Interest is increasing day by day in Bitcoin in light of its unprecedented price increase, and constant talk about its advantages and the possibility of it replacing traditional currencies in the future.
In a report published by the French newspaper "lefigaro", the authors: Fabrice Nudi Langlois, Ingrid Vergara, Herve Rousseau, Daniel Guineau and Georges Carasso, review a number of basic information about the most famous cryptocurrency in the world, by answering 7 questions.
How is Bitcoin made?
Bitcoin is governed by a computer protocol that was invented in 2009 by an unknown group under a pseudonym, Satoshi Nakamoto, and the currency is created as part of a process called mining.
Mining operations are carried out through computers equipped with high computing capabilities, and these devices form a decentralized network that ensures transactions and verification of sales and purchases, through what is known as blockchain technology.
Each unit is divided into divisible composition, and it is expected that no more than 21 million currencies will be created in the long term to reduce the risk of inflation.
Can it be adopted as a means of payment?
Originally, Bitcoin was designed to transfer money electronically from one person to another, without the need for a central authority to verify the authenticity of this transaction, and this cryptocurrency is traded on specialized platforms at a price determined by the law of supply and demand.
So far, Bitcoin has not technologically turned into a currency of exchange on a global scale, but many companies and brands accept the transaction to facilitate payments.
Bitcoin is not widely used as a means of payment in developed countries that have an effective infrastructure for traditional payment systems, unlike countries where bank accounts are difficult to access or suffer from high inflation rates, such as Venezuela or Argentina.
Bitcoin has not turned into a currency of exchange on a global scale, but many companies accept it (Reuters)
Can it be rigged or tampered with?
According to Le Figaro, it is not theoretically possible to forge Bitcoin, as proved by practical experience over the past ten years. The secret of the security of this technology lies in its computer protocol as well as the decentralized nature of the network that manages transactions.
Every computer contains a copy of a chain of transactions, linked to each other, and the larger the network, the more difficult it is to change codes or implement fraudulent operations.
To falsify data, you must be able to penetrate more than 50% of the computers on the network at the same time.
The only risk to Bitcoin may be the possibility of targeting digital wallets in which the currency is stored, whether by individuals, institutions, or large exchange platforms.
Why has its value increased?
It is clear that Bitcoin benefited a lot from the Corona crisis, as its value doubled 6 times in one year, during the pandemic, and became the preferred currency for traditional investment institutions such as banks, insurance companies and pension funds, as they see it as a haven from the depreciation of official currencies.
There is another factor that contributed to its rise in value, as the demand for it rose by thousands of companies looking to invest their money and betting on the upward trend in its prices, and many observers believe that Bitcoin has not yet reached its peak value.
Last month, Tesla's investment in buying Bitcoin worth $ 1.5 billion resulted in a 20% rise in prices within 48 hours.
Is it a safe haven like gold?
The cryptocurrency boom coincided with the worst economic recession since the thirties of the last century, and supporters of the Bitcoin currency see it as a safe haven, and that it will take the place of gold as a store of value, especially since the yellow metal is expensive in terms of storage, and can be confiscated, and it cannot be divided easily, while Bitcoin is easy to store and can The division is almost limitless, and it can be accessed everywhere, and it is completely independent from government authorities.
On the other hand, critics see that the value of the cryptocurrency is unrealistic and unstable, as it is not recognized globally, and cannot be traded in banks, and most companies in the world reject it, unlike the globally recognized gold, which represents a real haven against inflation.
Central banks in major countries seek to compete with cryptocurrencies by launching electronic versions of major currencies (Getty Images)
Is Bitcoin a bubble?
The price of Bitcoin rose in 3 months from 13 thousand dollars to more than 58 thousand in late February.
"Unlike real estate or stocks, Bitcoin has no fundamental value, and it does not generate financial flows like rents, so it is difficult to determine what price this currency is worth," says Matteo Bouvar, a researcher at the Toulouse School of Economics.
The value of Bitcoin depends on the confidence it places in investors, and to a lesser extent its prevalence as a means of payment, Bouvar returns, explaining that if this confidence diminishes for one reason or another, then the value of Bitcoin could theoretically fall to zero.
Despite all the pessimistic expectations about Bitcoin, since its emergence this cryptocurrency has been able to withstand all the confidence crises that have afflicted it, and for analysts at Citibank, Bitcoin is now experiencing a turning point, either it becomes a preferred currency for international trade or It will face an internal collapse.
Is it threatening other currencies?
"You can't buy coffee with bitcoin," said US Treasury Secretary Janet Yellen on the rise in Bitcoin prices. "You can't buy coffee with Bitcoin," said the well-known investor, Tika Tiwari, a supporter of cryptocurrencies, on the minister's words, "She is right, trucks were not built to transport a single pineapple."
Tiwari does not consider Bitcoin as a currency, but he sees it as an effective means of payment, as billions can be transferred from Tokyo to New York in minutes for $ 20.
Central banks in major countries seek to compete with cryptocurrencies by launching electronic versions of major currencies (the dollar, the euro and the yuan) in the coming months or years.
In developing countries with fragile financial resources, this virtual currency may cause imbalances and effects that are difficult to control, so the Financial Stability Board, the International Monetary Fund, and the Bank for International Settlements called for a regulatory framework for dealing with cryptocurrencies.