Why blockchain and bitcoin explanations still confuse most people
Despite countless online analyses, many struggle to grasp blockchain and bitcoin concepts. The fundamental reason? You haven't truly understood them until you've owned cryptocurrency. This technology requires dedicated mental effort to comprehend fully.
Let's examine a highly upvoted Zhihu response about blockchain (with 11.7K votes as of March 8, 2018) and uncover its critical flaws.
The decentralization misconception
The popular answer contains a fundamental logical error regarding decentralized trust. Blockchain's decentralization:
🔹 Cannot solve trust between trading parties
🔹 Doesn't eliminate third-party verification in online transactions
Consider this: If I have 1 BTC and you have a laptop, how does decentralization complete this trade? Who goes first - my bitcoin or your laptop? Strangers inherently lack trust. The answer dangerously conflates:
- Transaction trust (between parties)
- Payment trust (network verification)
Blockchain only solves the latter - ensuring payment legitimacy across the network. When I send you bitcoin:
✅ The network verifies the transfer
✅ The transaction becomes irreversible
✅ I can't falsely claim theft later
How blockchain confirmation works
The network achieves payment verification through:
- Decentralized mining (primarily using GPUs - hence their price correlation with BTC)
- Proof-of-work consensus requiring >50% node approval
- Public ledger recording of all transactions
This explains Bitcoin's painfully slow 10 transactions/second speed and high fees (reference: "Why Bitcoin Fees Are So High" on 8BTC). The bottleneck? Decentralization requires massive computational verification for each transaction.
The ant colony analogy
Imagine 100 equal-status ants in a queen-less colony:
🐜 Each lives in its own node (anthill)
📒 Each maintains an identical ledger
✍️ Transactions require 51+ ant verifications
Transaction Example 1:
Ant YueYue pays Ant Guo 10 cockroach legs
→ Message spreads through neighbor ants
→ 51+ verify YueYue's ledger shows sufficient funds
→ Transaction recorded on public ledger
Transaction Example 2:
Ant Guo tries to repay 100 legs
→ Network verifies he only has 10
→ 51+ ants reject the transaction
Key components in this system:
💰 Bitcoin = Cockroach legs reward (25 BTC/block)
⛏️ Mining = Ants competing to verify transactions
💪 Hashrate = Verification speed competition
🤝 Mining pools = Ant teams combining resources
Technical limitations and realities
All attempts to improve Bitcoin's speed fundamentally contradict its decentralized nature. Reducing verification nodes compromises security - a Catch-22 developers continue wrestling with.
Every transaction remains fully transparent on the public ledger, auditable by anyone - blockchain's greatest strength and privacy weakness.
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FAQs
Why is Bitcoin called "digital gold"?
Like gold, Bitcoin has:
- Limited supply (21 million cap)
- Mining process requiring work
- Value based on scarcity and adoption
Can blockchain be hacked?
While theoretically possible, attacking Bitcoin would require:
- Controlling >50% of global mining power
- Spending billions in electricity costs
- Immediately devaluing your stolen assets
Why do transaction fees vary?
Fees depend on:
- Network congestion
- Transaction size (data)
- Miner prioritization
Are all cryptocurrencies equally decentralized?
No - projects differ significantly in:
- Node distribution
- Governance models
- Development centralization
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Conclusion
Blockchain creates payment trust, not transactional trust. Its decentralized verification provides security at the cost of speed - an unavoidable tradeoff. While Zhihu's popular answer contains partial truths, its trust model oversimplification misleads newcomers.
The author sold 60+ BTC at ~$3,000 - a painful reminder that understanding technology doesn't guarantee investment success. As blockchain evolves, separating technical reality from hype remains crucial for meaningful participation.