Cryptocurrencies and blockchains - How to create trust

Mathematical cryptography has reached a remarkable maturity since the Second World War. At the same time, advances in the design and hardware construction of computer networks have led to the development of networks that operate without a main control center: peer-to-peer networks. These two factors, combined with the computing and memory power available to every machine today, have made it possible to design new payment methods that are unlike any other and are likely to revolutionize the economy and finance, and indeed many other sectors of activity.

At the end of 2008, the enigmatic Satoshi Nakamoto – is a pseudonym – published a text on the networks describing how it was possible to set up a system for exchanging currency units (which he called bitcoins) that, unlike all conventional currencies issued by central banks and all online payment systems, required no centralized control to operate. On January 3, 2009, the programs needed to launch this first "crypto-currency" were ready and it was created. After a confidential start, with only a few crypto experts aware of its existence and interested in it, it began to flourish. Its price, derisory in 2009, took off, giving it a concrete reality. By early 2013, one bitcoin was worth around ten euros. The year 2013 was the year bitcoin took off, acquiring worldwide notoriety. Its price increased 50-fold in one year, reaching 580 euros on 1 ^er January 2014. After a period of hesitation and falls lasting two years, it started to rise again and on 1 ^er January 2017, it traded for 885 euros. The year 2017 was a wild one, taking it to 16,870 euros on December 17, 2017. It has since come back down, hovering around 11,000 euros (11,130 euros on October 27, 2020, for example). Contrary to what was predicted by many analysts hostile to this strange and often misunderstood digital object, bitcoin is holding up quite well all in all, albeit with unpredictable and worrying jolts. Today, the total capitalization of the 18.5 million bitcoins issued exceeds 206 billion euros (on October 27, 2020).

From scratch, mathematical cryptology and network technology have created digital currencies that can be exchanged for hard cash, enabling, for example, a Norwegian student – Kristoffer Koch – to buy 25 euros worth of bitcoins in 2009, and sell some of them to buy an apartment in central Oslo. Several thousand crypto-currencies, more or less copying bitcoin, have been introduced, but bitcoin remains overwhelmingly dominant: its capitalization represents around 65% of the capitalization of all crypto-currencies.

The idea behind this currency is that, thanks to a subtle combination of cryptographic protocols, a currency can...