Scrypt (by Wikipadia) In cryptography, scrypt is a password-based key derivation function created by Colin Percival, originally for the Tarsnap online backup service. The algorithm was specifically designed to make it costly to perform large-scale custom hardware attacks by requiring large amounts of memory. In 2012, the scrypt algorithm was published by IETF as an Internet Draft, intended to become an informational RFC. A simplified version of scrypt is used as a proof-of-work scheme by a number of cryptocurrencies first implemented by an anonymous programmer called ArtForz in Tenebrix followed by Fairbrix and Litecoin soon.
A password-based key derivation function (password-based KDF) is generally designed to be computationally intensive, so that it takes a relatively long time to compute (say on the order of several hundred milliseconds). Legitimate users only need to perform the function once per operation (e.g., authentication), and so the time required is negligible. However, a brute-force attack would likely need to perform the operation billions of times, at which point the time requirements become significant and, ideally, prohibitive.
Previous password-based KDFs (such as the popular PBKDF2 from RSA Laboratories) have relatively low resource demands, meaning they do not require elaborate hardware or very much memory to perform. They are therefore easily and cheaply implemented in hardware (for instance on an ASIC or even an FPGA). This allows an attacker with sufficient resources to launch a large-scale parallel attack by building hundreds or even thousands of implementations of the algorithm in hardware and having each search a different subset of the key space. This divides the amount of time needed to complete a brute-force attack by the number of implementations available, very possibly bringing it down to a reasonable time frame.
The scrypt function is designed to hinder such attempts by raising the resource demands of the algorithm. Specifically, the algorithm is designed to use a large amount of memory compared to other password-based KDFs, making the size and the cost of a hardware implementation much more expensive, and therefore limiting the amount of parallelism an attacker can use, for a given amount of financial resources.