Bitcoin basics (part 2) - read in the blog of the company COREDO

Bitcoin basics (part 2)

06.11.2020

Bitcoin protocol is being updated all the time, which can be important to know while planning to obtain a cryptocurrency exchange license. The basic stipulation of Bitcoin protocol is that individual users stay online only if they follow identical rules. If someone attempts to modify the rules unilaterally, they can resultingly get expelled from using the system.

If the rules change, the contract needs to be changed as well. However, it requires approval from other users. Therefore, a controversial thing would probably never be endorsed by all the users since it would take hundreds of millions of them to agree.

Coding errors

In 2018 one accident happened with bitcoins: hackers used a coding error to disable bitcoin apps remotely and afterwards reused bitcoins several times. Although the bug fixture was managed right away, this case “inspired” other users to look for a similar flaw and damage the system again. Another question to speculate about was whether Bitcoin was resilient to inflation and to what level.

Importantly, the rules for Bitcoin are not made by the software but by the users. Consequently, launching an ICO and trying to change the rules later would mean creating a dead cryptocurrency that other users will reject.

How to fix a potential vulnerability then? A blockchain pattern can be rearranged which would lead to the elimination of damage caused by hackers. This operation would help by dividing a bitcoin network into two separate ones. Each of them will have its own set of tokens (with errors and without). Even though the number of tokens that every Bitcoin user owns will be the same, it is the value that would only depend on the amount of money other users intend to use for expenditure.

A crucial concept to understand before applying for a cryptocurrency license is that bitcoin tokens do not have any value themselves. Only other users in the network have the prerogative to define the value of tokens.

After the automatization and synchronization of rules, the Bitcoin software stops syncing for a certain time. The software then uses a social contract as a reference point anytime needed.

If you want to engage in legal activities and preserve the safety and security of your business, you should obtain a cryptocurrency exchange license or register a company for ICO. COREDO specialists will be happy to assist you in this procedure.

Forks and bitcoins

Forks are basically a modification or change of Bitcoin’s programming code that technically can be done by anyone. Yet such changes are required to pass on the protocol level. Overall, the change needs to be approved at the social level. Otherwise, it is to be expulsed quickly.

Entrepreneurs who get a license for cryptocurrency activities and want to keep their network alive are destined to persuade other users how many benefits their activities would generate.  Essentially, a consensus is reached by many users and then tokens receive their value. It is necessary to remember, that forming a protocol cannot be compared to creating a new contract.

Conclusion

Bitcoin is not a new concept but rather a new interpretation of an old contract. It has a distinctive feature in comparison with previous attempts. The safety of the new concept is guaranteed by the marketplace that develops an extremely competitive environment.

Given the popularity of Bitcoin today, we did our best to prepare this overview and hope it was useful. In case your questions were not completely answered, and you wish to make the process of company registration for ICO clearer, contact us and we will be glad to help you. COREDO experts are monitoring all the changes and keeping up with the industry.

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