To blow away the fog surrounding Bitcoin, we need to analyze it into two parts. On the one hand, Bitcoin is a token, which represents the ownership of a digital concept, like a virtual IOU, which is composed of multiple code fragments. On the other hand, Bitcoin is a protocol and a decentralized accounting network that records the balance of tokens. Both parts simultaneously point to what we call Bitcoin.

This system will allow users to make payment activities with each other without going through a central authorization, which is similar to a bank or other payment gateway. This system is completely electronic. Bitcoin is not printed, unlike currencies like the dollar, euro or yuan. Bitcoin is created by multiple computers around the world using free software.

Bitcoin is the first example of a cryptocurrency that has some characteristics of traditional currencies and is authenticated on the basis of cryptography.

A Japanese software developer anonymously named Satoshi Nakamoto first proposed the concept of Bitcoin in 2008. It is an electronic payment system based on mathematical proof supremacy. The idea is to create a transaction method that is independent of central authorization and can conduct electronic transfers in a secure and unchangeable way.

But no one still knows who Satoshi Nakamoto is.

Transactions using Bitcoin between two parties are similar to transactions using conventional dollars, euros or yen, but in digital form. The following are the most important features of Bitcoin:

1. Decentralization

The most important feature of Bitcoin is decentralization. No single institution controls the Bitcoin network. Bitcoin is maintained by a volunteer organization of coders and is an open network programmed by many computers around the world. Bitcoin has attracted a large number of organizations and individuals, especially those who are unwilling to let banks or official institutions control their assets. With Bitcoin, the entire transaction is maintained by a decentralized and open network.

2. Limited supply

The supply of currencies such as the US dollar, euro, Japanese yen, and Singapore dollar is limited because the central bank can issue currency according to their wishes, and it can also relative value. Currency holders (especially citizens with limited choice) bear these costs.

The supply of Bitcoin is tightly controlled by basic algorithms. New Bitcoins are generated every hour, but the amount is very small, and the growth will show a downward trend until the total circulation reaches 21 million. In theory, if demand for Bitcoin continues to rise and supply remains constant, the value will grow – which is why Bitcoin is so attractive as an asset.

3. Pseudonym

Traditional electronic payments are usually identifiable (for authentication purposes, and to comply with anti-money laundering and other relevant laws and regulations), while Bitcoin user theory It's semi-anonymous. Once a transaction request is submitted, the protocol checks all transaction records and confirms that the person transferring the money has the authority and sufficient Bitcoin to conduct the transaction. The system itself does not know the identity of the trader.

Virtually every Bitcoin user is identified by the address of his or her electronic wallet. And most transactions will verify their customer identities within the framework of laws and regulations before being allowed to conduct Bitcoin transactions. In this case, the use of Bitcoin can be tracked. Because the entire network is transparent, the entire transaction process is visible to everyone. Therefore, Bitcoin is not an ideal currency for criminals, terrorists, or anyone else involved in money laundering.

4. Immutability

Bitcoin transactions are irreversible, which is different from other electronic currency transactions. This is because there is no intermediary adjudicator saying, "Pay me back." If a transaction is already recorded online, it will be impossible to make changes after more than an hour.

This may be worrying, but it also means that any transaction conducted through the Bitcoin network is very serious and not to be trifled with.

5. Divisibility

The smallest unit of Bitcoin is called Satoshi Nakamoto. We can imagine that Bitcoin will spawn more micro-transactions, which are things that traditional electronic currencies cannot do.

In short, Bitcoin is fast and has low utilization cost. And Bitcoin pays more attention to the privacy of transactions.