What is Bitcoin and who is it for?
Hello friends welcome to this new article. Today we are going to talk about Bitcoin.
Bitcoin is the currency to accumulate in 2020, if you have not already done so!
Who is bitcoin for? Well, first of all it is for all those who do not trust governments and do not trust banks. Bitcoin is defined by many as “digital gold”, this is because Bitcoin and gold actually have many things in common and in this article I will explain what they are.
I am Carlo and I speak to students and young professionals who are struggling with the complex world of work.
In this article I talk about a fundamental topic for all those who ask: “but today, in 2020, should I invest in Bitcoin?” The reason why you need to go deeper into the world of Bitcoin and cryptocurrency in general is because this is the world of the future, regardless of price!
Bitcoin abruptly divides opinions in the world of investors: many people buy Bitcoins to invest in the long term or to speculate on price fluctuations in the short term; many old people are against Bitcoin, look at Warren Buffett…but whatever…in the end he’s still making a lot of money!
“Cryptocurrencies basically have no value and they don’t produce anything,” Buffett, the world’s third richest person with a net worth of around $90 billion, told CNBC’s Squawk Box.
*Little initial disclaimer*: I’m not recommending investments to anyone, my goal is just to get you informed and open your mind.
How Bitcoin works
Many people talk about Bitcoin as the final solution to solve the problem of banks; let’s find out in more detail what this problem is.
It is no secret that banks print a lot of money and currencies lose value; let’s take a current example from 2020. When there is a period of crisis banks have two tools: the first tool they have is interest rate manipulation; the second tool is printing more money. The “federal reserve system” , which is the central bank of the United States of America, is already at zero percent on interest rates and says it will not go negative.
What does this mean? It means that the only solution left is to print more money! Well, do you know what this means for your savings in dollars, in euros or in all Fiat currencies? It means a fall in value. This is a bit known by all, what maybe many people don’t know or are still wondering is: what can we do to protect ourselves? The answer is a healthy management of currency, which can be reached through a “Store of value”. We are talking about a tool that even during a crisis does not come out in a positive way.
The tools you have today are basically two: the first is gold or silver, in short, precious metals; the second, the new one and that many still do not know, is the Bitcoin.
What gold and Bitcoin have in common
Let’s see why gold and Bitcoin are similar.
Gold is one of the oldest means of exchange of value in the world; when we look at gold we have at least 5 thousand years of history, when we look at Bitcoin… well, we have only 11.
That’s why when it comes to buying gold no one is scared, when it comes to buying a Bitcoin there’s a lot of fear in general, at least among the uninitiated. The main advantage of Bitcoin, which has prompted so many to buy it, is the complete transparency and verifiability: with Bitcoin you know exactly how much it is produced every day and therefore you know exactly how much there is. The Bitcoin offer is known one hundred percent. What remains unknown in the equation is the demand. In the end, one of the main differences between gold and Bitcoin is purely generational, maybe the older generations are not very used to digital technologies.
But now let’s talk about a fundamental event of 2020, and we are not talking about Covid! What we are talking about is the halving of Bitcoin’s offer. Bitcoin is designed to increase in value over time; 2020 is not only the year of Covid but also the year of the fourth Bitcoin halving. While central banks are pumping billions and billions of dollars, euros, etc… that are put on the market every day, the Bitcoin offer is shrinking; the maximum number of Bitcoins will never exceed the 21 million, unless there is an agreement between more than 50 percent of the network to change things.
Every 10 minutes on average, new bitcoins are generated and fed into the network; at the beginning of 2009 the Bitcoins that were generated every 10 minutes were 50. When we talk about halving, we talk about the fact that every four years, the amount of bitcoin generated every 10 minutes is halved. This means that after four years of 50 bitcoins put on the market every 10 minutes, there was the first halving, and the amount of bitcoin put on the market every 10 minutes became 25 and so for another four years until it was halved to 12.5. In May 2020, after the fourth halving, the amount of Bitcoin generated every 10 minutes is 6.25. This means that at the beginning of 2020, 1800 Bitcoins were generated and distributed every day in the network, while now after the fourth halving, only 900. So, if we assume that the demand remains constant or grows… well, with the supply always decreasing, the value of the single currency can only increase!
I hope that the concept of halving is clear to you, I have not gone into too much detail to avoid complicating this topic further.
Why do young people like Bitcoin?
Now let’s find out why young people like Bitcoin and then let’s look at the advantages and positive things of Bitcoin. The reasons why young people like Bitcoin are multiple:
- Bitcoin is something planned and predictable, contrary to what banks do. What does this mean? It means that already now, in 2020, we know that in 2024 there will be another halving and the Bitcoins that will be generated every 10 minutes on average will be 3.125;
- Bitcoin is pure democracy, no individual can manipulate it. Today’s economic system is centralized: there are centers of power that control and command what happens, few people who decide for everyone. The economic system based on Bitcoin is completely decentralised, that means that it is not controlled by anyone and there is no president who can decide if today goes up and tomorrow goes down. There is a computer code that controls everything and is open source, which means that everyone (including you) can read and study it, there is no secret! This code can be changed only if more than 50% of the network agrees, and getting a change is honestly very but very difficult. In fact, to get more than 50% of the consensus you would have to coordinate millions and millions of people.
- The third is that Bitcoin is the complete separation between the State and currency, in fact no State can control or manipulate it.
What do you think, that states will stand by and watch without acting? Obviously not. If you want to deepen this topic read the next article on Bitcoin and all the other digital coins that the various states will invent to ride the wave a little bit.
Zio baffo business