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This is a digital world, and we need digital currencies in the digital world. One of the most talked-about digital currency in the new world is called the bitcoins.
The new world is totally different from the older versions, and it has systems and technologies that are not the same as the traditional one.
When we look at the currency of the digital world, it should have totally differentiating characteristics:
The new digital currency should have at least the following three characteristics, as mentioned in new trading App:
● Unlike the traditional fiat currency, the digital currency should be free from the control of the central authority. Thus, the currency cannot be manipulated and devalued as per the rules and regulations of any authority.
● The new world currency should be universally acceptable, and it should be borderless.
● The digital currency should be apolitical. This means it should not favor a small group of people.
Thus, when all of these features are available in a currency, it can be called the new age currency, as it does not face any limitations that come up with fiat money.
Bitcoins are the first decentralized currency in the world. The value of bitcoin is derived from the fact that no person, organization, or authority has control over the currency. Thus, anyone who is interested can buy, sell, and transact in bitcoins.
Bitcoins also get its maximum value as it is free from any dictatorship, oppression, and hyperinflation. You will be amazed to know that the supply of bitcoins is limited, and only 21 million bitcoins will be mined. Thus, everyone has an idea about how many bitcoins are in circulation at a particular time.
Why do people use fiat currency?
People use fiat currency as this is the only type of currency that has been in existence since the time immemorial. Since people who are alive today have always used the fiat currency, they are accustomed to using the currency. They were always used to the fact that the government or the central bank of a country issues currency. Most people have accepted the fact that price rise and the change in the value of currencies are a natural phenomenon.
Problem with fiat currencies
There are numerous loopholes and disadvantages associated with fiat currencies. In reality, the central bank of every nation issues the currency. But, practically speaking, it is the government that literally controls the central bank and the supply of fiat currencies in an economy. Thus, changes in government policies and systems can affect the demand and supply of fiat currencies in an economy.
The reason for the problem is pretty simple. The government likes to spend more than the money they receive as part of the taxes they receive from businesses and the public at large. Thus, by the power vested to them, they ask the central bank to print more currencies. As per the demand and supply rule, when more money is put in front of the economy, the inflation rate rises.
But, the technology with which the bitcoins are beautifully designed makes it possible for bitcoins to be well-functional even in most unstable economies like Argentina and Venezuela, where the government highly regulates currencies. Thus, Bitcoins have the ability to eliminate all loopholes and issues associated with the fiat currencies circulating in an economy.
Why are Bitcoins valuable?
The major flaw that existed with fiat money is not present with bitcoins. The supply of bitcoins in the world are fixed by code, and all participants and users of bitcoin abide by the code.
Another major advantage associated with bitcoins is that its distribution rate is fixed. In addition to this, the date when the amount of mining of bitcoins is also fixed. Thus, everyone knows how many bitcoins will be available. When compared to fiat money, this is the biggest advantage associated with bitcoin.
Bitcoin also does not have any public face that can influence the direction of the coin. Since Bitcoin is not represented by a particular country, it is totally apolitical; bitcoin is a better currency as compared to the traditional fiat currencies.
Before you invest in bitcoins, it is always advisable to know in detail about what is bitcoin and what gives value to bitcoins. We hope this article will help you in getting enough information about bitcoins.