What is digital currency? Where did the origin of encrypted digital currency come from?

Central banks and commercial banks in some countries are actively exploring the application of digital currency in the commercial field. So what is the core technology of digital currency? What is his operating system? What is the ultimate relationship between digital currency and traditional banks, and what opportunities and challenges digital currency will present to future financial formats.

What is digital currency? Where did the origin of encrypted digital currency come from?

When it comes to the concept of digital currency is rather confusing, there are different definitions.

Some people say whether Alipay or WeChat Pay is considered a digital currency or what Q currency, Bitcoin, etc.

Since there are more and more various electronic currencies, in essence, some are not digital currencies.

Therefore, the digital currency I am talking about here is a very narrow field, which must be based on cryptography. Such a digital currency.

The origin of encrypted digital currency is Bitcoin, the founder of the mountain. In 2009, Satoshi Nakamoto designed a new set of digital currencies that rely on encryption algorithms, creating a new situation.

What is digital currency? Where did the origin of encrypted digital currency come from?

If summed up, from a monetary point of view,

digital currency has three characteristics:

1.

Decentralized clearing 2. Distributed accounting

3. Discrete payment.

These three characteristics have a common foundation called blockchain.

Under the blockchain is its specific technical means to help it realize it. This is cryptography

What is digital currency? Where did the origin of encrypted digital currency come from?

If we make a vivid analogy, this cryptography is like the superglue Bitcoin network where these nodes are generating transactions, transaction data, and transfer records at all times.

These things form small ledgers one by one. This is the so-called block. This super glue firmly glues these small ledgers together, which forms a super big ledger. What is this big ledger called? It can be said that we call it a blockchain. What is recorded in this big ledger? That is, all transaction records since Bitcoin are recorded in this big ledger. It cannot be changed and will never be deleted. Therefore, it is a super ledger. How does this big ledger system achieve three characteristics? of.

The first feature is decentralized clearing. First of all, we have to understand what clearing is. Clearing is nothing more than transferring funds between two banks. This bank account transfers one hundred yuan so it is reduced by one hundred yuan, and the transfer account is added. One hundred yuan, if it is said that inter-bank transfers, in the end this bank will have to make a competition, and then make a correction in their respective accounts of the central bank. This is the most essential concept of liquidation.

Because this large ledger records all the data from All the transaction records from the beginning to the present. His transaction record is a running account. Zhang San transferred the money to Li Si, and Li Si transferred it to Wang Wu. The actions he recorded were recorded in accordance with his running account method. This means What are you doing? It means that if we go back and check it until the initial state, you can calculate the account balance of everyone who uses Bitcoin. Since the transfer process is so, it can finally be calculated by inverted calculation. How much is the account balance, isn't this clearing completed? Of course, I don’t have to remember the banking system to help me calculate and adjust this account. So in this case, the clearing function of the banking system is useless. This is a kind of decentralized clearing.

What is digital currency? Where did the origin of encrypted digital currency come from?

The second feature is distributed accounting. In this Bitcoin network, it has a large number of nodes. In fact, every important node has a complete hyperledger. Everyone is the same, but every node is always Transactions are happening every moment, and transfers are still happening there. The small ledgers formed by these exchanges need to be added to the big ledgers. There must be a problem, because everyone has to do this at the same time, and everyone will have a record. The question of account competition, who has the right to stick his small account book to the big one? This is Bitcoin.

In the course of the bookkeeping competition, this system gives each node a very difficult math problem, which requires you to use a lot of computing power to calculate it. Whoever is faster has the right to bookkeeping, so in this process you will I found that because everyone is competing faster than whoever counts, and those who count faster will get bonuses, then everyone will continue to upgrade the hardware and build their own computers very quickly. Upgrade the CPU and upgrade its memory. Afterwards, a large-scale computing group is created, the main purpose is to calculate faster than anyone else. This will make the competition for bookkeeping become more and more fierce, and it will produce a more interesting effect. If someone wants to It would be too difficult to tamper with the general ledger through false transaction information. Because you alone have to compete with these very crazy people on the entire network, it is difficult for you to succeed, so this is a very clever design. Satoshi Nakamoto here actually makes full use of the weakness of human nature, which is greed. .

Because the process of bookkeeping competition is mining, it uses the miners who want to get bitcoin bonuses, which is the bonus obtained after the bookkeeping is successful, and uses this greedy psychology, and then cleverly transforms this greed into the security of large books. A protective power of sex, so this design is very clever.

What is digital currency? Where did the origin of encrypted digital currency come from?

The third feature is discrete payment. How to realize discrete payment? Or use a large ledger, which can realize peer-to-peer payments. For peer-to-peer payments, Zhang San transfers Li Si to the big ledger. It is nothing more than adding a transaction record to the big ledger. Zhang San transfers to Li Si and this is done. No need to rely on the bank at all, so we will see that the bank originally acts as an intermediary in the entire transfer system, and the large-ledger blockchain plays a role of disintermediation and does not require the participation of banks, so The combination of these three characteristics is the entire Bitcoin system, which is the origin of encrypted digital currency.

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