Deflationary because there will be a maximum of 21 million Bitcoins and never more.
Lay people use the word Bitcoin as a synonym for all cryptocurrencies.
However, this should not be confused because there are hundreds of cryptocurrencies, while Bitcoin is only one of them.
However, this should not be confused, because there are hundreds of cryptocurrencies, while Bitcoin is only one of them.
Nevertheless, cryptocurrencies have developed over the years into a new asset class through which one can invest in electronic currencies and profit from increases in value.
meanwhile the idea of bitcoin is to buy and sell goods and services through the electronically transferred cryptocurrency.
The idea is to counter the central banks by charging very low fees.
What was smiled at by many at the beginning is now indispensable. Bitcoin has become more and more important over the years.
Many shops, shopping centres and online services have been accepting Bitcoin payments for some years now.
It has even gone so far that the state of El Salvador has completely accepted Bitcoin as a legal digital currency.
So now you can deposit, shop and draw wages in Bitcoin there.
Why is the Bitcoin so valuable?
Bitcoin brought out the so-called “Proof of Work”.
Proof of Work is nothing more than computers that approve Bitcoin transactions within the decentralised network and receive parts of Bitcoin as a reward in the form of Bitcoin mining.
In this way, new Bitcoins are constantly being created within the blockchain.
It is estimated that 900 Bitcoins are mined worldwide every day.
Now if Bitcoin mining continues at its current pace, the very last coin will be mined around the year 2140.
In early 2011, bitcoin first rose on par with the US dollar. In 2021, the peak of one Bitcoin was $60,000.
So for a decade, demand has been increasing and transactions piling up. This is how Bitcoin has been able to assert itself as the leading cryptocurrency.
Why are there price drops in Bitcoin?
The world of cryptocurrency is still very young and full of obstacles.
Negative news, cybercrime and, most recently, the knowledge about the high power consumption of Bitcoin mining, are gnawing away at the value of the world’s largest cryptocurrency.
This temporary price reduction unsettles many investors, which is why they sell their holdings and thus the price falls further.
Conclusion
Price changes are part of the game. Despite everything, bitcoin has become more and more important and will continue to gain in importance.
Because of the flood of money that has been created since 2020 by the pandemic, for example by the US Federal Reserve (Fed), normal fiat currencies such as the US dollar and others are losing more and more of their value.
Therefore, it is worthwhile to hold a part of one’s investment portfolio in cryptocurrencies, first and foremost in Bitcoin, in addition to shares and other asset classes.
