As one of the brightest stars in financial markets in 2017, bitcoin has attracted the most attention since its creation in 2009. It has been said that "it is as difficult for the general public to know what bitcoin is as it is for the people of the 1980s to know what the Internet is." Now, the search for "bitcoins" on Google has surpassed that of trump. After all the regulatory baptism, bitcoin did not go down, but ran. What has bitcoin been going through since it was not worth anything, and now it's worth tens of thousands of dollars?
The origin of bitcoin.
To fully understand the origin of bitcoin, we have to withdraw some financial system. As we all know, money itself is not valuable. At first, humans traded in barter, but with a lot of inconveniences, it was difficult to get what they needed. So the money came into being, and through the medium of money, different items could be priced at a rare degree, simplifying the transaction process. Although currency trading has many benefits, it also has one fatal flaw: centralization. The world's existing currency is either issued or abolished by the central bank, and ordinary people cannot participate in it. If the central bank keeps issuing money, then the money will be diluted, reducing the purchasing power of the currency.
In order to solve this problem, the father of the currency of the hearing in 2009 put forward the concept of decentralized, and currency is in open source software, and constructs the P2P network, to create a decentralized payment system. So, what is decentralization? We paid in China popular WeChat, for example, although WeChat for virtual payment system with COINS, but WeChat every transaction shall be conducted in the banking system, the center of the bank is WeChat pay. Decentralization is the point-to-point transaction, which is not affected by any other factors.
Bitcoins are electronic cash in peer-to-peer networks. In fact, anyone can participate in the process of making bitcoins. Unlike all previously widely accepted currencies, bitcoin has no issuer. Bitcoin does not exist in central servers, but in countless computers around the world. Since its release, no one in theory has been able to control the number of bitcoins, nor has it been able to artificially manipulate the value of the currency by churning out bitcoins. Cryptographic design allows bitcoin to be transferred or paid only by the real owner, with great security.
How do you dig bitcoin?
Currency is "block chain", the core principles of each block corresponds to a bill, all will link up to the block chain, any transaction information and transfer record is recorded in the block in the chain. Note that the blockchain exists throughout the Internet, so no bitcoin holder is concerned about the loss of bitcoin.
The people who make bitcoins are called "miners", who use computers to solve a complex mathematical problem to ensure the consistency of the bitcoin network's distributed billing system. Every point in time, the currency system will node in the system to generate a random code, all the computers in the Internet can go to look for this code, who find this code, can produce a block, then get a COINS, this process is that people often say that dig. Calculating this random code requires a lot of GPU computing, so the miners buy a huge number of graphics CARDS to get bitcoin more quickly. For a simple analogy, I have a 100-yuan note on my hand, and whoever guesses the number I will give it to. Bitcoin is equal to this money, guess the number is equal to mining, who guesses right is the fastest, this 100 yuan is who.
Some people worry that if it doesn't get more and more bitcoins, it won't be worth it at all? Of course, satoshi nakamoto also thinks about this, so there is a mechanism for the bitcoin system: the amount of bitcoins is limited. Four years before the total will produce 10.5 million COINS, every four years the amount of output in half, in 4 years to 8 years to produce 5.25 million COINS, 8 to 12 years are only 2.625 million COINS, and so on. In the end, there were 21 million bitcoins (about 16 million of them currently in circulation). Popular point said, COINS are like a composed of a total of 21 million gold COINS, jinshan, want to get it, you need the miners used computer operation ability, according to the existing algorithm to calculate a obeys the law of a particular set of figures. Of course, these math problems are getting harder and harder with the increase in existing bitcoins. Since its inception in 2009, bitcoin's hash rate (the speed of processing data per second) has increased by 16% on average every two weeks.
From virtual to reality.
At first glance, it looks like a bunch of fancy games for tech men, and some even suspect it's a pyramid scheme. Over time, however, the allure of bitcoin has become harder to ignore.
First of all, no issuer means that this is a kind of not controlled by the government of "free" money, will not depreciate because of excessive money printing, also won't face due to geopolitical risk, lower transaction costs at the same time.
Second, the system, which is actively maintained by many miners, makes bitcoin much safer than the French currency. Through key authentication, counterfeiting and theft are difficult to achieve. It will not be black until it is able to defeat 51 per cent of the network's computing power, which is now the equivalent of more than a dozen tianhe-1 computers. Assuming such a computing power, counterfeiting is not worth the cost, and the rate of return on mining is higher.
By the end of November 2017, Coinbase, the largest bitcoin exchange in the United States, surged by 100, 000 users to 13.1 million users. In November 2016, the number of exchanges was only 4.9 million.
Not only does bitcoin make shopping, trading, bypassing foreign exchange regulation and money laundering, but the United States also regulates the tax system. In 2014, the irs issued guidelines for bitcoin and cryptocurrency. According to the guidelines, if you buy goods and services in digital currencies such as bitcoin, you will have a tax problem with the added value. Australian legislation exempts bitcoin from double taxation. In April 2017, Japan formally announced the legalization of bitcoin and vigorously promoted bitcoin payment in China. South Korea's bitcoin transactions have surged into the world's top three, and the legalization of bitcoin has been on the agenda. At the end of September, the Pacific island nation of vanuatu announced that it would accept investment in bitcoin as a means of payment.
The madness of bitcoin.
On May 22, 2010, the United States, Florida, a programmer laszlo han fayyad's (LaszloHanyecz) with 10000 COINS to buy pizza $25, this is the first in the real world currency trading. Now it may be the most expensive pizza in the world.
In December 2017, bitcoin prices rose at an alarming rate. On December 5th, the price of bitcoin broke through $12,000. On December 6th, the price of bitcoin exceeded $14,000. On December 7th, the price of bitcoin broke through $15,000. On December 12, the price of bitcoin exceeded $17, 000. In early 2017, the price of bitcoins is only about $1,000, meaning that the price of bitcoin has risen 17 times since 2017.
Meanwhile, the world's leading commercial exchanges have launched bitcoin futures trading. On December 1, 2017, the Chicago mercantile exchange, the world's largest and oldest futures exchange, announced that it would launch bitcoin futures on December 18, 2017. On December 4th the Chicago board options exchange, America's largest options exchange, announced that it would launch a bitcoin futures product on December 10th. The nasdaq exchange also announced that it will launch bitcoin transactions in the first half of 2018. The Tokyo financial exchange, one of Japan's leading financial exchanges, also announced that it would begin preparations for bitcoin futures in early 2018. With the introduction of bitcoin futures on major exchanges, it will bring a lot of liquidity to bitcoin. That is one reason why bitcoin has soared in recent days: because many institutional investors can't invest in bitcoin directly, exchanges have introduced derivatives that give these investors access to investment.
A wild worry.
The early miners, who dug up their mines in the absence of bitcoin, squandered power and computing power, hoping that the future bitcoin could become a real currency. Now their dreams seem to have come true.
But the gloom is also growing. Investors know the truth: high volatility means high risk. Lloyd blankfein, the chief executive of Goldman sachs, once said: "a 20 per cent volatility in a day is not a currency, it is more like a fraud tool." Financial markets are no stranger to an example of euphoria and then a bubble. Some experts even argue that bitcoin threatens traditional trading and the real economy. Mark fisher, a prominent Wall Street trader, argues that the pattern of the bitcoin trend is very similar to that of silver in the 1970s. In the late 1970s and early 1980s, the market was wildly speculative in silver, firing silver from $2 an ounce to $80 an ounce. Then the bubble burst, and the silver was returned to its original shape. Although the question of bitcoin has not disappeared in eight years, it has not stopped it from rising.
Bitcoin's trading model.
Currently, there are three main types of otc transactions. One is the C2C otc transaction, which provides information publishing venue, and the two parties issue the purchase or coin advertisement according to the demand, which is similar to taobao. The second is the wallet APP+ otc transaction mode, which integrates the otc transaction function into the bitcoin wallet APP, offline transaction. Third, the exchange and otc business model.
The biggest risk for investors is the deal itself. There is no third party involved in the otc transactions. Once one party defaults, the other party's rights and interests are hard to be guaranteed, and the subsequent evidence and evidence are more difficult. The otc transactions also face financial security, virtual currency security and other issues. In addition to the individual countries will be in the form of licensing virtual currency trading into the regulatory framework, most of the countries and regions, virtual currency transactions are no regulatory endorsement, less online such as fund depository, virtual currency depository precautionary measure, it also increased the probability of investors suffered fraud risk. In addition, because of the low degree of decentralization, bitcoin prices are easily affected by the behavior of large families and are easily manipulated.
conclusion
Bitcoin is the most direct, typical and even the most crude application mode in the commercial field. It is now worth more than 288.6 billion dollars. With prices soaring, the value of bitcoin has also surpassed the market value of well-known public companies such as Morgan, Goldman sachs and general electric. The world's two most influential financial institutions, for example, have a market capitalisation of $97bn, while ubs in Zurich, Switzerland, has a market capitalisation of about $67bn. The combined market capitalisation of the two Banks is not as high as the market value of bitcoin. The most controversial is the intrinsic value of bitcoin. Some people say that buying bitcoin is like buying air. Unlike traditional financial products, the value of bitcoin is more likely to be supported by the faith of devotees. Nobel laureate Robert shiller said, "gold is a bubble, but it has lasted for thousands of years."
It is not clear how the price of bitcoin will change, but it is certain that the blockchain is reshaping the financial landscape. Whether the currency is a flash in the pan of ultimate, or change in the form of currency in one thousand, decentralized block chain technology has been quietly changed every aspect of our lives.