What is Bitcoin Support?
Bitcoin has become one of the most reputable currencies in the world today, which has both the ability to invest and the ability to exchange currencies and can be used to buy and sell; But the question is, what is the bankroll of Bitcoin? In general, the better question is to ask what is the bankrolling of digital currencies? Before we want to know what is the bankrolling of Bitcoin, we have to answer the question, what is the need for bankrolling at all? In other words, what effect do these supports have on the economy and sales?
In general, whether in the question of what is the backing of Bitcoin or in other cases, the backing is an old and traditional principle of economics that, contrary to popular belief, has not been used for years and has been replaced by fiats or unsupported currencies. In other words, today, except for Bitcoin, currencies such as the dollar and the euro and… unsupported currencies are considered; So in answer to the question of what is Bitcoin support, we must say no!
What is Bitcoin support?
But to understand the question of what is Bitcoin support, and it is better to explain a little more. In the past and in the early days when money and coins were created as a means of exchange. It was the coins themselves that formed the backbone.
In other words, gold or silver coins with bronze were valued based on their material of manufacture; But after the invention of paper money, the issue of valuation came into question. In fact, what made coins or money valuable (gold or silver or bronze) no longer existed in banknotes; Therefore, there was a challenge in valuing banknotes. However, what is the backing of Bitcoin? Bitcoin, which is not a real banknote.
Evaluate and answer the question “What is Bitcoin backing? “
The issue of valuation is a relative one; That is, when you say that this banknote is tens of thousands, we must find a ratio for it; That is, ten thousand in relation to what origin and starting point; So in today’s topic we ask what is the backing of bitcoin? The main and academic meaning is that the value of bitcoin and other digital currencies is measured based on what starting point or so-called zero point?
It makes perfect sense that currencies like the dollar or the euro, or even digital currencies, should have a zero point and a starting point through which we can make valuations; So when answering the question of what is Bitcoin support, we say no! We seem to come to a contradiction.
What is the backing of digital currencies?
Let’s start the story a little earlier to answer what bitcoin support is. When coins gradually became banknotes and the issue of valuation relative to a common point arose. Therefore, for the banknotes created, a valuation source should be introduced as support. This point should be valuable and of course fixed.
Therefore, gold and silver were chosen as the backbone of the currencies; So when it was said a thousand dollars, it was weighed against gold. In order not to prolong the issue of backing and not to create real confusion in the market, many other currencies tried to base their support on contracts based on the dollar, which itself was backed by gold. Hence, the dollar was considered a global currency.
This, in turn, made the dollar as valuable as gold and had a devastating effect on the world. It was enough for a country to oppose American politicians. The value and backing of the dollar greatly affected the economy of that country. This brought the economy into a new phase. Fuzzy What is the answer to the bitcoin backing question? It lies in it.
What is the backing of digital currencies? (What is Bitcoin support?)
So far, the story of the question “What is the backing of Bitcoin”? But because of the problems that you mentioned above, the most important of which, economists at least came to the conclusion that they should separate the issue of currency and gold; But in this case, the main question that arose was what would be the current backing of foreign exchange capital?
The answer was very simple and clear. The amount of financial turnover generated by each currency can determine the value of that currency. For example, when the dollar is used as the number one currency in global exchanges, it will certainly have a higher value than the currencies of African countries.
Given that the dollar is an important global currency and that all countries of the world deal with it in some way, instead of providing support for currencies, the ratio of currencies to each other is examined; That is, the dollar is the basis of the ratio, and other currencies are compared and valued against the dollar.
This solves both the issue of valuation in banknotes and the fact that the dollar itself is priced based on the amount used and considered. This type of currency in the economy is called fiat.
In response to the question of what is Bitcoin support, it should be said that there is also a program for digital currencies; That is, currencies such as bitcoin and… are valued based on usage rate as well as a few other indicators, and there is no longer an issue called physical support; But for some digital currencies, which are often fixed currencies, the issue is different. To keep their prices stable, these currencies must be present in the market on the basis of a stable support such as gold, dollars or oil. This is a completely separate issue from the question of what constitutes bitcoin support.
What is Bitcoin support?
But although bitcoin, like the dollar and the euro, is today a fiat (currency without physical backing), there are major differences between them. The first thing to consider when it comes to bitcoin backing is that bitcoin is practically an invisible currency; This means that you can not touch it like banknotes and coins and it is nothing but a multi-letter code; Therefore, in practice, what is its valuation and response to bitcoin backing is questioned.
To answer what is Bitcoin support, we must pay attention to the concept of Bitcoin and the currency code. Bitcoin is a cryptocurrency that operates through a new type of technology in the networking world called blockchain. There is no focus in this new network, and in terms of security and increasing unavailability, it has caused rapid attention and the creation of various platforms such as bitcoin in this network.
If we want to find a more accurate answer to the question of what supports Bitcoin bitcoin, we can say that in practice Bitcoin support is the same technology called blockchain. This information platform led to the introduction of the Bitcoin digital currency code and led to the use of Bitcoin as an exchange currency. (Also read the article What is a Digital Wallet?)
In fact, in answer to the question of what is the backing of bitcoin, it should be said that this increasing use of bitcoin as a currency of exchange and the currency in which it can be invested, is the main backing of bitcoin. The increase or decrease in the price of bitcoin depends on exactly this support. This can be considered the most important answer to the question “What is Bitcoin backing?”
What makes Bitcoin stand out and its price go up and down is mostly the way Bitcoin is used. In fact, in response to the question of what is Bitcoin support, it should be said that it is the trust of users and online stores that use Bitcoin in their sales. Because Bitcoin is almost untraceable and almost safe from hackers, as well as its spread on the Internet, we have virtually no reason to answer the question of what supports Bitcoin.
What is Bitcoin support? Another answer
But what is the backing question of Bitcoin? It does not end there. One of the answers we can give to the question of what supports bitcoin is the story of its extraction. In fact, mining and acquiring new bitcoins can be considered as an answer to the question of what is bitcoin backing. Given that this mining is becoming increasingly difficult and will actually be completed in a few years, the mining and discovery of a new bitcoin is a fundamental answer to what constitutes bitcoin backing.
So in answer to the question of what is Bitcoin support, if we want to say in general, how many factors can be present at the same time. What is our first response to Bitcoin support? That is, no physical factor, such as gold, currency, or oil, supports Bitcoin. Our second answer to the question of what is Bitcoin backing is that it is the users’ use of Bitcoin that determines the value of this currency.
In fact, if users stop using Bitcoin, the currency will practically fall. The third answer that can be given to the question of what is the backing of bitcoin is that the mining and acquisition of bitcoin, along with its daily use and investment capability, is another important backing of this currency. So in general, as long as the Internet exists and security is an important issue, bitcoin can be trusted and used.