Bitcoin Features
Legal currency used by the general public is currency issued by the national government and relies on government decrees to make it legal currency. The value of legal currency comes from the owner's belief that the currency can maintain its purchasing power in the future. Some countries or banks that issue legal currency will link their legal currency to one or more foreign currencies and use government foreign exchange reserves to maintain its exchange rate at a certain level. level. Its value floats freely and relies on the government to control the issuance, so there are basically no restrictions or regulations on the issuance.
As for the differences between Bitcoin and legal currency, Zombit will be divided into five key descriptions, namely decentralization, limited issuance, anonymity, transparency and irreversibility.
Decentralization of power: The most important feature of Bitcoin is decentralization. The Bitcoin network is basically not controlled by any person or country. It is jointly maintained by Bitcoin core developers and run by a global open source dedicated computer network. In electronic fiat currencies, banks implement this functionality, allowing them to control traditional electronic money systems, whereas with Bitcoin, the integrity of transactions is maintained by a distributed and open source network and belongs to no one. The advantage of its decentralized power is that no single country or institution has great influence, but the rights and obligations of each node are equal, and will not change because of the national government's needs for its own interests, such as the limited issuance mentioned next. .
Limited issuance: During the financial tsunami in 2008, a series of chain reactions caused by the collapse of the U.S. real estate market directly led to the collapse of the financial system. Then came the bankruptcy of Lehman Brothers, which also directly hit the global economy, and due to the interconnectedness of the global economy, had a major impact around the world. In order to rescue the sluggish economy, adopting loose monetary policy has become a common rescue option, but it also causes the problem of currency depreciation. The financial crisis exposed the shortcomings of the traditional financial system. However, in 2008, a mysterious person named Satoshi Nakamoto released the Bitcoin white paper "Bitcoin: A Peer-to-Peer Network Electronic Cash System". In order to avoid the above-mentioned financial crisis, A tsunami situation occurs. Unlike legal tender, the issuance of Bitcoin is controlled by a basic algorithm. New Bitcoins will be produced every hour, and will be produced at a decreasing rate until the total limit of 21 million is reached in 2140. According to the supply theory of economics, assuming that the demand for Bitcoin increases in the future and its supply remains unchanged, the value of Bitcoin will increase.
Anonymity: Nowadays, banks can almost obtain users’ personal information, including: credit history, residential address, spending habits, etc., but Bitcoin is different because the wallet does not have to be connected to any personally identifiable information, and basically no one else knows its address. Who is the owner of. However, because of its anonymous nature, interested parties use it for drugs, terrorism, illegal and dangerous activities, etc. Therefore, the laws and regulations of most countries require exchanges to conduct KYC on users before allowing users to conduct transactions, deposits and withdrawals. Received services.
Transparency: As long as there is a BTC transaction, it will be uploaded and stored in the blockchain. In addition, the Bitcoin network is transparent. Anyone can judge how many assets are in their wallet address through the blockchain ledger. In addition, specific transaction progress and information can be seen by everyone. If some addresses have been identified as being used for illegal activities, for example, if KYC verification is conducted and it is found that the wallet is used with criminal intent, due to the transparency of Bitcoin, the operation and transfer of assets in this wallet will be visible at a glance. Although Bitcoin has the anonymity mentioned earlier, the transparency of its wallet assets and transaction records makes Bitcoin not the most ideal currency for criminals, terrorists or money launderers.
Irreversibility: Unlike electronic and online fiat currency transactions, Bitcoin transactions are irreversible. The reason is that the Bitcoin network does not have banks, middlemen and third parties that can perform refund functions. If transactions are recorded on the Bitcoin network, it is basically impossible to trace back the Bitcoin network unless a fork or 51% attack occurs. In other words, once you send your Bitcoins to someone else, you cannot get them back unless the recipient wants to send them back. This means that any transaction on the Bitcoin network cannot be tampered with, so it also has the feature of transaction and settlement.
This article Bitcoin Features: Five Major Bitcoin Features Differences from Fiat Currencies first appeared on Zombit.