After Bitcoin, there have been thousands of digital virtual currencies around the world, and many of them are alt coins dressed as “digital currencies” . But the head of the fire exchange coins, the coins, currency and other security platform, currency trading ranks, always the Bitcoin lead, Ethernet Square, Wright currency and other major currencies followed .
Bitcoin was born in 2009, 2017 and the transaction price was up more than 10,000 usd. A widely-traded currency that can rise to such a high price must have its reasons. Bitcoin is so popular because it is considered a kind of “digital gold.” Why is gold worth? There are two reasons:
1.Gold is a generally recognized equivalent, that is, recognized currency in circulation. Currency itself has no value, and its value comes from the unified recognition of the public.
2.The amount of gold is limited, and at most it will not exceed the total reserves on the earth. If there is too much money, it will cause hyperinflation, and the value of money will drop sharply. Once the value of the currency is lower than the preservation cost, the currency will be completely invalidated.
Bitcoin is the first digital currency, and many people recognize the value of its transactions. The number of bitcoins is controlled to no more than 21 million. The specific approach is 10.5 million bitcoins are generated in the first 4 years (50 per 10 minutes), 5.25 million bitcoins are generated in the second 4 years, and then reduced by half every 4 years. According to the sum of the infinite geometric sequence, the total number of bitcoins is: 1050/(1–1/2)=21 million.
The design principle of Bitcoin is based on gold. Bitcoin is known as “digital gold”. Although Bitcoin can be described as “digital gold”, it is quite different from real gold because there are other digital currencies.
Other digital currencies
Before the great voyage, people were blocked by the vast ocean. However, regardless of Europe, the Americas, Asia, the non- Africa, or what religion, what culture, are choosing gold as money. How did gold defeat other metals and become recognized currency in different places? In layman’s terms, this is the elimination method, and other things do not meet the requirements, leaving gold in the end.
Although there seem to be a variety of ever-changing substances on the earth, these substances are ultimately composed of 118 elements.Among these 118 elements, the gaseous state cannot be used as currency because it is difficult to store and carry. Solid-state elements, in addition to the gold and silver and other elements can not meet the demand as the currency , in which the rare gold than silver, so the more precious. To put it bluntly, the other elements did not compete with gold and silver at all .
And other “digital gold” similar to Bitcoin can be created infinitely. Therefore, Bitcoin cannot really be regarded as gold. Although the newly created digital currency can have an impact on the value of Bitcoin , the newly created currency will be even less valuable. The newly created coins have no first-mover advantage and are not as popular as Bitcoin in terms of public recognition. Only a few people are willing to take it as a trade general equivalent, then its value will be very low.
Block chain produced
If someone transfers you a bitcoin, who will add this bitcoin to your account ? The answer is that everyone adds this bitcoin to your account in the ledger.
In the Bitcoin network, everyone has a ledger that contains all account information and transaction information. This method of accounting is called distributed accounting (. If the information in someone’s ledger is too old, you have to copy the new information from someone else’s ledger.
Bitcoin generates a block every 10 minutes, this block records a lot of transaction information, and then everyone compares the transaction information in the block, confirms the correct transaction, and rejects the wrong transaction . If a transaction is confirmed by more than 51% of people, then the transaction is considered established.
A steady stream of blocks every 10 minutes form a blockchain. With each block, the algorithm will generate a certain amount of Bitcoin. Now produces 25 Bitcoins every 10 minutes, four years will be halved again , the newly generated bitcoins will be divided assigned to people involved in accounting. Earning bitcoins by participating in accounting is called mining.
Blockchain digital currency must contain 3 core mechanisms: distributed accounting, blockchain, and each block generates a certain amount of digital currency. Without any one, it is not true digital gold.
What is Ethereum
As mentioned earlier, the value of newly created digital gold is difficult to rise. I want to create a bit currency as digital currency in the early mining to get more and more money, and then wait for appreciation, for now has been very difficult. The barrier of “mining” must be broken .
Then only keep distributed ledgers and blockchains. Coins are not generated by mining, but are allocated once when the system is created. For example, 1 billion coins are generated when the system is created, part of which is reserved for the founding team, and part is sold to investors. Of course, in order for investors to be willing to pay for this kind of coin created , there must be actual business and let the actual business support the value of the coin.
In 2014, Ethereum sold 60,108,506 Ethereum using this model, accounting for 83.47% of the initial allocation. 11,901,484 Ether was reserved for himself, accounting for 16.53% of the initial distribution .
Ethereum is an underlying technology platform on which developers can create distributed applications. With a transaction, currency is needed to complete the transaction. In this way, the currency will be valuable and investors will have a return on their investment. With the increasing transaction volume on the platform, the demand for currency will increase, and the currency will become more valuable.