Bitcoin, Cryptocurrency, what is it?

Bitcoin, virtual currency, what is it?

If you want to understand what virtual currencies such as Bitcoin, Ethereum and more than 700 other virtual currencies, you are on the right site.

In this first article we will explain first of all what money is in general and how it works.

The history of currency to understand the virtual currency

Historical reminder:
Originally, human beings traded their products, which is called barter.
More precisely, it was the means of acquiring products which were not produced by themselves.

On the other hand, how do we value the value of goods in relation to other goods?

Second, if I wish, for example, to exchange my wheat for apples, the producer of apples will have to buy wheat, otherwise I will stay with my wheat and him and his apples!

In addition, how to delay the purchases you want to make?

It was therefore necessary to find a neutral product of value which could serve as a bargaining chip.

At first it was simple shells that everyone wanted to acquire for their beauty. But when we realized that it was enough to bend down to find them they lost all their value!

So, they began to extract metals from the soil. It was hard work and it would make this product rare and therefore valuable. So they “smote money” with silver and precious metals.
The rarer and more desirable the metal, the more valuable it was.

Later, by practicality, it was decided to issue notes with gold as their gold standard.
A note would be worth X ounce of gold.

But gold is rare, it is likely to be missing for all trade on a global scale, and is hard to store.

This has led to the issuance of bills not on a benchmark, but on the basis of supply and demand. That is, the exchange rate of currencies between them will be freely determined on the foreign exchange market on the basis of supply and demand. This implies that the variations in the value of a currency will only be measurable between one currency and another: Dollar against the Euro, Yen against the Dollar etc …. because there is no longer a monetary standard.

Today the tickets are thanks to the new technologies, more and more replaced by simple computer writings.

Soon there will be no more tickets…

Conclusion:

The function of money is like the cryptocurrencies:

  • It is a unit of account that allows us to measure the value of goods and services exchanged.
  • It is an instrument of exchange.
  • It is a store of value allowing to delay its purchases or to constitute a savings.

And the virtual currencies in all this?

In our next article we will explain what is virtual currency such as the Bitcoin and if it meets the same rules.

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