Bitcoin: The Most Trusted Cryptocurrency: Here’s Why

by

The Bitcoin (BTCUSD) mostly in digital currency and as an alternative to paper money controlled by a central bank. However, the latter is valuable because it is issued by a monetary authority and is widely used in economics. network is decentralization Cryptocurrencies are not widely used in retail transactions.

It can be said that the value is similar to that of precious metals. both in limited quantity and they have Selected use cases. Precious metals such as gold are used in industrial applications, while basic technology is used blockchainIt has some applications in the financial services sectors. The digital source of this coin means that it may one day act as a medium for Retail Transactions.

Cryptocurrency value

Any discussion about the value of Bitcoin has to face The nature of the currency. Gold was useful as a currency due to its inherent physical attributes, but it was also huge. Fiat money was an improvement, but it requires production and storage and lacks the movement of digital currencies. The digital development of money has moved away from physical features and towards more features functional.

Why choose Bitcoin?

Bitcoin is not supported Government authoritiesas evidenced by Biden’s organizational approach on this issue, and has no system intermediary banks to spread its use. A decentralized network consisting of independent nodes Responsible for approving consensus-based transactions in the Bitcoin network. There is no legal authority in the form of government or otherwise monetary power To act as a counterparty to the risk and to make the lenders complete, so to speak, in the event of an error in the transaction.

However, cryptocurrency exhibits some features of the currency system Fiat. from rare and It can’t be fake. The only way you can generate fake Bitcoin is to run what is known as double spending. This refers to a situation in which a user “spends” or transfers the same bitcoin in two or more separate settings, effectively creating a duplicate record.

However, what makes double spending unlikely is the size of the Bitcoin network. A so-called 51% attack would be required, in which a group of Miners It theoretically controls more than half of the entire network’s power. By controlling most of the power of the entire network, this group can dominate the rest of the network for Forgery recordings. However, such an attack on Bitcoin would require a huge amount of effort, money and computing power, making the possibility extremely remote.

But Bitcoin does not exceed utility test Because people rarely use it in retail transactions. The main source of the value of this particular digital currency is its own loss. The argument for the value of bitcoin is similar to the value of gold, a commodity that shares characteristics with cryptocurrency. The cryptocurrency is limited to 21 million.

The value of bitcoin is a function of this scarcity. As the supply decreases, the demand for cryptocurrencies increases. Investors demand a portion of the ever-increasing profit pie that results from trading the limited supply.

Bitcoin’s usefulness is as limited as gold, and its applications are mainly industrial.

Bitcoin: the pros and cons

The underlying technology, called blockchain, is being tested and used payment system. One of the most effective use cases is to increase cross-border conversions Speed and reduce costs. Some countries, such as El SalvadorThey are betting that Bitcoin technology will develop enough to become a medium for daily transactions. Some signs in this sense come from the new trend that is taking hold in the world: encryption.
Another theory is that the digital currency has an intrinsic value based on the marginal cost of producing Bitcoin. The Mining It involves a large amount of electricity and this imposes a real cost on the miners. According to economic theory, in a competitive market between producers who all make the same product, the selling price of that product will tend to the marginal cost of production. Empirical evidence has shown that the price of bitcoin tends to follow the cost of production.

Bitcoin is so much more divisible of paper currency. Bitcoin can be divided into up to eight decimal places, with its component units called satoshis. Most fiat currencies can only be divided into two decimal places for daily use.

If the price of Bitcoin continues to rise over time, users who hold a small portion of Bitcoin will still be able to transact with the cryptocurrency. Develop secondary channels such as lightning network, It can increase the value of the Bitcoin economy.

Leave a Comment