How to categorise digital currency is a matter of controversy, that denies its entry into the asset space of the financial statements. To be told, its a software which constantly runs to call it as a currency. These kind of assets come under intangible assets and brings in productive gains. Investors have already dumped intangibles unless they are revenue boosting patents like coca cola.
Origin of the big boy:
The history of gold turning into paper spans over a period of 2500+ years where the paper was called a receipt. That’s when the inflation started to kick in, when the gold in the locker did not match the receipts in circulation and banks failed to address the issues regarding inflation, led to consequent bail outs by other lenders. Government is the people, they play with money paid by wheel running hamsters to rescue unethical, crooked, irresponsible lenders. Explicit it is, the robber is paying the robber where people have played the consistent role of a victim.
To say, Bitcoin invention is a response to the 2008 financial crisis, which amounted $500 billions of people’s money. Kicking out banks, other third parties and inflation out of the currency league. Nevertheless bitcoin eliminates banks, itself under-inflates to grow in value because its built in scarcity, which increases in value over time. It’s nice for non-bankers to hear that we will be able to buy more every year.
In 2008, shortly after the crisis a person named themselves as Satoshi Nakamoto published a paper on block chain and bitcoin which for sometime meant the same. The specific development of block chain is bitcoin and many more being duplicated as Ethereum, Dogecoin, LiteCoin, Ripple, NEO, etc., although bitcoin being the popularly traded currency, among the digital play Ethereum has gained traction.
The price fluctuation and no inflation scenario is quite simple to explain. The first lesson in economics teaches us the relation between the demand and supply in relation with the values. It’s explicitly told that the count of the coins will be stable, which is blocking the supply, whenever the demand comes in action, i.e., more people are trading or in need of them, the price moves up.
The basic block chain concept is straightforward. Any block chain that consists of a single chain of discrete blocks of information of any sort arranged chronologically. The block information might include contracts, certificated, transaction details, etc., on a mutual contract between two parties without the involvement of a third party such as banks or regulatory bodies. This is similar to peer to peer lending without a proctor or a dedicated firm monitoring on the financials of the loan bearer. Since the transactions leaves no trace of information to bodies other than the parties, the technology is cursed not to be transparent which makes it sometime legit.
Mining is a process of maintaining ledgers to include the transaction to the chain of blocks. The software or the miners, in the similar way can record illegal & fraudulent cash flows that seem to be legal as grocery payments. Mining is an energy demanding process, no matter how many miners it still takes 10 minutes to mine one bitcoin. At 600 seconds (10 minutes), all else being equal, it will take 72,000 GW (or 72 Terawatts) of power to mine a bitcoin using the average power usage provided by ASIC miners says the balance
The decentralized system of crypto currency is what bothers banks and the federal government, which keeps them away from every financial interaction, leaves them powerless. After the indigestible fact, government is still clueless about regulating the digital currency, but never broached on the currency’s infidelity.
The glitter, practitioners look for:
The divisibility is so simple and the fractions go zooming in as low as a part of billionth. The value of the smallest fraction may surge sometime in the future to involve them in day-to-day transactions. The thirst for gold will end with the cessation of the availability that’s when the value will be set and no further swings apart from market fluctuations. Most of the characteristics of cryptology tied with the yellow metal. The world of infusing cash was once based on gold, whose work is to act as a hedge and never fail to appreciate.
The downturn of bitcoin or crypto is they don’t need a briefcase, you go buy a car with bare hands. This might increase illegal assets such as off record cash & catalyses corruption.
The physical properties of a currency utterly mean nothing after crypto creeps to every nook and cranny.
As countries encountered a currency counterfeiting and difficult printing scared the economy, cryptos cannot be duplicated the number stays the same. There isn’t a software or technology found yet to produce bitcoins and if it happened, the supreme difficulty exists in adding it into the chain. The scarcity is no more a problem because of its billionth divisibility. The lower end coins were engulfed to the escalating inflation in turn the manufacturing cost, which will soon make thousand bills
Seeing the bitcoin price zooming year on year people are a yard away from buying them with paper money, as Indians drop jaw on USD or Euro conversion rate. At present, bitcoin to INR is close to INR 30 Lakhs. Imagine how low the jaw can go.
After looking onto volatile days bitcoin has risen all year, which proves the Nil-Inflation model. The model gets satisfied only when the adaptability rises which will put us in a nightmare of no inflation world. Conceptualize a world where you can buy more grocery, chocolates, stocks a year from now, being idle. People will be selling other assets even gold and silver to invest in cryptos, the rent goes down, businesses struggle to perform more than the currency, no FIIs, and much more will be the state of art.
As far as now people are buying bitcoin because of the conviction someday the world will trade with digital currency that’s when the value keeps on increasing. The present condition implies, we can term cryptos as a untraceable super fast transacting currency with a built in rate of return which is unknown, suspecting a mathematical model can solve. Often crypto’s market capitalization is compared to world class stocks attaining huge caps within no time. The reasons behind the price fluctuations are unknown which makes it vulnerable to influential people like Elon Musk commenting on the currency.