The digital currency Bitcoin is making headlines mainly because of its strongly fluctuating exchange rate. Do you want to know what are the advantages of the system, read below article:
There is talk of blockchain and an enormous innovative potential, but what exactly cryptocurrencies do “differently” and why that is stirring up the financial world, so far there is little to be found.
The digital currency Bitcoin has been in circulation since January 2009. Shortly before, in 2008, a design for a Bitcoin system was first published under the pseudonym ‘Satoshi Nakamoto’. Thanks to encryption, it should be tamper-proof and available across borders. Bitcoin is often referred to as crypto or internet currency.
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Bitcoin’s price surge: just a bubble?
Bitcoin is already accepted as an official form of payment in Japan. It is quasi a “digital coin”, the course of which fluctuates strongly and which is not without controversy. In the early years, the price was stable at around EUR 100 for a long time, so a rapid course rally set in in 2017. At the end of November 2017, a bitcoin was briefly worth over $ 11,000.
In just under a year, the Bitcoin rate in 2017 had risen by around 900 percent. On the other hand, the rate of the digital currency plummeted again by almost $ 2,000 in one day. Does buying bitcoins offer chances for quick profits or is it just hype and a bubble that is about to burst, how do critics complain? Exchange rate losses of ten percent a day are not uncommon for cryptocurrencies. There are even calls for a ban on Bitcoin.
The Bitcoin rate is determined independently of central banks via a decentralized computer network.But how does the Bitcoin system work? The Bitcoin value is not determined by central banks, but is calculated around the world via a decentralized computer network. A Bitcoin client and internet connection are required to participate in the network.
The Bitcoin client manages a digital wallet. Businessmen who offer their customers payment with Bitcoins also need one. This is possible, for example, in various online shops and restaurants.
All transactions carried out with bitcoins are stored publicly and transparently in a huge database (“blockchain”). The blockchain acts as an account statement, and new elements are regularly added to its bottom end. There are numerous copies of the blockchain database worldwide, which are continuously updated by volunteers.
The blockchain system is supposed to offer sufficient protection against fraudsters due to the decentralized structure and provides information about all transactions ever made with Bitcoins. The bitcoinsystem.app is one of the trusted bitcoin app for current rates and investment
Bitcoins owners remain anonymous
While the blockchain is publicly viewable, the owners of the bitcoins remain anonymous. Only they can carry out Bitcoin transactions. A Bitcoin address and the associated password are required to access the Bitcoins. If this private key is lost, the bitcoins under this digital ‘account’ are no longer accessible.
The owner faces a total loss. Because of the anonymity of payments, cryptocurrency is becoming increasingly popular among criminals. Various encryption Trojans are already demanding that their victims make transfers to Bitcoins to decrypt the hijacked devices.
Bitcoin money supply limited to 21 million bitcoins
How do you get bitcoins? Bitcoins are created when you voluntarily provide the computing capacity required to manage Bitcoin transactions. The helpers (“miners”) must confirm the transactions, which are then entered as a block in the blockchain. The total money supply of the digital currency is limited to 21 million bitcoins, 16 million bitcoins were already on the market in November 2017.
Since extremely powerful computers that consume a lot of electricity are required to create new bitcoins, the high energy consumption for the so-called “mining” of bitcoins is another point that is criticized in the system.
Bitcoins can also be exchanged traditionally for existing currencies. The rapid increase in Bitcoin prices in 2017 was caused, among other things, by plans from the US futures exchange CME, which wants to realize a financial product in the form of a Bitcoin future. This could allow investors to speculate on a rising or falling bitcoin price.