Bitcoin and Blockchain Basics: An Introduction to Cryptocurrency and Its Underlying Technology (English)

Key Chapter Title List

1. Introduction: Some Definitions
2. Money
3. Digital Currency
4. Cryptography
5. Cryptocurrency
6. Digital Tokens
7. Blockchain Technology
8. Initial Coin Offerings
9. Investment
10. Conclusion

Document Introduction

This report is an authoritative introductory work that systematically explains the core concepts of Bitcoin, blockchain, and cryptocurrency. From an interdisciplinary perspective, the author, Antony Lewis, aims to provide readers without specific professional backgrounds with a clear and accurate foundational knowledge framework. The report emphasizes the inherent complexity of this field, whose understanding requires the integration of multidisciplinary knowledge including economics, law, computer science, finance, history, and geopolitics, and acknowledges the challenge of maintaining absolute precision in a rapidly changing environment. The book strives to maintain a neutral stance, neither exaggerating the technological potential nor overly criticizing it, guiding readers to form independent judgments based on facts.

The report begins by exploring the nature of money and its historical evolution, delving into the threefold functions of money as a medium of exchange, a store of value, and a unit of account, and uses this framework to examine the performance of cryptocurrencies like Bitcoin. By reviewing the long history from barter, commodity money, representative money to fiat currency, the report reveals the universal patterns of continuous evolution in monetary forms and the recurring phenomena of devaluation and reform. On this basis, the report critically assesses Bitcoin's suitability as money, pointing out its limited acceptance as a medium of exchange, high volatility as a store of value, and obvious shortcomings as a unit of account, while also acknowledging its revolutionary innovation in enabling value transfer without specific intermediaries.

Subsequently, the report shifts to an in-depth analysis of the existing digital payment systems, deconstructing the actual operational mechanisms of interbank payments, cross-border settlements, and currency exchange, including core concepts such as peer-to-peer transfers, correspondent banking accounts, and central bank real-time gross settlement systems. This section reveals the reality of the traditional financial system being highly centralized, hierarchical, and experiencing financial exclusion in certain regions, providing crucial context for understanding the "double-spending" problem Bitcoin attempts to solve and its peer-to-peer, permissionless transaction model.

On the technical level, the report dedicates significant space to introducing the fundamentals of cryptography, including encryption/decryption, hash functions, and digital signatures, which are the cornerstones for understanding the security mechanisms of cryptocurrencies. Afterwards, the core section of the report provides an in-depth explanation of Bitcoin's operational mechanisms, offering a step-by-step systematic exposition from its design goals and the essence of its whitepaper, to its account system, transaction structure, Proof-of-Work consensus, mining incentives, blockchain linking, the longest chain rule, and strategies to prevent double-spending attacks. Simultaneously, the report objectively points out the practical decentralization limitations of the Bitcoin network in areas such as node software concentration, mining hash power centralization, and protocol upgrade processes.

Finally, the report outlines different types of blockchain technology and their potential application scenarios, briefly introduces the classification of digital tokens and the process of Initial Coin Offerings, and highlights various risks associated with cryptocurrency investment. The book concludes with open-ended reflections on the future forms of money, emphasizing that cryptocurrencies like Bitcoin, as a supplement to the existing monetary system or a new asset class, will have their ultimate positioning determined by practical utility and market acceptance. This report provides an indispensable foundational knowledge framework and critical analytical perspective for scholars, policymakers, investors, and enthusiasts who wish to move beyond superficial hype and gain a deep understanding of the essence of cryptocurrency and blockchain technology.