Use human words to explain bitcoin principles

Bitcoin hot, Beijing time on Saturday afternoon at five o'clock, Bitcoin Network has just traded the largest transaction ever - 190,000 bitcoin was thrown into the market, according to the then price of about 5000, a 10 Billion-yuan millionaire was born, you feel free.

However, this article is not to teach you how to speculate, Xiaobian also do not intend to encourage anyone to enter the bitcoin speculation market. Please be sure to read these characters and then read on:

Bitcoin market risks, speculation, please be cautious!

Well, the hit shot hit, and then we talk about business: This article does not discuss the business logic of Bitcoin, it does not discuss whether it is a hoax, but the principle of bitcoin with easy-to-understand, non Geeks are also able to interpret the language of understanding so that everyone can see what this e-currency makes the central bank deputy governor say "characteristic" and "very instructive". Because for reasons that are easy to understand, the explanation in some places is not very rigorous. Students who have a foundation for further study can look at the bitcoin original essay "Bitcoin: A Peer-to-Peer Electronic Cash System ".

Now, let's get into bitcoin ...

First of all, from the essence of bitcoin, the essence of bitcoin is actually a special solution generated by a bunch of complex algorithms. A peculiar solution is a set of infinite (in fact, a finite number of Bitcoin) solutions that an equation system can get. And every particular solution can solve the equation and is unique.
To yuan analogy, bitcoin is the renminbi serial number, you know the serial number on a banknote, you have the banknote.

The process of mining is to find a particular solution to this system by a huge amount of computation, the system is designed to have only 21 million special solutions, so the upper limit of the bitcoin is 21 million.

Until here, the essence of bitcoin and the mining part of the explanation is over, it is right? Why do I know the banknote money is mine? Then I spend the money still remember the number not?
No.
The bitcoin network is an online system where it is not useful to have bitcoin itself out as a string (trick) of bitcoin networks, and these numbers only work in bitcoin networks. In other words, Bitcoin is likened to the next chip here, comparing the bitcoin network to a downloadable network, leaving the download tool and leaving you with a ton of seeds and no Takizawa Lola?
The Bitcoin network is designed as a distributed storage database, in other words, just as if you had money saved in a bank, the bank took the money out and borrowed it, but you could still see the money in your online bank account , In fact, the bank wrote down your account amount in the database. There is such a database for bitcoin, but the database does not exist in a central server but is open to all: every bitcoin wallet is a node that is connected to a P2P network similar to BT, and now Bitcoin purse downloads about 7G after installation, recording data from Bitcoin wallet owners worldwide. Of course, if the future development of bitcoin wallet continues to increase, you can abandon some old and meaningless transaction details.
Why do you want to do this?
Remember bitcoin just a bunch? Why can we guarantee that this series will only have one legitimate owner at the same time?
The answer is: Every time you initiate a transaction, a broadcast is sent to the entire Bitcoin network as follows:

"I am node A, with special solution 123, now transfer to the node (wallet) B, you are optimistic Ang?

The other nodes in the bitcoin network received this information and compared their own local databases and responded:

"When I got into the equation, that was indeed a solution, and I saw that A was 123 and Node B was there as well, and I acknowledge the deal."

When the number of confirmed nodes reaches a certain amount, depending on how secure the payee wants, the transaction succeeds.

Next, more and more nodes received the news, and no one raised an objection, the transaction record is accepted by the entire bitcoin network, from 123 to become the property of the B wallet.

If you cheat the local client after the transaction is over and let A wallet send a message:

"I am node A, with special solution 123, now transfer to node C, you are optimistic about Ang?" (That is mentioned before the RMB number tricks).

Other nodes receive a comparison of information with the local database:

"No, I wrote Special Resolution 123 in B, do not recognize the transaction."

More and more nodes rejected the transaction, so your transaction failed.

Mining is the same principle, the use of a large amount of computational power to calculate the system of special solutions, and your mining machine program will be compared with the local database and found myself never had this special solution, so to the whole network broadcast:

"I am A, I have a new bitcoin, called 234, and have you seen it before I saw it?"

After the principle and the same transaction.

The bitcoin network has some fault tolerance mechanism that guarantees that even a certain fraudster (who has been issuing false information) and troublemakers (who have always refused to recognize others' transactions) will not affect the entire network.

As a result, bitcoin, though anonymous, is completely transparent, and you can track in your local database any node through which a bitcoin has traversed since it was discovered, as long as you want. By comparing these transaction records with those of the major Bitcoin exchanges, it is relatively easy to have an individual account.

Someone once again asked: Since Bitcoin's algorithm is open source, the database is open and the network is unmanned, can not we "crack" the bitcoin network with the power of a nation?

Know that there is such a question: "If using Tianhe II bitcoin mining machine effect?"

In short, the amount of computation currently available in bitcoin networks is huge, and even adding national supercomputers to bitcoin networks may not be able to take advantage of it, given the price instability of bitcoin, Super-cost electricity. And in terms of algorithms, bitcoin guarantees that the computational complexity of the entire network will increase as the computational complexity increases. It is probably only a week or so ahead of joining the Bitcoin network.

There is also the same question from open source: If bitcoin's algorithm is open source, then how can it be guaranteed that its upper limit is only 21 million, why can not be modified?

Who told you can not be modified? Of course, can be modified

Near the 998th line of this file in the bitcoin official client source code:

int64_t GetBlockValue (int nHeight, int64_t nFees)
{
int64_t nSubsidy = 50 * COIN;

// Subsidy is cut in half every 210,000 blocks which will occur approximately every 4 years.
nSubsidy >> = (nHeight / Params (). SubsidyHalvingInterval ());

return nSubsidy + nFees;

}

As long as the 50 can be amended to increase the bitcoin cap, but the problem is that Bitcoin is open source, the standard is open, the network is not centrally managed. The "official" client does not necessarily change the user is willing to use, a third-party client does not want to see the user does not follow up with others, so a change of this number does not make sense. Unless there are enough large enough nodes to adopt a new upper limit of the client will lead to the rise of the monetary ceiling of the currency network.

Therefore, the increase of 21 million US cents in bitcoin will not be an issue that can not be lifted. It is an issue that everyone does not want to have unanimity. (Objectively, it really can not increase).

It is not good for business logic to analyze whether PIT's fraud is a benevolent person, but the bitter computing power wasted by bitcoin really was a waste of money, not a contribution to research institutes like SETI @ Home. However, because the inventor of the bitcoin algorithm was confusing and was published in the beginning of the essay on the initial algorithm and system of bitcoin, people might be mysterious scientists using their computing power and universe Unknown force combat.

However, one point worth mentioning is that now China and the United States have related scholars in the financial sector to mention such an interesting use: Bitcoin's system and algorithm can be used to replace the existing SWIFT International Funds Clearing System Faster than the existing settlement system, but also very safe and reliable (in this case, the algorithm is reliable).

However, even if the real bitcoin algorithm is used as a new type of international billing standard, it will not be done using the existing bitcoin network. Just as with the BitTorrent standard, some download clients in the country can only guarantee their own clients for the source and disregard other clients. The bank will certainly amend certain algorithms as a private banking system for settlement, the existing bitcoin will certainly not be recognized by this new private network, so it has nothing to do with the public, this is not a full good news.

And then roar again: bitcoin risk is huge, speculative abnormal cautious.