What is the backbone of Bitcoin and how can we trust it?
People who are new to the cryptocurrency market are often asked this question: What is the backbone of Bitcoin? How can it be known that its price will not increase by tens of dollars in a short period of time?How do we know when we bought it, someone will eventually buy our bitcoins?
And questions like these which are always on everyone’s mind. In answer to this question it is necessary to give a brief introduction to the money that we currently have.
It does not matter if the money is dollars or pounds, or even the Iranian Rial. The important thing is that, contrary to the expectations of many people, this money has no support. Many people mistakenly think that the money we have is backed by gold, while this way of thinking is completely wrong.
It was at least since 1971 that all the world’s currencies became unsupported. When the former US president declared that year that the US dollar was not backed by gold but by the will and power of the US government and from that day on, all the countries of the world followed the same policy. And if you consider the inflation situation in Iran, it is because the government prints banknotes according to specific policies or it generates liquidity and all of these are the reasons of why the value of money is decreasing every day.
Given all these, what is the backbone of Bitcoin? Unlike Fiat currencies, we can offer two basic supports for Bitcoin.
The first issue to be discussed is mining on the Bitcoin network. As you know, there is a bitcoin miner to generate bitcoins and verify transactions. Miners are not a person, but hardware devices that do this. People who invest in these devices have a very strong reason.
The second support, which is perhaps even more important, is the issue of people trust. This trust is not gained overnight and can not be lost overnight; But it can greatly overshadow the value of cryptocurrencies like bitcoin. We look at gold as an investment tool, now we have the same attitude towards bitcoin. Also, when large and important companies invest in this currency, they increase people’s trust. So when you hear a lot of positive news, you trust more, and conversely, when you hear negative news, it becomes harder for you to trust.
The most trusted name in the Canadian Financial Service Industry. With 17 years of experience, Hafez provides a secure and fast channel for all clients. Hafez assists clients in their tuition payments and refunds, individual payments, corporate payments and crypto currency transactions.