The Basics of Bitcoin
For a little more than 10 years there has been some sort of digital gold.
It is mainly used by criminals, terrorist and has to be banned. It is a danger to our economy and will go to zero.
At least.. That’s what we have been told.
Wall Street, the big institutions and other powers where in for a big surprise when bitcoin kept surging higher. From pennies to 100 dollars, 1k, 3k and ultimately 20k. This new type of ‘currency’ is uncontrollable by the government and central banks. It is the people who control the network and decided what the price per Bitcoin is.
Today governments realize they can’t stop this revolution. They either act in favour of cryptocurrencies (digital assets) or get left behind.
Governments around the world are working on regulatory frameworks for digital assets, which will enable institutions to invest in/use them.
How is the price per Bitcoin determined?
It all comes down to supply and demand. When you want to buy Bitcoin you place an order through an exchange. In this order you state at what price you would like to buy a certain ammount of Bitcoin.
After placing this order, everyone will be able to see what your ‘offer’.
The same counts for the Bitcoin sellers. After deciding what they would like to sell their Bitcoin for, the order can be placed. If there is no one who wants to buy/sell at your desired price, there will be no deal.
Another option is to place a market order. This means you buy/sell your digital asset at the best available rate. Your order will be put through no matter the price. The balance between all buy and sell orders is the current price.
What makes Bitcoin better than the dollar/euro?
The dollar/euro (fiat money) are currencies which are controller by big entities. All fiat currencies are designed to depreciate over time.
BILLIONS of dollars are printed out of thin air every year. This means that the dollars sitting in your bank account will become less valuable over time.
Bitcoin (and almost every other digital asset) is finite, which means the total supply is pre-determined. No one can decide to print more Bitcoin.
It is known that ONLY 21MILLION BITCOIN WILL EVER EXIST.
Bitcoin is not controlled by a single entity. The network is operated by so called miners. Even you can buy the right equipment online and start mining Bitcoin. Miners get rewarded for their work by receiving Bitcoin.
There has to be consensus among the miners, meaning that one miners can not make changes to the network without ‘agreement’.