Foreword: Bitcoin works because it uses a range of techniques, not just links to blocks. The author of this paper believes that only block links (narrowly defined "blockchains") do not have an effective effect. To have a real impact, a series of techniques are required to work together. It should be noted that the “blockchain” referred to in this article is narrowly defined and refers to the link of the block. There is a difference between the blockchains of many of our ordinary meanings (in a broad sense) today. The generalized blockchain also includes technologies such as cryptography, consensus mechanisms, and peer-to-peer networks. The blockchain itself is constantly evolving and evolving, and it is not possible to draw conclusions from a constant point of view. The author of this article is Luc Dossis, translated by the "JT" of the "Blue Fox Notes" community.
Nakamoto's Bitcoin white paper is a genius. It describes a system that can effectively convert electricity into real records. This may sound strange, but Bitcoin is groundbreaking in building absolute trust between strangers.
We are just beginning to see the impact of this technology on our world. So how does Bitcoin manage these?
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Nakamoto focuses on four unique technologies: cryptography, proof of effort, time-stamped blocks (blockchains), and peer-to-peer communication.
Bitcoin will not work without these elements working together.
- Without cryptography, Bitcoin is not secure and users cannot securely own it.
- Without proof of work, anyone can tamper with the ledger of the transaction and undermine the collective consensus.
- Without a blockchain, you can spend the same token unlimited times.
- Without a P2P network, Bitcoin will be controlled by a single entity, which means you have to trust them and put the money under their control.
Therefore, it is clear that without these technologies, Bitcoin will no longer be Bitcoin. Because, as Andreas Antonopoulos said, it is no longer open, decentralized, borderless, and open.
However, what people often miss is that bitcoin is an emerging phenomenon. This means that the system produced by these technologies is larger than the sum of its parts. None of the techniques mentioned above give it the characteristics of Bitcoin. We should focus on the system, not the part. (Blue Fox Note: This is somewhat similar to the emerging effect, when multiple different individuals come together to create new features.)
Why is the blockchain?
In the above technology, why is the “blockchain” so popular?
After all, the blockchain is basically just a time-stamped Google form. As far as its technology is concerned, it is not a breakthrough paradigm shift level of technology. (Blue Fox Note: Please note that the "blockchain" in this article is just a link to a time-stamped block, in a narrow sense, not the blockchain we usually mean, we usually The blockchain is said to include technologies such as consensus mechanisms, peer-to-peer networks, and cryptography.
It is like the invention of the railway, witnessed the industrial revolution of the 1800s, and claimed that the steam engine is the only reason. Of course, the steam engine is one of the key technologies in these trains. Without the coal-powered steam engine, the industrial revolution will not go too far.
However, if during the peak of the railway frenzy in the 1840s, you went to the streets and shouted: "The steam engine is everything!" Then you will not grasp the point at all.
Blockchain Decision Tree (Sourced from Saifedean Ammous's Bitcoin Standard)
This is not necessarily a criticism of those who are attracted by the charm of “blockchain technology”. In the long river of history, we have seen patterns of applying new technologies to everything again and again.
The same is true for steam engines.
This technique has been experimentally applied to all forms of transportation and has achieved a certain degree of success on ships and road vehicles. However, this technology is truly revolutionary only when the steam engine is put into service and used for large-scale cargo transportation over long distances.
This is why the phrase "blockchain is not bitcoin" is similar to saying "the steam engine is not a railway" in the 1800s.
It can be seen that the "blockchain technology" and the steam engine have similar effects, while the bitcoin is the 21st century railway. It is a whole and has complete technology.
The steam engine did not bring the industrial revolution, and the railway had. (Blue Fox notes: It should be noted here that the blockchain here is a narrow blockchain, just a link to the block. It is not a blockchain in a broad sense. And the blockchain is always evolving. However, the blockchain Not a panacea, this is worth noting)
Bitcoin is not a blockchain
However, you might say "Bitcoin is an outdated technology, and other blockchains may be substituted to replace it." Although this sentence makes sense, those who despise Bitcoin ignore a key element. Some aspect of the currency cannot be solved immediately through technology. This element is trust.
In the end, money is just a physical (or digital) representation of trust. Trusting the item (currency) you just got will keep it for a long enough time so you can use it to redeem other items.
Bitcoin has been around for more than 10 years, and every 10 minutes, it will dig up another block and add more trust to the system. The inflation system will weaken trust in the currency. Even the most trusted currency gold in history can be confiscated or forged, reducing its trust.
The founders of some encryption projects are free to change the rules of the token for personal gain. This has happened many times. By design, each cryptocurrency item requires tokens to motivate its users, and if the token is not trusted, the network will not be used. It's that simple.
As I said before, in short, Bitcoin is by far the best currency ever invented by humans. Because it:
- Protected by one of the most powerful computers in the world
- Will be the most scarce thing in the world
- True decentralization
This is why people trust Bitcoin. When the currencies of Argentina, Venezuela and other countries begin to depreciate, their people will turn to the US dollar. It is also difficult to gain the trust of a centralized founding team and an “encryption project” that is rarely used to protect the network. Commitment and goodwill alone are not enough to create a trustworthy currency. It is necessary to combine the various technologies and let them work together to create a tough system. And this is not possible with a beautiful Google worksheet.
Risk Warning: All articles in Blue Fox Notes cannot be used as investment suggestions or recommendations. Investment is risky. Investment should consider individual risk tolerance. It is recommended to conduct in-depth inspections of the project and carefully make your own investment decisions.