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What the heck is Bitcoin and it's Them an effective Choice?

Viewed 91 times23-7-2022 04:04 PM

Bitcoin (BTC) is a new kind of digital currency-with cryptographic keys-that is decentralized to a network of computers employed by users and miners around the globe and is not controlled with a single organization or government. It is the first digital cryptocurrency that has gained the public's attention and is accepted by an increasing number of merchants. Like other currencies, users can utilize the digital currency to get goods and services online along with in certain physical stores that accept it as a form of payment. Currency traders can also trade Bitcoins in Bitcoin exchanges.

There are numerous major differences between Bitcoin and traditional currencies (e.g. U.S. dollar):

  1. Bitcoin does not need a centralized authority or clearing house (e.g. government, central bank, MasterCard or Visa network). The peer-to-peer payment network is managed by users and miners round the world. The currency is anonymously transferred directly between users through the internet without going through a clearing house. Which means transaction fees are much lower.
  2. Bitcoin is established through a procedure called "Bitcoin mining" ;.Miners around the globe use mining software and computers to resolve complex bitcoin algorithms and to approve Bitcoin transactions. They're awarded with transaction fees and new Bitcoins generated from solving Bitcoin algorithms.
  3. There's a restricted number of Bitcoins in circulation. Based on Blockchain, there have been about 12.1 million in circulation by Dec. 20, 2013. The issue to mine Bitcoins (solve algorithms) becomes harder as more Bitcoins are generated, and the maximum amount in circulation is capped at 21 million. The limit will not be reached until approximately the entire year 2140. This makes Bitcoins more valuable as more folks use them.
  4. A public ledger called 'Blockchain' records all Bitcoin transactions and shows each Bitcoin owner's respective holdings. Anyone can access the public ledger to verify transactions. This makes the digital currency more transparent and predictable. More importantly, the transparency prevents fraud and double spending of the same Bitcoins.
  5. The digital currency may be acquired through Bitcoin mining or Bitcoin exchanges.
  6. The digital currency is accepted with a limited number of merchants on the internet and in certain brick-and-mortar retailers.
  7. Bitcoin wallets (similar to PayPal accounts) are useful for storing Bitcoins, private keys and public addresses along with for anonymously transferring Bitcoins between users.

I believe that Bitcoin will gain more acceptance from the public because users can remain anonymous while buying goods and services online, transactions fees are much lower than bank card payment networks; the public ledger is available by anyone, which may be used to avoid fraud; the currency supply is capped at 21 million, and the payment network is operated by users and miners in place of a central authority 코인리딩.

However, I don't think so it is a great investment vehicle because it is incredibly volatile and is not so stable. As an example, the bitcoin price grew from around $14 to a peak of $1,200 USD this year before dropping to $632 per BTC during the time of writing.

Bitcoin surged this year because investors speculated that the currency would gain wider acceptance and so it would upsurge in price. The currency plunged 50% in December because BTC China (China's largest Bitcoin operator) announced so it could no longer accept new deposits due to government regulations. And according to Bloomberg, the Chinese central bank barred financial institutions and payment companies from handling bitcoin transactions.

Bitcoin will likely gain more public acceptance over time, but its price is incredibly volatile and very sensitive to news-such as government regulations and restrictions-that could negatively impact the currency.

Therefore, I don't suggest investors to purchase Bitcoins unless they were purchased at a less than $10 USD per BTC because this could allow for a much bigger margin of safety.

Otherwise, I believe it is far better to purchase stocks that have strong fundamentals, along with great business prospects and management teams since the underlying companies have intrinsic values and tend to be more predictable.

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