Myths About Bitcoin: Where and How to Dig It?

myths about bitcoin

Although Bitcoin has existed for more than a decade, there is still no doubt about this famous cryptocurrency and its future. Who invented it? Why does Bitcoin consume electricity? Where is it and how is it “digged”? Johans Javeuss, the chief strategist at SEB Group, is looking for answers.

Who started bitcoin?

An anonymous person or a group of people started Bitcoin business in March 2009 as Satoshi Nakamoto. By inventing blockchain technology, Satoshi Nakamoto solved the problems previously caused by the ability to easily copy digital currency and therefore use it multiple times, just like counterfeiting banknotes by printing copies of original banknotes.

The first known purchase using bitcoins occurred in May 2010, when someone offered 10,000 bitcoins to anyone who could arrange the delivery of two pizzas to his home. At the time, the value of a Bitcoin was $0.0015. Currently, the bitcoin price of the two pizzas will be close to 380 million US dollars.

How is Bitcoin secured? What supports it?

Bitcoins are valuable because they are accepted as payment. When we say that a currency is backed by gold, we mean that you have a place where you can convert the currency into gold. In a sense, we can say that Bitcoin is backed by the price set by the seller for the product, that is, the seller promises to exchange the product with a certain amount of currency. The main misunderstanding is that Bitcoin derives value from the cost of electricity required to create Bitcoin.

Cost does not equal value-hiring 1,000 people to dig a large hole in the ground may be expensive, but it doesn’t matter. Although scarcity is an important requirement for useful money, money alone is powerless. For example, your fingerprints are in short supply, but that doesn’t mean they are valuable.

How big is the bitcoin market?

Starting in February 2021, the total value of all bitcoins in circulation will reach 700 billion U.S. dollars. This number can be compared with the value of all physical gold in the world, which is almost $9.5 trillion.

One-day transactions are more difficult to estimate, partly because certain markets tend to exaggerate transaction volumes for marketing purposes. According to data from the market data service provider CoinMarketCap, starting from February 2021, the daily Bitcoin amount is about 60 billion U.S. dollars, while other estimates of actual transaction volume are ultimately much lower.

According to data from Nomics, another market data analysis company, the actual transaction volume of Bitcoin is approximately US$12 billion. In contrast, as of the end of 2019, the daily trading volume of physical gold reached US$145 billion at the end of the year, while the daily trading volume of the S&P 500 index, a broad US stock index, was approximately US$150 billion.

How many cryptocurrencies are there?

In addition to Bitcoin, there are currently more than 4,000 other cryptocurrencies. New cryptocurrencies appear every week, while others disappear. Three years ago, in the cryptocurrency boom, the number of cryptocurrencies was about 1,300.

The total market value of cryptocurrencies is more than $1 trillion, of which about two-thirds are Bitcoin. The second is Ethereum, which has a market value of approximately US$165 billion.

Where and how to “dig” bitcoins?

Most cryptocurrencies use “mining” techniques to maintain the security of the blocks on which the currency is based. In short, new Bitcoins are created by computers that use random speculation to try to find solutions to complex cryptographic problems that require testing and adding new transaction blocks to the Bitcoin blockchain.

The computer that first needs to find a new block solution will be rewarded from the new bitcoin that has not yet been obtained. In addition to getting paid in the form of new bitcoins, “miners” also charge transaction fees paid by users who perform transactions in the block.

The algorithm automatically adjusts the difficulty of the password problem that the computer must solve in order to “mine” a block on average within 10 minutes. In this way, the Bitcoin algorithm automatically compensates for the increase or decrease in computer processing speed and the number of “miners”.

“In the early stages of Bitcoin work, mathematical problems were easier to solve because there were fewer “miners” and they used ordinary home computers. Nowadays, such devices may no longer be competitive, and Bitcoin is built with a special A functional computer. A chip used to solve the cryptographic problem in the Bitcoin blockchain.”

Thousands of such computers are usually collected in large computer centers for industrial extraction of bitcoin, but natural persons can also participate in “mining.” it’s time to trade and profit through the Bitcoin Up login. Hurry up!

Or will banks use bitcoins?

Independent cryptocurrencies (such as Bitcoin) are not the only currencies that qualify as future means of payment.

The central bank also realizes that digital currency is needed to remain competitive. The Swedish National Bank has developed ambitious plans to introduce its digital currency, the e-krona, to replace cash.

The central bank also realized that digital currencies are needed to remain competitive. The Swedish National Bank has developed ambitious plans to introduce its digital currency, the e-krona, to replace cash.

Unlike Bitcoin, for obvious reasons, it will not be possible to use electronic money to make payments outside of Sweden. The Riksbank is currently studying various technical solutions for the electronic crown. It is not clear whether the e-Crown will be based on the same blockchain technology as Bitcoin and most other cryptocurrencies.

Does Facebook make a cryptocurrency?

In 2019, Facebook launched the Libra project, which is based on the idea of ​​providing a stable coin type for a basket of widely used currencies (including the US dollar, the euro, and the Japanese yen) at a fixed exchange rate.

Its stable value will not make people interested in investment, but will only be used as a means of payment. Other companies joined the Libra Alliance with Facebook, which created the potential to gain billions of measurable users. This fact caused American and European politicians to slow down the progress of the project.

In early 2021, the company group plans to introduce a simplified version of the currency called Diem, which will only be pegged to the U.S. dollar. However, the goal is to create suitable Diem variants for other currencies and eventually link them to the Diem currency basket as originally intended.

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