I. What is BTC?
Bitcoin is a decentralized peer-to-peer digital currency system proposed by an individual or group using the pseudonym Satoshi Nakamoto in 2008 and officially launched in 2009. It is not issued or controlled by any government, bank, or central authority.
· Identity: It is both an asset (often referred to as 'digital gold') and a payment network.
· Core Objective: To create an electronic cash system that does not rely on trusted third parties, solving the 'double-spending problem'.
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II. Core Features and Innovations
1. Decentralization: The network is maintained by thousands of nodes (computers) worldwide, with no single point of failure or control center.
2. Limited supply: The total supply is fixed at 21 million coins. This absolute scarcity is the cornerstone of its value proposition, mimicking the scarcity characteristics of gold.
3. Anti-censorship: Once a transaction is confirmed by the network, it is nearly impossible to reverse or stop. Anyone can participate.
4. Transparent yet anonymous: All transaction records are on a public blockchain ledger, accessible to everyone, but the identities behind transaction addresses are anonymous (pseudonymous).
5. Immutable: Thanks to the proof-of-work mechanism and cryptography, the difficulty and cost of altering historical transaction records are extremely high.
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Three, key technological principles
1. Blockchain: A public ledger linked chronologically that records all Bitcoin transactions. Each 'block' contains a batch of transactions, like a page of a ledger.
2. Proof of work: Miners compete for the right to package new blocks by solving complex mathematical problems (hash calculations). This process:
· Ensuring network security: Attacking the network requires controlling over 51% of the total network computing power, which is extremely costly.
· Issuing new coins: Miners who successfully mine blocks receive block rewards (newly generated bitcoins + transaction fees). This is the way Bitcoin is issued.
3. Halving: Approximately every four years, the block reward is halved. This controls the issuance rate of new coins, gradually bringing its inflation rate close to zero. The next halving is expected in April 2024.
4. Wallets and private keys: Users control the Bitcoin on their addresses through private keys (a string of passwords). A wallet is a tool for managing private keys. 'Not your private key, not your coins' is a well-known saying in the industry.
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Four, the current state of BTC and major narratives
1. Store of value ('digital gold'): This is currently the most mainstream narrative. Due to its scarcity, durability, and global recognition, many institutions and individuals view it as a hedge against fiat currency inflation and geopolitical risks.
2. Institutional adoption:
· Holdings of publicly traded companies: Such as MicroStrategy, Tesla, etc.
· ETF: The U.S. has approved multiple spot Bitcoin ETFs (such as BlackRock, Fidelity's IBIT, FBTC), providing compliant investment channels for traditional funds.
· National reserve: El Salvador has designated it as legal tender.
3. Payment network: Despite its original intent for payments, due to its transaction speed (relatively slow) and fee volatility, it is currently more used for large or international transfers. Solutions like the Lightning Network aim to improve its experience for small payments.
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Five, major challenges and controversies
1. Scalability issues: The Bitcoin mainnet can only process about 7 transactions per second, far below traditional payment networks like Visa. This leads to issues of transaction congestion and high fees.
2. High energy consumption controversy: PoW mining consumes a significant amount of electricity, leading to environmental criticisms. Supporters argue that a large portion of the energy used is renewable, and the security it creates is worth it.
3. Price volatility: As an emerging asset, price fluctuations are severe, affecting its function as a medium of daily transactions and a stable measure of value.
4. Regulatory uncertainty: Different countries have varying legal attributes (commodity, currency, security?) and regulatory attitudes towards it.
5. Discrepancies in technological evolution: The community often has disagreements on how to upgrade and improve the network, which has led to forks (like Bitcoin Cash BCH).
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Six, how to understand the price and market of Bitcoin
· Driven by multiple factors: global macroeconomics (interest rates, inflation), regulatory news, institutional capital flow, technological innovation, market sentiment (greed and fear index), and the narrative of the 'halving' cycle.
· Cyclical: History shows distinct bull and bear cycles, usually related to the expected supply shock brought by 'halving' events, but not a simple cause-and-effect relationship.
· Global market: 24/7 uninterrupted trading, strong liquidity.$BTC
