Why are we concerned about Bitcoin's downward movement
Bitcoins: shopping with virtual money
Acquisition of bitcoins
Bitcoins can be bought on certain exchanges at the current price. Alternatively, they can also be purchased by other users on certain trading platforms and marketplaces. Theoretically, interested parties can also make computing capacity available for generating the bitcoins and thus access the digital currency. However, since a correspondingly powerful computer is required for this, this approach is usually ruled out.
How are bitcoins secured?
Technically, the encryption techniques mentioned are supposed to guarantee security; the virtual currency is not legally protected at all. Bitcoins are not legal tender and are not controlled by any central bank, government or regulatory agency. Anyone who buys Bitcoins is therefore relying purely on trust - the trust that someone else will accept this Internet currency. However, there is no legal claim to this. If you want to use Bitcoins as a means of payment, you should make sure that the contractual partner also accepts Bitcoins before buying.
For Bitcoins there is neither a deposit protection nor a protection via a gold standard or any other security. Anyone who views bitcoins not only as a means of payment, but also as a possible financial investment, should therefore bear in mind that the capital invested in bitcoins generally involves the risk of total loss.
Where can bitcoins be used?
From the basic idea, Bitcoins are primarily intended for shopping on the Internet. In the meantime, however, the digital currency is no longer only accepted by a few internet shops, individual service providers and retailers also use the virtual money. Even though the adoption of bitcoins has increased over the years, the number of companies that accept this electronic money is still manageable. Users should therefore not be able to rely on being able to pay an outstanding amount with bitcoins.
The story begins in 2009 when Bitcoins were introduced by private individuals as an alternative to traditional payment methods. After the first exchange rates formed in 2010, users were initially able to purchase Bitcoins for rates below ten US dollars. In 2013 the course sale took an adventurous course. After various price increases and decreases, bitcoins reached a record value of over 1,200 US dollars in November 2013. This was followed by a downward movement in which Bitcoins lost more than half of their value within a very short time. Until it was split into "Bitcoin" and "Bitcoin Cash" in August 2017, the digital currency finally rose to a rate of around 2,700 US dollars. In December 2017, the virtual currency rose to just under 20,000 US dollars in just a few weeks, then in 2018 it fell back to below 7,500 dollars and lost almost two thirds of its value at its all-time high.
Bitcoins are not only traded in US dollars, but also in other currencies such as euros or yen.
Massive price fluctuations
Bitcoins are not only characterized by significant price movements within a year. Significant fluctuations within a single day are also not uncommon. This shows an example of the development on the following two days:
On April 6, 2014, the price rose from opening to closing from EUR 357.00 to EUR 492.39. The daily low was 301.17 euros, the daily high 736.65 euros.
On April 13, 2014, the price fell from opening to closing from EUR 416.88 to EUR 325.95. The daily low was EUR 280.56, the daily high EUR 638.05.
Anyone who invests in Bitcoins can therefore more than double their invested capital in a very short time, but conversely they can also lose more than half. With Bitcoins, even a total loss is basically possible. This shows the bankruptcy of the Mt. Gox exchange in late February 2014, when 850,000 bitcoins were lost in an unexplained manner.
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