Why use Bitcoin? Why is Bitcoin a viable medium of exchange?

Dec 17,2022
Why use Bitcoin? Why is Bitcoin a viable medium of exchange?

Why Bitcoin? Why is Bitcoin a viable medium of exchange? Bitcoin was originally a kind of online virtual currency, which can purchase items in real life. The concept of Bitcoin was first proposed by Nakamoto Cong in 2009. It is based on Nakamoto Cong's idea to design and release open source software and build P2P networks on it.

Why Bitcoin?

Once a Bitcoin transaction is added to the blockchain, it cannot be changed, so once the transaction is verified and recorded, it cannot be revoked. Since Bitcoin can be used by anyone with an Internet connection, it is very suitable for those who want to settle accounts quickly and at a low cost. People can safely send coins to anyone else (point-to-point) through a secure distributed network without the need for traditional financial intermediaries. The complete Bitcoin transaction history is available to anyone at any time.

What is Bitcoin for mainstream audiences?

Generally speaking, Bitcoin refers to the unit Bitcoin digital currency, also known as cryptocurrency. When referring to blockchain technology in general, some people mistakenly use Bitcoin as a synonym. Unlike traditional fiat currency, there is no local government or central bank to control Bitcoin. In order to control inflation, the supply of gradually minted Bitcoin is limited, which means that there are only 21 million coins forever.

The mainstream audience has not yet adopted or understood all the functions of Bitcoin. Bitcoin is not just a digital currency for global payments. It is also an immutable global public data ledger that enterprises can use to support blockchain applications and change their business in new and exciting ways.

Why is Bitcoin a viable medium of exchange?

The underlying blockchain technology aims to protect the integrity of data and transactions. Blockchain permanently records confirmed transactions through a process called mining. Each transaction is digitally signed and authenticated through encryption technology to ensure that the funds will not be used multiple times.

Double spending can also be prevented through the economic interests of miners. The miners will not include the Shuanghua transaction, mainly because there is a risk that other miners reject their blocks; As a result, they lost potential income. Double spending is a crime, and people will not leave behind unalterable evidence of their attempts to steal.

Bitcoin mining is also a way to generate new coins. Mining relies on cryptographic hash functions and workload proof (PoW) consensus algorithms. Changing the Bitcoin blockchain through mining requires decomposing the entire structure record by record, because each block contains the hash value of the previous block. To do so requires the perpetrator to spend a lot of money and resources. The data is distributed through many network miners' nodes in various places. Each miner node maintains a copy of the blockchain ledger. If the data on a node is changed, other network participants will consider it corrupted because it does not match other replicas.

In addition, the timestamp server obtains the hash value of the transaction block and publicly broadcasts the hash value. The timestamp confirms the existence of data. Each timestamp contains the previous timestamp in its hash, so each additional timestamp will strengthen its previous timestamp. In general, distributed systems are more resistant to failures and network attacks because they do not rely on a single, specific data source as traditional centralized systems do. The blockchain acts as a distributed ledger for recording all transactions. It has strong resistance because it is distributed, making modification and fraud difficult. Database records are immutable and can only be tampered with through absurd computing power.

In general, the above content introduces in detail why Bitcoin is used and why Bitcoin is a viable exchange medium. I believe you will understand it after reading it. In short, Bitcoin is a P2P digital currency. Point to point transmission means a decentralized payment system. Unlike most currencies, Bitcoin does not rely on a specific currency institution to issue it. It is generated by a large number of calculations based on a specific algorithm. Bitcoin economy uses a distributed database composed of many nodes in the entire P2P network to confirm and record all transactions, and uses cryptographic design to ensure the security of all aspects of currency circulation.