Investors are unpredictable and tend to turn to anything fashionable. Investment provides the most direct opportunity for people to get rich quickly. In 2017, as the price of Bitcoin soared to the $10,000 mark, Bitcoin attracted a large number of investors, but its sharp decline so far in 2018 has caused Bitcoin to lose a lot of momentum. However, one thing that investors cannot deny is that Bitcoin has left its mark on the world, its price has risen sharply, and investors and broader blockchain technology advocates are also increasing their interest in Bitcoin.
When many investors recall the painful memory of the financial crisis 10 years ago, it is now another anniversary. In October 2008, a person under the pseudonym Satoshi Nakamoto published a white paper discussing the concept of Bitcoin. Even ten years later, this white paper still has a lot of explanations about the working principle of Bitcoin, and anyone who wants to invest in cryptocurrency needs to read it. To commemorate the 10th anniversary of Bitcoin, here are 10 key quotations from Satoshi Nakamoto.
1. Bitcoin got rid of middlemen on the Internet
Business on the Internet is now almost entirely dependent on financial institutions acting as trusted third parties. What we need is an electronic payment system based on encryption certification rather than trust.
Cryptocurrency advocates like that Bitcoin does not rely on central institutions like banks, especially considering that such central institutions may lose credit. For example, credit card companies allow buyers to reverse their transactions under certain circumstances, preventing sellers from obtaining permanent payment guarantees. Bitcoin excludes third parties, making payments reliable and irrevocable.
2. Basic weaknesses of Bitcoin
The system is safe as long as honest nodes control more CPU power than attacker nodes.
To be effective, Bitcoin must work hard enough to crack those who try to combine fraudulent transaction chains so that fraudulent transaction chains cannot surpass the real blockchain. This requires powerful computing power, and it may eventually pose a threat to this cryptocurrency: enough people try to overthrow Bitcoin's dominance, thereby threatening the integrity of Bitcoin.
3. The foundation of Bitcoin trust
We need a way to let the payee know that the previous owner did not sign any early transactions. The solution we propose starts with a timestamp server. The biggest threat to Bitcoin as a payment system is the potential for double spending. With physical currency, double consumption is impossible, because you have to give the currency to the seller. The basic trustworthiness of Bitcoin stems from the view that everyone knows every previous transaction and gives them confidence in what happened before.
4. Why proof of work is essential
Once the CPU has worked hard to make it meet the proof of work, the block cannot be changed without reworking. Since the following blocks are chained, the work of changing the blocks will include redoing all the blocks afterwards. One reason Bitcoin is so tough is that it has become stronger over time, and proof work is an important part of Bitcoin's strength. As the blockchain becomes longer and longer, the effort required to successfully attack it has diminished. As time goes by, it becomes more and more difficult to prove Bitcoin, and Bitcoin's defensive capabilities are further enhanced.
5. How does Bitcoin keep growing
Nodes always think that the longest chain is correct and will continue to work hard to expand it. With the popularity of Bitcoin, one of the problems with Bitcoin is that not all nodes of the Bitcoin network will have the latest version of the blockchain. However, over time, subsequent transactions will be more widely distributed on the longer blockchain, allowing the entire network to catch up.
6. Rewards for mining Bitcoin
By convention, the first transaction of Bitcoin is a special transaction that initiates a new coin owned by the creator of Bitcoin. This increases the motivation of nodes to support the network and provides a way to initially distribute coins into circulation. Bitcoin mining has always been an attractive part of the cryptocurrency movement. With the increase in the price of Bitcoin, huge computing power is being invested in efforts to unlock new blocks and seize the small amount of Bitcoin brought about by success. As this article points out, mining also provides those with huge computing power with an incentive not to seek to subvert the blockchain itself, because they only need new bitcoins.
7. Deal with the growing blockchain
Once the latest transaction in the coin is buried under enough blocks, the used transaction can be discarded to save disk space. As Bitcoin becomes more and more popular, the processing speed of Bitcoin is getting slower and slower, but the founder of Bitcoin predicts that it will be necessary to trim the growing blockchain. The method involves compressing old blocks with shorter hashes, which is sufficient once enough past transactions have been accumulated.
However, in theory, the deletion of the blockchain is more troublesome than expected in the white paper, partly because people cannot guarantee that any block identified as being pruned does not have information that is vital to the rest of the blockchain.
8. Process larger transactions
Although coins can be processed separately, it would be difficult to conduct a separate transaction for each cent in a transfer. To allow splitting and combining values, transactions contain multiple inputs and outputs. The currency is in units of 1 Euro coins or 20 US dollars banknotes. In theory, Bitcoin can also be established with discrete currencies. However, it is more efficient to allow variable size transactions. This basically allows users to pay using "4-bitcoin bills" instead of including four transactions involving one bitcoin, which is necessary for four dollar cash transactions using four $1 banknotes.
9. Bitcoin privacy
The public can see that someone is sending money to other people, but there is no information linking the transaction to anyone. This is similar to the level of information published by the stock exchange. In this case, the time and scale of individual transactions, "recording" is public, but the parties are not told. Compared with most payments, confidentiality is a valuable advantage of cryptocurrency transactions. It turns out that Bitcoin is not as private as some users hope, which has prompted people to create more privacy-conscious competitors. However, the white paper points out other measures that Bitcoin users can take, including using slightly different key information in each transaction.
10. Bitcoin's defense mechanism
Nodes will not accept invalid transactions as a payment method, and honest nodes will never accept blocks containing invalid transactions. The attacker can only try to change one of his transactions to recover the money he recently spent.
Finally, the white paper looks at the possibility of an attacker generating a backup blockchain. To do this, the attacker must work fast enough for the fake version to be accepted. Otherwise, if the attacker lags behind other nodes, the probability of reversing past transactions will eventually be close to zero.
Will the price of Bitcoin remain the same?
The sharp drop in the price of Bitcoin has made some investors cautious about the conclusion that Bitcoin can survive for a long time. However, given that the basic principles in the white paper have achieved good results, Bitcoin has established itself as a key technology. No matter what changes in the price of Bitcoin in the long run, Bitcoin will continue as its legacy. exist.
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