Should Bitcoin replace the central bank’s currency?
Difference between Bitcoin and Central Bank Currency
What is the difference between the official currency of the central bank and Bitcoin? The official currency carrier of the central bank can only provide a tender for the exchange of goods and services. Bitcoin holders cannot provide tenders because it is a virtual currency that is not authorized by the central bank. However, Bitcoin holders may be able to transfer Bitcoin to other accounts from Bitcoin members in exchange for goods and services and even the official currency of the central bank.
Inflation will reduce the real value of the bank’s currency. Short-term fluctuations in demand and supply of bank currencies in money market effects change in borrowing costs. However, the nominal value remains the same. In terms of Bitcoin, the value of his face and the real value of both changes. We recently watched Bitcoin split. This is something like being divided on the stock market. The company sometimes divides stock into two or five or ten depending on the market value. This will increase the volume of transactions. Therefore, while the intrinsic value of currencies decreases over a certain period of time, the intrinsic value of Bitcoin increases because demand for coins increases. As a result, hoarding Bitcoin automatically allows someone to get a profit. In addition, the initial holder of Bitcoin will have a big advantage compared to other Bitcoin holders who enter the market later. In that case, Bitcoin behaves like assets whose value increases and decreases as evidenced by price volatility.
When the original manufacturer includes miners selling Bitcoin to the public, the money supply reduced on the market. However, this money will not go to the central bank. Instead, he goes to several individuals who can act like a central bank. In fact, the company is permitted to increase the capital from the market. However, they are regulated transactions. This means because the total value of Bitcoin increases, the Bitcoin system will have the power to disrupt the monetary policy of the central bank.
Bitcoin is very speculative
How do you buy Bitcoin? Naturally, someone must sell it, sell it for value, the value decided by the Bitcoin market and maybe by the seller itself. If there are more buyers than the seller, then the price rises. This means Bitcoin acts like virtual commodities. You can hoard and sell it later to get a profit. What if the Bitcoin price goes down? Of course, you will lose your money like how you lose money on the stock market. There are also other ways to get Bitcoin through mining. Bitcoin mining is a process where transactions are verified and added to public ledgers, known as black chains, and also the ways passed by new Bitcoin.
How is the liquid is Bitcoin? It depends on the transaction volume. In the stock market, stock liquidity depends on factors such as company value, free float, demand and supply, etc. In terms of Bitcoin, it seems that float and free requests are the factors that determine the price. High volatility Bitcoin prices are caused by fewer free float and more requests. Value of virtual companies depends on the experience of its members with Bitcoin transactions. We may get useful feedback from its members.
What can be a big problem with this transaction system? No members can sell Bitcoin if they don’t have it. This means you have to first get it by beating something valuable you have or through bitcoin mining. Most of these valuable things are finally given to someone who is the original Bitcoin seller. Of course, some quantities as profits will definitely go to other members who are not original Bitcoin producers. Some members will also lose their valuables. Along with increasing demand for Bitcoin increases, native sellers can produce more bitcoins as they do by the central bank. Because Bitcoin prices increase in their market, the original