- The definition of money We all know that the RMB is money, the US dollar is money, and gold and silver are money. I ask the question, what makes them money? You might answer, because they have value, or are a representation of value. But with so many things of value, why are these the only varieties that have become money? The answer is easy to think of because people generally believe in their value, and the value of other things is hardly commonly agreed upon and cannot become money. For example, there is no general agreement on the value of stamps, which cannot be used as money anywhere else except by stamp collectors. Generally speaking, the more people agree with them, the more universal such money is.
- Credibility So the essence of money, or of money, is its credibility. It must convince people that it has value before it can be money, before it can be collected and paid for. Why does the money have to be credible? Because the other person has to believe it’s worth something, otherwise you can’t pay it out. So, the next question is, is a credible thing money? My answer is Yes. Whether something is money or not depends only on whether people believe in its value, it doesn’t matter whether it actually has value or not. The same is true of cryptocurrency; it doesn’t really matter much what it is. What matters is that it has to make sure it is credible so that enough people believe in its value before it can become money. So what is Bitcoin, What is Dogemma? I will explain in the next paragraphs.
- The Trustworthiness of Cryptocurrency The core problem that Bitcoin seeks to solve is the creation of a trusted digital credential. Because this credential is trustworthy, it can be used as a currency. The technical basis of Bitcoin is cryptography, because only cryptography can guarantee its trustworthiness. Once the encryption is broken, it can’t be used as a currency. This is why this type of digital credential is called a “cryptocurrency”. There is another important reason why techies are interested in Bitcoin. It is a technology that can probably be used in any situation where reliable digital credentials are needed, so does similar currencies such as Dogecoin.
- the characteristics of Cryptocurrency Cryptocurrency such as Bitcoin has three characteristics, and it is because it does these three things that it is credible and can be used as money. First, it can’t be easily stolen. Or conversely, it makes it impossible for you to steal from someone else; you can only spend your own money. This is because you have to have someone else’s private key in order to take out their money. Under normal circumstances, you can’t get someone else’s private key. Secondly, it can’t be forged. Every bitcoin can be traced back to its source, and all bitcoins originate from the rewards that miners receive. The only way for a miner to get a reward is to create a new block, which is a very difficult thing to do, so it’s impossible to forge bitcoins. Finally, it can’t be generated in bulk. For the same reason as the previous article, bitcoins are issued at a steady rate, with 12.5 new ones added every 10 minutes now, then halved every four years, and eventually stop growing. So there is no inflation caused by indiscriminate government issuance, as there is with paper money.
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