The big difference between Bitcoin and conventional currency is that it is not controlled by any central bank or government. There is also a big difference with investing in stocks or bonds. Because it is not a business organization that will check the annual income-expenditure account and understand which way it is going.
Bitcoin is a type of cryptocurrency or digital currency. In 2009, Satoshi Nakamoto, a pseudonym, invented the virtual currency. Bitcoin transactions are recorded in the virtual ledger of blockchain technology. There is an account of where Bitcoin went from to whom. This is the proof of ownership of Bitcoin. How Bitcoin is valued
Without the control of the central bank or the government, a country's economy, monetary policy, inflation rate and economic development cannot determine the value of bitcoin. The factors that influence its pricing are:
Demand and supply of bitcoin
The cost of making bitcoin through mining
Remuneration received through blockchain transaction verification
The amount of conventional bitcoin
Is exchanged through that
Various state restrictions on bitcoin transactions
Bitcoin's internal management system
Let's start with demand and supply
As the central bank issues new banknotes, bitcoin is introduced in a process called 'mining'. Anyone can help perform transactions on Bitcoin and ensure the security of the Bitcoin network. For this you have to set up special computer parts, you have to solve mathematical problems. This is known as mining. In return they receive Bitcoin as a reward. The supply of Bitcoin is affected in two ways. First, the rate at which new bitcoins are created through mining is pre-determined. This rate will continue to decrease over time. For example, in 2016, the total bitcoin growth rate was 7.9 percent. In 2016 this rate was 4.4 and in 2016 this rate was 4 percent. As the demand for bitcoin grows, so does the supply.
Second, according to the Bitcoin protocol, a total of 21 million bitcoins will be introduced. If the total amount of bitcoin touches that number, it will no longer be possible to create new bitcoins through mining. That means the total amount of bitcoin is limited.
Till December 2020, a total of 1 crore 75 lakh 6 thousand bitcoins were in circulation in the market. That's 8.5 percent of the total bitcoin supply. The number has definitely increased in so many days. It is important to keep in mind the competition
Bitcoin is undoubtedly the most popular cryptocurrency. However, many more such currencies are being introduced. Bitcoin's 'closest' competitors include Ethereum, Tedder, Binance Coins, Cardano and Polcadot. This competition for cryptocurrencies is good for investors. The price can not be skyrocketing. However, in the case of Bitcoin, it has spread so much in the mouths of the people that it has got a chance to be far ahead of the rival currencies.
The cost of making new bitcoins is also increasing
Although it is a virtual currency, there is a cost to make bitcoin. There is the cost of setting up computer parts, there is the cost of electricity to operate them.
Suppose, at the current rate, one bitcoin is created every 10 minutes. Now if a minor does bitcoin mining, he will get one bitcoin every 10 minutes.