Are Digital Cryptocurrencies The Future?

There are now thousands of so-called cryptocurrencies. Bitcoin is one of the most well-known that investors have also had their eyes on.

Why is bitcoin popular?

The main reason should be the desire to speculate. The price of bitcoin rises astronomically from time to time and then often falls very sharply. Celebrities such as Tesla founder Elon Musk are the driving forces. His tweets drive the price up or down violently and apparently generate FOMO (fear of missing out) among some investors. The fact that the online payment service PayPal wants to partially allow transactions in bitcoins also led to price increases.

Investors who want to trade money are interested in these digital currencies. They read online reviews to get information as to how they can earn money in trading.

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Digital variant of gold

At the same time, it is suspected that some investors see Bitcoin as an opportunity to diversify their investments because of the long-lasting phase of low-interest rates. The economist Philipp Sandner sees in Bitcoin the possibility that this cryptocurrency will become a digital variant of gold developed. It is less a means of payment for everyday use than a way of storing value like gold.

The inventor Satoshi Nakamoto limited the money supply to a total of 21 million coins. This means that the supply cannot be increased indefinitely and “a certain value can develop” with Bitcoin. This salient feature of bitcoin is to potentially protect against inflation, which appeals to people who accuse central banks of trying to soften the value of money.

How and what can you pay with Bitcoin?

Online exchanges or marketplaces offer cryptocurrencies against fiat currency. Widespread storage of Bitcoins is the digital “wallet”. You can download it as an app on your cell phone. To open the wallet, you need a personal key. You can also print it out and put it in the safe. But if you lose or misplace the key, you can never access your bitcoins again.  Because of the decentralized system, there is no bank behind Bitcoin that you could ask for a new PIN code.

According to economists, a cryptocurrency like Bitcoin is not suitable as a means of payment. In addition, a single payment requires a lot of computing power and takes more time than a debit card payment in the shop namely up to an hour.