Why can’t Bitcoin be counterfeited (Why doesn’t the government regulate Bitcoin)?

Why can’t Bitcoin be counterfeited? Editor’s note: This article is from “Meng-eyes Finance” (ID: Meng-eyes), authorized by Odaily Star Daily for reprint.

Why can’t Bitcoin be counterfeited? In order to maximize its value, people have created a new form of currency – Bitcoin. But in reality, this is not so easy to achieve. Because it can create greater potential returns than any other cryptographic asset. In the past few decades, we have seen many different use cases and purposes. However, these applications have also brought more risks, uncertainties, and fraudulent behavior. Nevertheless, this new type of application is having a huge impact and driving the development of the Bitcoin network.

Although some blockchain protocols use public blockchains similar to Ethereum to solve this problem, some projects have even introduced restrictive technologies to improve the speed of Bitcoin transactions and the scalability of the system. For example, if the price of a token drops below zero and no one is willing to trust the project’s development team, that would be a very dangerous problem, as it would make developers feel insecure or confused. However, for those who hope to earn billions of dollars from decentralized systems, this seems to be a good thing! Since most blockchain projects are built on their own platforms, users cannot get what they want. So in most cases, a standalone product is not the best option, as it can be easily copied, stolen, or simply not successful. Instead, when the Bitcoin price drops, users have a hard time finding the amount of Bitcoin they should buy. This is the reason for this. Assuming the Bitcoin supply is 21 million coins, and a user with over 100 wallets can only get 10 BTC; assuming there are 2 million BTC, it would take $500,000 to get them. In fact, Bitcoin holders have enough capability to build various algorithms, including support for digital signatures, by utilizing smart contracts for complex computations. Therefore, only the wealthiest miners are able to verify the time spent on each block. As you can see in an article titled “What is Mining”. Mining must have economic security and needs to be compatible with the proof-of-work mechanism. According to the PoW mechanism, miners must ensure that they do not lose their computing power or they will be vulnerable to attacks. In addition, as more and more Bitcoin addresses enter the network, mining rewards will decrease.

Every transaction in the Bitcoin network pays miners a certain proportion of fees as transaction fees to maintain the operation of the blockchain. In this way, as long as Bitcoin remains stable and not lost, normal work and lifestyles can continue.

Of course, even if you have established a complete Bitcoin node, you can keep it until all other entities upgrade to the same result. In other words, if you still hold over 1,000 BTC (i.e. 110,000 BTC), you do not need to add additional money to maintain the network.

Why doesn’t the government regulate Bitcoin

According to CCN’s report, the regulation of cryptocurrency by the government has not changed. Bitcoin has been recognized and used by more and more people in the past year or so. After October 4, 2017, the term “virtual currency” became the hottest topic of discussion, but it was not until recently that the media reported that “a celebrity has purchased a digital wallet” and then released a white paper titled “Announcement on Preventing Risks of Token Offering Financing”. Although the official did not explicitly ban ICO and STO transactions, in November 2017, the central bank issued a statement that it would conduct research and development on new payment tools based on blockchain technology – Libra.

In response, the People’s Bank of China, the Central Cyberspace Administration of China, and other departments jointly issued a document stating that since the end of December last year until the end of May this year, the People’s Bank system has started to investigate all domestic platforms related to mining and trading, and will gradually clean and shut down related business activities. Since August 2018, no specific measures to crack down on or regulate Bitcoin have been announced by local governments, but since early September, various provinces and cities have also issued some policies to regulate Bitcoin trading behaviors, including restrictive requirements on the Bitcoin mining industry. At the same time, for some exchanges and project parties, such as Hudi Electric Consumption Park and Shanghai Maritime University, special action funds have been set up for fund management and 3 million yuan (RMB) bonuses have been awarded to eligible customers. Meanwhile, efforts have been made to organize forums and solicit opinions and guidance from the public on relevant issues. But this is just an example: it is estimated that by the end of 2017, more than 20 million users nationwide had invested in virtual assets, accounting for 5% of the total global Bitcoin supply, and most people hold these virtual assets.