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Blockchain and bitcoin (learn more)

Time : 18/03/2022 Author : fc98b1 Click : + -
        This article is an introduction to the knowledge of bitcoin and blockchain, which is like peeling onions. It goes deep layer by layer, so that readers can get complete knowledge from each layer. Blockchain was originally an Internet-based information coding, transmission, encryption, decryption and verification technology, but in my opinion, it has now risen to a "decentralized" concept, which is essentially a conceptual innovation. Bitcoin is a concrete application of this concept. For example, blockchain is equivalent to e-commerce. If you think about how many people understood what e-commerce was 20 years ago, it is essentially an idea, but this idea must be realized by certain technical means.
 
        Bitcoin is equivalent to Taobao. It is a specific application of e-commerce. The first example is downloading movies from the Internet. In the early days, we downloaded movies from some well-known movie download websites. These websites would store movie files on one or a group of servers, and everyone would visit this (Group) server to download movies. This is called centralization. In the rules of the game, the server of the movie website is the center, and everyone who downloads movies is just a line pulled out of the center. In a centralized game, the status of players is not equal, and the website owner occupies an absolutely strong position. He wants you to download and he wants you to limit the speed.
 
        Later, a decentralized download mode appeared, which is BT download, also known as P2P (peer to peer) download. Now, when we talk about P2P, it generally refers to personal lending websites. However, the original concept was downloaded from BT. P2P is personal to personal and point-to-point. The principle of BT downloading is completely different from that of movie websites. The movie is not stored on a server, but everyone downloads a small part of the movie from everyone on the network and finally assembles it into a complete file. In this game, the status of all players is completely equal. Any player can leave and join at any time. As long as there are still people playing, the whole game can operate normally, and no one has special power.
 
        This is called decentralization. The second example is the bank card, Alipay and wechat that we use every day. Let's put aside the cash. We use cashless payment to buy things in RMB, which is a centralized game. There are many levels of centers. For example, the server of Alipay is the first level center, the server of Alipay fund custody bank such as ICBC and CITIC Bank is the second level center, and the next level center of these banks is the central bank & mdash& mdash; The server of the people's Bank of China. In this game, the power and status of players at different levels are unequal. Of course, the largest boss is the central bank. It can even issue money. Its power can be so great that it can rob us of all our money in minutes. Very simply, it only needs to issue more money suddenly. If the price suddenly rises 100 times, our money will be robbed.
 
        Can currency Games be decentralized like downloading movies? Yes, bitcoin system is such a decentralized currency game system. You can consider it as a large-scale currency experiment. The bitcoin game is played in this way. There are only two core rules. First, its currency issuance is not controlled by a certain institution, but a set of algorithms are disclosed. Every time a number that meets the requirements is calculated, it is equivalent to digging up several bitcoins. Anyone can do it. It is absolutely fair, and no one can do anything wrong, because the algorithm is essentially a number by number. Second, the transaction information of bitcoin is not recorded on a certain server, but is recorded synchronously by all players participating in the game. In theory, this transaction record is almost impossible to tamper with.
 
        In this way, the status and power of all game players are completely equal, and almost no player is special. Why add the word "almost"? Because, after all, those miners who are able to dig bitcoin are somewhat special, but this particularity is not too great, and there are no barriers for miners. As long as you can afford a good computer, anyone can be a miner. It has to be said that the "decentralized" design of bitcoin is very wonderful. Its inventor, the mysterious Satoshi Nakamoto, is indeed a "green onion". Understanding decentralization means understanding the blockchain.
 
        A real blockchain project is a project that practices the concept of decentralization through reasonable game rule design and information technology. Bitcoin system is an excellent demonstration project of decentralized concept and blockchain technology. It's no exaggeration to say that I think this is a revolution in the concept of the Internet and another equality revolution of mankind. The last revolution was to break the inequality in status between people, and this time it was to break the inequality in the rules of the game itself. Because of this, blockchain can inspire people's enthusiasm. It is a new thing that sounds like it can overturn all old rules. However, in my opinion, the bitcoin system is not a successful blockchain application, or even congenital.
 
        Why do you say that? Because, looking at the two core rules of bitcoin introduced earlier, we can see that it has the following inherent defects:. First, the bitcoin client software needs enormous storage space, because every node must record all transaction records from the first day of the birth of the bitcoin system. As of the writing of this article (February 13, 2018), this transaction record file has been 147gb, and will only increase. Second, in order to prevent cheating, the bitcoin system has a very complex set of game rules to ensure that the transaction records are true, so that the confirmation time of each transaction generally takes one hour or even several days.
 
        Think about it. If you use bitcoin to buy a cup of milk tea on the street, what will happen. Third, there are only 21 million bitcoins at most, and no matter how many people are mining, the system rules determine that several bitcoins can be produced every ten minutes on average (12.5 in 2018). The contradiction is just like that: the contradiction between the growing demand of the people for bitcoin and the shortage of the total amount of bitcoin. In fact, the core problem solved by blockchain is trust. All financial institutions, such as banks, insurance companies and securities dealers, depend on credit for their survival. The reason why we buy stocks, futures and paper gold with confidence is because we trust the institutions that act as trading intermediaries, which are the centers of financial activities. We would rather pay a certain handling fee and transaction fee for this, and financial institutions also make a lot of money.
 
        However, when the blockchain is mature in people's concept and technology, this centralized financial institution may be subverted, because we can use the concept and technology of blockchain to rewrite the rules of the game, so that all financial product transactions do not need a center, but are completed in a point-to-point manner, and theoretically can guarantee the credit problem. At that time, I don't know whether banks need it or not, because banks also involve more complicated national interests. However, many commercial financial institutions will be impacted by the blockchain. For another example, notarization is also a typical centralized credit agency, and the blockchain can completely rewrite the notarization industry.
 
        The application of blockchain will be described in detail later. Nakamoto's paper really caused a storm in the world. What made him famous in the first World War was the blockchain technology. But please remember: bitcoin is not a blockchain, it is only a specific application of blockchain technology. Nakamoto's general idea is as follows: all computers in the bitcoin network recognize only one account book. When any computer accesses the bitcoin network, it must first synchronize this unique account book. If any computer wants to write new information into this account book, it must complete a set of cumbersome "procedures". This set of procedures is so complex that it is almost impossible to complete it twice at the same time. Even if there is a coincidence, If it is completed twice or even several times at the same time, there is also a rule to determine which information is legal and which information should be discarded.
 
        The output speed of bitcoin is essentially the speed of finding the Olympiad. The current Olympiad requires all the first 72 digits to be zero. If 72 is changed to 73, the difficulty of finding the Olympiad will immediately double. Similarly, if 72 is reduced to 71, the difficulty will be halved. Therefore, the system only needs to adjust the rules of Olympiad Mathematics according to the average computing power of the whole network, which can be easily achieved. The current rule is to adjust the difficulty once according to the average computing power of generating 2016 new blocks. We have also noticed that this adjustment is rough and can only be doubled or halved. The maximum amount is set artificially. The rules designed by Nakamoto Cong are as follows: after every 210000 blocks are added, the coin reward will be halved, and the initial value of the reward is 50 bitcoins. Therefore, on January 4, 2009, Beijing time, Nakamoto Cong awarded himself 50 bitcoins for the first creation block he created.
 
        According to the average output speed of a block of 10 minutes, it will be halved every four years. The first half reduction occurred at 7:24 on November 29, 2012, Beijing time. The 210000 blocks were born and the bitcoin rewards were reduced to 25. At 0:46 a.m. on July 10, 2016, Beijing time, the 420000 block was born. This time, the interval was about three years and seven months. The bitcoin reward was halved again, becoming the current 12.5 blocks. Knowing this rule, we can easily calculate the total amount of bitcoins that have been dug up according to the current block height. As of the writing of this article, the total amount of bitcoins is about 16.87 million.
 
        According to such a half-life, by about 2140, the output of bitcoin will be close to zero, and the upper limit is 21 million. In fact, it is impossible to reach 21 million. The minimum unit of bitcoin allowed to be traded is 0.00000001 (10 ^ (- 8)) bitcoin. This minimum value is also called "Yi cong", which is determined by the minimum numerical accuracy supported by the scripting language. Therefore, the maximum amount of bitcoin is 2100 trillion Cong. Why did Nakamoto set a cap on the total amount? Because his ideal was to create a currency that could not be issued indiscriminately, so as to completely stop the vicious inflation in theory. As to whether this ideal can be realized because the upper limit is set, it is an economic issue. I have no ability to talk about it. I only know that in economics, inflation and deflation are equally terrible.
 
        You may immediately think of another question: if you no longer reward bitcoin, who will go mining? Don't forget that there are also rewards for transaction fees. Although bitcoin rewards are decreasing, the rewards for transaction fees are increasing, and some people are still willing to mine. Moreover, the difficulty of mining can also be dynamically adjusted, and it can always be adjusted to a relatively balanced state. The future of bitcoin is not what I want to discuss. In the previous article, I have repeatedly stressed that bitcoin is only a specific application of the "decentralized concept" of blockchain. It has some inherent shortcomings. It can only be said to be an excellent application, not a successful application.
 
        It's really hard to say whether we can succeed in the end. As of February 27, 2018, the global distribution of merchants accepting bitcoin settlement. There are 11888 in total, mainly distributed in North America and Europe. But the future of blockchain is undoubtedly bright, which is the next innovation of Internet concept. What other scenarios can blockchain technology be applied to daily life? We might as well imagine that, for example, autonomous driving + blockchain can become a nightmare for Didi. Based on blockchain technology, a "smart contract" has been developed, which is also one of the largest application prospects of blockchain technology in the future. The so-called smart contract is to ensure that the contract can be completed automatically without any middleman and is not afraid of default.
 
        The payment method of the contract is digital currency, and the conditions and execution of the contract are all intelligent. For example, when I buy a car, the car will automatically drive from the factory to my home. I use my fingerprint or brush my face to drive, the contract will be automatically executed, and the digital currency will be paid to the automobile factory. This is the real "no middleman makes a difference". With automatic driving and smart contract, do you still need didi taxi? No, cars and customers can be automatically matched through software based on blockchain technology. In the future, blockchain technology is likely to play a pivotal role in various fields of human society. The following is the application scenario mentioned in the February 2018 issue of global science:.
 
        Financial institutions: global banks and investment institutions are studying and promoting blockchain projects. Since its establishment in 2012, ripple, a blockchain system that handles international transactions between banks, has been developing well. Startups like bloom intend to use the blockchain for credit reporting, hoping to prevent data leakage caused by hacking like Equifax. Government: Delaware and Illinois in the United States use distributed ledger to issue birth certificates, while a law of Vermont allows the use of blockchain technology to verify the authenticity of legal documents. Dubai integrates the blockchain into a number of administrative services, such as licensing.
 
        In 2016, Tunisia began to issue an electronic fiat currency called edinar through the blockchain. Tech entrepreneurs: Ethereum network is like an application store set up for blockchain startups. Its purpose is to support new applications, unlike bitcoin, which is just an e-cash ecosystem. Now, there are hundreds of projects and enterprises running on this network. One of the well-known projects is called wepower, which is dedicated to enabling households to directly buy and sell renewable energy (such as electricity generated by rooftop solar panels). Copyright owner and intellectual property owner: British musician Yimo Jane & middot; Imogen heap founded the mycelia technology incubator to track the metadata related to creative works, eliminating the intermediary like iTunes.
 
        Non profit organizations and aid organizations: bitgivefoundation is using blockchain technology to strengthen the accountability of charitable donations. The United Nations World Food Programme is using blockchain technology to streamline the tracking and delivery process of assistance to Jordanian and Syrian refugees. Academic institutions: don't think about paper diplomas. The blockcert project hopes to improve the credibility and sharing of various degree certificates and professional certifications. Asset management company: everledger, a blockchain company headquartered in London, aims at the diamond industry and uses the blockchain to record the content and source of each diamond.
 
        Famous wines and artworks can also be tracked. Journalists: in order to combat fake news, civil (decentralized news market) provides journalists with a platform for creating non advertising and unalterable news. These news are not affected by external interests (such as Russia and Facebook) and are supported by readers. Ordinary people: for migrant workers who send money to their families, the cost of using bitcoin to remit money is lower than that of using Western Union. For this reason, it is roughly estimated that 20% of international remittances between South Korea and the Philippines now depend on bitcoin. According to PwC's forecast, by 2020, 77% of the global financial services industry will adopt the block
 
        
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