Bitcoin defects

5. Bitcoin (bitcoin: bitcoin) was originally a kind of network virtual currency, similar to Tencent's q-coin, but it has been able to buy real-life goods. It is characterized by decentralization, anonymity, and can only be used in the digital world. It does not belong to any country or financial institution, and is not subject to geographical restrictions. It can be exchanged anywhere in the world. Therefore, it is used as a money laundering tool by some criminals. In 2013, the U.S. government recognized the legal status of bitcoin, making the price of bitcoin soar. In China, on November 19, 2013, a bitcoin was equivalent to 6989 yuan

in 2009, Nakamoto designed a kind of digital currency, namely bitcoin. The booming bitcoin market has gone up and down, and the identity of its founder "Nakamoto" has always been a mystery. Rumors about "the father of bitcoin" involve from the US National Security Agency to financial experts, and also give bitcoin a mysterious aura

on January 7, 2014, Taobao announced that it would ban the sale of Internet virtual currencies such as bitcoin and lightcoin from January 14. On February 26, 2014, Democratic Senator Joe Manchin of West Virginia issued an open letter to a number of regulatory authorities of the federal government of the United States, hoping that relevant institutions would pay attention to the status quo of bitcoin encouraging illegal activities and disrupting the financial order, and demanded that actions be taken as soon as possible to completely ban the electronic currency. On January 11, 2017), the Shanghai headquarters of the people's Bank of China and the Shanghai Municipal Finance Office carried out on-site inspection of bitcoin China, focusing on whether the enterprise carried out credit, payment, exchange and other related businesses without permission or license; Implementation of anti money laundering system; Fund security risks, etc. On January 12, 2017, the business management department of the people's Bank of China also entered the trading platforms such as "fire coin net" and "currency bank" in Beijing
on May 12, 2017, a global outbreak of bitcoin virus madly attacked public and commercial systems! More than 40 hospitals across the UK have been widely hacked, leaving the NHS in chaos. The campus networks of many colleges and universities in China were also occupied. Nearly 74 countries in the world have been seriously attacked
currency characteristics

Decentralization: bitcoin is the first distributed virtual currency, and the whole network is composed of users without a central bank. Decentralization is the guarantee of bitcoin's security and freedom
Global Circulation: bitcoin can be managed on any computer connected to the Internet. No matter where you are, anyone can dig, buy, sell or collect bitcoin
exclusive ownership: the private key is required to manipulate bitcoin, which can be stored in any storage medium in isolation. No one can get it except the user himself
low transaction cost: bitcoin can be remitted free of charge, but a transaction fee of about 1 bitfen will be charged for each transaction to ensure faster transaction execution
no hidden cost: as a means of payment from a to B, bitcoin has no cumbersome quota and proceres. If you know the other party's bitcoin address, you can pay
cross platform mining: users can explore the computing power of different hardware on many platforms
advantages
complete decentralization, without issuing institutions, it is impossible to manipulate the number of issues. Its distribution and circulation are realized through open-source P2P algorithm. Anonymity, tax exemption and supervision free. Robustness. Bitcoin is completely dependent on P2P network and has no distribution center, so it cannot be shut down externally. Bitcoin price may fluctuate and collapse, and many governments may declare it illegal, but bitcoin and its huge P2P network will not disappear

cross border. Cross border remittance will go through layers of exchange control agencies, and the transaction records will be recorded by many parties. But if you trade with bitcoin, enter the digital address directly, click the mouse and wait for the P2P network to confirm the transaction, a lot of money will pass. It does not go through any regulatory agencies and will not leave any cross-border transaction records. It's hard for a cat to survive. Because bitcoin algorithm is completely open source, anyone can download the source code, modify some parameters, recompile, and create a new P2P currency. But these counterfeit currencies are fragile and vulnerable to 51% attacks. Any indivial or organization, as long as it controls 51% of the computing power of a P2P currency network, can manipulate transactions and currency value at will, which will be a devastating blow to P2P currency. Many Shanzhai coins die in this link. The bitcoin network is robust enough. If you want to control 51% of the computing power of the bitcoin network, the number of CPUs / GPUs required will be astronomical
disadvantages
vulnerability of trading platform. The bitcoin network is robust, but the bitcoin trading platform is fragile. Trading platform is usually a website, which will be attacked by hackers or shut down by competent authorities. Transaction confirmation takes a long time. When bitcoin wallet is first installed, it will consume a lot of time to download historical transaction data blocks. While bitcoin transaction, in order to confirm the accuracy of data, it will take some time to interact with P2P network, and the transaction will be completed only after the whole network is confirmed

the price fluctuates greatly. Due to the intervention of a large number of speculators, the price of bitcoin for cash fluctuates like a roller coaster. Making bitcoin more suitable for speculation rather than anonymous trading. The public did not understand the principle, and the traditional financial practitioners resisted. Active netizens understand the principle of P2P network and know that bitcoin has no legal person to manipulate and control. But the public doesn't understand, and many people can't even tell the difference between bitcoin and q-coin“ "No issuer" is the advantage of bitcoin, but in the view of traditional financial practitioners, "no issuer" currency is worthless.

6. This still depends on the resources. Professional mining machines are very profitable, and ordinary mining machines may be suspended. Look at the flow of ore mining, we know that the super miner's income is more cattle.

7. The "defects" of bitcoin as an alternative currency
the concept of bitcoin has a strong inspiration for the existing currency issuance and circulation system, but bitcoin itself can not replace legal currency, not only because of the government's permission, but also because of its own internal restrictions
transaction processing capacity limit. Each block size is limited to 1m, and each transaction is about 250 bytes, so each block can hold up to 4000 transactions. Since the average generation time of each recognized block is 10 minutes, it means that only 7 transactions can be processed per second
with the popularity of blockchain transactions, many transactions have to wait in line to be written into bitcoin blockchain. In turn, the limitation of transaction processing capacity will affect the application scope and scenarios of bitcoin as a digital currency
the underlying cryptographic algorithm may be broken. The hash function selected by bitcoin has collision resistance (if two values cannot be found, X and y, X is not equal to y, and H (x) = H (y), it is said that the hash function h has collision resistance), but there is no hash function in the world with real anti-collision characteristics, but the probability of being broken is very low. The problem is that once it is broken, it means that the security of the whole bitcoin will be fundamentally threatened. By then, bitcoin may be worthless. In fact, this worry alone will affect people's confidence in bitcoin
in addition, the total amount, segmentation and blockchain reward structure of bitcoin will become restrictive conditions at a certain stage of bitcoin development. To solve these problems, we need to release a new basic version. In the distributed architecture, we can not ensure that all nodes update the latest protocol, and the release of the new version will bring the problem of bifurcation
of course, through the introction of strict verification mechanism, the underlying protocol can be updated by tolerating soft forks for a period of time, which will not have a fundamental impact on the value of special currency, but it is not competent to replace legal currency
at present, compared with the positioning of special currency, the consensus reached in the instry is "digital gold" or "quasi digital currency", rather than digital currency. Through the regulation and supervision of the third-party intermediary platform, effective transactions can be concentrated in the field, which can become a new type of investable asset. And its "quasi digital currency" feature is more of the digital evolution of legal money to provide ideas and technical implications, how to talk about substitution
finally, there has been controversy about the anonymity of bitcoin and the risk of money laundering. Indeed, it is one of the core concepts of the bitcoin system not to require everyone to join with their real identities, but bitcoin transactions can not be truly anonymous, and different transactions made by a user with different identities can be eventually traced; The transactions made by third-party service organizations such as bitcoin wallet and exchange are subject to the anti money laundering management of regulatory agencies. In fact, they are all real name transactions.

8. Since the Chinese mainland announced that it would close the bitcoin trading at the end of October, bitcoin prices have experienced a roller coaster market. It once dropped to about 25000 yuan in September, and then rose to nearly 40000 yuan in October, which seems to show its tenacious vitality< However, this high price is very fragile
Chinese mainland bitcoin game player has been transferred to Hongkong after a lot of closes. The exchange can be used as futures by some exchanges, which is about 10-20 times of leverage. Combined with the over-the-counter trading, even after the "outbreak", the trading volume is only 1 / 100 of the previous on-the-spot trading volume. It can be seen that the number of players participating in bitcoin trading has been greatly reced, and a few speculators have managed to maintain the bitcoin price with the help of leverage< However, it is hard to imagine that these speculators are totally supported by free funds. Considering the borrowing cost of funds, the fact that the world has entered a cycle of monetary tightening, and the increasing attention paid by more and more countries to the risk of speculating in digital assets, regulatory policies will become more and more intensive. I am afraid that this kind of high price without foundation will not last for too long. Could it be that a few early hoarders deliberately made the game in order to find the receiver? It's not impossible
on the other hand, the official digital currency is also under intensive preparation. In fact, since the second half of 2016, there has been more and more discussion on official legal digital currency in China. In September 2017, China Banknote Printing and Minting Corporation also set up a blockchain Research Institute to track and study digital currency technology, which is generally regarded as a precursor for the Chinese government to accelerate the research and launch of digital currency. China is likely to be the first country to issue official legal digital currency
of course, this process will not be achieved overnight, and the final proct will be quite different from digital assets such as bitcoin, which is more like a digital legal currency based on cryptography. Now the suspense is whether the settlement mode of this new legal digital currency is real-time Centralized Settlement similar to the current online banking mode, or offline point-to-point settlement. If it is the latter, the application prospect will be broader, and the use may be more comprehensive
in the final analysis, money is the medium of transaction and the means of storing wealth, and its essence is the embodiment of credit. Therefore, in order to play the role of money in a long period of time, this medium must have considerable credit. At present and in the foreseeable future, the strongest credit still comes from the powerful means of the government. If someone takes out the golden yuan certificate in the period of the Republic of China, it can only be called antique
therefore, in the long run, I am not optimistic about privately issued currencies. In particular, bitcoin has a logic defect in the underlying design that is difficult to last. So now we see the phenomenon of "capacity expansion", and every time this "correction" is harmful to its credit
however, even if bitcoin and other private digital currencies can not become the mainstream, blockchain technology has great potential. For example, digital property certification. We can imagine that in the rental market, if the law forces the landlord or intermediary to show the ownership certificate of the house with official or third-party certification and based on blockchain technology before renting the house, then the problem of fake houses will be much less
on this basis, it can also make remote online mortgage and transaction possible. The digitization of assets will make the transaction more convenient, which can be applied in many fields, and even for direct international transactions, such as long-distance mortgage and transaction of bulk commodities, futures and valuables (real estate, jewelry, antiques, art, etc.)
of course, all these also need supporting laws. Only when there are clear precedents, can it play a role in the future property rights protection based on blockchain and build up public confidence in it“ "From zero to one" will be very slow, but once it breaks through the critical value, with the first person to eat crabs, then "from one to ten thousand" will be completed quickly
in addition, cooperation between countries is also indispensable to expand the scope of application. Digital technology is inherently easy to spread across regions and international. When the new technology has accumulated and pieced together the required jigsaw puzzle, the breakthrough from quantity to quality is only the last layer of window paper. The breakthrough is inevitable. The chance is just who will finish it. Everyone is running like crazy, but history will only remember the first one who crossed the finish line
as a new thing, the application scope and depth of blockchain still need to be explored, just as at the beginning of the birth of electric power, people don't know its use. However, with the integration of human behavior with Internet and digital technology becoming more and more in-depth, the prospect of cryptography technology similar to blockchain must be unlimited.