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Cyber Bitcoin
Edited by qqqpeter at 2019-5-8 14:42

Bitcoin is a cryptocurrency that came out in 2009 and is the first product to use blockchain.

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Image from the web

Let us first look at what is the blockchain. The blockchain is a decentralized recording system. Compared to decentralization, it is centralized. For example, we need to send money. The records are recorded in the bank. If the bank goes bankrupt, which records will be difficult to query, as it is recorded only in the bank. And because record only exists in one location, records have the possibility of being modified intentionally. While decentralization is the opposite, records exist in different places, usually computers, and the creation of a new record is responsible for the mining machine, they will encrypt the transaction into a record. When 51% of the results of record are the same, new records are added to the old records. We call a set of records a block, and when a new block is added to the old block, it becomes a blockchain. Since the blockchain is existing in different places, it cannot be edited individually. And if you want to add a fake record, you need to manipulate a large number of mining machines, and these machines can produce 51% of the results so that the fake records can be added to the blockchain. This makes the cost of adding a fake record is very high today.

From the above, Bitcoin is a product that uses blockchain. It is decentralized and records are difficult to be modified. The miner encrypts the transaction into a record and rewards it in the Bitcoin agreement. This is why people mining can getting bitcoin.

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Mining machine, picture from web

Bitcoin rewards will be halved every four years. After halving, the coins given to the mining machine are fixed according to time. If the mining machine is reduced, the coins that can be dug by each mining machine will increase. This mechanism is often said to be a self-coordination mechanism. When the price of the coin rises, the amount of coins obtained by mining is reduced, and some of the miners are forced to leave. When the price of the currency falls, the coins that are dug up increase, and the mine is encouraged. The household entered the market. For example, in November last year, the price of bitcoin fell by nearly 50%. The income of the miners is not simply 50% less, because the coins they have dug increased, but whether the increase in the amount of coins can be offset The fall in the price of coins is another matter.

Bitcoin application

Bitcoin transactions are subject to transaction fees. But for large transactions, the transaction fees required are cheaper than using bank wire transfers or Paypal. In addition, Bitcoin uses decentralized blockchain technology, which means that transactions do not need to pass through financial institutions, and are not subject to government control. In the situation of the financial system is imperfect, such as wartime Ukraine or in some North American countries where domestic inflation is up to four digits, Bitcoin is a suitable tool for trading and storing wealth.

Bitcoin investment

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Buffett often said that the value of a company is to look at a weighing machine in the long run and a voting machine in the short term. The value of Bitcoin is the same. Today, Bitcoin can't replace traditional currency, but in some scenarios, there are still quite good applications. With the increase in the application and acceptance of Bitcoin, the value of Bitcoin is growing rapidly. This kind of asset, because of the great difference expectation of Bitcoin in the market, makes the price volatility quite large, and many people use Bitcoin as a speculative tool.

However, as an investment or a speculative tool, Bitcoin has a shortcoming. In the early days of bitcoin, its acceptability was very low and a few number of users. The aforementioned amount of money was halved every four years and the amount between the time was fixed, earlier Bitcoin participants held a very large percentage of Bitcoin today. According to reports, 40% of Bitcoin is currently in the hands of 0.01% of participants. It is often said that a small number of participants holding a large amount of bitcoin are Bitcoin whales.

These bitcoin whales, which hold a lot of bitcoin, can easily manipulate the market and affect the price of the currency. For speculators, buying and selling bitcoin is like betting against players who hold unlimited bets. But in the long run, the value of Bitcoin will increase with application and acceptance, and it will be a dark horse in long-term investment tools.
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