With the ever-increasing use of virtual currency and its volatility, cryptocurrencies are being adopted across the world for various transactions. Cryptocurrency derivatives trading is a new trading area that many daytime traders are interested in. Several people hold some experience and knowledge of what is Bitcoin and Bitcoin’s two paths to monetization. For those who do not, we will give you the basics introduction of this, so you may have a deeper understanding of it.
What is Bitcoin
Bitcoin (BTC) is usually described as a virtual, decentralized and at first glance anonymous currency that is not government-backed or backed by any other legal entity, and that can not be exchanged into gold or any other commodity.
At the heart of the creation of Bitcoin stands the text "Bitcoin: a Peer-to-Peer Electronic Cash System" of Satoshi Nakamoto127, published on the internet in 2008. It was on the basis of this text and the ideas conveyed in it that the development of Bitcoin accelerated. Contributory to the mystic nature of Bitcoin is that until now it remains unclear whether Satoshi Nakamoto is a real person, a pseudonym, or perhaps even a group of hackers.
Bitcoin: Two Paths to Monetization
If we muse about the future, how will the transition from being a store of value to a unit of account look for Bitcoin? You can consider it in two ways.
On one side, Bitcoin becomes a reserve asset for central banks. A domino effect could prompt more nations to buy Bitcoin to protect against speculative attacks and to ensure that public debt can be paid off with investments in Bitcoin. The Marshallian Islands already have an investment in Bitcoin, and the Central Bank of Barbados wrote a paper on the topic in 2015. Negative scenario. Loss of confidence in the fiat system, and there will be a huge rush into the new safe haven being Bitcoin.
On the other hand, you can see a scenario in which Bitcoin ascends into monetary supremacy by each person slowly transitioning to Bitcoin. Just a monetary upgrade. Install healthy software on a crappy Windows PC, and it starts functioning better. The monetary system that we have creates money when debt is created. The flipside of that is that it destroys money when debt is paid off. We have had this sort of system for the past 40 to 50 years, and now we have another alternative, and everybody will jump into this new system (Bitcoin). Eventually, people can use Bitcoin to pay off their fiat debt. If we just keep paying off our debt, an orderly unwinding of the global monetary fiat system will ensue. Basically, everyone pays off all of their debt and the money supply contracts until it drops to zero, and then a new monetary system that is functional takes over the world. It might be slow or quick, but it doesn’t have to be messy and ugly.
Thanks for your time, after reading this article, you may have a deeper understanding of what is Bitcoin and Bitcoin’s two paths to monetization. It was an honor to share the experience of cryptocurrency derivatives trading with you. For more information, please follow all of our newest articles on Bybit.
Bybit is a cryptocurrency derivatives exchange with 100x leverage BTCUSD perpetual contracts; providing a fairer, faster, and more human trading environment. With a matching engine 10x the industry speed, a 24/7 multilingual CS, and an advanced order system. www.bybit.com