Click here to get this post in PDF
The term bitcoin appeared more than a decade ago and has been strengthening its positions over years. In fact, bitcoin is the most popular cryptocurrency, however, there are also other types of cryptocurrencies these days. If you are enthusiastic about cryptocurrency, bitcoins, and the crypto market, read this article to discover interesting facts that you have not probably heard about yet.
What is the use of bitcoin?
Getting back to early times reveals the barter approach that was common for those who wanted to buy or sell goods. It was used to exchange one type of goods for another, considering their approximate value. As the monetary relationships were being constantly transformed, barter was substituted by cash nexus, which was a real revolution in the sphere. That way we can now use paper money or coins to buy goods and services.
The introduction of the bitcoin concept was also revolutionary as it presented a totally new form of financial assets. Even though credit cards and the possibility to make payments in seconds have made our lives easier, there are still plenty of stumbling blocks when there is a need to make international transactions in particular. Luckily, the use of cryptocurrency can facilitate this kind of operation so that you can transfer bitcoins abroad in seconds at extremely low fees.
Even though cryptocurrency was not widely used for buying goods in the past, now it is common to exchange cryptocurrency for other types of assets on the stock exchange. Furthermore, the crypto market capital has recently exceeded the value of Microsoft and is very close to Apple. Such things happen as the value of the cryptocurrency has a tendency to grow over time. More details on why this happens will be provided in the next chapters of this article.
What is the difference between cryptocurrency and fiat money?
The emission of fiat money or so-called traditional currency is fully controlled by the governments. The value of the traditional currency has a direct dependence on the authority of the corresponding country, its political and economic situation.
In the 21st century, there is also digital money, which certainly has analogs to fiat money of the same currency, that is used primarily for making electronic payments. All the information about transactions made on the web using electronic money is saved on the bank servers.
Cryptocurrency is digital money that is not controlled by the government or banks, which makes it easier to make any transactions. The information about transactions using cryptocurrency is saved in a blockchain. Owing to the high-security levels of the blockchain, transactions could not be changed, transformed, or canceled.
How Bitcoins Are Generated And Why Are They So Valuable?
To start gaining bitcoins, one has to join the eponymous system network that is also called Bitcoin. This network is completely decentralized as it comprises computers from different parts of the world.
So, how to gain at least one bitcoin after having joined the system? The answer is simple, your computer has to resolve a mathematical task of high complexity, which might take a lot of computational and electrical resources. The computer that has completed that mathematical task first sends it to the system over the blockchain, while other nodes of the system perform the same computations to confirm the solution is correct. If the task was solved right, then the computer that provided the correct answer first gains a bitcoin.
It might really seem exciting as you solve tasks and gain remuneration for that, however, everything is not that simple as you might imagine. The founder of the Bitcoin system has established the limit of 21 million bitcoins that could be generated. That is why, it becomes harder to generate bitcoin and its value tends to rise, so this financial asset is actively being traded on the specialized stock markets.
What is a crypto stock exchange?
Some time ago, the cryptocurrency existed exclusively in its own dedicated space, so it was practically impossible to exchange it for traditional currency. Now things are changing, however, some governments do not recognize this new form of currency. That is why there are no traditional exchange points where you can sell cryptocurrency and get the monetary equivalent in dollars.
Luckily, there is a crypto market that makes it easier to perform any kind of such operation. The crypto stock exchange is the place that brings together people who want to sell and buy cryptocurrency. This platform allows for trading and exchanging one digital currency for another or for traditional currency such as euro, dollar, or ruble. The most popular crypto stock exchange platforms are Poloniex, Exmo, LiveCoin, and Kraken.
To perform any operations on the crypto market, you should be aware of the current trends in the cryptocurrency market with CoinCap. This application allows for monitoring the real-time cryptocurrency value on the crypto stock exchange. It also provides lots of other useful information for crypto enthusiasts to help them make profitable deals.
What is the cryptocurrency value dependent on?
Bitcoin is a high-volatile asset, so its value changes rapidly and depends on a myriad of factors. Let’s go back to 2010 when 10,000 bitcoins were worth only one pizza. Three years later one bitcoin was equal to around $100 already and continued to show stable growth.
The value of bitcoin is increasing as the maximum possible number of items to be issued was predisposed long ago. This could be compared to the collection that has a restricted number of rare items.
As for any type of asset, the ratio between demand and supply influences its value. When there was a deficiency of masks during the start of the pandemic, their prices skyrocketed. The same happens with cryptocurrency, when many people are willing to buy it, its price equivalent is rising.
Even though bitcoin is a kind of isolated system, the value of cryptocurrency is also highly dependent on the political and economic events in the world. For instance, when investors decide to put up money in cryptocurrency rather than in traditional shares, the value of the former increases. Meanwhile, when governments decide to not support cryptocurrency, its value drops down significantly, influencing all other cryptocurrencies.
You may also like: Bitcoin Price – A Look at Crypto Price Determinants
Image source: Shutterstock.com