Bitcoin is the first application of blockchain technology《Bitcoin: A Peer-to-Peer Electronic Cash System》It is proposed in this paper. This series of articles will focus on this paper, in a popular but rigorous way, about the core technology of bitcoin.
Traditional monetary system
In the current mainstream monetary system, there is a concept of “center”. For example, the Chinese people’s Bank of China, as a “currency issuing center”, issues Renminbi for everyone to use. Alipay, as a “trading center”, provides buyers with sellers one hand delivery and delivery service. We need this kind of “center” because we need a credible organization to control money and transactions.
But maintaining such a center in the monetary system is costly. Taobao has been appearing for a long time, but in recent years, it has been gradually popularized by the young people from the young people. One of the important reasons is that there is no “trading center” like Alipay. In a transaction, the basic problem we want to guarantee is that money and goods can be exchanged safely and lossless. It took many years for Alipay to gain more common trust and exercised such a responsibility.
When we use Alipay, each of us has its own real account. Alipay provides us with a large account which records the balance and transactions in our account. When A transfers $100 to B, Alipay allows A’s balance to be reduced by 100 while B’s balance plus 100. Objectively speaking, Alipay can arbitrarily modify the user balance and cancel any transaction.
Differences between bitcoin and traditional monetary system
The traditional monetary system is familiar to all of us, and even people in the non-financial sector can basically understand the above-mentioned contents. However, we need to understand bitcoin from a new perspective
- There is no “center” for bitcoin. The operation of the whole trading system is maintained by many spontaneous nodes around the world (the reasons for “spontaneity” will be explained in detail later). The “center” in the traditional monetary system has great power, just like the feudal monarchy, “emperor node” can control the large central ledger arbitrarily. But in the bitcoin system, every node has certain democratic rights.
- Bitcoin does not have a large central ledger, but copies the entire ledger on each node. In the traditional monetary system, the account books of large-scale centers are controlled by the “center”, so often everyone only has specific permissions. For example, a can only view his own transfer records, but not B’s transfer records. However, in bitcoin system, each node has complete account book information, that is, the balance and transfer information of each account are transparent throughout the network.
- There is no real name system for bitcoin. In the traditional monetary system, in order to facilitate the management of the “center”, the real name system is usually required for everyone and the number of accounts is limited. But in the bitcoin system, everyone can create countless accounts of their own, each with its own address (similar to user name) and private key (similar to password).
The above three points correspond to bitcoin’s “decentralization”, “distributed ledger” and “anonymity”.
Bitcoin and blockchain
The reason why bitcoin is different from the traditional monetary system is that bitcoin relies on the magic technology of blockchain. Blockchain is the distributed account book of bitcoin, which stores the account balance and transfer records in a special way.
Blockchain, simply understood, is a chain composed of blocks. The operation process is like making sugar gourd. Hawthorn is inserted into the signature in turn. However, this is a quite long signature.
Follow up articles
This article is the first in a series of articles on bitcoin, which mainly compares the bitcoin monetary system with the traditional monetary system. In the following article, we will talk about the implementation of bitcoin step by step from the technical point of view.