April 13 2022
What is bitcoin - simple answers to complex questions
What is bitcoin ( bitcoin ) - this question is already of interest to quite a few people on Earth. We will try to explain the essence of bitcoin as simply as possible.
Bitcoin is a cryptocurrency created by Satoshi Nakamoto (it can be one person or a group of people) in 2008, when the mechanism for mining and tracking transactions for exchange and payment was described, this technology is called blockchain .
Bitcoins do not have a physical form, that is, it is not an ordinary currency in its standard sense and exists only in digital form on computers.
Blockchain technology is built in such a way that many computers simultaneously store all transactions starting from the very first one, this is called the decentralization of the cryptocurrency system.
1 thesis: Cryptocurrency Bitcoin ( bitcoin ) did not appear out of nowhere
And yet, what is bitcoin ? Is it a know-how that arose out of the blue , or is it still a long process of reincarnations and evolutions?
Let's turn to the history of the emergence of cryptocurrency .
Cryptocurrency technology , in particular bitcoin , did not arise at one moment out of nowhere, but went through a number of reincarnations, for example, a similar DigiCash technology created by David Chaum back in 1990 in Amsterdam or b -money of authorship Wei Daya , which also arose in the 90s.
Also, the transaction proof technology called hashash was developed by Adam Beck in the same 90s, now it is thanks to it that transactions of buying and selling bitcoins are confirmed .
This all laid the foundation for the emergence of cryptocurrency in 2008. bitcoin .
2 thesis: There is no third party (bank or intermediary) in settlement transactions with bitcoins
When transferring cryptocurrency , at least 3 computers must confirm the operation, that is, in simple words, imagine that you give money to someone and ask 3 people to testify to it. Technically, this is called entering information into the blockchain (a fireproof list of all transactions).
For those of you who are familiar with accounting, payment confirmation technology can be thought of as double-entry bookkeeping.
From all this, the fact emerges that there is no central authority in the cryptocurrency technology that controls it.
3 thesis: The most basic lever that cryptocurrencies own is the trust of people.
Still, the main advantage of bitcoin is the trust of those people who invest in it, they pay for it, however, this is also true for any currency in the world.
Only unlike any other currency, bitcoin does not have a central governing body of a national bank or any other financial institution.
4 thesis: You do not have to fully understand what bitcoin is in order to use it.
Just like you don't have to know the structure of a car's engine to drive it. You can set up a wallet for yourself, buy some bitcoins , and in the process of working with this currency, become aware of it.
5 thesis: The bitcoin currency is officially recognized in the United States, the European Union, Switzerland, and is being actively implemented in the CIS countries.
Considering only this fact, one can at least treat it not as another financial pyramid. In the USA, for example, bitcoins are used as a means of payment in online stores and supermarkets, in restaurants and airports, and you can also exchange bitcoins for dollars at special exchanger ATMs.
Thesis 6: What is happening with bitcoin and why hackers cannot hack cryptocurrency
As a rule, the bad guys, most often, have more advanced computers and capabilities, why can't they hack and take all the bitcoins for themselves ?
Here you need to understand that in order to hack bitcoin technology , hackers must have stronger computer power than all bitcoin adherents who perform the functions of mining it and confirming transactions. And this is simply impossible.
bitcoin exchange , but the blockchain technology itself is built in such a way that it cannot be hacked.
7 thesis Bitcoin is not supported by anything, unlike the dollar or euro currency
In fact, the dollar is backed only by the obligation of the United States as an issuer, which says that it will accept it from you as a means of payment, just like the euro currency - an obligation to accept it in the EU countries.
The gold standard, according to which the currency was printed exactly as much as there is gold in the country for a long time in the past.
Therefore, nevertheless, the main asset of any fiat (one that has no intrinsic value, unlike, for example, gold) currency is trust in it and the sanity of people who turn the printing press on and off.
8 thesis Bitcoin is the currency that has a circulation limit of 21,000,0000 btc
Yes, the bitcoin mining algorithm limited the miners to only this amount, which will be reached in 2140.
Further , bitcoins will not be issued, but this is rather not a disadvantage, but an advantage, because it turns out that bitcoin is not subject to inflationary processes (glut of the money supply of the issued currency)
Thesis 9: Bitcoin is a volatile currency that is very prone to rapid ups and downs.
In the short term, yes, but if you analyze the behavior of the bitcoin rate, you can see a constant increase in the rate.
Thesis 10: Bitcoin mining is a rather strange and incomprehensible process
The process may be strange, but nothing more than the emission of ordinary money, which causes inflationary processes.
Recall that the process of extracting bitcoin is called mining. and represents the calculation of complex mathematical equations on the computers of the miners and the one who first solves the problem receives a reward in bitcoins .
The main function of such computers is not just an ephemeral problem solving, but the formation of blocks in the blockchain as a confirmation of transactions by the computer that first solves it and forms a block and receives a reward.