Bitcoin Mechanism (What technology is Bitcoin based on?)

08/17/2023 15:14 • Blockchain Buzz • 113 views

Bitcoin Mechanism Bitcoin is a cryptocurrency based on proof-of-work, and it is one of the most anonymous cryptocurrencies in the world. It is composed of a set of specific nodes (such as miners, exchanges, or wallets). Due to the large number of blocks in the network and the low unpredictability, it is difficult to tamper with. In this case, double-spending can be solved using the double-spending technique – because only one user receives the payment amount in a single transaction. However, if everyone accepts the funds at the same time, these “intermediate transfer of funds” will be blocked, ultimately preventing the transaction from being completed. In order to ensure security, Bitcoin has designed a new mechanism: signing two entities to prevent double-spending. Assuming we use a hash value as the exchange medium, we will get a signer and generate the first Bitcoin token, and this address will send a transaction message and receive information to the validator in chronological order. However, when the Bitcoin blockchain fails, this process becomes very difficult. To make Bitcoin successfully implement the consensus algorithm, there are two methods: 1. Create a new state 2. Add new scripts to existing blocks 3. Increase the capacity of new blocks 4. Increase the difficulty 5. Reduce storage space 6. Increase the size of the memory pool 7. Improve the block size 8. Improve the fault tolerance of the Bitcoin blockchain 9. Optimize mining difficulty 10, equal to 1 hour

What technology is Bitcoin based on?

Bitcoin is a digital currency driven by computer code. Its basic principle is the combination of cryptography, network effects, and blockchain technology. And these common points are based on the “distributed ledger to ensure security” proposed by Satoshi Nakamoto (note: this article only starts from the Bitcoin white paper). But due to their respective characteristics, they do not have any basic technological attributes, so they cannot be widely applied. So what exactly supports this new type of encrypted asset? What algorithm is Bitcoin developed based on?

First, we need to understand what Bitcoin is.

Simply put, it is a cryptocurrency called PoW, which is a proof-of-work mechanism based on the proof-of-work system, and it is also a block reward obtained through mining, as well as the implementation of other types of consensus protocols. This process is similar to the transaction execution mode of an electronic cash system. When you send your tokens to another person, they will receive the corresponding share and exchange it for Bitcoin as a reward, thereby achieving economic purposes. If a node decides to convert its tokens into Bitcoin, the network becomes one of the largest payment companies in the world. There are also some more special features such as fungibility. For example, Ethereum is a decentralized platform that can be used for smart contract invocation; Litecoin is an open-source virtual currency that can be used to exchange various types of value storage funds; Monero uses zero-knowledge proofs, so people can easily write code and account for transactions.

Secondly, it is clear that Bitcoin is not the first person running based on mathematical models, because only a few people have mastered the core software of Bitcoin-Zcash. Although most people do not know whether zk-SNARKs can effectively solve many of the problems currently existing in Bitcoin, there is evidence that even the most advanced technology can provide effective solutions.

Finally, for those who want to understand more about the core concepts of Bitcoin, this is a very important period. Although Bitcoin does not currently exist, there may be significant changes in the next few years. What are the advantages of the underlying technology of Bitcoin?

1. Support for privacy

One of the main innovations of Bitcoin is to allow anonymity of all participants, ensuring that data will not leak to third parties or third parties. However, as more applications and research emerge and new tools to verify the true identities and security of users, this trend will continue.

2. Trustless nature makes Bitcoin more reliable and has high throughput characteristics. In addition, it can also prevent attackers from utilizing the low latency and highly tamper-resistant capabilities on the Lightning Network to increase transaction speed and cost. This not only protects users from phishing attacks but also helps combat criminal activities. (Cointelegraph)

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Bitcoin Mechanism (What technology is Bitcoin based on?)

What technology is Bitcoin based on?

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