Do you know bitcoin? Some misunderstandings about bitcoin

It has been more than ten years since bitcoin was born in 2009. Bitcoin has not been as ephemeral as many people think, and then disappeared in the torrent of history. On the contrary, in the past 2020, bitcoin has stepped out of the basement of its hiding place and stepped onto the world stage. Not only that, a large number of bitcoin have entered traditional institutions, which further affect and change the world we live in. Compared with the Internet, people’s attitude towards cryptocurrency is much more cautious, so that more than a decade later, many people still have a half understanding of cryptocurrency. Intentionally or unintentionally, we seem to ignore the most important function of cryptocurrency, that is, its payment function. Either way. Bitcoin, Ethereum, letcoin or other cryptocurrencies are designed to be used as money to buy goods and services. Today, there are still many people who question whether it is easy to use cryptocurrency accounts to trade with them? From the perspective of companies and institutions, bitcoin has been expected to be a general currency since its birth. However, due to its unstable price and natural deflation, its function as a payment currency has been controversial. However, up to now, tens of thousands of enterprises have accepted bitcoin payment, including many multinational companies such as Microsoft, Dell and Starbucks. The first mistake is that bitcoin must be purchased as a whole. Divisibility is one of the characteristics of legal tender or cryptocurrency in any form of monetary commodity, which makes things available or makes money tradable. In order to be able to exchange goods of different values, money must be divided into smaller units. In order for bitcoin to become the currency used in daily life, the separability of bitcoin is also very important. Just as a euro can be broken down into 100 euro cents, bitcoin can also be divided into smaller units. As the value of one bitcoin increases, it makes sense to buy only a fraction of the virtual currency at a time, rather than the entire bitcoin. In the future, bitcoin’s divisibility can be increased to 100 billion smaller units, or even more, if the situation so requires. This is because the bitcoin protocol and its associated software can be modified to handle smaller units. Second, bitcoin and blockchain are the same thing. Bitcoin and blockchain are sometimes interchangeable. But they are not exactly the same thing. In short, blockchain technology is the underlying technology of bitcoin, and bitcoin is the first application of blockchain. Bitcoin is a global payment system and the first decentralized virtual currency. Just as the US dollar or euro is the currency of the United States and Europe, bitcoin is the first permanent cryptocurrency, also known as virtual or digital currency. The transaction information of bitcoin is recorded in a decentralized ledger, which is blockchain. In essence, blockchain is a shared database, and the data or information stored in it has the characteristics of unforgeability, full trace, traceability, openness and transparency, and collective maintenance. Based on these characteristics, blockchain is also or will be more and more applied in the field of Internet of things and logistics, government and public services, medical field, digital copyright field and so on. As mentioned above, bitcoin is the largest application of blockchain, but it is not the only one. Third, hackers can steal bitcoin. The most useful thing about blockchain is that it can’t be tampered with. Therefore, no one can forcibly confiscate the bitcoin owned by the holder, and no one can arbitrarily change part of it. This is actually the biggest advantage of blockchain. We often see some cases of bitcoin theft, in fact, they are not related to the blockchain itself, but hackers directly hacked into the user’s personal computer to steal the private key. Because the blockchain belongs to the decentralized structure, users declare their ownership through a public address and a private key that only they know. Therefore, whoever holds the private key will substantially own the bitcoin assets in the corresponding address. Therefore, losing the secret key often means losing bitcoin forever. Therefore, individual owners must pay attention to the security of personal computers. Fourth, bitcoin can’t be used for shopping yet. In fact, bitcoin has been used for shopping since 2009. Of course, as we said at the beginning, the monetary function of cryptocurrencies such as bitcoin has been seriously ignored. Although bitcoin is not issued by a centralized institution, it has a high price volatility and is not legal, but it can still be used as a digital asset for payment. After all, bitcoin was originally created as currency in circulation to compensate for its defects. Although it is still affected by multiple factors in the financial market, the full use of bitcoin payment has not been realized. But don’t forget that even the dollar is not a currency that can be accepted by all businesses. At present, each country still uses its own legal currency as a trading tool. Therefore, compared with the decentralization of the US dollar, is it possible for bitcoin to become a global currency? A supplement to currency in circulation. Fifth, bitcoin is a pyramid scheme. In recent years, many potential cryptocurrency investors have been deterred by the frequent fraud of MLM currency and air currency. The so-called air currency is a white paper based on the blockchain project, and the token is released in the form of an Ethereum smart contract. However, there is no real technical team developing and maintaining it according to the white paper. It is only for the purpose of issuing coins and encircling money. The pyramid selling currency is a new type of pyramid selling style with virtual currency. It is a kind of air currency. It is characterized by pulling people’s heads and dividing them into different levels. So bitcoin is not a pyramid scheme. However, with the rise of cryptocurrency, many people want to share a share of it. It is true that they cheat everywhere under the banner of cryptocurrency and seek huge profits for themselves. Sixth, bitcoin investment needs to be able to program and write code. The technology of bitcoin is really complicated, but just like we use computers, it does not mean that we must be able to build computers. It is the same with bitcoin to trade or invest in bitcoin. Users and investors don’t need to be able to program or write code. If bitcoin is used as an investment tool, then bitcoin here is just like stocks. Investors need financial intelligence to be keen on the market, risk control, investment knowledge and skills, etc. If only bitcoin is regarded as. Currency in circulation is simpler, just like we don’t have to worry about how money is printed. Not knowing the production of bitcoin will not affect our use of it as currency. The seventh myth is that bitcoin is unregulated. Bitcoin exists on the blockchain, which is a global, decentralized and unregulated distributed ledger. So in the traditional sense, bitcoin is not regulated by the government and the central bank, but this does not mean that bitcoin can grow savagely. One of the characteristics of blockchain is collective maintainability. As the currency of the people, bitcoin is the supervisor of everyone on the blockchain. The information on the blockchain will be recorded and everyone can see it immediately. It also contains every transaction processed since the start of bitcoin network, so it can verify its effectiveness. The digital signature corresponding to the sending address can maintain the authenticity of each transaction. This allows users to take full control of the process of sending bitcoin to their own bitcoin address, and all transactions must be confirmed by the network through a process called mining. As for financial reports, bitcoin is not issued by a centralized institution, so there is no financial report in the traditional sense. However, based on blockchain technology, bitcoin related data can be queried in real time and can not be tampered with. Investors can check the number of active addresses, the number of transactions on the chain, and the volume of transactions on the chain through the blockchain browser. Senior people in the industry also said that although cryptocurrency payment is not the mainstream at present, the trend of its vigorous development is obvious. In the future, cryptocurrency payment will become very common.

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