Why can Bitcoin be divided (Why Bitcoin)?

Why can Bitcoin be divided? According to cointelegraph news, why can Bitcoin be divided? How is it generated? First of all, when people put a pile of coins on the blockchain, a large amount of transaction fees will be generated. This fee will cause some people to go to mining machines to mine their rewards and then exchange these tokens for fiat currency for payment.

The second is to determine which information is included in each block through a mathematical formula (such as a timestamp), making calculations easier and faster, thereby increasing the demand for this type of digital currency. The last method is to achieve the application of this encryption technology without increasing costs or improving efficiency in the absence of other conditions.

In a sense, Bitcoin and Ethereum are distributed electronic cash systems because they have different algorithms for processing transfers or transfers between different amounts of fiat currency. So we all know that Bitcoin is a “peer-to-peer” network, that is to say, if a person is willing to store all his assets with his private key, his entire network can become a completely digital world! But due to its nature and its characteristics, Bitcoin cannot be called a wallet.

Why Bitcoin

In the world of digital currencies, the emergence of Bitcoin has brought another belief to people. Behind it is an important concept of cryptographic economics – “peer-to-peer (P2P)”. Simply put, the things you want to buy have no value; if you want to use your money to buy things, you can use tokens such as BTC and ETH to pay for goods or services.

When someone asks why a new asset class is needed, they say, “I don’t want to own any hard currency like Bitcoin.” However, this question is not resolved. If you want to create this new asset type, what should you consider? First, what is Bitcoin itself? Second, what functions does Ethereum have to make it the standard protocol for the next generation of cryptocurrencies? Finally, what are the differences in these characteristics? This article will provide a detailed introduction from a technical perspective.

1. Why does Bitcoin rise in price?

As one of the oldest virtual currencies on the blockchain, Bitcoin has been widely used in the financial field since 2008 and has attracted the attention and enthusiasm of global investors due to its unique anonymity. As time goes by, more and more people regard Bitcoin as a medium of exchange. Although many people think that its price will rise, the fact is not the case because they are all to get cheaper transaction fees, making Bitcoin more attractive.

2. How does Bitcoin make money?

1. Bitcoin is mined through the network. Due to the high cost of mining, miners usually have difficulty finding places where resources for mining Bitcoin can be effectively mined.

2. Generate rewards in the form of block rewards. This allows miners to obtain a certain amount of Bitcoin rewards by calculating the size of computational power, and can maintain a certain speed for a long time.

3. Bitcoin relies on an algorithm to automatically allocate transaction fees. Bitcoin currently only supports ERC-20 tokens, which are the smallest units used in the ERC20 standard. For example, users must use USDC or DAI before they can continue to generate blocks. (Note: There is an upper limit for each ERC20 token issuance), and you will only receive the corresponding block rewards when you reach the limit.

4. Bitcoin relies on a mathematical model to determine the return on investment that market participants can provide, that is, it can only produce 10 BTC per minute, and the total amount of Bitcoin mined each time is limited.

5. Establish an incentive system based on cryptographic principles. Bitcoin uses mathematical methods to predict future price trends, including two elements:

1. Hash value.

2. Consensus mechanism.

3. Verification method.

In summary, each node runs its own proof of work algorithm based on the proof of stake, and everyone wants to know whether they have obtained data from a certain data set. If a node loses all data or unspent funds, it will cause the entire system to change its unstable state.