BUYING BITCOIN (BTC): A PROFITABLE INVESTMENT AND A SAFE VALUE AGAINST INFLATION?


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 If you haven’t heard of Bitcoin yet, you’re doing it on purpose! Since its price boom in 2020, Bitcoin has been the hot topic of eco news. Thinking about buying Bitcoin? Find out what Bitcoin is and why it is a good investment.

What is Bitcoin?
Bitcoin or BTC is a cryptocurrency created in 2008 by Satoshi Nakamoto. If to this day the identity of its creator is still a mystery, Bitcoin has made itself known to the whole world! The first cryptocurrency to have been created, Bitcoin is also the gondola head of cryptos in the world. With an estimated capitalization of over $850 billion, Bitcoin is far ahead of other cryptos.

As a cryptocurrency, it is therefore an electronic or dematerialized money. The main characteristic of Bitcoin is to operate on the basis of a blockchain. The blockchain can be defined as a public ledger in which all transactions appear. As the name suggests, it is a blockchain. Concretely, the transactions are grouped by blocks. To limit processing time, the block size on the Bitcoin blockchain is limited to 1 MB. When the block is complete, it then undergoes a validation phase. The people in charge of this control are network nodes and are called “miners”. Their activity consists of “mining”, that is to say that they play the role of controller and validator, a role that a bank would play in a traditional transaction. In return for this service, miners receive a reward directly in Bitcoin. In addition to a bonus, these rewards also allow new Bitcoins to be released.

Why buy Bitcoin?
Blockchain, a major asset for Bitcoin

All the interest of Bitcoin is due to blockchain technology which tends, moreover, to become more democratic in many areas. With the blockchain, Bitcoin allows so-called peer-to-peer transactions to be carried out, that is to say without the intervention of a third party. The network itself performs the roles of control and validation of operations.

This particularity therefore allows Bitcoin to operate on the basis of a decentralized system. Indeed, to carry out a transaction, it no longer needs to go through the “bank” box. Bitcoin therefore makes it possible to put the individual back at the center of transactions. The Bitcoin user is therefore completely the owner of his money. Buying bitcoin is very simple and popular as an investment..

The price of Bitcoin and the law of the market

Moreover, as a cryptocurrency, the production of Bitcoin is not subject to the decisions made by a government or a central bank. As mentioned above, the monetary creation of Bitcoin takes place through rewards paid to miners. Because of this decentralization, the price of Bitcoin is only influenced by the law of the market, i.e. supply and demand. This important feature helps protect Bitcoin against inflation risk, so common in standard financial markets.

For a fixed supply, if the demand increases, the price will also increase. Demand is determined by the number of Bitcoin users. The supply, on the other hand, corresponds to the monetary mass in Bitcoin present on the network. However, in this area, Bitcoin has an important particularity. Indeed, since its creation, the Bitcoin network has set a limit on the number of BTC in circulation. Thus, only 21 million Bitcoins will be produced. Currently, there are over 18.5 million BTC in circulation. The last bitcoin should be created in 2140. This limitation of supply may be similar to a voluntary creation of a shortage which should guarantee a high price of bitcoin in the long term.

 

 


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