What technology actually allows Bitcoin to scale (How does Bitcoin appreciate)

What technology actually allows Bitcoin to scale According to Bitcoinexchangeguide, what is the technology behind Bitcoin’s “scaling” technology? In the past few months, we have conducted extensive research on Bitcoin. But I haven’t delved into how this area is actually implemented—is the practical application of this technology already underway? (Is this about scalability? Or is it still unclear?) What is the scaling solution on the blockchain? Bitcoin is a peer-to-peer network that can serve any use case. If a user is willing to use it to send transactions worth millions of dollars or thousands of dollars (like Ethereum), they must pay up to 1 satoshi (e.g. 100 euros) as a transaction fee to other people. Why do this? Because you need a trusted network to verify the status of the chain and confirm that they are accepted. If you are a node operator and your node operator has the ability to ensure that these data will not be lost, then blocks will be created. Therefore, “lightning scaling”, also known as double-spend attack. Although Bitcoin’s proof-of-work consensus mechanism is similar to proof-of-work protocol, this protocol does not allow people to bring their calculations and storage into the blockchain, only requiring the client to be able to handle these transactions. This scaling method also applies to other use cases such as exchanges, DeFi projects, etc. However, the problem is: What will happen when Bitcoin becomes a currency? How to use this system? In theory, the performance bottleneck of the existing blockchain can be solved by fragmenting Bitcoin, such as the total cost of a single account of about $1,000 or more Bitcoin cannot meet the demand. Of course, it is also possible to build applications based on this, including decentralized finance (DeFi), games, and DAOs, etc. However, due to the complexity and lack of scalability and interoperability of Bitcoin, most cryptocurrencies still rely on the participation of a single entity. Therefore, in order to improve the efficiency and usability of Bitcoin, some companies have adopted a double signature scheme to support multiple Bitcoin transactions, making transactions faster and more cost-effective.

How does Bitcoin appreciate

As more and more people understand the value proposition of Bitcoin, they are also beginning to realize the importance of Bitcoin. In a recent interview, “why use it? There are three reasons”, including “how to reassure investors to buy” and “where to start”.

First, the volatility of Bitcoin prices gives it a high price advantage compared to stocks; second, due to its scarcity and fast transaction speed, coupled with the increased demand for investment portfolio assets by traditional financial institutions, it becomes more liquid; thirdly, as a digital gold, Bitcoin is considered an indispensable part of the global monetary system—ensuring secure and stable wealth storage through blockchain technology; fourth, when users want to earn more profits, they can transfer BTC to other wallets or engage in coin-saving activities; fifth, users who hold BTC can earn interest without affecting privacy.

Currently, there have been many methods on the market that use digital currency to achieve inflation, which can help reduce deflation rates. However, in most cases, without proper protection measures, it is impossible to guarantee that users’ funds will not be lost. “We cannot ignore the potential of another project because of a new project.” Ron Brian Brooks, a commissioner of the Securities and Exchange Commission (SEC) and one of the richest people in the crypto industry, publicly stated, “We need to be able to provide higher security than traditional banks and lower-cost investment tools. Bitcoin and other cryptocurrencies are a very powerful medium of exchange, which can not only reduce the impact of legal deposit outflow but also effectively prevent illegal activities.”

But this does not mean that the scope of Bitcoin’s use will expand in the future. According to the World Economic Outlook Report 2019, although Bitcoin is still in its early stages, it does have the potential to become part of mainstream payment methods.

In fact, since 2019, Bitcoin has become the largest circulating category of virtual commodities in the world: gold, silver, and diamonds. Since the beginning of 2020, gold reserves have increased by more than four times. However, this situation is changing: in the past ten years, the market value of Bitcoin has been declining and it has fallen below the trillion-dollar mark. This change has led to a large number of speculators entering the market, resulting in a lot of cashing out, and ultimately causing a series of events such as Bitcoin network crashes and hacker attacks.

However, some people also believe that Bitcoin can achieve permanent preservation and resistance to censorship through a decentralized manner, and may bring new benefits. In addition, some researchers have pointed out that although Bitcoin is expected to continue to maintain upward space in the long term, they also assert that the potential value of Bitcoin is still significant.