Explain what a potential attacker can and cannot do with a large proportion of network hashing power. Understand the relationship between mining pools, specialized hardware, and the likelihood of attacks.
Wallets, Clients and Key Management
Wallet Types
What is a bitcoin wallet and how are they used? Explain the differences between software, web, hot/cold, paper, brain, hardware, multisig, HD, and HDM wallets.
- Bitcoin Book - The Bitcoin Wallet
- 14 best Bitcoin wallets and the reasons why
HD Wallets
The Hierarchical Deterministic (HD) key creation and transfer protocol (BIP32), which allows creating child keys from parent keys in a hierarchy. Wallets using the HD protocol are called HD wallets.
HDM wallets
Multisig added to HD
Use the concept of an Oracle, originally coined by Alan Turing and adapted to Bitcoin by Mike Hearn. An Oracle in this context is a trusted third party that signs transactions only when certain conditions are met, in order to enforce security or implement other functions.
HDM wallets with a third-party Oracle can provide security while not compromising usability. The user retains custody of 2 out of 3 keys, and does not experience counterparty risk, while still relying on a trustworthy third party to countersign normal transactions. The trusted third party, an Oracle, vets transactions to protect a user from theft, fraud and risk without being able to take possession or control of funds. The Oracle can also alert the user to wallet compromise and merchants with negative reputation. For more about 2-of-3 multisignature wallets, please see BIP-0011 and the Storage white paper.
Bitcoin Clients
Describe the difference between lightweight and full clients. What is Simplified Payment Validation (SPV) and how is it used in lightweight clients?
Deterministic Wallets (BIP32)
What are deterministic wallets? What advantages do they have over “Just a Bunch of Keys” wallets?
PassphraseEncrypted Wallets (BIP38)
What are passphrase encrypted wallets? What advantages do they have over plain wallets?
Backups, Importing and Exporting
What is Wallet Import Format (WIF)? Describe the process of backing up private keys and restoring them to the same or new wallets.
Bitcoin Commerce
Bitcoin Merchants
Describe how merchants can begin accepting bitcoin for products and services.
Bitcoin Payment Processors
What is a payment processor? What services do they provide?
Secure Payment Protocol (BIP70)
What is the Secure Payment Protocol and how is it used on the network? How can you identify secure payments compared with standard payments?
