Cryptocurrency (Bitcoin) Introduction
1. Basic Concepts
- Cryptocurrency is a digital currency that uses encryption technology for transactions and controlling the creation of new units. The most famous one is Bitcoin.
- Bitcoin is a decentralized digital currency that uses a peer-to-peer network for transactions, recorded in a public distributed ledger called blockchain.
2. Blockchain Technology
- Blockchain is a distributed database that records all Bitcoin transactions. It ensures transaction security and immutability through encryption technology.
- Blockchain Consensus includes machine consensus (algorithm rules), governance consensus (rules formulated or modified by humans), and market consensus (equilibrium price formed by market transactions).
3. Trustless
- Trustless means that within the blockchain, transaction parties do not need to trust each other or any third-party institution, and transaction confirmation and state changes occur synchronously.
4. Applications and Regulation
- Cryptocurrency has various applications globally but has also raised regulatory issues. For example, China has completely banned virtual currency trading, believing it may lead to financial risks and illegal activities.
- 5. Taxation
- In terms of taxation, different countries have different regulations on cryptocurrency transactions. For example, the Internal Revenue Service (IRS) in the United States requires taxation reporting for cryptocurrency transactions.
In conclusion, cryptocurrency is a digital currency based on blockchain technology, characterized by decentralization and trustlessness, but also facing regulatory and taxation challenges.
