foreword
Bitcoin is a very popular term now. Presumably, even if you don’t know anything about it, you must have heard it in the communication with your family and friends. Bitcoin is a new type of currency that emerged in 2009. It can be used for transfer, payment and purchase just like the money we need to deal with in our daily life. But it is very different in that it is limited.
We know that we can get more money through work. After we work hard, the country can choose whether to print more money to meet the social and economic development according to the state of the country's operation. So if our money is not considered other Under the premise of restrictions, it can be issued indefinitely. The total number of bitcoins is only 21 million, so destroying one will result in one less. This has led a large number of people to collect bitcoins as limited edition collectibles, leading to higher and higher prices of bitcoins, and bitcoins have gradually entered everyone's field of vision, becoming a currency and investment product in a new era.
And this series of articles is to explain for everyone what Bitcoin is, why Bitcoin appears, and what is the realization principle of Bitcoin.
This article is the beginning of the whole series, which mainly introduces what Bitcoin is and why Bitcoin appears.
what is bitcoin
In the preface, we have already said that Bitcoin is a new type of currency. This actually defines Bitcoin. But simply saying this is like telling everyone that AI is a computer program, and it has no value. So if we really want to understand Bitcoin, we first need to understand what currency is and what it can do.
what is currency
This is a very simple question, because we all use it every day, and our RMB-money is a good example. So what is money? At this time, we should all remember what the history teacher said: money is a general equivalent, and it is the target used to measure the value of each item.
Next, let's explain what a general equivalent is, and here we also use a simple example to explain it.
A long time ago, people did not have the currency of silver/coins, but since then, people have needed to exchange items. Every household does not plant all the things they need in their daily life, or make them themselves. If at this time, a certain villager Lao Wang has rice at home, but wants to have a drink with his friends during the energy saving festival but there is no wine, then he needs to go to Lao Li next door to change the wine. The two negotiated that 100 catties of rice could be exchanged for 20 catties of wine, so they completed the transaction. It's okay if the two partners are close, but if they are far away, they both need to bring their own things to trade, which is really troublesome. And this is still a transaction between two people. If someone sells it in large quantities in the market, it will still be full when they go back, which is really inconvenient. At this time, everyone advocates the use of silver as an intermediary. When everyone trades, If you are buying something, you only need to give the money to the other party and take the goods away. If you are selling something, you only need to give the money to the other party and collect the money. Greatly reduce the burden of the transaction. At the same time, each item can also make a price statement through an intermediate item such as silver. For example, a certain product, xxx silver per catty...
The silver here is a general equivalent, which means that all items can be bound to it to obtain a price target. When there is a price, you can buy things with corresponding prices with silver, and you can exchange things with corresponding prices for exactly the same silver.
Money is just another name for a general equivalent.
Basic Use of Currency
Since money has the function of a general equivalent, money can be used for purchases, that is, in daily life, we use money to buy the things we need every day. Secondly, currency can be used for transfer, that is, we can send red envelopes to our relatives or friends.
Currency is a means of payment that can represent a transfer of value
bitcoin is a currency
And the reason why Bitcoin is a currency is precisely - Bitcoin is also a new type of general equivalent. Although its price fluctuates greatly, it still does not affect its use as a means of payment for purchasing and consuming goods. At the same time, Bitcoin is a worldwide payment network, which can realize transfer transactions between any two places in the world with network connections.
The reason for Bitcoin
Disadvantages of traditional currency systems
After talking about the basic knowledge of currency and introducing that Bitcoin is a new type of currency, all of us must have a question. The current RMB and US dollars are operating so well, and there are third parties such as WeChat Pay and Alipay. The means of payment, no longer need to carry a lot of gold and silver treasures (column) with you like in ancient times, and even have the latest face payment and palm payment. We don't even need paper money when we go out. So why do you need to create a Bitcoin? This is really puzzling.
I used to be as confused as everyone else, but then I will tell you a few specific application scenarios. Everyone should understand where the current currency system is still flawed.
The first is a story from Africa. As of 2009, 36% of African compatriots have bank cards. If I am in China and I need to transfer money to a compatriot who does not have a bank card, how should I do it? First of all, I need to find an African compatriot with a bank card, and ask him which destination bank to transfer to him (he will receive funds from this bank), and then I start sending money through the bank where my funds are located. Here I call it sending square bank. The sender's bank sends my remittance instruction to the correspondent bank of the domestic "correspondent" destination bank. The agency bank remitted the funds to the destination bank again, and finally the friends of the African compatriots went to the bank to withdraw the money, and finally handed it over to my friend. This process generally takes about a week. And in the middle of this process, every financial institution we pass through will charge us a handling fee, and a remittance from home to abroad requires a high handling fee.
From this scenario, we can know that the traditional currency and financial system still have shortcomings such as extended payment and high cross-border fees .
With the advent of the Internet age, our payment methods have gradually changed. I still remember that when we were young, we used 5-cent banknotes to buy candy. Completed the payment. These payment methods have indeed greatly improved the convenience of our use of currency. But it also brought many other problems. What are these problems? When we use these traversal tools, we have to store our assets in the corresponding platform, whether it is a bank or a third-party payment, this is the model. This is no problem. But the platform can use the money we store in them to make profits, and they use our funds to lend and store interest but will not give us dividends. Worse, when banks recognize certain risk characteristics in us, we lose the ability to use and withdraw our own funds. This means that we are slowly losing our right to own and use our financial property .
It is these shortcomings that have prompted the development of Bitcoin. As a decentralized non-intermediary cash system, Bitcoin has officially entered the field of vision of mankind since 2009. It protects the property rights of users through the principles of cryptography and uses a distributed network. The model solves the problems of long time and high cost of cross-border transactions. Step by step to become a bright star in the new century.