In fact, Bitcoin is a kind of digital currency. A person published such an article on the Internet in 2008 to express his views on electronic currency. Since then, Bitcoin has been born and popular all over the world. Therefore, Bitcoin is actually a decentralized and equivalent digital currency. But how does Bitcoin work?
A boss came up with such an incentive mechanism to encourage employees to work actively. If employees work hard, they will get corresponding points, which can be exchanged for paid holidays. Not only that, at the end of the month, these employees can also receive monetary rewards. The company's accountant Bill will record the change of each employee's points. Because of this incentive mechanism, every employee works hard, so the shopkeeper is very pleased. However, after several months, John found something wrong. He worked hard every day, but his negative colleague Bill had more points than him. So he told the shopkeeper about this problem.
The shopkeeper soon understood what was going on and decided to change the incentive mechanism: Bill, the accountant, was no longer responsible for recording the points of each employee. Everyone records their own points, and after work, each employee will check each other to avoid mistakes. And the first person to calculate the points will get extra points.
This new mechanism is in line with the basic principles of Bitcoin. 1. It is no longer a person who records scores, but everyone has the right. This is decentralization. 2. Everyone can exchange points for holidays or money, which is digital currency. 3. Everyone will supervise each other, which is equivalent. 4. The first person who calculates the points can be rewarded, which is mining. 5. If someone does not want to offend others, they can be anonymous. 6. No copying and restriction
So after my explanation, what do you think of Bitcoin? In fact, the key is non replicable and limited. Once the points change, they will be recorded in everyone's account book synchronously, so there is no one to copy the points at will. In addition, the convertible holidays and money are limited, so the points are also limited. So Bitcoin has a ceiling of $21 million.
Because of the above characteristics, from the perspective of economics, Bitcoin is scarce and has other advantages. Bitcoin is likely to replace the legal currency, and its value may continue to rise in the future. This is why the price of Bitcoin keeps rising, which is the same as diamonds.
Bitcoin also has a story. Like diamonds, although the quality of artificial diamonds and natural diamonds is comparable, the price of diamonds remains high because of the story of "diamond eternity". In addition, Bitcoin cannot be copied, so its value will always be high. Many people still regard Bitcoin as a good investment.
However, whether Bitcoin can replace fiat currency remains to be discussed. Bitcoin's original intention is to make it easier for everyone to trade rather than hype. Once Bitcoin replaces fiat currency, it will lead to hoarding, and then the number of Bitcoin in circulation will decrease, eventually leading to rising prices and people continue to hoard, which will be a vicious cycle. And it may lead to economic collapse.
