We are hearing more and more about bitcoin, an electronic currency on which some traders are quick to speculate. Here is an article to sort out the true from the false regarding bitcoin.
What is bitcoin?
Bitcoin, currency and means of payment
It is electronic money created in 2009 by Japanese calling himself Satoshi Nakamoto (pseudonym). We also say “virtual currency” but personally we don’t like this term which implies that this currency is not real. It is, however, since it is possible to pay for certain purchases with bitcoin. The objective was to create a currency independent of central banks and therefore of states. Therefore, bitcoin can be used in all states and especially between countries using different currencies, which minimize transaction costs since there are no exchange costs. According to Xtrade review, such trading options are open in Xtrade and therefore you can go for it.
Bitcoin, a currency that knows no inflation
The basic principle of bitcoin is that unlike other currencies, it cannot experience inflation. In fact, bitcoin is bound to be in constant deflation, and this is what attracts investors and speculators of all kinds. How is that possible, you ask yourself? Bit coin’s money supply is limited; it will never exceed 21 million regardless of demand. So in theory, it is a currency that will always increase in value. In practice of course it is very different: in the short history of bitcoin we have already witnessed prodigious declines linked to crises of confidence in this electronic money.
What are the pros and cons of bitcoin?
Bitcoin is still recent, hence the many questions about it. While it has many advantages, the risks and doubts associated with this new means of payment should not be overlooked. Here are the main positive points of bitcoin and its limits.
Benefits of Bitcoin
- Bitcoin does not depend on a central bank or a state, so an economic or political crisis will not affect it
- Transactions between two states with different currencies will be less costly than changing currency
- Bit coin’s money supply being limited, this currency does not experience inflation
- For speculators, it’s very high volatility makes it possible to make profits in the very short term
- Bitcoin can be used worldwide
- There is no amount limit for bitcoin transactions