What is the difference between central bank authorized currency and Bitcoin? The bearer of central bank authorized currency can merely tender it for exchange of goods and services. The holder of Bitcoins cannot tender it because it’s a virtual currency not authorized by way of a central bank. However, 코인커뮤니티 may be able to transfer Bitcoins to another account of a Bitcoin member in exchange of goods and services and also central bank authorized currencies.
Inflation will bring down the real value of bank currency. Short term fluctuation in demand and offer of bank currency in money markets effects change in borrowing cost. However, the facial skin value remains the same. In the event of Bitcoin, its face value and real value both changes. We have recently witnessed the split of Bitcoin. That is something like split of share in the currency markets. Companies sometimes split a stock into two or five or ten dependant on the market value. This can increase the level of transactions. Therefore, while the intrinsic value of a currency decreases over a period of time, the intrinsic value of Bitcoin increases as demand for the coins increases. Consequently, hoarding of Bitcoins automatically enables an individual to produce a profit. Besides, the original holders of Bitcoins could have a huge advantage over other Bitcoin holders who entered the market later. In that sense, Bitcoin behaves as an asset whose value increases and decreases as is evidenced by its price volatility.
When the original producers like the miners sell Bitcoin to the general public, money supply is reduced in the market. However, this money won’t the central banks. Instead, it would go to a few individuals who is able to act like a central bank. Actually, companies are allowed to raise capital from the market. However, they are regulated transactions. This means because the total value of Bitcoins increases, the Bitcoin system will have the strength to hinder central banks’ monetary policy.
Bitcoin is highly speculative
How do you buy a Bitcoin? Naturally, somebody has to sell it, sell it for a value, a value decided by Bitcoin market and probably by the sellers themselves. If you can find more buyers than sellers, then your price goes up. It means Bitcoin acts just like a virtual commodity. You can hoard and sell them later for a profit. Imagine if the price of Bitcoin comes down? Of course, you’ll lose your money similar to the way you lose cash in stock market. Addititionally there is another way of acquiring Bitcoin through mining. Bitcoin mining may be the process by which transactions are verified and put into the public ledger, known as the black chain, plus the means by which new Bitcoins are released.
How liquid is the Bitcoin? It depends upon the quantity of transactions. In currency markets, the liquidity of a stock depends upon factors such as value of the company, free float, demand and supply, etc. In case of Bitcoin, it seems free float and demand will be the factors that determine its price. The high volatility of Bitcoin price is because of less free float and more demand. The value of the virtual company depends upon their members’ experiences with Bitcoin transactions. We may get some useful feedback from its members.
What could be one big problem with this particular system of transaction? No members can sell Bitcoin should they don’t have one. It means you have to first acquire it by tendering something valuable you possess or through Bitcoin mining. A large chunk of the valuable things ultimately goes to a person who may be the original seller of Bitcoin. Needless to say, some amount as profit will surely go to other members that are not the original producer of Bitcoins. Some members may also lose their valuables. As demand for Bitcoin increases, the initial seller can produce more Bitcoins as is being done by central banks. Because the price of Bitcoin increases in their market, the original producers can slowly release their bitcoins into the system and create a huge profit.
