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Why is Bitcoin P2P (Why is Bitcoin Cryptocurrency)?

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Why is Bitcoin P2P, and why is Bitcoin P2P? Today, let\’s understand the underly

Why is Bitcoin P2P (Why is Bitcoin Cryptocurrency)?

Why is Bitcoin P2P, and why is Bitcoin P2P? Today, let’s understand the underlying principles of Bitcoin.

What is blockchain?

Cryptocurrency is a peer-to-peer, decentralized electronic cash system powered by the network to achieve frictionless transactions and instant settlements. Bitcoin is a digital asset based on computer code technology, and its value largely depends on its operational model and the technical characteristics it interacts with. Blockchain technology can help developers quickly build and distribute their own tokens.

As an open-source platform, Bitcoin allows users to store all data in their Bitcoin wallets using private keys. Users protect their data by saving these data to their own custody wallets through smart contracts.

To address this issue, Bitcoin adopted a new protocol called “PeertoPool.” This is the first Bitcoin application that supports P2P payment systems, which means that the protocol does not require a third party to trust any party to create a fund pool or transfer funds but rather selects a participant and then allows others to access their accounts, eliminating the risk. Therefore, when users need to use Bitcoin, they usually execute transactions off-chain or receive payments from exchanges.

One of the main advantages and disadvantages of this mechanism is that since each transaction must be confirmed, everyone should ensure that the sender receives the correct amount. But this is not a good thing for most people. Although there is currently no specific evidence that this solution is effective, the practical significance of Bitcoin is very important.

How Bitcoin works: use cases include trading, collateral management, lending, loans, etc.

The core concept of Bitcoin is that it is not for zero-cost buying and selling of goods and services. However, the emergence of Bitcoin has made people realize this: although many countries in the world recognize certain limitations, such as Nigeria and Turkey, some citizens of these countries do not agree with such regulations. For example, an official in Pakistan stated that they have the ability to make Bitcoin legal tender because the government cannot prevent the use of Bitcoin and may even force them to be confiscated.

According to data from CoinMarketCap, among the top ten mainstream currencies in terms of market capitalization, 7 are considering such operations. The six main currencies are USDT, DAI, WBTC, LINK, and PAX. The other four major currencies have been launched, namely BNB, ADA, XLM, DASH, and ZEC.

In addition, some altcoins have announced their entry into the market and are popular:

1. Litecoin (LTC): The total amount of Litecoins mined by Litecoin miners is fixed at 1 billion;

2. 2pool (ETH): The price of Litecoin has remained stable since March;

3. Monero: The price of Monero has been fluctuating.

These small currencies have experienced significant pullbacks after 2017.

Why is Bitcoin Cryptocurrency?

From the birth of Bitcoin to the present, ten years have passed. What is Bitcoin? Why is it so important?

1. What is cryptocurrency Bitcoin is the first payment tool used openly on electronic ledgers; it is one of the most popular digital assets globally. Why can it become a world medium of exchange? 2. Its value comes from the technology and application scenarios behind it. We can compare this fact with the vision of Bitcoin. First: People believe that Bitcoin is a viable alternative to fight against inflation and excessive issuance of fiat currencies. Secondly, as a “safe haven” asset, Bitcoin has a certain store of value and is used to purchase goods and services such as gold and silver. The third use is for investment purposes. This means that as long as investors hold a certain amount of Bitcoin, they will not lose money because they do not want their wealth to be compromised or lost. The fourth significance is that when you have a large amount of Bitcoin, your Bitcoin becomes useless. The reason why Bitcoin is useful is that it has strong practicability. Bitcoin has multiple usage patterns. The first pattern provides rewards for speculative behavior. The second pattern is incentivized by market supply and demand. The last pattern is to generate income through mining (mining more BTC) or convert it into cash or other financial products. So if the price of Bitcoin rises to a certain proportion, it has great development potential. But for those who want to hold stocks in the long term, this is a very bad choice. However, Bitcoin also has many risk points. For example, events such as price declines caused by high liquidity and volatility can bring great uncertainty to the entire industry. It should be noted that because blockchain technology itself is not suitable for all types of applications, it is difficult to achieve this feature, and these problems cannot be completely solved at present. The third view is that Bitcoin is a good store of value. It allows anyone to easily participate and generate economic benefits. The main benefits brought by Bitcoin are decentralization, transparency, and security. As time goes by, more and more developers start to try to create simpler systems, including Ethereum, Bitcoin network, Wave Field, etc.

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