📢 A daily article on the basics of cryptocurrency
Most people know that cryptocurrencies are digital assets, based on blockchain technology, and decentralized. But when it comes to understanding the principles of cryptocurrencies in depth, many people only have a vague understanding. Starting today, we will popularize basic knowledge every day to help everyone better understand and operate these contents, while raising awareness of asset security. Without sufficient understanding, it is difficult to make money beyond cognition. I hope everyone can learn patiently, and we try to avoid using too many technical terms.
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🌐 What is blockchain technology?
Blockchain technology is simply a distributed information technology. You can imagine it as a series of interlocking train carriages. Information materials are packed into each carriage, and in order to improve security, each carriage has its own encryption code and the encryption code of the previous carriage. This ensures that the information materials cannot be modified. In addition, these information materials are public and anyone can access this "system". Therefore, blockchain technology has a wide range of application prospects, from identity authentication, financial systems, media entertainment, to the next generation of the Internet Web3.
💸Cryptocurrency benefits from blockchain technology, forming a public "ledger" to ensure decentralized operating logic.
🤝 What is decentralization?
To better understand decentralization, think of a few examples:
1. No witness situation: Zhang San borrowed 500 yuan from Li Si, but Li Si finally denied it, so Zhang San lost his money. 💸
2. Single witness situation: Zhang San borrowed 500 yuan from Li Si and found Wang Er as a witness. With Wang Er's witness, the funds are theoretically safe. But if Li Si spends 200 yuan to bribe Wang Er and make him deny the loan, then Zhang San's money is still lost. 💼🕵️
3. Decentralized situation: Zhang San borrowed 500 yuan from Li Si, but he made it public to everyone in a circle, and 200 people witnessed it. In this way, even if Li Si is very powerful, he can't bribe 200 people and can only pay back the money obediently. 📢👥👥👥
In this example, you can replace Wang Er's identity with any institution, bank or government. You should understand that the credit of an institution can be tampered with. As long as it is managed by humans, it cannot escape human nature. Even if the institution encounters a major accident, bankruptcy, credit collapse, etc., it may cause losses to your assets. The decentralized system does not rely on the management of any single institution, but is maintained by everyone. Based on cryptography, it ensures that information is not tampered with.
Anyone can access it, but it is impossible to know who is behind these carriages. Their identities will be represented in the form of encrypted addresses, which is also the core of decentralization, the so-called "digital wallet". 💳🔒
You can understand that cryptocurrency is inherently an asset that is resistant to regulation, government, and any other centralized institutions.
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I hope this helps you better understand cryptocurrency and blockchain technology! If you have any questions or want to learn more, please leave a comment in the comments.
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