Updated 04:34 PM EST, Tue, Jan 18, 2022

Bitcoin – a Best Currency in the World

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Bitcoin – a Best Currency in the World
(Photo : pixabay)

The topic of virtual currencies such as Bitcoin is making news. Unlike ordinary currencies, virtual currency does not have a government agency central bank that artificially controls the volume of circulation. However, it is possible to prevent the forgery and theft of money by protecting cryptographic transaction records from the past to the present with cryptographic technology so that they cannot be easily tampered with and published. 

Moreover, international remittances are cheaper and more comfortable on the internet than through traditional banks. Also, Bitcoin, which is a representative virtual currency, is a very acceptable currency.

 It can be used as payment for shopping and eating and drinking at some stores overseas and in-country. Taking advantage of this popularity, many people have virtual currency in anticipation of the price increase of virtual currency.

Since virtual currencies such as bitcoin are a recent topic, they have not appeared in texts such as financial theory and finance theory learned at university. The actual conditions and future of virtual currencies are analyzed with the analytical methods and concepts learned there.

 In conclusion, virtual currencies do not replace traditional national currencies.

From the name, the virtual currency seems to be a companion to money. Still, of the three primary functions that money should satisfy, value scale function, exchange function value storage function, the third value storage function only works remarkably. 

Bitcoin for shopping

Recently, the number of shops that can use Bitcoin for shopping is increasing to satisfy the above two functions, but it cannot be used for payment for general shopping. 

This is because virtual currency does not have general acceptability as a legal currency, such as the national currency used in each country by law; no one in the country can refuse to receive payment. If it's just a function to store value, money and currency are only names, and the reality is the same as financial products, bitcoin system is one of the recommended sites for the bitcoin.

However, ordinary financial instruments are issued as money borrowed documents. The value of financial is determined by the return of funds to the financial instrument holder at the time of future repayment. 

Also, precious metal currency such as gold has an intrinsic value as a precious metal among financial products. Like bills, virtual currencies do not have inherent worth and do not have a maturity repayment deadline like ordinary financial products.

Why are people buying these virtual currencies?

In other words, what value do virtual currencies have? It was supported by blockchain public trading ledger system technology. It is a value that provides a cheap, fast, and secures international money transfer service. 

Traditional bank international remittance services are expensive, slow, and complicated under government guidance to check for errors and fraud at the source and destination. This convenience of virtual currencies creates value, and virtual currencies are added to those who first achieved the cryptographic calculation called mining.

It is necessary to connect a new fixed period transaction to the blockchain public ledger.

With the reward system given to people, all people have a virtual currency. Therefore, the market price of major virtual currencies such as Bitcoin has also fluctuated significantly. Speculation aimed at opportunities for trading margins has become popular; the half-life timing of mining reward halved was successfully.

After the half-life, bitcoin newly supplied to the market as a reward for miners will be split, so there are various concerns that if the price does not rise, the mining participants will decrease, and the risk will increase. However, although the hash rate representing the mining calculation speed temporarily reduced, it has recently recovered to near the level before the half-life period, and there has been no significant drop in prices.

Bitcoin (BTC) has been transitioning without significant price fluctuation since its birth. However, the price soared in the latter half of 2017, and 1 BTC temporarily exceeded 2 million yen. Since then, the price has dropped significantly, and it is currently below half of the high cost.

Meanwhile, there were reports of crypto assets virtual currencies leaking due to hacking and reports that regulated crypto assets virtual currencies in each country. The price of Bitcoin (BTC) responded each time sensitively. 

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