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With the development of the Internet, payment systems have appeared that use the virtual space. Bitcoins themselves are often referred to as cryptocurrencies.
It is possible to exchange such units for real money. Anyone can issue new bitcoins using the computing power of computer technology.
It is quite logical that such a virtual currency raises a lot of questions for an ordinary user. Often, instead of reasonable answers, people are forced to settle for rumors and myths, which should be considered in more detail.
Bitcoin is another virtual currency that is no different from its counterparts. In fact, all virtual currencies are managed by their own single center. This suggests that the number of units can be arbitrarily increased in accordance with the whims of the regulator. And an attack on him can completely destroy the entire payment system. And who prevents this center from one fine moment from taking and establishing its own rules for handling its own banknotes? But bitcoins, due to their initial decentralization, are devoid of such problems.
Bitcoins cannot solve problems like gold or real money. The difference from gold is that bitcoins are much easier to store and transfer, they are difficult to counterfeit, they can be split into tiny pieces, and transactions are very fast. The difference from fiat real money is that the emission of bitcoins is predictable and decreasing, while the control of some center simply does not exist. There are also differences with fiat e-currencies. Bitcoins can very well be as anonymous as cash. It is impossible to freeze user accounts.
Bitcoin is backed by CPU time. In fact, it is unwise to talk about it. First of all, conversations about some kind of security speak of a centralized peg to the exchange rate. But you cannot exchange bitcoins for the enormous computing power that is wasted when generating them. So such a currency has no collateral, it is a self-valuable product. And don't be scared. Even gold is not backed by anything, being just a valuable metal. Something similar is happening with bitcoins. This currency is created through computational processes, while this process is protected from attacks by the existence of an extensive computer network.
In reality, bitcoins are worthless, as they are not backed by anything. Let's go back to gold, which is also not secured by anything. However, it allows most currencies to be valued.
The value of bitcoins lies in how much electricity and processing power is required to generate them. Thanks to this myth, someone is trying to apply a labor theory of value to bitcoin. Not only is it considered by many to be generally false, but it is simply inapplicable to this situation. If X resources are required to create something, then this does not mean that the price of the final product will be X. The resulting result may cost more or less depending on how useful it will be to users. The theory itself, like this myth, suffers from a violation of the causal relationship. The value of bitcoins is based on their value. If it increases, then more and more people will try to generate a result. This is more and more profitable! Accordingly, the complexity of the generation will increase, which will make the extraction of banknotes more difficult. If the bitcoin price falls, then the opposite picture is observed. Such processes maintain a balance between the cost of the generation itself and the cost of the generated currency.
Bitcoins have no intrinsic value, unlike other things. While many things have a value of their own, it is usually below market value. For example, gold. If a person came up with the idea of using it as the main value, resistant to inflation, then the metal would be used exclusively in industry. Then gold would not be as valuable as it is now. After all, the industry simply does not need as much "yellow metal" as people have now. Through history, some things have gained value as media of exchange. However, this is not at all a vital necessity. While bitcoins are not destined to become a raw material for the industry, these units have other useful qualities of exchange. The value of bitcoins lies solely in the willingness of people to trade them, that is, in supply and demand.
Bitcoins are actually illegal legal tender. Who can prevent a person from exchanging one thing for another? Barter between individuals cannot be illegal. Yes, there are generally many currencies that, in their essence, are not legal tender. And what is currency in general? It's just a unit of calculation that is convenient for everyone. Of course, national laws may have their own characteristics, but in general, trading in exchange goods, including digital ones (bitcoins, currencies of gaming virtual worlds, etc.) are considered quite acceptable.
Bitcoin is actually a manifestation of some kind of internal terrorism. After all, such units harm both the stability of the state and its currency. Any action that excludes violence can no longer be considered terrorism. Nobody is forcing bitcoins on someone. Terrorism means acts of intimidation of people, it is obvious that bitcoins are not created for this at all.
Bitcoins help evade taxes, which negatively affects civilization in general. It all depends on how the user follows the laws adopted in his country. Do not forget that there is also an opposite point of view - the development of society provides for a gradual decrease in government interference in people's lives and in their business relations.
Since anyone can create bitcoins, there is no use in them. It takes quite a lot of computing power to generate coins. The ideology of the system provides for the coming of the time when all coins in general will be generated.
The uselessness of bitcoins lies in the use of unverified cryptography. The Bitcoin program uses well-known algorithms such as SHA-256 and ECDSA. They have already established themselves as well-known industry encryption standards.
The earliest users of the payment system received unfair rewards. This is understandable by the fact that early adopters took on a higher risk of losing money and time. From a practical point of view, justice is a very conditional matter; it is simply impossible to coordinate it with all the numerous participants. The goal of the project is not at all to establish "justice", because it is simply impossible. The vast majority of the 21 million bitcoins created are not yet widespread among humans. So if someone starts generating or acquiring bitcoins today, then he himself can become one of those very first users.
The generated 21 million coins are not enough, this is not enough for all of humanity. In fact, the Bitcoin project envisions the existence of 2099999997690000 (more than two quadrillion) of the maximum possible indivisible units. Therefore, each bitcoin can be divided into one hundred million pieces. With the rise in the value of bitcoins, people may well, for convenience, work with the most microscopic units, such as millibitcoins and microbitcoins. Perhaps, over time, a denomination will be made with ratios of 1 to 10, 1 to 100, and so on.
Bitcoins are stored in wallet files. Some people believe that you can simply copy the wallet and get more coins that way. In fact, this file contains only a secret private key that allows a person to dispose of their funds. It is as if the bank gave the person the key to manage the account. But giving it to someone will not increase the amount in the bank account at all. The funds will simply be spent by one person or another.
Lost coins cannot be replaced. In bitcoin, the minimum unit is 0.00000001, so the loss could be negligible. The loss of a coin will lead to the fact that the rest of the coins will simply rise slightly in value. So it can be considered a small gift for all other users of the system. A logical question arises: why is there no mechanism for replacing lost coins at all? In fact, it is impossible to distinguish between a lost coin and one that is simply not used at the moment, but simply waits for its time in the wallet of some user.
Bitcoin is actually a huge pyramid scheme. The classical financial pyramids were the Ponzi scheme, MMM. In them, the founders convinced users that they would certainly make a profit. Bitcoin does not provide any guarantees. There is no single governing center, just a group of people are building a new economy. But the system itself should not be confused with those projects on the Internet that accept bitcoins as deposits. So they can be a financial pyramid, promising get rich quick.
Lost coins, together with limited supply, create a deflationary spiral. The human factor is opposed by both deflationary forces and economic reasons, for example, hoarding. This reduces the chances of a deflationary spiral forming.
The very idea of bitcoin is not viable, as there is no way to control inflation. Inflation is the rise in prices over time, which is the result of currency depreciation. This is how supply and demand function. And the supply of bitcoins is fixed, which is associated with the peculiarity of the issue. This is the difference from fiat money. The only way to avoid inflation is to simply drop the demand for bitcoin. It should be borne in mind that this is a currency with a predictable decentralized emission. If demand drops to zero, then bitcoins will be doomed. But this can hardly happen in the future. The key point is that this currency simply cannot be depreciated sharply by inflation by some government or person, organization. After all, it will not be possible to significantly increase demand due to standardized emission. The growing demand for bitcoin is much more likely due to the popularity of this currency. As a result, deflation is observed and the exchange rate is growing.
The Bitcoin community is geeks, anarchists, conspiracy theorists, the gold standard. It's hard to deny, but isn't society itself even more colorful? So why be surprised?
Anyone with powerful computing technology behind them can take over the entire network. This is true, but the huge costs required to implement such a plan simply will not pay off. Generating nodes are becoming more and more painful, therefore, it is more and more difficult for some organization to seize control. Currently, the power of all private generating nodes is already eight times greater than any supercomputer created, as well as the most famous distribution network. And let one day some attacker be able to take control of the entire network. In fact, this will give him limited options. After all, he will not be able to use other people's bitcoins under any circumstances. A cracker can only undo his recent transfers or slow down the passage of strangers. But are these advantages worth the costly attack? So there is simply no rational economic reason for it.
Bitcoins violate some government regulations. Only now no one can name which state norms are violated. At the moment, there is not even a clear legal definition of coin generation itself.
Fractional banking is not possible in the Bitcoin system. How do ordinary banks work? After opening, they accept deposits, and some of them are issued in the form of loans. The main thing is that the funds with interest are returned. It is logical to assume that the withdrawal of all 100 percent of their deposits by depositors will bring down the system. Ordinary banks cannot guarantee that this will not happen, relying only on government insurance. Bitcoin does not have it, but there is faith in the common sense of users.
It is impossible to create a point of sale that accepts bitcoins, because it takes at least 10 minutes to confirm the transfer. Confirmation of the transfer may actually take minutes and hours, nothing will change in the foreseeable future. Indeed, even if the total computing power grows several times, the complexity of generation will immediately be automatically adjusted to maintain a stable output of six blocks per hour. There are two ways to try to solve this problem. First of all, taking into account small transfers, you can trust the client by giving him the goods without waiting for confirmation of the arrival of funds. The translation itself will come almost instantly, which the seller will see. If the client wants to return these bitcoins and spend them somewhere else, then he will have to spend quite a lot of money on such an attack. As a result, a petty scam will lose all meaning. And nobody canceled the prepayment system. You can ask the client to first replenish the account, and then freely dispose of these funds. No other convenient and safe ways have yet been found.
After 21 million coins have been mined, no one will generate blocks confirming transfers. It may happen that the generation costs will no longer be covered by the block creation reward. And this can happen even before the maximum number of bitcoins is reached. But miners can profit from the transfer fees. The holder of bitcoins will also be interested in the generation of new blocks, because if the generation stops, then their funds will lose all value.
It's bad that there is no built-in mechanism for canceling payments. The possibility of canceling payments is fraught with the appearance of scammers. It's also a good thing if large organizations like PayPal have a responsibility to prevent intruders from acting. For example, if after the transaction on eBay the seller has not sent the goods, the money is withdrawn from his account and returned to the buyer. Such a measure only strengthens the economy of the online auction, because buyers understand low risks, even making risky purchases. If a person owns bitcoins, then they can only belong to him, this is the whole point. Allowing users to cancel payments will enable attackers to take funds. As a result, a person has to choose - either full control over his funds, or protection against fraud, as is the case with PayPal. And one and the other at the same time simply will not work. The owner of the bitcoin is responsible for preventing fraud. All power over money is in the hands of the user. And there have always been crooks, so you should only send your bitcoins to verified recipients.
The advent of quantum computers will destroy the security of the Bitcoin system.This is theoretically possible, but there are no such quantum computers that could compete with ordinary ones at the moment. If the security of bitcoins is threatened, then nothing prevents the transition to post-quantum cryptography. Only productive quantum computers will turn out to be dangerous for ordinary banks. After all, those in making payments are guided by the same cryptography.
Generating bitcoins is environmentally damaging and energy-intensive. And then what to say about the extraction of gold from the ground, and then its melting and shaping? People build huge buildings with bizarre shapes to store money there, energy is spent on printing or minting fiat money. But there is also the transportation of currencies in armored vehicles with security guards. Can't such people do something more useful? So bitcoins are a much more economical resource than others.
Store owners are unable to price their item in bitcoin due to the ever-changing exchange rate. This myth is based on the belief that bitcoins must be sold immediately to cover their costs. But this does not have to be done, you must first understand whether there is a need for this. In addition, no one bothers to sell this virtual currency later, when it really becomes necessary and the rate will be more profitable. And the fact that small trading volumes quite strongly affect the rate is true. But this should change in the future, because the turnover is constantly increasing. And many merchants simply regularly update the prices on the sites in bitcoins, which correspond to the current exchange rate. It is also possible to enter into a put option at a fixed price for a certain time. This can really help protect yourself from rate jumps and make your pricing easier.
Like the infamous currencies Flooz, E-gold bitcoins are great for criminals. Do not predict a quick death for this currency. Users hope that the system will soon evolve to such an extent that no organization will be able to liquidate Bitcoin. Wouldn't it be better to join the progressive movement? And at the same time, is it really necessary to fight the terrorists' instrument, and not with them? The suicide bombers are directing planes to buildings, but this does not force the ban on planes. The public good outweighs the potential consequences. And there is no uniform criminal law between different jurisdictions.
Bitcoins will soon be liquidated by the government, as happened with the Liberty Dollar. The name Liberty Dollar is associated with a rather risky attempt to introduce an alternative currency in America. At the same time, quite physical coins and banknotes were issued, which were backed by precious metals. The US authorities immediately banned these free dollars, accusing the organizers of the system of making counterfeit money and attempting to cheat. Unlike the Liberty Dollar, bitcoins are neither physical nor commercial instruments, nor are they backed by anything at all.
In fact, Bitcoin is a scam designed to make money quickly on the Internet. And again, we repeat that Bitcoin itself has nothing to do with quick-earnings schemes, the system does not promise any super-profits. Even the creators of the official client program do not earn from the participants, since they do not receive any money from them. It is worth considering Bitcoin as an experimental payment system with its own currency. Yes, it can be successful as it can fail in the end. At the same time, no developer expects wealth from participating in the program. And scammers, of course, can use Bitcoin in their schemes, just like any other payment system.
You just need to install the Bictoin client on your computer to start making money. Installing a client by itself will not make money. After all, this is essentially just one wallet. After opening the WebMoney wallet, do we not expect that money will start to flow there? Some people make money by mining, solving a complex computational problem. For this, special software and hardware are used. But it would be a mistake to think that earning coins through mining is the only purpose of the system's existence. In fact, it is just an auxiliary function of the money issue and network protection. Some people are generally engaged in mining just out of love for the project, without earning anything.
Bitcoin is a great opportunity to invest your funds. It is worth exercising discretion in this matter. This is a new electronic currency, whose real value is not provided by any organization or government. Like all currencies, its value is formed from the fact that people are ready to exchange their services or goods for it. The bitcoin rate is constantly changing. So investing in this currency is fraught with great risk. In addition, at an early stage, the system lacks high prevalence, which leads to its vulnerability. Over time, Bitcoin will become much more famous, stability will increase, but for now, the rate is jumping unpredictably. So any investment of real money in this payment system must be carefully thought out, a clear plan must be drawn up that would allow managing possible risks. Of course, the deflationary model itself implies an increase in the exchange rate over time, but this is still not guaranteed by anyone. So you shouldn't invest your last funds in Bitcoin as an investment.