For Bitcoin, many people are not strangers, especially some friends who like to play virtual currency, and they are very familiar. As a digital currency or virtual currency, since its birth, it has developed rapidly, but the attitude of countries around the world is different, this article will detail how Bitcoin was born, and what is the technology behind it.
In fact, for Bitcoin, it is the most subversive, controversial, and most anti-centralized idea in the financial world, and its power is so amazing that every government in the world is studying whether to use it or ban it, so we also need to explore this.
One. The birth of Bitcoin
In 2008, the world faced the largest and most intense financial crisis in decades. It was during this moment of financial crisis that a paper circulated among a small group of cryptography enthusiasts. Satoshi Nakamoto published a paper in 2008 titled "Bitcoin: A Peer-to-Peer Electronic Cash System," describing an electronic currency and its algorithm that he called "Bitcoin." In the paper, Satoshi Nakamoto explains the concept known as Bitcoin and the solution to the long-standing problem of "multiple consumptions."
According to online information and the introduction of many books, Satoshi Nakamoto may be a pseudonym, may also be the name of a team, and some sources introduce that Satoshi Nakamoto is Japanese-American, often translated by the Japanese media as Tetsushi Nakamoto, and agrees that he is the creator of the Bitcoin protocol and its related software Bitcoin-Qt, but the real identity is unknown.
In fact, for many years, the problem of multiple consumption has been one of the main obstacles to the inability of digital currencies to gain widespread popularity, that is, electronic vouchers, with the rapid reproduction of digital currencies, have led to the inability to issue digital currencies. It should be noted that digital currency is completely different from the WeChat, Alipay and other payments we are currently carrying out, and the so-called WeChat, Alipay and other payments are all payment means carried out by banks.
In 2008, the Bitcoin domain name Bitcoin.org completed registration. In early 2009, Bitcoin's creation block, the first block of the blockchain, was created. No one could have foreseen the impact that Satoshi Nakamoto's foundational technology would have on the world's largest organizations, trusted intermediaries, and society as a whole.
What exactly is Bitcoin? Interested friends can search the information online to further understand, but in our view, it is a valuable ledger on the blockchain, which is a digital asset, or a digital token, according to the different laws of various countries, this word digital asset can be exchanged with legal tender.
Because of this, many people around the world began to mine, produce Bitcoin, or invest, speculate and speculate on Bitcoin.
Two. Attitudes of national laws towards Bitcoin
When Bitcoin first entered China, we took a cautious attitude towards this, but did not prohibit it, but with the expansion of Bitcoin transactions and the intensification of mining behavior, the mainland has issued a series of laws and policies to prohibit Bitcoin.
For example, in 2017, in accordance with the spirit of the "Announcement on Preventing the Financing Risks of Token Issuance" issued by the Chinese Bank, the Central Cyberspace Administration, the Ministry of Industry and Information Technology, the State Administration for Industry and Commerce, the China Banking Regulatory Commission, the Securities Regulatory Commission, and the Insurance Regulatory Commission, the three major domestic virtual currency trading platforms Bitcoin China, Huobi.com, and OKCoin Coin Bank have issued statements one after another, saying that they will suspend registration and RMB recharge business, and will notify all users before September 30 that they will stop trading.
In fact, the mainland's policy on virtual currency has changed from early observation and transition to today's ban, which can be described as the most stringent in the world. Bitcoin is accepted differently globally:
Singapore treats Bitcoin as a commodity, and when Bitcoin is sold, or used to pay for goods, there will be taxes incurred. Israel, for its part, sees Bitcoin as an asset that is somewhat different from financial securities or stocks. Japan is the most open to Bitcoin, with a cabinet passing a series of bills acknowledging that virtual currencies such as bitcoin have "property-like value" and can be used for payments and digital transactions; Australia treated bitcoin as money on July 1, 2017, and will abolish the Bitcoin Goods and Services Tax (GST). U.S. states have different attitudes toward Bitcoin, with Washington being the strictest, requiring digital currency exchanges to apply for licenses and requiring independent review by third parties. The more liberal Nebraska allows lawyers to accept digital currencies as compensation.
It can be said that although mainland law prohibits Bitcoin, Bitcoin is the most successful case of global blockchain technology application, and what results it will develop into, we still need to wait and see.
But it is certain that Bitcoin is an anonymous currency, with the characteristics of decentralization, if it exists in large quantities or widely used, it will inevitably have a significant impact on the current operation of central banks and commercial banks, and even subvert the traditional "centralized" financial institutions.
Three. The technology behind Bitcoin
The technology behind Bitcoin is actually blockchain technology. And blockchain technology is a complex technology, of which, very important is cryptography, key technology, we focus on the key technology in the public key, private key technology to introduce, we generally understand the technology behind Bitcoin.
In fact, Satoshi Nakamoto, who invented Bitcoin, is not a complete genius, and the Bitcoin technology he invented is also based on the development of public key infrastructure, and it can be said that public keys are intrinsically related to identities on the blockchain.
We look back to the 1970s. In 1976, two stanford mathematicians, Whitfield Diffie and Martin Ellman, discovered an advanced mathematical relationship and named it "asymmetric cryptography." They determined the relationship between the large prime numbers so that data encrypted with one key could be decrypted with the corresponding key, and vice versa.
Meanwhile, in 1978, three other mathematicians, Ron Rivest, Adi Shamir, and Leonard Adleman, discovered the same relationship and published it under the name of the RSA algorithm. They tried to use this algorithm for business scenarios, basing themselves on a company called RSA. The company was subsequently sold to EMC and is currently owned by Dell.
Asymmetric encryption means that there are two keys, one public key and one private key. The two keys are mathematically related to each other. This relationship means that data encrypted by one key (public key) can only be decrypted by another key (private key), and vice versa. For data encrypted by one public key, it is impossible to use another public key to decrypt it.
Therefore, you can use a pair of keys to identify the owner of a particular digital asset. Because the public key is public, any data encrypted with the associated private key can only be decrypted by the corresponding public key. If user A encrypts the file with his own private key and sends it to user B who uses the corresponding public key, then B can determine that A is the person who encrypts the file.
Since then, PKI has been widely deployed. Almost everything a user does online uses a public key infrastructure, whether it's sending an email or visiting a website (if the website has an ssl certificate and is prefixed with https, the website uses public key infrastructure to encrypt it).
This means that we can ensure that the data sent between the user and the server is not disturbed. Public key infrastructure can also be used to ensure the authenticity of documents. The public key, combined with the private key held by the user, coupled with the hashing algorithm, constitutes the basic technology of Bitcoin.
Let's briefly introduce the hashing algorithm.
In fact, the hashing algorithm is a special mathematical formula that converts any input information into a fixed-length combination of numbers and letters for output. If you change the input, then the output will change completely. If you need to protect a message or data file, the data can be hashed and then encrypted with a public key infrastructure. This can prove the identity of the data sender, and verify the authenticity of the data file to determine whether the file has been tampered with.
It is this hashing algorithm, coupled with key technology and cryptography, that produces Bitcoin: the person who holds Bitcoin holds the "private key" of Bitcoin, and the "public key" of Bitcoin is on the blockchain, which is transparent and cannot be tampered with. The cooperation between the private key and the public key completes the transaction or circulation of Bitcoin.
At this point, do you have a general understanding of how Bitcoin was born?