What is Bitcoin? Is Bitcoin a scam? Is Bitcoin a currency

The concept of BitCoin was first proposed by Satoshi Nakamoto in 2009. According to Satoshi Nakamoto's ideas, Open-source software was designed and released, and P2P networks were built on it

The concept of BitCoin was first proposed by Satoshi Nakamoto in 2009. According to Satoshi Nakamoto's ideas, Open-source software was designed and released, and P2P networks were built on it. Bitcoin is a P2P form of digital currency. Point-to-point transmission implies a decentralized payment system.

Unlike most currencies, Bitcoin does not rely on a specific currency institution for issuance. It is generated by a large number of calculations based on a specific algorithm. Bitcoin economy uses the Distributed database composed of many nodes in the entire P2P network to confirm and record all transactions, and uses Cryptography design to ensure the security of all links of currency circulation. The decentralized nature of P2P and the algorithm itself can ensure that currency value cannot be artificially manipulated through the mass production of Bitcoin. The design based on Cryptography can make Bitcoin only be transferred or paid by the real owner. This also ensures the anonymity of currency ownership and circulation transactions. The biggest difference between Bitcoin and other virtual currencies is that its total number is very limited and has a strong Scarcity. The currency system was once limited to no more than 10.5 million units within four years, and the total quantity will be permanently limited to 21 million units thereafter.

Bitcoin can be used for redemption and can be exchanged into the currencies of most countries. Users can use Bitcoin to purchase virtual items such as clothes, hats, equipment, etc. in online games. As long as someone accepts, they can also use Bitcoin to purchase real life items.

On February 26, 2014, Joe Manchin, a Democratic senator from West Virginia, sent an open letter to multiple regulatory authorities of the Federal government of the United States, hoping that relevant institutions could pay attention to the current situation of Bitcoin encouraging illegal activities and disrupting the financial order, and requested that actions be taken as soon as possible to completely ban the electronic currency.

Starting from 12:00 noon on January 24, 2017, the three major Bitcoin platforms in China officially began collecting transaction fees.

Starting from the essence of Bitcoin, its essence is actually the special solutions generated by a complex set of algorithms. A special solution refers to a set of infinite (in fact, Bitcoin is a finite) solutions that a system of equations can obtain. And each special solution can solve the equation and is unique. [10] To use Chinese yuan as an analogy, Bitcoin is the serial number of Chinese yuan. If you know the serial number on a certain banknote, you have it. The process of mining involves constantly seeking specific solutions to this system of equations through a huge amount of computation. This system of equations has been designed with only 21 million specific solutions, so the upper limit of Bitcoin is 21 million.

To explore Bitcoin, you can download specialized Bitcoin computing tools, register various cooperative websites, fill in the registered username and password in the computing program, and then click on the operation to officially start. After completing the Bitcoin client installation, you can directly obtain a Bitcoin address. When someone else pays, you only need to paste the address yourself to others, and you can make payment through the same client. After installing the Bitcoin client, it will be assigned a private key and a public key. You need to back up your wallet data containing your private key to ensure that your property is not lost. If the hard disk is unfortunately completely formatted, the personal Bitcoin will be completely lost.

Many websites targeting technology players have started accepting Bitcoin transactions. Including websites such as Mtbox and BTCChina, as well as some Taobao stores, they can even accept services such as exchanging Bitcoin for US dollars and euros. Undoubtedly, Bitcoin has become a true circulating currency, rather than a virtual currency like Tencent's Qcoin. There are special third-party payment companies for Bitcoin abroad, similar to Alipay in China, which can provide API interface services.

You can use money to buy Bitcoin, or you can be a miner. They can "mine" by searching for 64 bit numbers on their computers. By repeatedly decrypting with a computer, competing with other gold miners to provide the required numbers for the Bitcoin network. If a computer can successfully create a set of numbers, it will receive 25 Bitcoins. Bitcoin is decentralized and requires the creation of a fixed number of Bitcoins per unit of computing time, resulting in the acquisition of 25 Bitcoins every 10 minutes. By 2140, the maximum amount of Bitcoin in circulation will reach 21 million. In other words, the Bitcoin system can be self-sufficient, encoded to resist inflation and prevent others from causing damage.

Lack of regulation

But some people are concerned that Bitcoin has become a breeding ground for drug trafficking, money laundering, and other illegal activities. A website called 'Silk Road' was shut down by US authorities earlier this month as a platform for illegal individuals to trade Bitcoin. On October 25, 2013, US police reported that they had found $2.8 million worth of Bitcoin in the computer of the website owner Ross William Ubrlich.

Reuters reported that this website has been in operation since 2011, building a trading platform for criminals. The website sells heroin and other drugs, and even offers assassins. More than 900000 registered users of the website use Bitcoin for drug transactions. According to court documents, the website completed $1.2 billion worth of Bitcoin transactions during its two-year operation, with each transaction charging a processing fee of 8% to 15%.

According to Agence France Presse, Bitcoin has not yet been effectively regulated in any country or region. Germany was the first country in the world to recognize Bitcoin as a "private currency".

Trading chaos

Transaction fraud

At the end of October 2013, the Hong Kong GBL platform absconded with funds, and the whereabouts of over 20 million RMB were unknown. The program for this trading website is very poorly written, without using the SSL security protocol, and even the username is stored in plaintext. They do not have some basic programming knowledge. GBL relies on brokers to develop new customers through a "pyramid scheme" model.

On October 22, 2013, looking at the market of Bitcoin, Mr. Qiao, a resident of Dongyang, searched the Bitcoin trading platform GBL on the Internet and recharged 90000 yuan on the trading platform through third-party payment to buy and sell "Bitcoin". On October 26, 2013, it was discovered that the staff of the online trading platform were not online and some normal trading procedures could not be implemented. Upon investigation, it was discovered that the company's registered address was fake and a total of 90000 yuan was scammed. This is the first case in Dongyang City that was defrauded due to the purchase of "Bitcoin". The police remind citizens who purchase "Bitcoin" on the Internet to pay attention to the authenticity of websites to prevent being cheated.

Western economic circles have many concerns about the current economic foam of Bitcoin. John Quiggin, an Australian economist, called Bitcoin "the purest example of an economic foam"

Virus invasion

In recent times, the continuous popularity of Bitcoin has also made related viruses and Trojans active. Some antivirus companies have reported that there have been 10000 Trojan variants related to Bitcoin mining in the past month. In addition, some netizens revealed to the IT channel of Zhongxin Network that some counterfeit coins similar to Bitcoin may have "special blocks" and have the phenomenon of poaching. For ordinary miners, this may be even more terrifying than a Trojan horse.

A Bitcoin blackmail virus called "CTB Locker" has exploded in China. The virus remotely encrypts users' computer files, extorting ransom from them. User files can only be opened after paying the ransom.

Anti virus experts say that it is currently impossible to crack the virus at home and abroad.

Bitcoin is a utopia dressed in a high-tech vest

Bitcoin is a utopia dressed in a high-tech vest3

1. Actual use value, such as gold can be used as jewelry. The actual usage value of Bitcoin is 0;

2. Value of exchange medium: Credit currency (banknotes) also has no actual use value, but can be used to purchase goods and serve as an exchange medium, and the reason why the public believes this is because it is backed by sovereign credit. Unfortunately, currency issuance has become a crucial aspect of national sovereignty in contemporary society, even more important than the military. Therefore, the government will not tolerate anti government colored "currencies" like Bitcoin having exchange media value. Even if some stores accept Bitcoin, if such applications expand to a certain extent, the government will definitely eliminate them. The government has not taken any action at present, just because there are few Bitcoin users and they are enjoying themselves. The current total value of Bitcoin is $40 billion, which is not worth mentioning compared to sovereign currencies. So, there is currently no need to strike.

It is only meaningful to continue with point 3 if at least one of the conditions in 1 and 2 is met.

3. Relative to the Scarcity of commodities: given the quantity of commodities, the more money issued, the lower the value of unit currency. Does this seem to be the advantage of Bitcoin? Wrong!

That's right, Bitcoin itself only has 21 million. But don't forget, Bitcoin is just a currency based on blockchain technology, and other virtual currencies based on blockchain are essentially replicas and competitors of Bitcoin. In this sense, the supply of 'pan Bitcoin' is infinite and the supply cost is extremely low.

At present, there are more than 800 digital Cryptocurrency, 9 digital Cryptocurrency with a market value of more than $1 billion, and more than 400 digital cryptocurrencies with a market value of less than $1 million. Ethereum, known as the "Bitcoin 2.0 Edition", currently has a market value close to half of Bitcoin. So, the scarcity of Bitcoin itself is a pseudo proposition.

Some people may say that other currencies cannot compete with Bitcoin? It is advisable to look at the length of the scenery. The recent split of Bitcoin has highlighted its "innate" bug.

When designing Bitcoin, each block was set to a size of 1M, recording transactions that occurred globally within 10 minutes. The problem is that as the transaction volume increases, the confirmation time for a transaction continues to extend: traffic congestion! Eric Piscini, head of virtual currency at Deloitte Consulting, recently tried to push a small Bitcoin transaction without paying a transaction fee, and the transaction process took a whole two days. Speed means cost, with the average single transaction cost of buying or selling Bitcoin reaching $5 in early June, the highest level since its inception in eight years. Two years ago, the average transaction cost of Bitcoin was less than 5 cents.

Where there are pain points, there is innovation. So Bitcoin Cash (BCC) was born.

ViaBTC, a mining pool owned by the mining giant Bitcoin Mainland, hard forked Bitcoin, launched "Bitcoin Cash Cash" based on the original chain of Bitcoin, and increased the block size to 8M. At 20:20 on August 1, 2017, Bitcoin Cash cash began to mine, and every Bitcoin Cash investor's account will have the same amount of Bitcoin cash (BCC). Isn't this a blatant attempt to dig the corners of Bitcoin? This split will not be the last.

Similar competitors also include Litecoin: it has the same implementation principle as Bitcoin in technology. The difference is that Litecoin network can process one block every 2.5 minutes (instead of 10 minutes). It is expected to produce 84 million Litecoin, which is four times more than the amount of currency issued by Bitcoin network.

So, the future of Bitcoin depends on two factors: 1) competition from other blockchain currencies; 2) The attitude of the central bank.

The attitude of central banks in various countries can be summarized as: they are optimistic about blockchain and dislike Bitcoin. So Bitcoin fans must not 'get it wrong'. As an underlying technology, blockchain has been recognized for its superiority, but Bitcoin cannot be favored by central banks. The central bank's abacus is to develop its own virtual currency based on blockchain technology.

The words of Zhou Xiaochuan, governor of the People's Bank of China, are typical:

The central bank believes that the development of technology may cause significant changes to future payment businesses, and highly encourages the development of financial technology. Technologies such as digital currency and blockchain can have unpredictable impacts. The problems that arise during the development process need to be regulated... Bitcoin is a tradable asset, not much like a payment currency. For example, stamps and the like are mainly collectibles... From the perspective of the central bank, future digital currencies should make every effort to protect private privacy and find a balance between protecting privacy and cracking down on illegal and criminal activities.

*The Reserve Bank of Australia has revealed that it has established an internal working group focused on blockchain technology.

*The U.S. Securities and Exchange Commission (SEC) rejected the listing application of a Bitcoin fund, which allows small traders to invest in Bitcoin in the US stock market.

*Russia: Those who exchange Bitcoin for rubles may be sentenced to four years in prison.

*Ecuador: In 2014, the National Assembly of Ecuador revised the existing monetary and financial laws to prohibit Bitcoin and other decentralized digital currencies, and will issue digital currencies endorsed by the country's central bank, with the number of issues determined by the country's national needs.

*China: In 2013, five ministries jointly issued the "Notice on Preventing Bitcoin Risks", which pointed out that Bitcoin does not have monetary attributes such as legal compensation and compulsion, and is not a true currency.

The one who understands the central bank's thoughts the most is Ethereum.

In 2013, Vitalik Buterin, the founder of Ethereum, released the first white paper of Ethereum. From July 24, 2014, Ethereum conducted a 42 day pre-sale of Ether coins. One Bitcoin can be exchanged for 1337 Ethereum coins. In 2016, the price of Ethereum began to skyrocket.

The smartest thing about Ethereum is that it downplays its monetary function. Ethereum is more often described as a "platform" for secondary development, intended to weaken the "currency" position. Ethereum is a "valuable application" that can help programming developers to produce and create, namely blockchain 2.0, which aims to apply blockchain technology to fields other than digital currency. The commercial profitability of Ethereum smart contracts and Ethereum virtual machines is a major innovation.