Wednesday 3 January 2018

3 bitcoin concepts that everybody need to know (1)

Just a few years ago, almost nobody knew anything about cryptocurrencies, like a bitcoin. Now, everyone is aware of them and they are ready to hold fierce arguments about the future of digital currencies.
We will not provide an opinion on this one, but rather, we will introduce you to three basic concepts of cryptocurrencies that everybody should know.
1) Comparison with shares is not appropriate
With new records coming in at the bitcoin in mid-December, many experts began to make an analogy between the bitcoin and the stock markets, which, incidentally, also enjoyed an exceptionally strong year.
Comparisons have even begun between the bitcoin and the shares of individual companies.
However, you should know that such a comparison is not particularly relevant. The total cost of the bitcoin is about $230 billion. If the bitcoin was a company, it would be among the top 20 in the S&P 500 index.
But how can we compare the cryptocurrencies with the company's shares? The bitcoin is a currency and should be compared to other currencies.
According to the Fed, money supply M3 is at a level of 13.7 trillion dollars. This gives the US dollar a market capitalization of 13.7 trillion dollars, which is much higher than that of the bitcoin.


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