Blockchain Encyclopedia
Episode 1: From Barter to Bitcoin
Money started out as physical money, shells, gold and silver, etc., because of their scarcity, and used to act as general equivalents. Later we started paying with paper money. The production cost of banknotes may be only a few cents, but it can be exchanged for items worth 100 yuan. This is because the country's credit endorsement makes people believe that this worthless banknote can be exchanged for 100 yuan of goods.
With the development of the Internet, we have transitioned from paper money to bookkeeping currency. For example, paying wages is just adding numbers to bank card accounts, and buying clothes is just subtracting. During the whole process, the bank is keeping the books, and only the bank has the right to keep the books.
During the 2008 global economic crisis, the U.S. government could issue unlimited currency because it had bookkeeping rights. Satoshi Nakamoto felt that this was very unreliable, so he wanted to create a new payment system: everyone has the right to keep accounts, the currency cannot be over-issued, and the entire account book is completely open, transparent, and very fair. This is the reason and motivation for Bitcoin.
Episode 2: What is Bitcoin?
The concept of Bitcoin (BTC, abbreviated as BTC) was proposed by Satoshi Nakamoto and is a peer-to-peer, decentralized digital asset.
In 2009, Satoshi Nakamoto packaged the first block and received a mining reward of 50 Bitcoins. The mining reward is halved every 4 years. According to this calculation, Bitcoin is expected to be issued in 2140. The total amount is 21 million pieces.
With the development of bitcoin, bitcoin is gradually recognized: Germany is the first country in the world to accept bitcoin payment; well-known companies such as Microsoft and Dell also accept bitcoin payment. For example, you can buy an alien computer made in the United States directly with bitcoin. Not only that, investors can also invest in Bitcoin on the trading platform and trade profitably.
Episode 3: The Birth of the Bitcoin White Paper
The financial crisis occurred in the United States in 2008. At this historic moment, a self-proclaimed Satoshi Nakamoto published a paper "Bitcoin: A Peer-to-Peer Electronic Cash System" on the Internet, describing a new The digital currency system: Bitcoin.
The Bitcoin system is a decentralized digital currency system, which solves the problem of issuance and circulation of currency with a constant amount in the absence of a central institution. Through the Bitcoin system transfer, the information is open and transparent, and Bitcoin can be transferred to people on the other side of the world with confidence, and every transfer information will be recorded by the entire network. The advent of the white paper also marks the birth of the blockchain, the underlying technology of Bitcoin.
Episode 4: The first Bitcoin is born!
On January 4, 2009, Beijing time, three months have passed since the release of the Bitcoin white paper.
Finally, on this great day, Satoshi Nakamoto, the author of the white paper, created the first block—the Genesis Block of Bitcoin—on a small server in Helsinki, Finland, and obtained the The first 50 bitcoins were awarded, and the first bitcoins were born.
At the time of the financial crisis in 2008, in order to commemorate the birth of Bitcoin, Satoshi Nakamoto put the headline on the front page of The Times that day—“The Times” Times 03/Jan/2009, Chancellor onbrink of second bailout for banks" is engraved on the first block.
This move of Satoshi Nakamoto clearly shows the birth time of Bitcoin, which is amazing for my Satoshi Nakamoto!
Episode 5: Who is Satoshi Nakamoto?
Satoshi Nakamoto is the developer and creator of Bitcoin. On November 1, 2008, Satoshi Nakamoto published the Bitcoin white paper, and he mined Bitcoin for the first time on January 3, 2009. Whoever can use the Bitcoin in the genesis block is Satoshi Nakamoto himself, so who Is it Satoshi Nakamoto? There have been many "Satoshi Nakamoto" in history:
In 2013, someone broke the news that Mochizuki Shinichi, who had made outstanding contributions in the field of mathematics, was Satoshi Nakamoto, but no direct evidence was presented.
In 2014, hackers hacked into the mailbox used by Satoshi Nakamoto and found the owner of the email, Dorian Nakamoto. Later, Dorian said that he only obtained the address and password of the mailbox by accident, not Nakamoto. Cong. In 2016, Craig Wright stated that he was Satoshi Nakamoto and could provide Satoshi's private key. But then Wright retracted his statement because he couldn't face everyone's doubts.
Episode 6: What is Cypherpunk?
Satoshi Nakamoto's Bitcoin white paper was first published in "Cypherpunks". In a narrow sense, a "cypherpunk" is an encrypted email system.
In 1992, Tim May, a senior scientist at Intel, started the Cypherpunk mailing list. In 1993, Eric Hughes wrote a book called The Cypherpunk Manifesto. This is also the first time the term "cypherpunk" appears.
"Cypherpunk" has about 1,400 users and discusses topics including mathematics, encryption technology, computer technology, politics and philosophy, as well as private issues. The early members included many IT elites, such as Assange, the founder of WikiLeaks, Bram Cohen, the author of BT downloads, Sir Tim-Berners Lee, inventor of the World Wide Web, Nick Saab, who proposed the concept of smart contracts, and Facebook's Co-founder Sean Parker. And, of course, Satoshi Nakamoto, the inventor of Bitcoin.
According to statistics, before the birth of Bitcoin, members of cypherpunks discussed and invented as many as 10 digital currencies and payment systems that failed.
Episode 7: How was Bitcoin issued?
Bitcoin does not have a specific issuing organization, but relies on a decentralized issuance mechanism to gradually issue Bitcoin. The Bitcoin system is equivalent to a large decentralized ledger, each block is a page in the ledger, and the system automatically generates Bitcoin as a reward to motivate miners to participate in bookkeeping.
Every 10 minutes, all miners work together to calculate a question. The miner who calculates the answer first gets the right to keep a one-page account. After the account is completed, he will automatically receive a certain amount of bitcoins. This is the process of issuing new bitcoins.
According to the design of Satoshi Nakamoto, at the beginning, each account was rewarded with 50 bitcoins, and for every 210,000 pages of accounts (note: that is, 210,000 blocks, which takes about 4 years), the reward for bookkeeping will be reduced by half. , until about 2140, Bitcoin will not be able to continue to subdivide, so far, the issuance of Bitcoin has been completed, with a total of 21 million. Therefore, mining should be as early as possible~
Episode 8: Pizza actually sold for 300 million yuan?
On May 22, 2010, an early Bitcoin enthusiast, LaszloHanyecz, an American programmer, hoped to exchange Bitcoin for physical commodities. He posted on a Bitcoin forum: He hopes to exchange 10,000 Bitcoins for 2 $25 worth of pizza.
A British volunteer made a deal with Laszlo and was paid 10,000 bitcoins. This is the first time that Bitcoin has a price, and it caused a great stir in the entire crypto community. To commemorate this transaction, people call May 22 every year "Bitcoin Pizza Day". Bitcoin enthusiasts Get together and celebrate with pizza.
Calculated at the current bitcoin price, 2 pieces of pizza were worth about 300 million RMB at that time. Brother Laszlo, who bought the pizza, cried and fainted in the toilet.
Episode 9: Who is Satoshi Nakamoto's successor?
Gavin Andresen was a member of the Bitcoin Core development team, one of the few people who kept in touch by email before Satoshi Nakamoto disappeared from the internet.
In 2010, Gavin began to contact Bitcoin and began to submit code to Satoshi Nakamoto to optimize the core system of Bitcoin. Satoshi Nakamoto gradually gained trust in Gavin's code. Finally one day, Satoshi Nakamoto asked Gavin if he could put his mailbox on the Bitcoin homepage, and Gavin agreed. Since then, Satoshi Nakamoto has stepped back into the background, and Gavin has become the leader of Bitcoin.
Gavin set up the Bitcoin core development team, dedicated to fixing the security loopholes in the Bitcoin code and improving the stability of the Bitcoin software to make it easier to use. In 2012, Gavin founded the non-profit Bitcoin Foundation. The development and growth of Bitcoin is due to Gavin and the Bitcoin core development team he formed.
Episode 10: Bitcoin Faucet
In its first few years, Bitcoin was cheap and very easy to obtain.
At the end of 2010, in order to let more people know and try to use bitcoin, programmer Gavin Andresen bought 10,000 bitcoins for $50, and created a website called "Bitcoin Faucet" to all Those who visited the site gave away 5 bitcoins for free, which were worth about 5 cents at the time, a move that had a significant effect on people accepting bitcoins.
Later, someone imitated Gavin and built a website similar to the Bitcoin faucet. On the one hand, it distributed small amounts of Bitcoin to users who visited the website. Earn advertising fees by directing traffic to major bitcoin sites.
The Bitcoin faucet website has even formed a new business model, with about 50% of the Bitcoin websites relying on it in the early days.
Episode 11: Why hasn't Bitcoin been mined yet?
The Bitcoin system relies on adjusting the difficulty factor to ensure that Bitcoins are not mined too quickly. Every 10 minutes, the miners of the whole network jointly calculate a problem and compete for bookkeeping rights and bitcoin rewards. If the computing power of the entire network continues to grow, Bitcoin will be mined very quickly.
In order to ensure the stability of Bitcoin to dig a block in about 10 minutes, Satoshi Nakamoto designed the difficulty for miners to obtain Bitcoin by mining to dynamically adjust every 2016 blocks (about 2 weeks), so that the adjusted difficulty makes every The expected time to generate a block is 10 minutes.
The current difficulty coefficient is about 480PH/s, which is about 68 billion times that of the genesis block. That is to say, with the current computing power, miners on the entire network need to go through about 300 trillion hash operations to find a qualified one. answer, generate a new block.
Episode 12: How Does Bitcoin Total Constant?
Bitcoin is a deflationary virtual currency with a total amount of 21 million. Do you know how it came from?
When Satoshi Nakamoto designed Bitcoin, he stipulated that each Bitcoin can be subdivided to 8 decimal places, 50 Bitcoins are issued per block, and after every 210,000 blocks, the Bitcoin output of each block is Halved.
A block is generated every 10 minutes, and 210,000 blocks are about four years. Since 2009, the bitcoin output has been halved twice, and currently 12.5 bitcoins are issued per block.
Around 2045, 99.95% of bitcoins will be issued. In 2140, bitcoins cannot be further subdivided. At this point, bitcoins are completely issued, and the total number of bitcoins issued is about 21 million (note: the actual number is 20999999.97690000) .
Although the monetary policy of Bitcoin deflation is very controversial in monetary terms, this issuance mechanism strongly motivates miners to invest in Bitcoin mining as soon as possible, which makes the Bitcoin system gain a lot of computing power and security.
Episode 13: Bitcoin and Q Coin are not the same
Bitcoin is a decentralized digital asset with no issuer.
Q Coin is an electronic currency issued by Tencent, similar to electronic points, but not currency. Q coins need a centralized issuer, and Q coins can only be recognized and used because of Tencent's credit endorsement. The scope of use is also limited to Tencent's games and services, and the value of Q coins is entirely based on people's trust in Tencent.
Bitcoin is not issued by a centralized organization, but it can be widely recognized around the world because Bitcoin can prove itself. No one can tamper with the ledger.
Episode 14: Countries and Blockchain Assets
From a global perspective, governments of various countries have different attitudes towards blockchain and blockchain assets, but overall they are still in the exploratory period. European and American countries actively supervise.
Germany is the first country to recognize digital assets such as Bitcoin as private property. The U.S. CFTC (Commodity Futures Commission) characterizes Bitcoin as a commodity. New York State currently issues 3 BitLicenses.
The situation in Asia is different. Japan actively supports it. In April 2017, Japan implemented the Payment Services Act, officially recognizing Bitcoin as a legal payment method. South Korea actively regulates. In July of the same year, South Korea’s “Bitcoin Supervision Act” came out, setting an investor access threshold of 500 million won.
China is strictly regulated. In September of the same year, seven ministries including the People's Bank of China jointly issued the "Announcement on Preventing Token Issuance and Financing Risks", stipulating that in China, trading platforms shall not engage in the exchange business between legal currency and "virtual currency".
Episode 15: How to Transfer Bitcoin?
We all have our own bank accounts in our lives, and transfers are made between bank accounts.
Likewise, a bitcoin transfer is the process of transferring bitcoins from one bitcoin address to another.
If you want to transfer bitcoins to others, you need to enter your bitcoin address, recipient address, transfer amount and fee amount in the bitcoin exchange platform, bitcoin wallet or bitcoin client.
After the payment is confirmed, the transaction information will be broadcast on the entire Bitcoin network. Miners pack unrecorded transactions in the Bitcoin network into a block every 10 minutes, which completes a confirmation and the bitcoins have been transferred to the other party's account. It usually takes 6 confirmations to ensure that the transaction record cannot be tampered with by anyone, and the transfer is truly completed.
Episode 16: Bitcoin Transfer Fees
Bitcoin transfer fee is a fee paid by traders to miners to motivate miners to compete for bookkeeping to provide enough computing power for Bitcoin to ensure the security of the Bitcoin network. It is also called miner fee in some places.
When users initiate a transfer on the Bitcoin network, they generally need to pay a certain transfer fee to the bookkeeping miners. The transfer fee is generally 0.0001-0.0015 Bitcoin. Due to the limited capacity of the block to accommodate transaction records, miners will give priority to packaging transactions with high fees, so the overpayment of the fee can be recorded faster.
The existence of bitcoin transaction fees can raise the transfer threshold, effectively prevent the block chain from being flooded with spam, and ensure that miners still have the motivation to maintain the bitcoin network after bitcoins are mined.
Episode 17: Blockchain transfers are charged per byte
We often transfer money between banks, and the inter-bank transfer fee is generally charged according to a certain percentage of the transfer amount.
For example, the handling fee for inter-bank transfer is about 5‰, and the handling fee for remote transfer ranges from 1‰ to 1%. In addition to the above handling fees, cross-border transfers also need to pay 50-200 yuan per telegram fee.
The transfer fee between blockchain assets has nothing to do with the amount of the transfer, and is charged per byte.
Taking bitcoin transfer as an example, an ordinary transaction occupies about 250 bytes, and the handling fee is about 0.001-0.0015 bitcoins (about 20-30 yuan).
If you need to transfer money to multiple bitcoin addresses in one transaction, the number of bytes in this transaction will be larger, so you need to pay some extra fees so that miners can package your transactions in time.
Even so, from the perspective of transfer costs, there are still great advantages to using blockchain for cross-border transfers.
Episode 18: What is a Bitcoin Address?
A bitcoin address is a 26- to 34-bit string of letters and numbers that looks a bit garbled, like my bitcoin address is long. 1CzNYqfVaYiQxW5km5isNM6cXgE6tLWMVk
All transfer records of each bitcoin address can be found through the blockchain.
A bitcoin address is a personal bitcoin account, which is equivalent to your bank card number. Anyone can transfer bitcoin to you through your bitcoin address.
How to get your own bitcoin address? You can download a bitcoin wallet, or register on the exchange. Everyone's Bitcoin address is unique. Once you have an address, you can make bitcoin transfers.
Download the bitcoin client or bitcoin wallet, and you can also register your own bitcoin address. Create your own Bitcoin address now~
Episode 19: What is a Bitcoin Node?
Bitcoin is a peer-to-peer electronic cash system, more directly, node-to-node. Each transaction is broadcast by the nodes around the initiator, and after the node receives it, it is broadcast to the nodes around it, and finally spreads to the whole network.
Every Bitcoin wallet is a node, and the node with the complete blockchain ledger is called a full node.
In October 2017, there were about 9,300 full nodes in the Bitcoin network, responsible for the broadcast and verification of Bitcoin transfer transactions.
After the transfer transaction occurs, it is broadcast to the entire network by all nodes, and the mining node will record the transaction in the blockchain ledger after verifying that the transaction is correct.
Since running a Bitcoin node does not provide any rewards, and Bitcoin transfers can be performed without a full node, the number of Bitcoin full nodes is only a small fraction of the number of nodes.
Episode 20: From Sending Transactions to Miner Packing
When you initiate a bitcoin transfer, you need to broadcast the transaction to the entire network. After receiving the transaction, the mining node first puts it into the local memory pool for some basic verification, such as the bitcoins spent by the transaction. Whether it is an unspent transaction.
If the verification is successful, it will be put into the "Unconfirm Transaction Pool", waiting to be packaged; if the verification fails, the transaction will be marked as "Invalid Transaction" (InvalidTransaction) and will not be packaged.
That is to say, mining nodes need to verify each transaction in time and update their "unconfirmed transaction pool" while competing for computing power.
After the node grabs the accounting right, it will extract about a thousand "unconfirmed transactions" from the "unconfirmed transaction pool" for packaging.
Sometimes our transactions cannot be packaged in time because there are too many transactions in the "unconfirmed transaction pool", and the number of transactions that can be recorded in each block is limited.
Episode 21: Digital Signatures for Bitcoin
The digital signature of Bitcoin is an anti-forgery string that can only be generated by the person who transfers the Bitcoin.
By verifying the digital string, on the one hand, it proves that the transaction was initiated by the transferor himself, and on the other hand, it proves that the transaction information has not been changed during transmission.
Digital signatures consist of digital digests and asymmetric encryption techniques. First, the transaction information is shortened into a fixed-length string through digital digest technology, and then the digest is encrypted with its own private key to form a digital signature.
After completion, the complete transaction information and digital signature need to be broadcast to the miners. The miners use Niuniu's public key for verification. If the verification is successful, it means that the transaction was indeed sent by Niuniu, and the information has not been changed.
Asymmetric encryption technology means that the private key for digital signature encryption and the public key for decryption are inconsistent. It looks so complicated, but in fact, the real transfer process only requires you to enter the private key and it is completed instantly!
Episode 22: Bitcoin Transactions and Change Mechanisms
Bitcoin transfers can transfer the balances of multiple addresses at a time, or transfer to multiple addresses at a time.
For example, you need to pay Niuniu 5 bitcoins, but you have 1/2/2 bitcoins in each of your A/B/C 3 addresses, and the balance of each address is not enough to pay 5 bitcoins . At this time, you can initiate a transfer and transfer a total of 5 bitcoins from the three addresses A/B/C to Niuniu.
Another example, if your bitcoin address has 5 bitcoins, but you only need to transfer 1 to Niuniu. You need to tell the miners when transferring money: I have 5 bitcoins, 1 of which is transferred to Niuniu, and the other 4 are transferred back to myself (it can be the original address or create a new address). Don't forget to say oh, otherwise the remaining 4 bitcoins will be used as fees for miners.
This is the change mechanism of Bitcoin.
Episode 23: What is Mining?
Mining is the process of confirming transactions that occur in the Bitcoin system over a period of time and recording them on the blockchain to form new blocks. The people who mine are called miners.
Simply put, mining is the process of bookkeeping, miners are bookkeepers, and blockchain is the ledger.
How to motivate miners to mine? The bookkeeping power of the Bitcoin system is decentralized, that is, every miner has the right to bookkeeping. Miners who successfully grab the bookkeeping right will be rewarded with new bitcoins in the system. Therefore, mining is the process of producing bitcoins.
When Satoshi Nakamoto originally designed Bitcoin, it stipulated that for every 210,000 blocks, the Bitcoin reward is halved until Bitcoin can no longer be subdivided. Because bitcoin, like gold, has a limited amount. So bitcoin is called digital gold, and bitcoin production is also commonly known as mining.
Episode 24: How to mine Bitcoin?
Bitcoins are generated through mining.
Every 10 minutes, the miners of the whole network calculate an arithmetic problem together. Whoever calculates the answer first is equivalent to digging this block, and the miner can get the new bitcoin reward of the system.
When Bitcoin was first born, it was possible to mine through the CPU of a computer.
As more and more miners are mining, it is no longer possible to mine bitcoins with CPUs, so people start mining with mining machines.
If you want to mine, you first need to prepare a mining machine, bitcoin address, mining software, etc.
However, the current computing power of the Bitcoin network is too large, and it is difficult for individuals to purchase a small number of mining machines to mine blocks.
Many miners join the mining pool to mine together. The mining farm is only responsible for computing, and the mining pool is responsible for information packaging.
After mining bitcoins, the mining pool distributes the income according to the proportion of the mining farm's computing power, so as to ensure a more stable input and output.
Episode 25: How do miners mine?
Before the rise of the blockchain, miners specifically referred to the workers digging coal mines. The group impression was that they were covered with coal dust and dark-skinned men except their clothes.
After the birth of the blockchain, miners are no longer just short for coal miners, but have a whole new meaning: people engaged in virtual currency mining. Different from the traditional "miners", the mining tools in the blockchain field of the blockchain industry have more technological colors.
The main job of a miner is transaction confirmation and data packaging. If you want to become a miner, it is actually relatively simple. You can start mining by purchasing a dedicated computing device and downloading the mining software.
Mining does not require the miners to do it by themselves. In fact, the computer performs specific operations. For the miners, they only need to ensure the power supply of the mining machine and the network connection.
Episode 26: What is a Miner?
Taking Bitcoin as an example, a Bitcoin mining machine is a professional device that competes for bookkeeping rights by running a large number of calculations to obtain new bitcoin rewards. It is generally composed of mining chips, heat sinks and fans. It only executes a single calculation program and consumes power. large amount.
Mining is actually a competition of computing power among miners, and miners with more computing power have a higher probability of digging bitcoins.
As the computing power of the entire network rises, it becomes more and more difficult to mine bits with traditional equipment (CPU, GPU). People have developed chips specially used for mining.
The chip is the core part of the mining machine. The process of chip operation will generate a lot of heat. In order to dissipate heat and cool down, bitcoin mining machines are generally equipped with heat sinks and fans.
The user downloads the Bitcoin mining software on the computer, uses the software to assign the tasks of each mining machine, and then starts mining. The algorithm of each coin is different, and the required mining machines are also different.
Episode 27: History of Bitcoin Mining Machine Evolution
Since the birth of Bitcoin, Bitcoin mining has gone through the following four stages: CPU mining → GPU mining → professional mining machine mining → mining pool mining.
On January 3, 2009, Bitcoin founder Satoshi Nakamoto used the computer CPU to mine the first batch of Bitcoins. With everyone's recognition of Bitcoin, more and more people are mining, the computing power of the entire network continues to rise, and the mining difficulty gradually increases.
On September 18, 2010, the first graphics card mining software was released. A graphics card is equivalent to dozens of CPUs, and the mining capacity has been significantly improved.
Later, some people invented professional mining equipment based on mining chips, that is, mining machines. At present, the industry-leading Antminer is equipped with nearly 200 BM1387 chips, which is equivalent to the computing power of more than 30,000 GPUs.
As more miners join mining, it becomes difficult for individual miners to mine Bitcoin. As a result, miners gathered their own mining machines to form mining farms and mining pools.
Episode 28: What the Mine Looks Like
Mining farms are places where mining machines are centrally managed, and are generally located in places where electricity costs are relatively cheap and stable.
In the early days, the operation of the mine was relatively extensive, that is, to build a shelf, and then put the mining machine on it, and then the operation could start.
Later, it was found that under this operation mode, the damage rate of the mining machine is high, and the maintenance cost is too high. Later, there were plans for ventilation and dust isolation, and further development, there was strict control of indoor temperature and humidity.
At present, the operation plan of the entire mine is still being upgraded and evolved. Because the mining machine is very noisy when running, when one mining machine is running, the test noise at one meter is about 73dB(a), and the impact on the surroundings when thousands of mining machines are running can be imagined, so in some places After design and renovation, a silent mine appeared.
Episode 29: How do mining pools mine?
As more and more people participate in mining, the computing power of the entire Bitcoin network continues to rise, and it is difficult for a single device or a small amount of computing power to mine Bitcoin.
At this time, the mining pool was born. The mining pool breaks through the geographical restrictions and connects the computing power of miners and mining farms scattered around the world to mine together.
The mining pool is responsible for information packaging, and the incoming mining farm computing power is responsible for competing for bookkeeping rights. Since the computing power of many miners is gathered, the computing power of the mining pool accounts for a large proportion, and the probability of mining Bitcoin is higher.
The Bitcoin rewards generated by mining pools will be distributed according to the proportion of computing power contributed by each miner. Compared with solo mining, joining a mining pool can get more stable income.
At present, the mining pools with the largest computing power in the world include Yuchi, Antpool, Biwang, Guochi, and BitFury. Except for BitFury, the rest are from China.
Episode 30: What is Hashpower?
In the process of obtaining Bitcoin through "mining", we need to find its corresponding solution, and to find its solution, there is no fixed algorithm, only random hash collision of the computer.
The number of hash collisions a miner can do per second is the representative of its "computing power", and the unit is written as hash/s.
Computing power can be simply understood as computing power. The current mainstream mining machine is about 14T computing magnitude, that is, a mining machine can do at least 1.4*10 13th power hash collision per second. We can say that this 14T specification mining machine has 14T computing power.
The percentage of all mining machines controlled by miners in the total computing power of the Bitcoin network represents the probability that TA can win in this 10-minute competition.
For example, if the current computing power of the entire Bitcoin network is 100, and a certain miner has a computing power of 10, then the probability that TA succeeds in accounting for each competition is 1/10.
Episode 31: What is Competitive Accounting?
Competitive accounting is the accounting method of the Bitcoin system, which solves the problem of how to ensure the consistency of the Bitcoin ledger in a decentralized accounting system. There is no centralized bookkeeping agency in the Bitcoin system, and each node has the right to bookkeeping. How to ensure the consistency of the ledger is an important issue.
In the Bitcoin network, the miners of the whole network participate in the competition of computing power, and the miners with high computing power have stronger computing power and easier to obtain the right of bookkeeping. Miners who successfully grab the accounting right are responsible for accounting and synchronizing the accounting information to the entire network. In return, miners will be rewarded with newly generated bitcoins by the system. As the price of bitcoin rises, more and more people compete for the right to book bitcoin in order to obtain bitcoin, and the difficulty of computing power on the entire network increases exponentially.
Episode 32: How to Invest in Blockchain Assets?
Since Satoshi Nakamoto released the Bitcoin white paper in 2008, the types of blockchain assets have increased, and investment methods have become more abundant.
When Bitcoin was first born in 2009, investors were mainly geeks, but with the addition of more professional investors, the investment methods of blockchain assets have become more abundant.
At present, there are many channels for investors to participate in the investment of blockchain assets, including on-exchange trading, OTC trading, centralized trading platforms, and decentralized trading platforms. Not only have more investment channels, but also more abundant investment methods. Investors can make profits through trend trading, hedging, and cross-platform trading.
Episode 33: Trading Platforms Investing in Blockchain
Compared with peer-to-peer transactions, mining, etc., buying on trading platforms is currently the most mainstream way to obtain blockchain assets, that is, on-site transactions.
The floor trading of blockchain assets is similar to that of stocks. The platform helps you match them. You do not know and do not need to know who your counterparty is. Your counterparty may be one person or many people. Whether buying or selling, the trading platform will record the price of all pending orders, and buyers and sellers can obtain the latest transaction price through real-time orders.
At the same time, the trading platform will summarize the historical transaction price and volume into a K-line chart, which is convenient for investors to analyze the market trend. For example, huobi.pro is a relatively mainstream trading platform in the world.
Episode 34: What is Quantitative Trading?
Quantitative trading, sometimes called automated trading, refers to the use of advanced mathematical models to replace human subjective judgments, which greatly reduces the impact of investor sentiment fluctuations and avoids making irrational investments when the market is extremely frenetic or pessimistic. decision making.
There are many kinds of quantitative trading, including cross-platform moving bricks, trend trading, hedging, etc. Moving bricks across platforms means that when the price difference between different target platforms reaches a certain amount, sell on platforms with high prices and buy on platforms with low prices.
Trend trading is a bit more complicated, it issues sell and buy signals based on trend indicators. Hedging refers to the simultaneous execution of two transactions that are related to the market, have opposite buying and selling directions, equal quantities, and offset profits and losses, so as to achieve the effect of hedging risks.
Quantitative trading is the hallmark of a mature trading market.
Episode 35: Blockchain Assets OTC
Over-the-counter transactions are also called OTC transactions. Users need to find the counterparty by themselves, without matching the transaction, the transaction price is determined by the two parties to the transaction, and the two parties can fully communicate by means of face-to-face negotiation or telephone communication.
OTC trading is the most primitive way of trading. When Bitcoin was first born, there was no trading platform. Investors could only trade Bitcoin through over-the-counter transactions, and most of them adopted the transaction method of one-hand payment and one-hand delivery. Now, there are many standardized over-the-counter trading platforms, and investors can directly choose the counterparty on the trading platform, which is as convenient as on-exchange trading.
Through the trading platform, it can effectively avoid the situation of people and goods being empty due to information asymmetry in OTC transactions. At present, the mainstream OTC trading platforms include Localbitcoins and huobi.pro.
Episode 36: Decentralized Trading Platforms
Since 2013, many decentralized trading platforms have been born. Different from the centralized trading platform, the decentralized trading platform does not need to register an account, and can participate in transactions using a personal digital asset account.
Secondly, each transaction of the decentralized trading platform is carried out through the blockchain, and the transaction needs to wait for the confirmation of the blockchain to be successful. At the same time, the decentralized trading platform is not responsible for keeping the user's assets and private key information. On the one hand, it avoids the moral hazard of the trading platform, and on the other hand, it requires you to keep your private key.
Due to the low liquidity and slow transaction processing speed of decentralized trading platforms, the current transaction volume only accounts for 0.03% of the global digital asset transaction volume. Currently, the tokens of the decentralized trading platform projects Airswap, Kyber, 0x, and OmiseGo can all be traded on huobi.pro.
Episode 37: What is Coin Trading?
With the increase in the types of blockchain assets, the transaction of traditional fiat currencies to blockchain assets can no longer meet the investment needs of global investors, and more professional investors have begun to try currency transactions.
Currency trading refers to using one blockchain asset to price another blockchain asset. For example, using Bitcoin to price Ethereum will generate an ETH/BTC trading pair. The price of the trading pair indicates how much bitcoin you need to buy one ethereum. Through currency trading, you can directly exchange one blockchain asset for another blockchain asset, without involving the transfer or settlement of legal currency. At present, nearly half of the global bitcoin transaction volume comes from currency transactions, and the proportion of fiat currency and bitcoin transactions is gradually shrinking. At present, the more well-known currency trading platforms are huobi.pro and so on.
Episode 38: What is a Bitcoin Wallet for?
Bitcoin is a peer-to-peer electronic cash system that has no physical form and can be stored in a Bitcoin wallet.
The bitcoin wallet stores your bitcoin information, including bitcoin address (similar to your bank card account number), private key (similar to your bank card password). Just like a physical wallet can store multiple bank cards, a bitcoin wallet can also store multiple bitcoin addresses, as well as an independent private key corresponding to each bitcoin address. The core function of a bitcoin wallet is to protect your private key, if the wallet is lost, you will lose the bitcoin forever. Bitcoin wallets come in many forms, such as PC or mobile wallet clients, online web wallets, and even small books (paper wallets) or brains (brain wallets) that record Bitcoin private keys.
You can choose the wallet that suits you according to your needs. As the saying goes, "Don't put your eggs in one basket", and using a variety of ways to disperse storage is also an effective way to reduce risks
Episode 39: Cold Wallet Hot Wallet
According to the storage method of private keys, Bitcoin wallets can be divided into cold wallets and hot wallets.
A cold wallet is a wallet where the network cannot access your private key. Cold wallets often rely on "cold" devices to ensure the security of Bitcoin private keys, such as computers that are not connected to the Internet, mobile phones, and small books with private key addresses written on them. Cold wallets avoid the risk of private keys being stolen by hackers, but may face physical security risks, such as computer loss and damage.
A hot wallet is a wallet that can be purchased on the Internet to access your private keys. Hot wallets tend to be in the form of online wallets. When using a hot wallet, it is best to set different passwords on different platforms and enable secondary authentication to ensure the safety of your assets.
Whether you use a cold wallet or a hot wallet, as long as others know your Bitcoin private key, they can transfer your Bitcoins. Remember, whoever holds the private key is the real owner of Bitcoin.
Episode 40: Full Node Wallets and Light Wallets
Earlier, we knew the various forms of wallets, and we also knew that wallets are actually "management tools for private keys, addresses and blockchain data".
According to the maintenance method of blockchain data and the degree of decentralization of wallets, we can divide wallets into: full-node wallets, light wallets, and centralized wallets.
The representative of the full node is the bitcoin-core core wallet, which needs to synchronize all blockchain data and takes up a lot of memory, but can be completely decentralized. The light wallet relies on other full nodes on the Bitcoin network and only synchronizes data related to itself, which can basically achieve decentralization. The centralized wallet does not depend on the Bitcoin network, and all data is obtained from its own centralized server, but the transaction efficiency is very high, and it can be received in real time. The account you registered on the trading platform is the centralized wallet.
Episode 41: Can Bitcoin be used for payments?
As a digital asset, Bitcoin can currently be used for payment in some countries, such as Japan and Germany.
Most merchants indirectly accept bitcoin through third-party payment institutions, that is, the buyer pays bitcoin for shopping, and the third-party institution immediately converts the bitcoin into fiat currency after receiving it, and the merchant receives fiat currency instead of bitcoin. The merchant's practice of restricting transactions to third-party platforms makes it unnecessary to transfer bitcoins during transactions, but only changes in the asset figures of both parties, making bitcoin "second-to-account" a reality.
The operation of paying with Bitcoin is very simple. Generally, you can open the Bitcoin wallet on your mobile phone and scan the QR code, or click the Bitcoin address to jump to the PC client for payment. Different from WeChat, Alipay and other online payments, using Bitcoin to pay, after scanning the code, the real-time exchange rate of Bitcoin will be displayed first, and the buyer and seller will confirm before making payment.
Episode 42: The relationship between blockchain and Bitcoin
Blockchain technology is the underlying technology of Bitcoin, and Bitcoin is the first application of blockchain.
As mentioned earlier, Bitcoin transaction information is recorded on a decentralized ledger, which is the blockchain. If we compare the blockchain to a physical ledger, then each block is equivalent to a page in this ledger, and a new ledger page is generated every 10 minutes, and each page of the ledger records the Bitcoin network for 10 minutes. transaction information. According to the principle of cryptography, each block is connected in chronological order to form a chain structure, hence the name blockchain.
Since the birth of the white paper "Bitcoin: A Peer-to-Peer Electronic Cash System", major financial institutions at home and abroad have scrambled to study the blockchain, the underlying technology of Bitcoin, and seek practical applications of blockchain technology.
Episode 43: History of Blockchain Technology
When Bitcoin was first born, there was no concept of "blockchain". People used bitcoin (lowercase B) to represent Bitcoin, and Bitcoin (uppercase B) to represent its underlying technology, which is what we now call blockchain technology.
In 2015, after The Economist published the cover article "Blockchain Technology Reshaping the World", blockchain technology set off a global financial technology frenzy, and major financial institutions and banks in the world scrambled to study blockchain technology. In 2016 alone, billions of dollars were invested in blockchain-related businesses.
Episode 44: Blockchain's Machine for Creating Credit
Blockchain is not a newly invented technology, but the integration of a series of technologies, including asymmetric encryption technology, time stamping, consensus mechanism, etc.
Taking Bitcoin as an example, the blockchain solves Double Spending and Byzantine Generals'Problem through Timestamp and Proof of Work mechanisms, that is, guaranteeing the same Bitcoin It cannot be spent twice and is consistent across all nodes in the entire decentralized blockchain network.
The asymmetric encryption mechanism guarantees the security of the private key, the timestamp guarantees that the blocks are connected in sequence into a chain, and the proof-of-work mechanism solves the problem of how to distribute 21 million bitcoins fairly in a decentralized system.
Blockchain technology has the characteristics of anonymity, decentralization, openness and transparency. Therefore, the blockchain is known as a machine for making credit.
Episode 45: Blocks Connected into a Blockchain
A blockchain consists of a series of blocks that are connected using a cryptographic algorithm. Each block is filled with transaction records, and the blocks are connected in sequence to form a chain-like structure, which is the blockchain large ledger.
Taking Bitcoin as an example, when miners generate a new block, they need to calculate the new hash value and random number based on the hash value of the previous block, the new transaction block and the random number. That is to say, each block is generated based on the data of the previous block, and this mechanism ensures the uniqueness of the blockchain data. Because slight changes in transaction records can completely change the result of the hash value, miners cannot cheat when competing for computing power. Each miner must wait for the previous block to be generated before starting the calculation based on the data of the previous block. Eligible random numbers ensure the fairness of mining.
Episode 46: What information does the blockchain record?
The blockchain is the large ledger of the Bitcoin network, and each block is equivalent to a page in the ledger. So what information is recorded in the "ledger"?
At present, each block of Bitcoin mainly records data such as block header, transaction details, transaction counter and block size.
The "block header" contains all information except transaction information, mainly including the hash value of the previous block header: used to ensure that blocks are connected in sequence; timestamp: record the generation time of the block; random number: namely The answer of the arithmetic question that the miners of the whole network PK together; Difficulty target: The difficulty coefficient of the arithmetic question is scored.
"Transaction Details" details the sender, recipient, amount and the digital signature of the sender of each transaction, and is the main content in each block.
The "transaction counter" expresses the number of transactions contained in each block.
"Block size" indicates the size of the data of each block. Currently, each block is limited to within 1MB, and it does not rule out the possibility of expansion in the future.
Episode 47: What is a timestamp?
The blockchain uses timestamps to ensure that each block is connected in sequence. Timestamps make every piece of data on the blockchain time stamped. Simply put, a timestamp proves when something happened on the blockchain and cannot be tampered with by anyone.
Timestamps play the role of a notary in the blockchain and are more trustworthy than traditional notary systems because the information recorded on the blockchain cannot be modified by anyone in any way.
Because of the use of timestamps, blockchain technology is well suited for areas such as intellectual property protection. For example, you have written a paper and want to ask an industry expert for guidance before publishing it, but you are worried that the expert will publish it directly in his name. At this time, you only need to save it on the chain first, and you can easily prove the copyright.
Episode 48: Is the Longest Blockchain Right?
The Bitcoin white paper states that nodes always consider the longest chain to be the correct blockchain and will continue to extend on it. All miners mine on the longest chain, which is beneficial to the uniqueness of the blockchain ledger. If the bitcoin transaction sent to you is not recorded on the longest chain, you may face property damage.
What is the "longest blockchain"? Because miners all over the world are mining at the same time, it is possible that 2 miners have calculated the correct answer at the same time, then the blockchain will form a fork, and the remaining miners may continue to mine on any of the forks. Extend the blockchain.
Therefore, we usually require that after the Bitcoin transfer is packaged, it needs to go through 6 blocks of confirmation to ensure that the miner will not go back to another fork to mine, and then the real transfer is successful.
Episode 49: How Are Blockchains Classified?
Blockchain is divided into 3 categories according to the access mechanism: public chain, private chain and alliance chain. Other types of blockchains may be born in the future.
The public chain is open and transparent. Any individual or group in the world can send a transaction on the public chain, and the transaction can be effectively confirmed by the blockchain. Everyone can compete for bookkeeping rights. The Bitcoin blockchain is a typical representative of the public chain.
The alliance chain is semi-public. It is a blockchain used within a group or organization. Several nodes need to be pre-designated as bookkeepers. The generation of each block is jointly determined by all pre-selected bookkeepers. Other nodes can trade, but do not have bookkeeping rights.
The private chain is completely closed. Only the blockchain technology is used for bookkeeping, the bookkeeping rights are not public, and only internal transactions are recorded, which are exclusively enjoyed by companies or individuals.
Episode 50: Global Circulation of Blockchain Assets
Blockchain assets have several characteristics, one of which is global circulation. Blockchain assets are first and foremost internet-based. As long as there is an Internet, blockchain assets can be circulated. The Internet here can be the World Wide Web or various local area networks, so blockchain assets are circulated globally.
Even if you are on the moon or Mars, as long as you have the Internet, I can transfer my blockchain assets to you.
Compared with the centralized method, the transfer fee for the global circulation of blockchain assets is very low. For example, the early transfer fee of Bitcoin was 0.0001BTC, but it is a little expensive now. Others such as Bitcoin Cash network transfer fee of 0.0001BCC, Dash transfer fee of 0.002Dash, and Ethereum transfer fee of 0.01ETH, equivalent to RMB is only a few dollars, which is very cheap. Compared with traditional transfers, blockchain assets are also very fast, usually within a few minutes to an hour.
Episode 51: Blockchain Assets Have Anonymity
The second major feature of blockchain assets is anonymity. That is, others cannot know how much of your blockchain assets are and who you have made transfers with. This anonymity is of varying degrees.
Bitcoin's anonymity is fundamental. You can only find the transfer record on the blockchain network, but you don't know who is behind the address. However, once you know who the person behind this address is, you can also find all its related transfer records and assets. Dash and Monero are more anonymous. Even if you find out who is behind this address, you have no way of knowing all its transfer information.
Zcash achieves the ultimate in anonymity, and only those with the private key can check all transfer information.
Episode 52: Blockchain Can Decentralize Bookkeeping
The third major feature of blockchain assets is the decentralization of accounting.
Your transfer to others will not be delayed for a few days because the bookkeeping agency is on holiday; it will not be charged a high handling fee because the bookkeeping agency wants to make a profit; it will not be subject to cheating by the bookkeeping agency loss.
Because its accounting is carried out jointly by the whole network. The ledger of your transfer records to others will not be unified because of the loss of the ledger data here or on the other side, because this ledger is jointly maintained by the entire network, and each full node has a backup. If you transfer 0.5 coins to Huobi Niu Niu, you two can look at the recorded data of the whole network together: whether there is any receipt, how many confirmations, etc., it is very transparent and fair.
Episode 53: Blockchain assets are not replicable
The fourth major feature of blockchain assets is that they cannot be copied. The mode of dissemination of information on the Internet is by copying. I sent a very interesting picture to Huobi Niu Niu. The network copied the photo in my hand to Niu Niu. It didn’t really take it from me. I still have this picture in my phone.
Copyright on the web has always been a big issue. Text, pictures, and images are easily copied, causing great trouble to their copyright owners.
The reason why blockchain assets can become assets is because of their non-replicability. It can be delivered by encryption rather than by copying. I send a blockchain asset worth 1,000 yuan to Niuniu, and the 1,000 yuan asset will be transferred from my account to Niuniu's account. I no longer own the 1,000 yuan asset. Non-replicability is an important factor in ensuring that it becomes an asset.
Episode 54: The Consensus Mechanism of Blockchain
In the blockchain system, there is no centralized bookkeeping agency like a bank to ensure the consistency of each transaction on all bookkeeping nodes, that is, it is very important for the entire network to reach a consensus. The consensus mechanism solves this problem.
At present, the main consensus mechanisms are the workload proof mechanism PoW and the equity proof mechanism PoS.
PoW determines the probability of you obtaining the right of bookkeeping by evaluating your workload. The greater the workload, the more likely you are to obtain this bookkeeping opportunity.
PoS determines your probability of obtaining bookkeeping rights by evaluating the number and duration of tokens you hold. This is similar to the dividend system of stocks, and people who hold relatively more equity can get more dividends.
The principle of DPOS is similar to that of POS, except that some "deputies to the National People's Congress" are selected. The main difference from PoS is that the nodes elect several agents, who are verified and accounted for by the agents.
With the development of technology, more advanced consensus mechanisms may be born in the future.
Episode 55: Proof of Work Mechanisms
Proof of Work (POW) is a kind of consensus mechanism, which can be simply understood as a proof that you have done a certain amount of work, that is, I can know that you have completed the specified amount of work by looking at the work results. Work.
Bitcoin mining uses the proof-of-work mechanism. The Bitcoin network adjusts the calculation difficulty to ensure that each competitive bookkeeping requires miners to calculate for about 10 minutes to calculate a result that meets the conditions. The result is the random number contained in the "block header".
Proof of work means that if the miners find a result that satisfies the conditions, we can consider that the miners of the whole network have completed the workload of the specified difficulty coefficient. The probability of obtaining the right of bookkeeping depends on the proportion of miners’ workload in the entire network. If it accounts for 30%, then the probability of obtaining the right of bookkeeping is also 30%. Therefore, increasing the proportion of workload can improve competitiveness and obtain more newly born bitcoins!
Episode 56: Proof-of-Stake Mechanisms
Proof of Stake, or POS for short, is also called Proof of Stake. It is similar to depositing assets in a bank, and the bank will distribute the corresponding income to you based on the amount and time of digital assets you hold.
In the same way, with PoS digital assets, the system assigns you corresponding rights and interests according to your coin age, which is the product of the number of coins you hold and time. For example, if you hold 100 coins for a total of 30 days, then your coin age is 3000.
Compared with PoW (Proof of Work), PoS has two advantages. First, PoS will not cause too much power waste, because PoS does not need to compete for mining power. Second, POS is more difficult to conduct a 51% attack. It is obviously not worthwhile to have 51% of the currency to launch an attack, but if the network is attacked, it will cause damage to its own interests.
At present, many digital assets use PoW to issue new coins and use PoS to maintain the security of the blockchain network.
Episode 57: Share Authorization Proof Mechanism
The share authorization proof mechanism, referred to as DPoS, is similar to board voting. Token holders vote a certain number of nodes to act on their behalf for verification and accounting. In order to motivate more people to participate in the election, the system will generate a small amount of tokens as a reward. Digital assets such as BitShares and Diandiancoin all adopt this method.
DPoS is a bit like a parliamentary system or a people's congress system. If delegates are unable to perform their duties, such as when it is their turn to keep accounts, they will be delisted if they fail to do so, and the network will elect new nodes to replace them.
Each client of DPoS has the ability to decide which nodes can be trusted. Compared with PoW (Proof of Work), DPoS greatly improves the blockchain's ability to process data, and can even achieve account arrivals in seconds. At the same time, it also greatly reduces the cost of maintaining blockchain network security, so that the transaction speed of digital assets is close to Visa. Equal centralized settlement system.
Episode 58: What is Zero-Knowledge Proof?
Zero-knowledge proof refers to a technology in which the prover can make the verifier believe that a certain assertion is true and credible without providing the verifier with the content of the information itself. At present, the anonymous transaction of ZCash, a digital asset with outstanding anonymity, is realized by relying on "zero-knowledge proof".
For example, A wants to prove to B that he has the key to a room, assuming that the room can only be unlocked with the key, but not by any other method. At this time, A can choose to give the key to B, and B will use the key to unlock the room, thus proving that A has the correct key for the room.
Or A can use the key to open the room by himself, take out an object from the room and show it to B, and B knows that this object is indeed only in the room. The principle of method 2 is zero-knowledge proof.
Zero-knowledge proofs can prove that I know the secret without revealing the content of the information itself, and can effectively solve many verification problems.
Episode 59: What is a Hash Algorithm?
A hash algorithm is a cryptographic algorithm that can only be encrypted but not decrypted. It can convert information of any length into a string of fixed length.
This string has two characteristics:
Even if the input value changes only a little, the output hash value will be very different.
Only the exact same input value can get the exact same output value.
There is no law between the input value and the output value, so the input value cannot be calculated from the output value. To find the specified output value, you can only use the enumeration method: constantly change the input value, and find the output value that meets the conditions.
The hash algorithm ensures that Bitcoin mining cannot reverse the results. Therefore, the miners continue to perform calculations, essentially brute-forcing the correct input value, and whoever finds it first will be rewarded in Bitcoin.
Episode 60: Asymmetric Encryption Algorithms
A symmetric encryption algorithm means that the same key is used for encryption and decryption. Unlike symmetric encryption algorithms, asymmetric encryption algorithms require public and private keys. The public key and the private key are a pair. If the data is encrypted with the public key, it can only be decrypted with the corresponding private key.
Asymmetric encryption is more secure than symmetric encryption. Symmetrically encrypted communication both parties use the same key. If one party's key is leaked, the entire communication will be cracked.
Asymmetric encryption uses a pair of secret keys, one for encryption and the other for decryption, and the public key is public, and the secret key is stored by itself. It is not necessary to synchronize the secret key before communication, which avoids the need to synchronize the private key. The risk of information being stolen by hackers in the process.
Episode 61: What is Expansion?
At the beginning of the birth of Bitcoin, Satoshi Nakamoto, the founder of Bitcoin, did not specifically limit the size of the block, and the maximum block can reach 32MB.
At that time, the average size of each block was 1-2KB. Some people thought that the upper limit of the blockchain would easily lead to waste of computing resources and DDOS attacks. Therefore, in order to ensure the security and stability of the Bitcoin system, Satoshi Nakamoto decided to temporarily limit the block size to 1MB.
At that time, the number of Bitcoin users was small, and the transaction volume was not so large, which did not cause block congestion. Since 2013, the price of Bitcoin has skyrocketed, and the number of users has increased. The problems of Bitcoin network congestion and rising transaction fees have gradually emerged.
The Bitcoin community began to explore how to "expand" Bitcoin, that is, to improve the transaction processing capability by modifying the underlying code of Bitcoin.
Episode 62: Why does Bitcoin need to scale?
The current Bitcoin block size is 1M, which can only process about 7 transactions per second. With the continuous growth of bitcoin transaction volume, the bitcoin network has been difficult to confirm the transfer transaction quickly, and the bitcoin network is congested.
At the peak of the Bitcoin blockchain, there are tens of thousands of transactions backlog, and Bitcoin transfer transaction fees are as high as tens of dollars. When the network is congested, it even takes several days for Bitcoin transactions to be packaged. Everyone began to discuss how to expand.
Since 2013, people have proposed a lot of plans for Bitcoin expansion, some people say to increase the upper limit of the block size, some people say to take out some useless information in the block... But these plans have not been widely recognized. Therefore, Bitcoin scaling has been debated for a long time.
In August 2017, Segregated Witness was activated, and the information processing capacity of a single block of Bitcoin increased to 1.7 times that of the previous one. Segregated Witness is the first step in Segwit2X's scaling plan.
Episode 63: What is Segregated Witness?
Segregated Witness is a method of blockchain scaling that has been successfully implemented on Litecoin and Bitcoin.
At present, each block on the blockchain not only records the specific information of each transfer transaction, that is, how many bitcoins were received or transferred out of the account at which point in time, but also contains the digital signature of each transaction, which is used to verify the transaction. legality of the transaction. When miners pack blocks, they need to use digital signatures to verify each transaction one by one. After confirming that there is no problem, the transaction will be recorded in the block.
But for ordinary users, he only cares about how much assets each account has, and does not need to verify each transaction one by one. Segregated witness is to take out the digital signature information in the block, so that each block can carry more transactions, so as to achieve the purpose of expansion.
Episode 64: What is a blockchain fork?
Upgrading software in a centralized system is very simple, just click "Upgrade" in the app store. However, in decentralized systems such as blockchain, "upgrade" is not so simple, and it may even cause a blockchain fork.
Simply put, a fork is when the blockchain is "upgraded" with a disagreement, resulting in a fork of the blockchain. Because there is no centralized organization, every code upgrade of digital assets such as Bitcoin needs to obtain the unanimous approval of the Bitcoin community. If the Bitcoin community cannot reach an agreement, the blockchain is likely to form a fork.
Taking bitcoin as an example, in July 2017, in order to solve the congestion problem of the bitcoin blockchain, some bitcoin enthusiasts proposed a bitcoin cash fork scheme, which caused the bitcoin blockchain to be divided into two.
According to whether the blockchain after the fork is compatible with the old blockchain, the fork is divided into "hard fork" and "soft fork".
Episode 65: Bitcoin Has a Baby
There are many expansion schemes in the Bitcoin community now. If there is a certain expansion scheme that can obtain enough computing power to support and activate successfully, then the Bitcoin network will avoid the risk of fork.
However, since Bitcoin does not have a centralized authority, it is difficult to reach consensus. If none of the solutions is supported by sufficient computing power, the Bitcoin blockchain will form a fork, and there will be multiple Bitcoin fork coins. Those who originally held Bitcoin will automatically and freely own each forked coin generated after the fork after the fork. Because the forked coins are obtained for free, they are also called candy.
In August 2017, the community reached a consensus on the expansion plan, activated the Segregated Witness expansion plan, and the processing speed of the Bitcoin blockchain was increased to 1.8 times. In the following 4 months, Bitcoin has undergone several forks one after another, resulting in multiple forked coins. Many Bitcoin enthusiasts jokingly called Bitcoin "born many sons".
Episode 66: Soft and Hard Forks
A hard fork is when old nodes refuse to accept blocks created by new nodes after the Bitcoin code is changed. Blocks that do not conform to the original rules will be ignored, and miners will follow the original rules to create new blocks after their last verified block.
A soft fork is when old nodes are unaware that the Bitcoin code has changed and continue to accept blocks created by new nodes. Miners may work on blocks that they do not understand at all, or that they have verified.
Both soft forks and hard forks are "backward compatible" so that new nodes can verify the blockchain from scratch. Backward compatibility means that new software accepts data or code generated by older software, such as Windows 10 that can run Windows XP applications. Soft forks can also be "forward compatible". Forward compatibility means that the old software can accept the data and code generated by the new software. For example, if you save a document with Word 2013, if it can still be opened with Word 2011, it is a kind of "forward compatibility".
Episode 67: What is a replay attack?
If Bitcoin does fork, as ordinary users, the biggest risk is replay attacks.
What is a replay attack? If Bitcoin is split into one or more Bitcoins, such as BTC1/BTC2/BTC3, etc., there will be a corresponding number of all forked coins in each Bitcoin account according to his Bitcoin balance.
Since the addresses, private keys, algorithms, etc. on each chain are the same, and the transaction format is also the same, transactions initiated on one blockchain can be re-broadcasted on the other blockchain, and may also be re-broadcasted. be confirmed. This is a "replay attack".
Simply put, when you transfer BTC1, your BTC2/BTC3 may also be transferred at the same time.
However, at present, many forked coins have been treated with two-way anti-replay attack to avoid the risk of replay attacks after the fork.
Episode 68: Hard Fork Ethereum Classic
Ethereum (ETH) and Ethereum Classic (ETC) are classic cases of hard forks.
The DAO plans to build a crowdfunding platform based on Ethereum smart contracts. It was officially released in May 2016, and by June of that year, more than $160 million had been raised. Afterwards, The DAO was hacked by exploiting a loophole in the smart contract to transfer USD 50 million worth of ether. In order to restore investor assets, the Ethereum community voted to change the Ethereum code, hoping to recover the funds. To this end, Ethereum hard forked at block 1920000, rolling back all ether (including those held by the hackers).
However, some people think that Ethereum's approach violates the decentralization and immutability of the blockchain, and insists on mining on the original chain, thus forming two chains, one is a chain that does not recognize rollback transactions - Ethereum Classic (ETC), a chain that recognizes rollback transactions, namely Ethereum (ETH), each represents different community consensus and values. Those who held ether at the time of the fork would hold both ETH and ETC after the fork.
Episode 69: Blockchain Project Classification and Applications
From the current mainstream blockchain projects, blockchain projects are mainly divided into four categories: the first category: currency; the second category: platform category; the third category: application category; the fourth category: asset tokenization.
Currency mainly acts as the "medium of exchange" in the field of blockchain assets, and the medium of exchange refers to general equivalents, such as gold and silver notes in the past.
Platform projects refer to the establishment of technical platforms to meet the development of various blockchain applications, which can lower the threshold for developing applications on the blockchain.
The scope of application projects is relatively wide, covering many fields such as finance, social networking, games, property rights protection, etc. It is also the fastest growing field of blockchain assets.
Asset tokenization projects refer to the blockchain mapping of physical assets, that is, physical assets are on the chain, and currently there are no more than 10 varieties.
Episode 70: Coins of Blockchain Projects
The first category is currency projects, which are also the earliest blockchain projects. Currency projects mainly include projects such as Bitcoin and Litecoin.
In addition, there is another type of asset with the characteristics of anonymity. Its main functions include realizing payment while protecting the privacy of both parties. The more well-known ones are Dash, Monero, and Zero-Knowledge Proof. Coin (Zcash), etc.
Currency is mainly used as a "medium of exchange" in the field of blockchain assets. The medium of exchange is the general equivalent that you use to exchange for goods. For example, gold, silver, and silver notes can be used as a medium of exchange in the past.
At present, there are more than 1,000 types of digital assets in the world, and the number of currency blockchain projects is not growing rapidly. As of January 2018, the largest market value is still Bitcoin. Everyone is already familiar with Bitcoin. The next few episodes of HuoXiao will introduce Litecoin, NEM, Dash, Monero, and Zcash in detail.
Episode 71: What is Litecoin?
Litecoin, called Litecoin in English, referred to as LTC, was born on November 9, 2011, and its founder was Charlie Lee.
The purpose of Litecoin is to improve Bitcoin, so it has many similarities with Bitcoin. In the industry, there is a saying of "Bit Gold, Lite Silver". Compared with Bitcoin, the total amount of Litecoin is larger and the confirmation speed is faster. ''
The total amount of Litecoin is four times that of Bitcoin, with 84 million pieces; its production halving time is the same as Bitcoin’s 4 years; its consensus mechanism is the same as Bitcoin’s proof of work mechanism (PoW); its The block time is 2.5 minutes, which is a quarter of Bitcoin, and a block is packaged every 2.5 minutes; the earliest block reward of Litecoin is 50 Litecoins, and as of January 2018, Litecoin block rewards It is 25 Litecoins, and the issued amount is about 54 million.
Episode 72: What is NEM?
NEM, or NEM for short, was born on April 1, 2015. It is the first digital asset developed using a test-driven development model.
What is a test drive? It is to test first and then program. To give a common example, when building a house, construction workers like to hammer a line down first, and then build bricks according to this line, so that the wall can be built straight. If you lay bricks directly, you may make the wall crooked behind. Test-driven development is development with only code that passes tests.
NEM adopts the PoI consensus mechanism of Proof of Importance (dubbing note: poi), which determines the accounting rights according to dimensions such as transaction volume and activity, so it can pack a block every 60 seconds, which is faster than Bitcoin and Litecoin. a lot of.
Its total amount is 9 billion, and all NEM coins are issued at the beginning of the release, so each new block does not generate new NEM rewards, and the block rewards are only transaction fees. For latecomers Incentives are not enough.
Episode 73: What is Dash?
Dash was born on January 18, 2014, and has a higher degree of anonymity than Bitcoin.
Dash has three transfer methods, one is ordinary transfer like Bitcoin; the other is instant transaction. Transactions can be confirmed without miners’ package confirmation, almost in seconds; the third is anonymous transactions. It is impossible to see from the blockchain who made the transfer with whom.
How does Dash conduct anonymous transactions? In addition to ordinary nodes in Dash, there is also a type of node called "master node". Masternodes can provide a range of services such as anonymous transactions and instant payments. Traders who want to conduct anonymous transactions initiate an anonymous application, and the master node performs currency mixing, usually 3 transactions are mixed together. For example, people at a table put their own money on the table, mix it up, and then get back the money of the corresponding face value, so that you don't know who the money in your hand really belongs to. This is mixed currency. After the currency is mixed, the network does not know who transferred the money to whom.
Episode 74: What is Monero?
Monero, referred to as XMR, was born on April 18, 2014, three months later than Dash. Its total amount is 18.44 million, and currently (January 2018) has issued 15.62 million. Monero has no block size limit, so there is no risk of scaling.
Monero provides anonymity through ring signatures. What does ring signature mean? In Monero's blockchain network, the network first mixes the signer's public key with another public key, and then signs the message, so that the outside world cannot distinguish which public key in the set corresponds to the real signer.
This is very similar to the joint letter in ancient China. In order not to reveal which one is the initiator, it is usually used to form a ring with the signatures of all people, and there is no sequence, so that it is impossible to know who is the initiator. The anonymity of Monero can even make it so that the sender of the coin does not know which address the coin was sent to, and the recipient of the coin only opens the wallet and does not know who sent the coin.
Episode 75: What is Zcash?
Zcash, the full name of Zero Cash, referred to as ZEC, is called Zcash in Chinese, and the developer is Zooko Wilcox, which was born on November 9, 2011.
It adopts the zero-knowledge proof mechanism to provide complete payment confidentiality and is currently the most anonymous digital asset. What is zero-knowledge proof? Please review episode 58. At present, the time period of Zcash anonymous transfer is relatively long, about 20 minutes. The network can choose normal transfer or anonymous transfer, which affects the level of privacy protection.
Most of Zcash's code is very similar to Bitcoin. For example, it is halved every 4 years, and the total amount is 21 million. Zcash further improved the inadequacy of Bitcoin’s anonymous function, and caused a sensation in the cryptography and blockchain circles when it was released, causing its price to soar to more than 7 times that of Bitcoin when it was first born. Zcash adopts the PoW consensus mechanism, the block time is 2.5 minutes, the block reward is 12.5 ZEC, and 20% of the mining income in the first 4 years is automatically distributed to the Zcash team and investors.
Episode 76: Platform Class for Blockchain Projects
The second category of blockchain projects is the platform category. The main function of platform projects is to establish a technology platform to meet the technical requirements required for the development of various blockchain applications.
Simply put, platform applications allow developers to directly issue digital assets, write smart contracts, etc. on the blockchain. A smart contract is a computer program that runs on a blockchain database and can execute itself under the conditions set by its source code.
For example, you develop a smart contract based on a house rent agreement on the blockchain. When the owner receives the rent, it will trigger automatic execution and give the security key of the apartment to the tenant.
The main function of platform-based blockchain projects is to establish the underlying technology platform, allowing developers to develop applications on the underlying technology platform. A considerable number of platforms are still under development. As of January 2018, the largest market value is Ethereum. .
Episode 77: What is Ethereum?
Ethereum is a programmable, visual, and easier-to-use blockchain that allows anyone to write smart contracts and issue tokens.
Just like Bitcoin, Ethereum is decentralized, with the entire network jointly accounting, and the ledger is open, transparent and immutable.
Unlike Bitcoin, Ethereum is a programmable blockchain. It provides a set of Turing-complete scripting languages. Therefore, developers can directly program in high-level languages such as C language and convert them into assembly language, which greatly reduces the cost of programming. The difficulty of developing blockchain applications. Similar to the Android system, it provides a very rich API and interface, allowing users to develop various apps.
From its birth to the present, more than 200 Ethereum applications have been born, and the Bank of Russia has also reached a cooperation with the Ethereum Foundation. As of September 2017, the market value of Ethereum is second only to Bitcoin, ranking second.
Episode 78: What is EOS?
EOS is a blockchain development platform with strong scalability and support for large-scale commercial applications.
First of all, EOS adopts the DPoS consensus algorithm and other technical means to achieve millions of transaction requests per second, which will be able to support thousands of commercial-grade DAPPs.
Ethereum is a public chain, and every application running on the Ethereum chain consumes the resources of the entire chain, but EOS is only the blockchain infrastructure, developers can freely create a public chain on EOS, and the chain and the chain are connected. It will not affect each other's resource usage, and there will be no large-scale network congestion due to the huge resource consumption of individual applications.
Second, transferring and running smart contracts on EOS does not require EOS tokens, which will attract more users.
Finally, when a system error occurs on EOS, its "constitution" can be used to distinguish whether the error is indeed a bug, and to judge whether the community's repair measures are appropriate.
Episode 79: Ethereum for Platform Projects
Ethereum (Ethereum), referred to as ETH. At the end of 2013, Vitalik released the Ethereum white paper, and in July 2014, the pre-sale of Ethereum began. At that time, people in the circle called this kind of token issuance "coin crowdfunding". Through the 42-day pre-sale, the Ethereum team raised more than 30,000 bitcoins through the pre-sale of 60,102,216 ethers; in addition, the early contributors who participated in the development before the pre-sale and the developers who have been engaged in the project research for a long time are respectively based on At that time, 9.9% of the total amount of ether sold was distributed. So when Ethereum was officially released, there were more than 72 million ETH.
After the Ethereum pre-sale is over, the proof-of-work mechanism PoW is used for mining, and the miners are rewarded every year according to 26% of the total issuance at that time. In October 2014, Ethereum reduced the block production time from 60 seconds to 12 seconds, and it is currently stable at 15 seconds, and each block rewards 5 ETH.
Although the PoW mining mechanism is adopted, the block generation mechanism of Ethereum is still different from that of Bitcoin. Due to the short block time of Ethereum, it is easy to form orphan blocks in Ethereum, which refers to blocks that are not on the longest chain. Bitcoin's orphan blocks do not have any block rewards, but in Ethereum, orphan blocks can be referenced, and the referenced orphan blocks are called "uncle blocks", and the data they package is also recorded in the block. in the chain. Unlike Bitcoin, Ethereum's uncle blocks are rewarded, and each uncle block can be rewarded with a maximum of 4.375 ETH.
Ethereum is a programmable, Turing-complete blockchain development platform, equivalent to a decentralized global computer. On a programming system, there are usually some compiled and executed virtual machines to support. JAVA has JVM, and in Ethereum, there is also the virtual machine EVM of Ethereum, which can execute arbitrarily complex algorithm code. Developers can use existing programming languages such as JavaScript or Python to create their desired applications on Ethereum. Through the virtual machine of Ethereum, you can easily issue digital assets, write smart contracts, build and run decentralized applications, and establish decentralized autonomous organizations.
Ether (ETH) is also known as the fuel within Ethereum. Unlike currency digital assets, Ethereum is used to pay for smart contracts in addition to transfers.
To avoid rubbish contracts and rubbish applications on the Ethereum blockchain, to build and run smart contracts on Ethereum, you have to pay smart contract fees in ETH. For example, to transfer your newly created digital assets on the Ethereum blockchain, you need to pay the handling fee in ETH, not your newly created digital assets.
Episode 80: Applications of Blockchain Projects
The third category of blockchain projects is the application category. Application projects are blockchain projects developed based on blockchain development platforms (such as Ethereum) that can solve many problems in various fields of the real economy.
For example, Augur, a blockchain-based forecasting platform, Golem, a blockchain-based computing power trading platform, VeChain, a blockchain-based luxury traceability platform, and OmiseGo, which provides asset exchange and transfer services based on blockchain. Using blockchain technology, these projects can better solve the problems of trust and cross-border circulation. At the same time, using smart contracts and tokens on the blockchain can better achieve automatic execution and greatly improve the efficiency of social and economic activities. efficiency.
The scope of applied blockchain projects is relatively wide, covering many fields such as finance, social networking, games, property rights protection, etc., and it is also the field with the fastest growing market value of blockchain projects.
Episode 81: Applied Project Augur
Augur is a decentralized prediction platform based on the Ethereum blockchain. It was officially released in June 2015 and is the first application on Ethereum.
Augur employs a concept called "swarm intelligence", which means that a group of people will be smarter than the smartest person in the group. Therefore, Augur's prediction results are often closer to the true direction of things.
Relying on crowd wisdom to predict the outcome of events can effectively eliminate counterparty risk and server centralization risk. At the same time, Augur has created a global market by utilizing the properties of global circulation of blockchain. How can we ensure that everyone makes rational predictions? Users make predictions and bets with Augur tokens. If the prediction is correct, you will gain the opponent's chips, and if the prediction is wrong, you will lose the cost of the bet.
Episode 82: Applied Project Golem
Golem is the first computing resource trading platform built on the Ethereum blockchain. Through the blockchain, Golem can link the global computing power resources, thus realizing the global sharing of computing power. Application owners and individual users (computing "requesters") can rent computing power from other users (computing "suppliers") peer-to-peer.
At present, the computing power market is seriously monopolized, and they enjoy high profits by taking advantage of market advantages, which in turn leads to high computing power prices.
A decentralized computing power trading platform may significantly reduce the price of computing power, but its development is very dependent on the number of platform participants.
Golem tokens are referred to as GNT. When using computing power resources, GNT needs to be paid to computing power suppliers and software developers. The total amount of GNT is 1 billion, 82% of the GNT is sold and circulated outside, and 18% of the GNT is kept in the hands of the Golem team.
Episode 83: Blockchain Asset Tokenization
The fourth category is asset tokenization blockchain projects. Asset tokenization refers to linking blockchain assets to physical assets such as gold and U.S. dollars. It is a blockchain mapping of physical assets. Currently, there are no more than 10 varieties. The typical representatives are USDT against the U.S. dollar and against gold. Digix Dao, each DigixDAO token represents 1 gram of gold certified by the London Bullion Market Association.
Asset tokenization has the advantages of convenient transactions and easy custody. First, asset tokenization is more convenient for transactions. Because blockchain assets can be split and have better liquidity. For example, at present, the real estate needs to be transferred as a whole. If the real estate can be tokenized, it can be split and purchased, which is more convenient for transactions.
Second, the tokenization of physical assets is more conducive to safekeeping. Gold and other physical transactions are prone to wear and tear, resulting in losses. However, after the tokenization of physical assets, there is no need for physical transfer, which is more conducive to the custody of physical assets.
Episode 84: Digix for Asset Tokenization
Gold is a safe haven. The gold token issued by Digix is the gold in the world of digital assets. Its token is referred to as DGX, which can play a role in hedging in the world of digital assets.
How does DGX achieve benchmarking against gold? It puts gold assets on the chain (ie: blockchain). For example, if you have 1 kilogram of gold to sell, you can cut the gold and sell it, but this is too cumbersome and prone to wear and tear.
You can also send 1kg of gold to Singapore for the London Bullion Association (LBMA) to verify the gold. After the verification, you will be issued a certificate of ownership of the gold asset.
This digital certificate can be converted into 1000 DGX tokens, that is, 1 DGX token = 1 gram of gold. Greatly improved the circulation efficiency of gold. In the same way, when you need to withdraw gold, as long as you have the corresponding token, you can exchange the certificate to withdraw gold.
Episode 85: USDT against USD
USDT is Tether USD, a token against the US dollar (USD) launched by Tether. 1USDT=1 US dollar, users can use USDT to exchange 1:1 with USD at any time. Tether implements a 1:1 reserve guarantee system, that is, each USDT token will have a reserve guarantee of $1, which supports the constant price of USDT. The unit price of a digital asset is how much USDT, which is equivalent to how much its unit price is in US dollars (USD).
Since USDT is equivalent to the same amount of US dollars, it is a digital asset with relatively stable value. When the market price fluctuates violently, users can replace the blockchain assets in the account with USDT to achieve value preservation and hedging.
Episode 86: Altcoins and Altcoins
Altcoins refer to blockchain assets that use the Bitcoin code as a template and make some modifications to the underlying technology blockchain, among which there are technical innovations or improvements, also known as altcoins.
Because the Bitcoin code is open source, the plagiarism cost of Bitcoin is very low. Even just copying the Bitcoin code and modifying some parameters can generate a brand new blockchain.
There are hundreds of altcoins in existence today. Most altcoins are not recognized by the market and have no investment value due to the weak technical strength of the founders, lack of technical maintenance, and lack of market promotion. Only a small number of excellent altcoins developed by teams with strong technical strength and innovation ability can be recognized by the market and have investment value. The altcoins we are more familiar with include Litecoin and Ethereum.
Episode 87: Can Blockchain Change the World?
The Internet is a decentralized information transmission system, and the blockchain is a decentralized value transmission system. Both have been hailed as great technologies that changed the times.
The main purpose of the Internet is to realize the rapid sending and receiving of information. The transmission of word documents on the Internet is actually a copy of the information. You have a copy and others have a copy.
The blockchain is used for value transmission, and passing bitcoins on the blockchain is essentially passing ownership, and your bitcoins become someone else’s bitcoins.
The data on the blockchain is highly tamper-proof and can be used after verification by most nodes in the entire network. Once recorded, it cannot be modified. Every transfer of value on the blockchain is clearly recorded and traceable. Blockchain can build trust between centers. Some people say that blockchain can change the world like the Internet.
Episode 88: What are the disadvantages of blockchain?
The advantages of blockchain are many, and the disadvantages are also obvious.
The information on the blockchain is open and transparent, which can effectively prevent black box operations and other phenomena. But it also means that if I know someone's account, I can know all his wealth and every transaction, no privacy.
The information on the blockchain cannot be modified, which means that if you fill in the wrong transfer information, no one can help you recover the loss.
The blockchain is decentralized, and nodes can prove their trust without a centralized organization, but it also means that everyone needs to have a complete ledger. As time progresses, the ledger becomes larger and larger, and ordinary computers May be difficult to run. At the same time, decentralization means that there is no centralized authority to keep the keys for you, and once lost, they can never be retrieved.
Decentralized network networks are inefficient in reaching agreement among various nodes, and it is difficult to be as fast as centralized payment methods.
Episode 89: Where does blockchain fit in?
Blockchain is a decentralized value transmission system with the characteristics of open and transparent information, non-tampering, global connectivity and low transaction costs. It is suitable for applications such as temporarily no trust center, very high cost to solve trust, and value transfer between centers. At present, blockchain has a wide range of applications.
Social management fields such as file management and patent protection, Internet of Things fields such as item traceability and anti-counterfeiting, and public welfare fields such as charitable donations all use the characteristics of open, transparent and non-tamperable information on the blockchain; transaction settlement, private placement and other financial services. The characteristics of the low transaction cost of the blockchain; the social, communication, shared leasing and other sharing economy fields use the characteristics of the global connectivity of the blockchain.
The application prospect of blockchain is huge, and it will completely revolutionize the existing value transmission system.
Episode 90: Current Blockchain Consortium Inventory
In the early stage of the development of the blockchain industry, many enterprises and institutions formed a blockchain alliance to share the research results of blockchain technology and seek wider application of blockchain technology.
In the past two years, blockchain alliances have emerged. As of July 2017, there are currently R3, which is composed of more than 40 international banks, Hyperledger, which is initiated by the Linux Foundation, and Zhongguancun District, which is located in the core hinterland of China's Internet. The Blockchain Industry Alliance, the China Ledger Alliance jointly initiated by 11 institutions, the Golden Chain Alliance jointly established by 25 financial institutions, the Russian Blockchain Alliance called "Russian R3", and those seeking to integrate with micro-finance. Blockchain Micro-finance Industry Alliance, Qianhai International Blockchain Ecosystem Alliance led by Shenzhen Qianhai Authority, and Lujiazui Blockchain Financial Development Alliance located in Lujiazui.
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