From exploration and extraction to transportation and logistics, distribution, and marketing, the exchange process in every business is long and complicated, involving fiat currencies. The bright side of bitcoin investment is not a commodity created from a chain of supply relationships and has not had a limited usage value within the Bitcoin network.
However, some countries have considered this currency as a commodity. The below-listed information will help you know what bitcoin is, which is different from real money in supply chain relationships.
What is Bitcoin?
In this “credit card-like” form, Bitcoin can be freely bought, sold, and transferred from one computer to another. Bitcoins are like any other currency; people can use them to buy goods and services, but it’s essential to remember what you’re buying when you purchase goods with bitcoins. Furthermore, all Bitcoin transactions are public, so people can track their history.
Differences between bitcoin and actual money?
The issuance of bitcoin has been a bit controversial. Under normal economic circumstances, when the supply of a commodity like gold is increased, its value tends to decrease. But in the case of bitcoin, things are a bit different because, unlike actual money, it can’t be easily exchanged for goods and services in some companies by people.
Also, there is no clearing house for bitcoin transactions; instead, payments are cleared based on complicated cryptographic algorithms through thousands of computers worldwide, considering current demand and supply for bitcoin balances without any central oversight. This decentralized nature of bitcoin’s payment system makes it very difficult for governments to shut down the network or impose their own rules and regulations.
Differences between real money and bitcoin – Security Issues:
One of the most significant differences between actual money and Bitcoin is that no one can reverse a transaction of BTC. Once bitcoins have been transferred from one person to another, there is no way to recall them. That’s because every transaction registered in bitcoins’ public ledger, called the blockchain, is irreversible. It means that transactions are irreversible, but this can also be viewed as an advantage since illegal or fraudulent transactions are not possible with bitcoins due to their irreversible nature.
Differences between bitcoin and actual money – Bitcoin is not subjected to inflation:
The main feature of the actual money is that it was designed to inflate. The government can design a currency with inflation and keep it in circulation because the cost of printing more money is negligible. Inflation helps the government and central bank control the economy, leading to issues like rising prices.
A large number of bitcoins have been lost forever as a result of thefts from bitcoin users’ online wallets. Around $500 million worth of bitcoins have been taken from various online exchanges by hacking, in addition to 0.76 percent ($270 million) worth of bitcoins being lost due to scams or fraud.
However, bitcoin users can protect themselves against theft and fraud by using safe operating practices and wallets. However, bitcoin is not subjected to any inflation due to its finite supply, making this currency more viable as a monetary system as its value is not devaluing with time compared to fiat currencies.
Differences between bitcoin and actual money – Use of Bitcoins:
Bitcoins are not just a currency; they can also be used as a medium of exchange. Bitcoins can be bought at Bitcoin exchanges Coinbase and Binance, which allows people to purchase bitcoins with conventional currency. These websites let people buy and sell bitcoins with other people. Some online retailers accept bitcoins as payment, but most people prefer to use them for personal transactions rather than being paid by employers or banks.
Actual money is prone to more risks:
Fiat currencies are prone to more risks as compared to any fiat currency. The government authorities undeniably back fiat currencies, but that does not mean there is no room for hacks and scams in this ecosystem. Counterfeiting is a fundamental issue in the fiat currency ecosystem, resulting in inflation. However, counterfeiting and double spending are not possible in the case of bitcoin due to the cryptographic network.
