How does the Bitcoin system work?

I have been paying attention to Bitcoin since 2011, contributed code to altcoins, the author of yacoin-p2pool, basically studied all Bitcoin contracts, wrote trading websites, followed silkroad for a long time, and witnessed almost half of Bitcoin’s transactions. history. As Yuri said at the beginning of "Lord of War", "I'm just gonna tell you what happened." This article will use a lot of dry goods to describe what happened. The principle of Bitcoin begins to introduce the principle of Bitcoin in concise words: 1.First of all, you need to know the concept of private key and public key (you don’t need to read this part if you already understand it) Public key and public key are branches of modern cryptography The nouns in asymmetric encryption usually use the private key to encrypt information, and use the public key to reveal the information. Why is this? Because when you watch TV dramas, all telegrams are encrypted with symmetric encryption. The shortcomings of this encryption method are obvious. If someone knows the secret key and encryption method, then the secret can be revealed according to the reverse of the encryption method. It was not until asymmetric encryption that the situation changed. The public key is the secret key that can be disclosed to the whole world. For example, if you communicate with Google, encrypt it with the 1024-bit public key given by Google, and send it to Google where only he has the corresponding Only he can reveal the secret, so the security of communication is ensured2.Bitcoin mainly uses ECDSA, which is the elliptic curve signature algorithm. This algorithm has two characteristics. Note that these two points are very important for the following a. As long as you know the public key, you can calculate the corresponding private key; b. If you signed something with the public key, you can use the private key to calculate whether you signed it; 3.The knowledge plan is over, let’s start talking about bits Bitcoin transactions, although Bitcoin has no wallet, only transaction bills, the entire Bitcoin is a lot of transaction bills such as: bill 1 transferred from A to B transferred XXX Bitcoin bill 2 transferred from B back to C and D Transferred XXX Bitcoin Bill 3 Transferred from C to E Transferred XXX Bitcoin.

. . . Anyone who downloads the client can receive all the bills from the three days since the creation of Bitcoin, so as long as all the bills are downloaded, they will naturally know how much money should be left in each account (think carefully here). )4.Bitcoin account is the private key I just talked about5. Now I start to post a bitcoin bill, here is the core part! ! ! Each bill is a piece of data. After you sign it, it will be sent to the entire network. The data structure will be reversed into an easy-to-understand English explanation as follows: FROM (who sent it, including two parts) Previous tx: This is what you want to spend The id of the bill of the money, that is to say, any money you spend should be transferred to you, you need to show the idscriptSig of the bill: Your signature for this transaction is to use the bill Hash your public key, only you can do this hashTO (who accepts, including two parts) Value: how many scriptPubKey: the other party's private key, the bitcoin account is a private key 6. Waiting for you to sign After the order is placed, it starts to be sent to the whole network. How to send it? Bitcoin communication is not so complicated. You can compare it to an IRC channel, but unlike ordinary "IRC", any client is an "IRC" server. When you start the client, it will receive surrounding The client address that has a public IP is the "server" list. This list is constantly refreshed, and they are all other Bitcoin users. So when you shout a word in this "IRC", people around you will see it. to, and then spread all over the world.

7.After sending the signature to the world, all clients who receive the order will check whether your order is correct, such as checking your signature, whether it was sent by you, and checking whether you have that much money (It can be inferred how much money you have to spend based on historical transactions.) If you have calculated this transaction, basically even if the remittance is successful. 8.In fact, the other party has already accepted Bitcoin, but if he wants to spend it, he must have the public key corresponding to which address (public key). So he can fill in the FROM back of a list. Previous tx is the serial number of the transaction just now, and scriptSig fills in the hash signed by his public key. . . After mining, I will explain the mining part. I am trying my best to simplify the whole process to make it easier for you to understand, so I have specially removed mining and double-spending problems (counterfeiting currency, spending the same money twice). After reading the explanation, there will be doubts. Since it is all transaction records, where did the original money come from? There must be the original part of the money in the transaction. That money is what comes from mining and will get a transaction record after mining. However, FROM is too special, and the whole system also recognizes this FROM. In addition, the bill is to If the bill is attached to the block, after the bill is sent to the entire network, the entire network needs to estimate whether it is correct or not. Did you just say that the entire network is counted as one block? Bitcoin stipulates that the first calculation is rewarded, which is the mining income , now the reward amount is 25 bitcoins, then. . . . .

I only use one pc to be considered weak, so I have a mining machine. The function of mining is to calculate whether the bitcoin transaction is correct. The mining machine is to launder money faster than others. Talk about bitcoin more. If people are not really experienced, they will not be able to explain the problem of money laundering, and this problem is related to the essence of Bitcoin. Why can Bitcoin launder money? This is also determined by the characteristics of Bitcoin. In it, I explained the bill of Bitcoin, which is only one in (FROM) and one out (TO). In fact, the contract of Bitcoin allows an infinite number of In, countless outs, as long as the FROM expenditure is equal to the TO expenditure, in order for you to understand more vividly, I specially found a transaction with multiple FROM and multiple TO from the actual Bitcoin transaction records. The screenshot is as follows, The link is here... After ef968 understands this, let's take a look at such a transaction: If a person A engaged in drug dealing wants buyer B to pay, he can make such a transaction, there are countless innocent people on the left, Just one cocaine seller, countless innocent people on the right, just one buyer. When the FBI knows the account of the cocaine buyer, to find the source, it needs to trace the source of countless innocent people, one by one to check whether he is the seller or not. In fact, these transactions upstairs can be repeated hundreds of times, so I finally want to trace it back. The source of money has become too difficult, because it may involve tens of thousands or hundreds of thousands of people, and these people may be branched out in various countries around the world...... Then some people will wonder, you are only in This is empty talk, is there any website that actually provides money laundering services? Have! And it is so famous that it is one of the wallet services provided by this website - shared address (as the name implies, shared address, public address, let Bitcoin go around the public address, mix black and white) Specifically, you can See the description on his website: Send Shared - Blockchain.info Chinese report: Blockchain launched Shared Coin coin laundering service. Up to now, the accumulated remittance amount has exceeded 40 billion US dollars. As for how much is black and how much is white Yes, I can't tell the difference. In a sense, people who invest in Bitcoin hype Bitcoin are the "white", innocent people whose money is related to cocaine, arms, and terrorists. The money is mixed together and then comes down, although they are a part of it.

For more information on money laundering, see this Bitcoin (bitcoin) summary. The author is also me, and there is a PDF of the FBI about bitcoin money laundering. It also gives a typical example - the drug trading website Silk Road (which was shut down by the FBI two days ago), and how this website is anonymous. . Gambling casinos are the second pillar of Bitcoin, mainly because of a website, SatoshiDICE translated into English called "Nakamoto Dice", this website is similar to sports lottery, but unlike the previous sports lottery, he uses bitcoin The blockchain of Coin has developed an algorithm, which makes it difficult for the betting site to cheat on his website. The algorithm ensures fairness, and there will be no such thing as the insider of the two-color ball, so it is welcomed by gamblers, and he Only pay transaction commission. Data for June showed that the site accounted for 51% of all Bitcoin transactions. Gambling website SatoshiDice: It accounted for 51% of all bitcoin transactions in June 2013. Summary Due to the support of money laundering and casinos, which are two "rigid needs", bitcoin will be difficult to escape for a while, or the secondary market is It collapses and then pulls up, because there are blue-chip stocks on it. They are interest groups, which will make Bitcoin still active, and Bitcoin will be able to do more. The control is like a duck to water. You can always play. And the people who really use Bitcoin to launder money simply exchange the money to the Bitcoin dark box and then exchange it immediately after washing it. The whole process should not take more than a few minutes.

The role of the Chinese in it is the first type of people, who make and sell mining machines. Basically, all the mining machines in the world, whether they are foreign or Chinese brands, are all made in China. For example, the well-known butterfly mining machine (BFL) is produced in China, not to mention Dr. Pumpkin Zhang, and Huaqiangbei makes mobile phones. There was a period of time when the copycat machines did not make any profit, and the mobile phone industry was in short supply, so many mobile phone manufacturers changed their boards to mining. The second category of people, miners. One of the largest mining groups in the world is in China. The computing volume of mining machines in China accounts for a large part of the world. Chinese people have unique conditions for mining - public appliances, and some people use the cluster mining of units. The third type of people are those who do trading websites. Represented by Yang Linke, the owner of Bitcoin China-China Bitcoin website (Bitcoin China), so far, the transaction volume of btcchina has already ranked first in the world, and the three major exchanges in China and a futures trader, 796 Xchange, have already monopolized the world's Bitcoin For transactions, the total daily transaction volume is about 1 billion to 1.5 billion. A-share ICBC only has a transaction volume of 1-200 million yuan in three days. The fourth type of person is the bookmaker. The recent decline in bitcoin led by China is their work. These people are from the US stock market. They are called daily limit death squads in the US stock market. Such a group of crazy people have entered an unregulated market. The consequences can be imagined It is known that there is news that Delong’s former department is involved in Bitcoin: Chinese local tyrants are the fifth type of people with the biggest hot money, hackers. The representative of them is this website. At the beginning of November, this website began to transfer personal information by the number of pieces. Basically, you can enter your commonly used id, and you can immediately seize the ID card and even Alipay account information. This website uses Bitcoin to pay, but the website is open. Two days later, the stationmaster may be scared out of his mind and close the door.

Word of mouth is unfounded. For details, see: How did the data in the website "Social Work Library" come from? 90% of Bitcoin traders in China are hackers? There are a lot of dry goods and screenshots. The sixth type of people, long-term investors in Bitcoin, represented by Li Xiaolai and Shenxi, they see a lot all the year round, but they do not trade very much. They enter the market very early, and they basically make a fortune. The seventh type of people, bitcoin Short-term speculators, the performance is to open positions and sell on major trading websites every night. I have communicated with these people on the btc-e trading channel for a period of time, but I still cannot understand why some people choose such a risky market. The problem of future collapse Bitcoin has many things related to blue, and this white thing is often not completely eliminated due to the inherent darkness of human nature, so Bitcoin will exist all year round. For example, being a banker will rely on this year-round profit. Their trick is nothing more than increasing the distribution and making high leverage at the same time. When Bitcoin falls, they make money and they make money, and they fall out to collect chips for another round. If you go to the U.S. stock market for manipulating the stock price, you will be caught, and you will feel like a duck to water here), and the long-term rise will attract the attention of various media, so more people will enter the market. Bitcoin China trading platform does not know that Bitcoin is manipulated? Doesn't MTGOX, the largest foreign trading platform, know that Bitcoin is being manipulated? Will the trader in it just quit obediently and stop interfering? Will some of the paid media stop reporting? Will China's crazy speculators become sane in the foreseeable future? These problems can only be haha, it is strange that the regulatory authorities do not act.

暴涨暴跌的问题 比特币的波动问题，有几个原因： 用户减少了。比如最近以来，一个很小很特别的小圈子里的东西突然爆发到几十亿人。任何花了这么多媒体资源曝光的东西，本身就给比特币带来了很多钱。媒体带来的新人大多是投机者。投机者的特点是低估了比特币的升值潜力。如果比特币的真实用户（比如上文提到的黑市）平均每年下降 100%，投机客络绎不绝请简述比特币系统的运行过程，就有可能透支未来几年比特币下滑的前景，把它吹成一个 10,000% 的泡沫，这就是格林斯潘所说的泡沫。在股市中，这被称为早期消化负面，这意味着当前的比特币价格已经考虑到了一段时间后的升值潜力。例如，购买汽车的抵押贷款透支了未来 20 年的工资。工资稍微中断会怎样？博彩公司。这种常年的存在，谁都知道是有村子的，尤其是这波没落的时候，都离不开村子。政府新政策的影响，尤其是中国，因为中国的比特币交易量占全球的比重很大，所以中国政府的新政策自然会对比特币产生重大影响。我经历过的比特币历史上从 5 美元涨到 30 美元，然后涨到 2 美元左右，然后涨到 90 美元，然后又涨了请简述比特币系统的运行过程，

The subsequent rise is the result of the media taking the opportunity to exaggerate, the influx of newcomers, and the operation of the bookmakers. Therefore, it is not that Bitcoin has not been stable. In a stable state, the time for money launderers to exchange in and then exchange it should be too short, and the impact of price fluctuations is not very large. The premise of Bitcoin’s stability is: the plate is big enough that no banker or any exchange can monopolize the transaction. One banker increases the position, and the other big investor may hold the exact opposite opinion. When the plate is big enough, it will fluctuate. 1%, in fact, has a great impact (such as gold, foreign exchange, stocks, futures), the fluctuation of 1% larger plate and 30% smaller plate for three days are a taste; the media will not make such a fuss as recently, Bitcoin users tend to be stable , the daily transaction volume is also maintained at a relatively fixed scale, rather than dropping exponentially as it is today. In order to regain a steady state, it is currently impossible in the short term: only in 2011, the three-day transaction volume of Bitcoin in China was 1w RMB, last year it was 3000w in three days, and three days last year to four 500 million, it is not clear how much the transaction volume will be next year, and it is impossible to predict how big the dish will be next year; there are still many people who hold a large amount of Bitcoin. It can be said that there is serious wealth inequality on Bitcoin. people. But then again, once they throw out their chips, although they make money on the one hand, they also lose control on the other hand. If they want to continue to hype, they can only go to the market to buy chips by themselves, and there are quilts. Risk; Bitcoin has impacted the national order and will inevitably be suppressed. Before it matures, it is estimated that the biggest risk comes from governments of various countries, and the strategies adopted by the governments are much better. They can strictly prohibit transactions, can use a large amount of estimated resources to attack, and can qiang Dropping the Bitcoin contract can allow the national team to enter the field to control, and facing a country, Bitcoin is still too weak.

The problem of deflation is that it is difficult to prevent more speculators from US stocks from entering the market. In addition, the total number of bitcoins is limited and has long-term stagflation. Therefore, from the time scale of "year", bitcoin will fall. is a huge fluctuation. As for whether to invest? This depends on personal preference. Some people don’t like risk, so Yu’ebao’s treasury bond repurchase starts. Some people really have nowhere to invest their spare money. When the market is bleak (like stocks, when the streets are talking, when everyone thinks it will not rise, when everyone wants to buy, it is often the last madness). Possible hidden property issue Because of the well-known property issue of senior officials in China, Bitcoin may become a tool for hiding property. At present and there is no precedent for this, we will wait and see. Why do I have this concern? Because there is a brain wallet, you can search for this keyword yourself, or you can read Bitcoin Teaching: How Much Do You Know About the Brain Wallet Password? Simply put, the brain wallet has the following characteristics: as long as you remember a unique character String (a poem + your id, your favorite sentence + phone number, whatever you want to write), or know a special file (such as the last file of the Windows installation disk), according to this string or a specific The hash value of the file can generate a bitcoin wallet (a pair of private key and public key), which only you know and only you can use. Therefore, for these people who escaped with money, they no longer have to be afraid that the money will be stolen in the house, buried in the ground and dug up, smuggled with gold and extorted by the remnants, and the bricks and stones are not easy to exchange, all just need to remember one sentence If you want to go to any corner of the world to exchange it and spend it, don't you think it's scary? The problem of being used by extremist forces In the end, the biggest doubt of Bitcoin is whether it will become a source of funds for terrorists. Once this thing is used by some extremist forces in Shanxi, the consequences will be unimaginable, so the country should track this thing all the year round and formulate a supervision plan as soon as possible. Otherwise, in addition to It will cause an impact on the financial order, and I am afraid it will lead to political problems. appendix