This article will answer a series of concerns about the most popular and in-demand digital currency globally. It is Bitcoin, which has reached historical records with its value in recent months. A few days ago, Bitcoin passed the barrier of $60,000, while a few months ago it reached $8,000, while 5 years ago it cost around $350.
Is Bitcoin a bubble?
The exact answer is unknown; the bubbles burst and Bitcoin has done it several times by skyrocketing in price and suffering sudden price drops. For example, in 2017, it was priced at more than $ 17,000, and months later, it came to cost $ 3,000. However, if we analyze in the long term (counting different ups and downs), Bitcoin increases its value over the years; thus, it is still too early to conclude that Bitcoin is a bubble.
What type of asset is Bitcoin?
Bitcoin is more like a house than other financial assets such as bonds and stocks; for example, when we buy a share, we are acquiring a title that gives a right to a share of the ownership of a business; i.e., it is a financial asset with the backup of a real asset. When you buy a house or a gold bar, you do not have the right to anything; you only have what you bought; after that, the user decides whether to talk or sell it. It is important to consider that in this case, we are talking about Bitcoin, not about possible “assets or derivative products” of this cryptocurrency that may be in the market.
What is the backing of Bitcoin?
Blockchain technology, a decentralized system that transcends the cryptocurrency environment, backs bitcoin enabling the future development of different applications and services. Blockchain uses blocks with a kind of fingerprint or special mark called “hash,” which is a kind of “fingerprint,” allowing the system to be more secure and transparent.
Currently, Bitcoin’s users support it (who trust that cryptocurrency); however, this may seem curious because something similar happens with the US dollar, which works simply because people trust it (or use it).
Are there unlimited Bitcoins? Can more Bitcoins be created?
Bitcoin has a limited number of units, and no additional units can be created; on the other hand, conventional currencies from different countries (for example, the US dollar) have an unlimited number of units, and more currencies can be created in an unlimited manner (according to the decision of each government or central bank).
What do you think about this topic? Do you think Bitcoin will one day have value on its own, being an asset similar to that considered equity?
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