What is the model of Bitcoin (What is the principle of Bitcoin)?

08/17/2023 21:24 • Metaverse & Beyond • 57 views

What is the model of Bitcoin? How does it work? How is its value reflected? According to the development history of Bitcoin, it has gone through three key stages: the first stage is the era of “currency”; the second stage is the beginning of Ethereum 1.0; the third stage is to improve blockchain technology to achieve decentralized applications (DApps) without central intervention. Due to its characteristics of decentralization and the adoption of a new consensus mechanism, it has a significant impact on prices.

Editor’s note: This article is from, Odaily Planet Daily, authorized for reprint.

Bitcoin is the first government-controlled form of currency, it is a peer-to-peer electronic cash system. It can be used as a store of value, as a medium of exchange, or as a means of transaction for various goods. It gained interest among people when it circulated on the Internet, but when we combine cryptographic assets with blockchain technology, a situation like this occurs.

What is “Bitcoin”? Bitcoin is a digital currency based on a computer system created by former US President Donald Trump. According to its white paper, the term “Bitcoin” originates from Bitcoin being a unit of account stored in the chain in a verifiable, secure, and readable manner. “Everyone can access this network.” To achieve this goal, Bitcoin has designed a set of rules to ensure the secure operation of the protocol, thereby ensuring that no party can intervene in certain activities in the network. The supply of Bitcoin determines the inflation rate of Bitcoin-which means that if miners sell their mined BTC to pay for all their expenses, they will lose this scarcity. “Why do we need to use Bitcoin? First of all, to make people understand where it comes from, it is necessary to understand how to utilize the economic benefits it generates. Second, Bitcoin is different from traditional fiat currencies. It settles through smart contracts, so it has complete transparency. Third, each time you purchase Bitcoin, a corresponding number of blocks (block rewards) will be generated and then sent to the recipient’s wallet. Finally, Bitcoin can be automatically converted into other currencies or tokens. Fourth, Bitcoin is a decentralized virtual machine-the essence of Bitcoin is an open database system. Bitcoin itself is not a distributed database, so there is no central limit. In addition, since Bitcoin does not rely on third-party servers, it is not affected. The issuance mechanism of Bitcoin is similar to a bank account, but not all funds are public. However, over time, Bitcoin has become part of the daily lives of many people. The design principles of Bitcoin include: 1. Bitcoin has a limited total supply; 2. Only a small number of users have these wallets, and there must be enough users to join the community; 3. No individual can manipulate the price of Bitcoin.

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What is the model of Bitcoin (What is the principle of Bitcoin)?

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