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There are a lot of voices, rumors and different myths Bitcoin, so that his reputation is still uncertain. Most people consider this resource as a financial pyramid to justify that it is not physically proven. Let's face it in more detail.
Content
(please, click on the topic to scroll to it)
- Is Bitcoin a pyramid scheme?
- What is Bitcoin supported for?
- Conclusion
1. Is bitcoin a pyramid scheme?
First of all, let's find out what the financial pyramid really means. Well, a financial pyramid implies profit received from the membership fees of new users to previous participants. You have a great chance of earning money in this scheme if only you are a founder or a co-founder of this project. According to the law of large numbers, sooner or later schemes like this are doomed to failure.
Now, we discuss the laws on market value, due to which The price of Bitcoin the shapes. If the demand exceeds the offer, the price of Bitcoin grows, if on the contrary, and the amount of sellers is more than the buyers, the currency drops. The price of any good works this way. For example: natural resources, wheat, precious metals, stocks, etc. So, as a result, we can definitely say that Bitcoin is not a financial pyramid.
2. What is Bitcoin supported for?
To address this question, we must first understand what "backup assets" means. We analyze the analogy with the most liquid resource in the world, now it is USD. This is a fiat currency of one of the most developed countries in the world. Its emissions are completely controlled by the Central Bank of the United States. At the dawn of its history, the USD was backed by official reserves, but it has not been for a long time, starting in the 1950s, when the dollar became an international economic currency, the his link with gold has disappeared. Today the dollar is only supported by people's trust in the stability of the American economy, but in no way by anything physical.
The next example will help us understand the price of physical objects, such as: gold, platinum, etc. So, what factors have the impact on the price of, for example, gold?
- Production cost
- Values from use
- Limitation
Not for nothing, the bitcoin is often compared to gold, in fact, these two resources have much in common.
1. Cryptocurrency can also be extracted and this process has its cost price. For mining, a kilowatt of Bitcoin X of electricity is required. Every year the difficulty of mining extraction increases, leading to increase the main cost of extraction.
2. The value of Bitcoin consists of easy storage and transfer of funds directly from one user to another without the involvement of mediators. It is impossible to close the chain of Bitcoins, to do so, all the computers of participants around the world should be turned off.
3. Do not forget that the issue of coins is strictly limited to 21 million, which is why the disclosure of Bitcoin can inevitably increase its rate.
But above all, Bitcoin is supported by the trust of many people all over the world. Most cryptocurrency investors are confident that in the next 3-5-10 years digital coins will become an integral part of the global economy.
3. Conclusion
All innovative products face with some skepticism at the beginning of their history. It is absolutely normal, because the public can not make changes immediately. If you understand Bitcoin pricing, it will be clear that it is not a financial pyramid. If you spend another five minutes, it will be clear that Bitcoin is supported not worse than the US dollar or gold.
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