The price of bitcoin is soaring and the technology is booming

Today, bitcoin has once again become the focus of attention. With a new wave of liquidity pouring into the bitcoin market, bitcoin prices have soared again recently and reached an all-time high. The tortuous development of the past three years has proved that bitcoin has not died out. It also adds credibility to the optimistic claims of proponents of investing in bitcoin: bitcoin is one of the most revolutionary technologies today. But what makes bitcoin so different from other financial products that blue chip insurance funds, hedge funds and asset management investors are willing to buy it now? Bitcoin is a comprehensive product of decades of development of cryptography technology. For its predecessor, bitcoin is the first attempt of digital cash, and a completely decentralized system has been established. For starters, it’s a technical feature that makes bitcoin so compelling. Fact 1: bitcoin is cryptocurrency. Contrary to common misconceptions, bitcoin transactions are not confidential or encrypted. In fact, they are public. But bitcoin system is based on public key cryptography. Public key cryptography is a branch of computer science that encodes data using complex mathematical operations (through a digital key system) and keeps secret those who do not have the correct key to decode. With bitcoin, users have a public key (from which they can create a public address to receive bitcoin) and a private key; as the name suggests, the public key is shared, and the private key must be kept secret (if disclosed, the user’s bitcoin may be stolen). The private key is the ownership of bitcoin owned by the user. Technically, wallets store private keys, not bitcoin. Each bitcoin exists on the blockchain, while the wallet only holds the key that allows users to access. The user needs to use the private key to approve the transaction, and needs the public address of someone else to make the transaction. If people are familiar with PGP encryption, they may see similarities in encryption for bitcoin transactions. The design of bitcoin adopts the security principle of encrypted communication to protect the security of bitcoin. Just like sending encrypted messages, bitcoin transactions are peer-to-peer and will not be blocked by anyone. Fact 2: bitcoin is designed to be unlicensed and censored. Because bitcoin can be sent as freely as messages, bitcoin is inclusive. The founder of bitcoin, Nakamoto Nakamoto, designed the system without a license, which means that anyone can use bitcoin to hold and transfer value. He also designed “anti censorship” features, which means that no one can prevent users from joining the network and making transactions. No one can freeze the money in their wallets, and no one can stop bitcoin trading. Because of the way bitcoin transactions are handled, there is no central authority that can control the payment of bitcoin. Unlike PayPal, venmo, or other electronic transfer technologies, bitcoin payments are made directly between the payer and the payee due to encryption. The system’s bitcoin core is an open source software, it is a multi-functional wallet and server of bitcoin network. Anyone with the right hardware can download and run bitcoin’s software, which keeps copies of the bitcoin blockchain transaction ledger and broadcasts transactions to other servers in the network. The so-called “run full node” is the ultimate exercise in bitcoin control, as users can fully audit the bitcoin ledger and broadcast their transactions themselves. Bitcoin users can freely use the blockchain network when using their wallets, even if they don’t have a fully running node, which allows them to control their private key, even though it means that they are trusting other people’s network nodes to broadcast transactions for them. Fact 3: bitcoin transactions are immutable. The blockchain adopted by bitcoin is a digital ledger that stores all network transaction records and is immutable. No organization or organization can modify it, and no one can cheat the network to get bitcoin. Bitcoin transactions are run by “miners” running servers to “mine” (maintain) bitcoin. They find the next block in the blockchain sequence and record the latest pending transactions in it. If people know something about the “mining” of bitcoin, they may know that this process consumes a lot of electricity, which makes sense when considering the high price of bitcoin, because it’s not free. This kind of competition and energy consumption in mining helps to ensure the security of the network. Encourage “miners” to trade, not interfere. For large “mining” companies, it means that the investment in hardware costs and operating costs of tens of millions of dollars. If an cryptocurrency miner wants to cheat, the only way to change the bitcoin transactions recorded in the blockchain is to do more than half of the work of all the other miners in the network – and the earlier the transaction, the longer the hours. On average, the bitcoin network consumes the same amount of electricity per year as Austria. So changing a bitcoin deal, say three years ago, would cost hundreds of millions of dollars. Its rollback is not theoretically impossible, but it is extremely unlikely when considering the cost of the decentralization of bitcoin mining. Fact 4: bitcoin is at risk of being stolen. Of course, bitcoin may be stolen or seized if you are not careful. But if you take the right precautions, users can make bitcoin more secure, because as long as you keep the private key (or the password that controls bitcoin) in your own hands, you can completely control it. To improve security, users can set up “multi signature” wallets to assign access to their funds across multiple devices. For example, some wallets even include security features, such as virtual passwords, which can be entered to display blank accounts if at risk of blackmail. Users can even use multiple word combinations of “seed phrases” to remember the private key and destroy the associated wallet. When users want to visit them again, they can download any bitcoin wallet and enter the seed phrase to access bitcoin. Users can also write the “seed phrase” on paper, store it on an encrypted USB drive, or on a computer that is not connected to the Internet. Bitcoin transactions can even be sent without having to connect to the Internet via satellite and mesh networks. Fact 5: bitcoin is a decentralized digital currency system. Bitcoin is not only a point-to-point payment network, but also a personal digital bank. Bitcoin economy is driven by consumers who buy bitcoin, miners who process transactions and issue new bitcoin for circulation, node operators who audit network and broadcast transactions, and enterprises based on bitcoin. This economy is also self regulating. Every four years, its automatic execution mechanism cuts the number of bitcoins produced by mining in half, and so on, until the last bitcoin is mined. This “half cycle” ensures that the supply of bitcoin will never exceed 21 million, and that its inflation rate can be predicted. Nakamoto calls bitcoin a peer-to-peer e-cash system in the bitcoin white paper. Since then, bitcoin has been a kind of digital cash that can be freely consumed like physical cash, but some people regard this brand image of bitcoin creators as a signal that bitcoin is mainly used for money. Bitcoin can be used in this way, and new extended technologies such as lightning networks are providing the infrastructure to process these transactions faster and cheaper. However, a lot of bitcoin acquisition ultimately does not care about its use. At the same time, all the factors that make bitcoin censorship resistant and unlicensed make it an attractive source of funding for some dissidents. Bitcoin’s technology is also attractive to criminals, but it’s only a fraction of the actual users of the network. Since all bitcoin transactions are public, it is sometimes much easier to track down illegal traders. Of course, there are privacy protection technologies that make it difficult to trace the footprints of the blockchain. The core technology of bitcoin is rooted in the principle of user freedom and financial freedom, which leads to a large number of software, wallets, protocols and other tools. Developers are committed to making bitcoin more functional and sustainable.

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