About Bitcoin Details Generation Trading and Circulation

What is Bitcoin?

Bitcoin has gone up ten million times from the beginning to today. However, at the beginning, bitcoin was not for everyone to get rich, but was defined as an electronic cash system.

Q. Why do we say that, in 2008, someone named "Satoshi Nakamoto" wrote a paper called "Bitcoin: A Peer-to-Peer Electronic Cash System"?
Ans. Note that it is an electronic cash system.

About Bitcoin Generation Trading Circulation

I. Background of Bitcoin

Why did Satoshi Nakamoto propose the concept of Bitcoin?
 You know, it is very convenient to pay by credit card or bank card. In fact, the emergence of Bitcoin comes from a time background:

In 2008, the world was in a severe financial crisis. The Federal Reserve continued to issue more currencies to exacerbate inflation. A mysterious man named "Satoshi Nakamoto" felt that this central bank was too unreliable. If he wanted to increase cash, he would issue additional funds, Excessive!

He began to think about how to curb this "willful" central authority and prevent it from issuing more or less cash from time to time.

A few months later, he came up with the answer: It would be unrealistic to kill the Fed, but I can make a new currency system and kill the Fed's authority in this system!

In other words, since the Fed is a "centralized authority", the way to contain it is of course "decentralized"!
So he combined some digital currencies he had seen before and created a peer-to-peer, fully decentralized electronic cash system called "Bitcoin".

What does peer-to-peer, decentralization mean? This means that two people can transfer transactions directly. Let's take an example to explain the difference between peer-to-peer, decentralization and traditional trading methods:

If you transfer 2,000 USD to a company, if you use the current payment method, the process of the 2,000 USD circulation is as follows: your-bank >> App >> Merchant Account, that is, the 2,000 USD will go through " Bank >> App >> Merchant Acct "can reach the merchant.

If it is bitcoin, if you transfer 2,000 bitcoins to Merchant, the process of 2000 bitcoins is as follows: you-merchant, pay the payment directly, and there is no middleman to earn the difference.

Since there are no issuing agencies and no middlemen, how is Bitcoin generated, traded, and circulated? We then look down.

II. The generation, trading and circulation of Bitcoin

(A) The generation of Bitcoin or Bitcoin Mining

Bitcoin is generated through "mining." "Mining" is actually an image metaphor. Mining is the process of creating and maintaining a blockchain. In essence, mining is doing a lot of mathematical calculations to find the positive solution of "math problems".

Therefore, when we say that mining Bitcoin, we actually maintain the Bitcoin system by doing a lot of mathematical calculations. Bitcoin can be understood as the reward for creating and maintaining the Bitcoin system blocks. When Satoshi Nakamoto created the first Bitcoin block in 2009, he received 50 Bitcoins as a reward.

It needs to be emphasized that Bitcoin is not like the kind of golden coins that many media distribute with pictures. Bitcoin is actually just a string of codes. Therefore, when we read the news that someone smashed a Bitcoin ATM machine to steal Bitcoin, we could only say one thing: No culture is terrible!

(B) Bitcoin Circulation

We say that Bitcoin is decentralized, and there is no need for a transit agency to enable transactions between two people. So how do you transfer money? The process of Bitcoin transfer is very simple. It looks like sending an email. The other party can provide your address and receive your transfer.

The address here is equivalent to a bank card number, but having a "bank card number" is not enough. We also need a password. Well, in the bitcoin world, passwords are called "private keys", so we say that private keys are very important and must not be disclosed.

When it comes to transactions, you must mention actual value. Bitcoin didn't have any practical value at first, it was just a "decryption game" circulating in some tech geek communities. Everyone had nothing to do. They were doing sensible arithmetic problems.

Until the emergence of a programmer. In 2010, a programmer in Florida, the United States, bought two pizza coupons with 10,000 bitcoins. In this way, bitcoin was given transaction value for the first time, which is equivalent to one bitcoin worth 0.3 US dollars. Minute.

When a new thing is suddenly given real value, people look at it differently. For Bitcoin, if the former "mining" was just a pastime after a group of "technical coffee", then the emergence of the actual value of Bitcoin began to make this "recreational" gradually become "competition".

In addition, at that time, it just happened to catch up with the game industry. The game training was not profitable. In order to subsidize households, programmers and some computer enthusiasts began to compete for computing power and became "miners" to earn Bitcoin rewards.

In 2010, shortly after the birth of Bitcoin, the world's first Bitcoin online exchange "Mt. Gox" (Mentougou) went online, so the large-scale trading of Bitcoin really started.

Bitcoin Market Exchange Trading Online

III. Why is Bitcoin soaring?

Why did Bitcoin skyrocket ten million times in just ten years? You know, bitcoin was not valuable at the earliest, and 10,000 bitcoins can be exchanged for two pizzas. Why did it soar ten million times in just ten years?

Let's start with the dark web here. The first large-scale circulation of Bitcoin was through the dark web. Because of the anonymity of Bitcoin, through the encryption algorithm, the information of both sides of the transaction can be wrapped in a rigorous package, which can easily escape the tracing of banks and police. Therefore, Bitcoin has become an ideal currency on the dark web:

A drug dealer buys bitcoin with US $ 1 million and sends it to the address of the system dealer. After the system dealer receives the bitcoin, he puts the bitcoin on the exchange and exchanges it for US dollars ... Every step of both of them is protected by the encryption algorithm. , Their criminal records can be covered up.

However, after all, the dark web is also a small circle and a place where you can't see light. It cannot make Bitcoin a well-known thing, nor can it make Bitcoin soaring.

The important reason that really caused Bitcoin's soaring is: Many countries have announced their recognition of Bitcoin's legitimacy, some merchants have begun to support the use of Bitcoin for payment, coupled with the emergence of blockchain projects, and increasingly complete trading platforms, these factors have made Bitcoin Ushering in a bull market.

After the price of bitcoin has increased greatly, people have realized the truth that things are scarce, and the total amount of bitcoin is only 21 million and halved every four years. In this way, the scarcity of bitcoin is magnified. , Prices continue to skyrocket.

Many people have achieved wealth freedom through Bitcoin: those who participated in Bitcoin mining early, those who bought early and have been holding a lot of Bitcoin. But the ultimate reason why Bitcoin becomes a "rich artifact" is not that So why do you say that for 2 reasons:

  a.   Many people who participated in bitcoin mining in the early days did not take bitcoin seriously at the time, and there were not a few miners who lost thousands of bitcoins.

b. Even if they buy a lot of bitcoin in the early days, these people may not hold it for a long time, but choose to sell at a time of ten times or hundred times.

So, how did bitcoin become a "rich" artifact? We believe that the real reason for Bitcoin to become a "rich artifact" is that this underlying technology has brought some inspiration to financing and private equity.

The surge in the price of bitcoin has spawned many other "tokens" that have evolved from mere buying and selling transactions to a model similar to private placement:

Blockchain project companies obtain financing by issuing tokens, and the tokens they issue can be listed and traded like stocks in the future. In other words, holding the tokens issued by this company is equivalent to the ownership of this company.

However, the digital currency issued by the blockchain project company does not have the legal response and cannot obtain the transaction settlement services of financial institutions. Therefore, many of these currency transactions must be exchanged through bitcoin, because bitcoin can be exchanged with the US dollar. Expanded the scope of application of Bitcoin.

In addition to issuing digital currencies to obtain financing, Bitcoin also brought a new round of entrepreneurial enthusiasm, involving various aspects of bitcoin mining and trading, such as the development of bitcoin professional mining machine chips and hardware, and the establishment of digital currency exchanges, and many more.

Therefore, the reason why Bitcoin has become a "rich artifact" in the new era is not only in the growth of its own value, but in a series of exploration and practice related to the financial model it brings.

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