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The origin of cryptocurrency and the characteristics of blockchain

The origin of cryptocurrency

Cryptocurrency was first proposed by Satoshi Nakamoto, the father of Bitcoin, in 2008.

The core concept is "decentralization," which allows buyers and sellers to trade directly, avoiding the exploitation of middlemen, and avoiding the rise and fall of currency values due to human and policy factors (such as quantitative easing, trade sanctions, etc.).

Many people believe that the emergence of cryptocurrency symbolizes the society's dissatisfaction with the fees charged by middlemen such as banks and resistance to the government's wanton adjustment of exchange rates.


Blockchain, cryptocurrency, mining

There are two ways to obtain cryptocurrency:

1. Obtained by mining in the blockchain

2. Purchase through money


Cryptocurrency is built on the blockchain and was originally used as a "gas" purpose. The relationship between the two is inseparable.

The original blockchain was developed from Bitcoin.

There are many blocks in the Bitcoin network, and each block records multiple transaction data. These blocks are connected in series to become the "blockchain".

 

In the Bitcoin network, a block can record about 2,000 transaction data, and a block is generated every 10 minutes.

There will be a "guess number" question on each block. The block will be added to the Bitcoin chain only if the correct number is guessed. In this process, a large amount of computer computing power can be used to solve the problem and succeed. The person who guesses the number can get the bitcoin issued by the system as a reward---this kind of behavior is called "mining".

 

But the Bitcoin network has a big disadvantage, that is, it can only process about 7 transaction data per second. A general online payment company (such as VISA) can process 5,000 to 8,000 transactions per second.

Obviously, the Bitcoin network is difficult to meet needs in today's massive market transaction, which is why other types of blockchains have begun to emerge.

 

One of the most well-known blockchains is Ethereum, which was launched in 2015 by Vitalik Buterin (Vitalik Buterin). The most famous feature is the addition of a "smart contract".

The "smart contract" means that you can add your own program to the block and execute it directly on the main chain of Ethereum. The execution cost (Gas) will be paid in Ether.

 

Features of blockchain

The main features of the blockchain are as follows, I believe you have also heard of some:

 

Non tamperability (Can not be modified)

Counterfeit banknotes have always been a serious issue in society because they will cause panic among the people, and at the same time their confidence in the currency will fall.

Therefore, when a large amount of counterfeit banknotes flows into the market, the government must take strong measures to avoid losing trust and causing the currency to collapse.

In order to avoid such things from happening, the blockchain has the feature of "blocks cannot be modified" to ensure that the operation of the blockchain is trustworthy.

 

Decentralization


Information transparency

Data will not be stored in a specific server. Everyone has the right to store all the data in the blockchain.

In other words, all accounts and transaction information will be recorded. On the one hand, it can be traced. On the other hand, it is more difficult for hackers to modify these accounts, because it is necessary to modify data of the accounts on the main chain of the blockchain on all computers in the world at once.

 

Won’t interfere by human factors

Unlike ordinary currencies (fiat currencies), cryptocurrencies are affected by central bank and government policies.

For example, the blockchain forms of Bitcoin and Ethereum are neutral and not controlled by specific countries and institutions, but the disadvantage is that the transfer efficiency is poor.

 

Generally speaking, the exchange rate of cryptocurrency is determined by the law of market supply and demand. In the future, most investors will further study the technical value of this cryptocurrency and its potential application value.

However, it should be noted that many cryptocurrencies are actually created to "rip off". When the value of the currency rises to a certain level, the founder or team will sell a large amount of the currency in their hands, causing the market to collapse. Commonly known as "got whacked". Eliminate middlemen and reduce handling fee costs

Encrypted currency can be used by both parties to directly transact transactions by transferring keys.

Therefore, there is no need to rely on intermediaries such as banks and exchanges, which can greatly reduce the handling fees paid for transaction transfers.