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Since the advent of Bitcoin, the blockchain industry has gone through more than ten years. For an industry, 10 years is just the beginning. For the blockchain industry, my personal feeling is that this is an industry that requires high-density and high-frequency continuous learning, because a large number of new projects appear around the world every day, and new ideas are proposed and implemented every day. If you want to participate in it, only by continuous learning and understanding can you go further in this industry.

bitcoin

bitcoin

In the blockchain world, no matter what project you talk about, Bitcoin cannot be bypassed, not even the industry.

Bitcoin, as of now, still occupies nearly half of the market capitalization of the entire encryption world. The highest market value once reached 1.23 trillion U.S. dollars, and the price of a bitcoin was as high as more than 67,000 U.S. dollars, which is more than 430,000 yuan.

Many familiar principles, ideas and concepts in the blockchain world today are derived from Bitcoin.

the birth

At the end of October 2008, Satoshi Nakamoto published a paper on the idea of ​​Bitcoin, the white paper of Bitcoin.

Satoshi Nakamoto

Satoshi Nakamoto

No one knows whether he is a person or an organization. He claims to be Japanese-American, and even members of the Bitcoin community group, no one has seen the real face of Satoshi Nakamoto.

Satoshi Nakamoto paid great attention to the protection of personal privacy, and did not leave any information related to him, such as voices and images. In recent years, speculations about Satoshi Nakamoto have been widely discussed, and there have been people claiming to be Satoshi Nakamoto, who have been slapped in the face one by one to prove that they are liars. Some say he is dead, others say he is alive. Some people think that WikiLeaks founder Assange may know Satoshi Nakamoto, due to the early promotion of Bitcoin, but these have not been confirmed.

consensus mechanism

consensus mechanism

The consensus mechanism can be understood as a way for some people (nodes) who do not know each other to reach a consensus on a certain purpose.

The way to reach the Bitcoin consensus mechanism is POW, that is, proof of work. Through the "mining" method, everyone competes together to obtain the right to package block accounting, and the winner can obtain block rewards.

mining

mining

The so-called mining is just a concrete description of the image. The mining process is actually a mathematical calculation process of finding random numbers. Whoever gets the answer first will get the right to package the block.

Satoshi Nakamoto's original design intention is that everyone's computer can participate. But as the price of Bitcoin continues to rise, profits are getting bigger and bigger, and mining machines dedicated to mining are also produced. Now it is almost impossible for personal computers to mine bitcoins, and the calculation speed of computers is far behind that of professional ASIC mining machines.

Cryptography

Cryptography

During the design process of Bitcoin, two principles of cryptography were applied: hashing and signature.

Bitcoin uses the SHA256 hash function, which can be used to verify whether data has been changed.

zero-knowledge proof

zero-knowledge proof

For Bitcoin, my understanding of zero-knowledge proof is to prove that you own these coins without revealing your personal privacy.

double spend attack

double spend attack

For decentralized cryptocurrencies, there are two problems: one is who has the right to issue currency; the other is how to verify the validity of transactions to prevent double-spending attacks.

The issuance of bitcoins can be said to be issued by miners, or strictly speaking, according to the algorithm set by the system, the miners who win every 10 minutes or so can get this reward and get the newly generated bitcoins.

Double-spend attack, that is, a sum of money is spent twice. In our reality, this problem does not exist, but in the decentralized world, without third-party supervision, this problem is easy to occur. Bitcoin introduced UTXO to solve this problem.

UTXO, unspent transaction output. There is no concept of account in Bitcoin, only UTXO. UTXO records your transaction records, amount and other data. In the Bitcoin network, the input of a transaction corresponds to another unused output, and the private key signature of the output address is also required. The node verifies the current UTXO to see if it can find a matching record.

For example, you have 10 bitcoins and you want to transfer 2 to your friends. Now you initiate a transfer transaction, you transfer 10 bitcoins, 2 of which are to your friend's address, and the remaining 8 are to your own address, and all of them are signed by your private key. After the node receives your transfer request, it verifies the transaction and updates the UTXO data record, and packs the block to complete the transaction after it is correct.

Special case: Rewards in the genesis block and blocks produced by mining have no transaction input.

longest legal chain

Bitcoin stipulates that all miners mine on one chain, and the longest chain is the legal chain, which is conducive to the uniqueness of the ledger.

Mining is a process of comparing computing power. The stronger the computing power, the greater the probability of obtaining block rewards. Of course, there are also situations where multiple nodes calculate the answer at the same time, and a fork will occur at this time.

future outlook

future outlook

Bitcoin has been pursued and intercepted by various countries for more than ten years. It has experienced plummets and witnessed new highs, but it has always existed tenaciously.

On September 7, 2021, Bitcoin officially became the legal tender in El Salvador, and Bitcoin has reached a new milestone. At the same time, several ETFs have been approved and launched in the United States recently.

Attached reference reading:

Attached reference reading:

1. The original text of the Bitcoin white paper:https://bitcoin.org/bitcoin.pdf

2. Bitcoin Browser:https://www.blockchain.com/btc/blocks

3. Genesis block:https://www.blockchain.com/btc/block/000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f

4. Satoshi Nakamoto address:https://www.blockchain.com/btc/address/1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa?page=1