Bitcoin the money of future is cool. The Internet’s currency, a secure, a private, and a decentralized kind of money which makes it possible for everyone to anonymously and virtually make cost-less transactions across borders. Which contains the seeds of its own destruction, as per by many experts on the Internet.
Presently more and more individual users and worldwide businesses have started accepting this digital currency for their day-to-day transactions freely, securely, privately, and without the control of any central authority or middlemen.
There are many people and businesses still unaware about this innovative system discovered by Satoshi Nakamoto. The Bitcoin system is great, but it can be used for illegal activities to scam others, like still happening with other currencies!
Many people and businesses who are uninformed and still new to this, might be thinking about, is Bitcoin a bubble, or any ponzi scheme? This article tries to explain this in below paragraphs.
# Is Bitcoin a Big Bubble?
In case of Bitcoin, a rapid rise in price does not constitute a bubble kind. An artificial over-valuation leads to a sudden downward correction that constitutes a bubble.
Choices based on Individual user action by hundreds of thousands of global market participants is the cause for bitcoin’s price to fluctuate as the market seeks price discovery.
Different reasons for changes in sentiment may include a loss of confidence in Bitcoin’s technology, a large difference between value and price not based on the fundamentals of the Bitcoin economy.
Increased press coverage stimulating speculative demand, or fear of uncertainty, and old-fashioned irrational exuberance and greed.
# Is Bitcoin a New Ponzi Scheme?
A classic Ponzi scheme is a fraudulent investment scheme operation that pays returns to its investors from their own money, or the money got paid by subsequent investors, instead of profit earned by the individual users running the business.
Ponzi schemes are specifically designed to collapse at the expense of the last investors, when there is not enough new participants. But, Bitcoin is an open source project with no central authority.
So, there is nobody is in a position to make fraudulent representations about any investment returns. Like in other major currencies such as Gold, the U.S. Dollar, Euro, or Yen, etc. there’s no guaranteed purchasing power, and the exchange rate floats freely.
This really leads to volatility where users of bitcoins can unpredictably make or lose their money.
Beyond speculation, Bitcoin is also an innovative digital payment system, which is totally new, but with useful and competitive attributes that are being used by thousands of individual users and businesses across the boundaries.
What do you think about this new kind of digital money, which seems to get more and more adopted by the worldwide users and businesses? Let us know via your comments below.