Bitcoin = block chain? Five minutes to really understand the block chain

Time:2019-10-6

Recently, Facebook’s Libra official website, a global encrypted currency project, officially launched and published a white paper. It is self-evident that a world-class Internet giant not only adopted block chain technology, but also paid money. Some even think that this is the most important white paper in the field of digital currency since 2009 Bitcoin and 2013 ETF.

Does this mean that the real block chain tuyere is coming?

Many friends have heard about the concepts of Bitcoin and Digital Currency, but they do not have in-depth understanding. Now let’s talk about what a block chain is, what it can bring, and how it relates to the bitcoins we hear about everyday.

What is bitcoin?

You can watch this video first:

Uncle explains block chains and bitcoins – “easy to understand”

In fact, uncle has perfectly explained what is bitcoin, block chain. Next, let’s tell a story so that you can get a better understanding of these concepts.

Suppose there are four people in a room, namely A, B, C and D. They know how much the balance of other people’s accounts is, and they have financial needs between them, but they don’t trust each other. So they come up with a way to do that.Make sure that all transactions in the room are notified and recorded.。 For example, one day A lent B $10. In order to prevent B from defaulting, A pulled B and told everyone in the room that I lent B $10. B said, “Yes, that’s right!”

Then everyone heard and confirmed that it was A who lent B 10 yuan and went to revise his account book. The balance of A’s account subtracted 10 yuan, and B’s account increased 10 yuan. Pass it on until everyone’s books are the same. This process is a process of de-centralization.

Bitcoin is actually a de-centralized account book on the Internet, a point-to-point encrypted digital currency. It is not a paper currency such as RMB and US dollar that entities can see and touch. It is generated by computer through specific mathematical calculation and stored in computer. Because bitcoin is just a bunch of data in a computer, it is also called “virtual money” relative to paper money. In short, you can understand that Bitcoin is just a string of numbers with cash value.

From Bitcoin to Block Chain

So what is the block chain? Let’s continue with the example above.

The bills generated by the above transaction process will be packaged in a few transaction records over time. Ben Cong, the father of bitcoin, designed a package award, playing a package every 10 minutes. In the first four years, each package rewarded 50 bitcoins, the second four years reward was halved, the third four years reward was halved again, and so on. So we can figure out that the total number of bitcoins will not increase from January 3, 2019 to 2040. The total number of bitcoins is 21 million.

But if everyone records the bill and gives the record number at the same time, and we only need one package, who are we going to decide? Nakamoto presented a workload proof at that time. That is to say, every bookkeeping person needs to do an operation. The main principle of the calculation is a 256 bit binary string obtained from the SHA256 hash algorithm, and the person who first calculated the result can pack and receive the prize.

The bills recorded above are packaged and packaged into blocks, called blocks. Each block contains a number of transactions, and then each block is linked into a chain, eventually forming a distributed and unanimously agreed book database, which is the block chain.If the block chain is compared to an account book, then the block is each page of the account, which records the details of each transaction in the open account book that can be seen by everyone.

In short, Bitcoin is an application of block chain, and block chain technology is the underlying technology of Bitcoin.

Vision of blockchain in the future

Block chain is essentially an information technology solution to solve trust problems and reduce trust costs. The application of block chain technology subverts the old centralized model of traditional trust intermediary. Without centralized trust intermediary, the trust problem among strangers can be solved and the cost of trust can be greatly reduced.

In a nutshell, what are the applications of block chain technology? Block chains are used in banks. Decentralization technology can simplify and automate some banking processes and reduce the cost of banking services and payment speed. Block chain can be used in insurance to establish a point-to-point mutual insurance platform. Once someone is ill, the hospital is the only legitimate data provider, including medical records, medical progress, patient status and so on. Participants will pay the fee directly to the sick members. This can be achieved through block chain technology to make funds more open and transparent. This can also avoid some previous fraudulent practices to defraud the public.

The above may be a little far from our daily life, and the next one is closer to life. Daily you have some valuable electronic products or luxury goods, more troubled you is the authenticity of the product, you may need to go to the counter to test whether the goods are genuine, time-consuming and laborious. In fact, the application of block chain technology in supply chain can solve this problem. Based on the block chain technology, the manufacturer links each product information to the block chain through the way of bookkeeping, and then registers any information changes in the process of dealer, logistics and final consumer, so as to realize the full coverage of product information, and any information can be tracked through the block chain. Consumers can distinguish between true and false by looking at the block chain information.

Block chain is worthy of our understanding and concern. Although it is still in the embryonic stage, it only takes a while to develop the block chain. It may extend to intelligent fields such as intelligent agriculture, smart home, intelligent manufacturing and so on, and is closely related to our life.

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