What problem does Bitcoin solve (Bitcoin dilemma)?

What problem does Bitcoin solve? Before Bitcoin was introduced, let’s take a look at its basic concepts: currency and encrypted assets. Bitcoin is issued in a way called “digital cash”, endorsed by central banks, implemented through cryptographic technology, and decentralized accounting system that can be used for value transfer and freely convertible. It is called Digital Gold and also has a name similar to paper money – Silvercoin.

If we consider it as a new currency theory or experimental application of new technology, then it is true electronic cash! The reason why this payment method is so important is mainly because of the increasing demand for Bitcoin and the high transaction costs associated with it, which require a lot of money to be spent. Therefore, this idea has become a controversial issue: “How do you understand that Bitcoin is real when you use it? So why can Bitcoin be successful? Because it has been existing since Satoshi Nakamoto invented it. But over time, the development speed of blockchain has also accelerated, such as the emergence of Bitcoin and the use of smart contracts. This actually proves that Bitcoin’s technological capabilities are very strong.” There are many discussions about the principles of blockchain. Some people think that this is the first point-to-point transmission network on the Internet, but there is actually no such demand. Some people have proposed this idea, believing that Bitcoin is a distributed database system. These questions are all one of the core functions of Bitcoin, that is, the so-called private key.

Simply put, as long as you have a public key, you can send that public key to anyone who wants to initiate a Bitcoin transaction; and some people feel that they have control over a whole chain of data resources and can improve the ability of other people’s computers to process information. This is what many countries are studying to solve this problem. “Private key” refers to the information unit owned or controlled by the account holder. In addition, Bitcoin is a special virtual commodity that allows each user to join freely and generate their own private keys, and can also be used as a source of funds for others. Of course, this process also involves various application scenarios. “Private key” means that ordinary individuals or companies cannot provide relevant data to third parties, but can transfer and store them among nodes, making them unable to obtain.

Bitcoin was initially created as a new algorithm by Professor Vermont Lee-Harrison, a professor at the University of Colorado, Berkeley. Although initially designed specifically for Bitcoin, it has been developed to be more perfect. Now more mainstream institutions support Bitcoin, including companies such as PayPal, Square, MicroStrategy, etc. In addition, listed companies such as Square are beginning to get involved in the field of Bitcoin. For example, Morgan Creek founder Anthony Pompliano recently announced that he will invest in Bitcoin in 2019 and complete the listing application by the end of 2020.

Bitcoin Dilemma

Editor’s note: This article is from Cointelegraph China (ID: cointelegraphChina), authored by JOSHUA MAPPERSON, authorized to be reproduced by Odaily StarDaily.

The biggest problem with Bitcoin is how it competes with fiat currency. Due to the high transaction costs and expensive gas fees of encrypted assets, Bitcoin is currently facing a “dilemma”. What is unique about Bitcoin? In the past decade, people have been trying to solve the problems of Bitcoin-this problem is often proposed by Bitcoin developers, who hope to bring this technology into the traditional financial system. However, as time goes by and many other reasons such as network congestion and rising transaction costs appear, this situation has changed and some major improvements have appeared. “Bitcoin is a very unstable product,” said a person named “Bitcoiner,” “you may have owned many such products.” He added: “We need to build new things that everyone has the same demand for, and this is what we need.” Is there no better choice if there is not enough money to use a decentralized protocol? Nevertheless, Bitcoin still exists in a unique economic world: “If you want to know who controls your wallet or whether you can change them… you can decide from which exchange to buy a certain cryptocurrency; or, if you want to hold these digital gold tokens, you have to hold any of them.” According to data from blockchain intelligence company Chainalysis, as of February this year, about 1.5 billion addresses have received at least 1 million BTC as a reward through an unspent fund. In addition, this indicator has increased by about 1000% since the end of last year.

It is reported that the Bitcoin community is now working hard to cope with the upcoming halving event. Although most miners believe that this halving event will not happen, Bitcoin supporters still believe that more mining pools will join the mining ecology in the future.

Therefore, Jeffrey Kastpelter, a core contributor to Bitcoin, said that when block producers transfer their computational power to block height 64,000, the price of Bitcoin will soar and recover quickly. However, only a few miners agree to certain terms in the Ethereum 2.0 deposit contract, such as allowing it to be transferred to validator nodes under the PoS consensus mechanism before submitting a new updated version to the network. Kastpelter further explained that one of the main use cases of Bitcoin is an alternative solution pegged to the US dollar and other fiat currencies. He said, “For those who believe that Bitcoin can maintain long-term value, this is an exciting thing.” “I don’t know how much Bitcoin will continue to be lost, but I expect that once Bitcoin grows larger than ever, its supply will increase. Even the most powerful mining companies will not stop operating.” Why is it so important behind Bitcoin? In fact, Bitcoin is experiencing a difficult development.