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What is the difference between central bank authorized currency and Bitcoin? The bearer of central bank authorized currency can merely tender it for exchange of goods and services. The holder of Bitcoins cannot tender it because it is a virtual currency not authorized by a central bank. However, Bitcoin holders might be able to transfer Bitcoins to some other account of a Bitcoin member in trade of goods and services and also central bank authorized currencies.

Inflation will bring down the real value of bank currency. Short term fluctuation in demand and supply of bank currency in money markets effects change in borrowing cost. https://algowiki.win/wiki/Post:I_Dont_Want_To_Spend_This_Much_Time_On_TOP_QUALITY_BITCOIN_How_About_You However, the facial skin value remains the same. In the event of Bitcoin, its face value and real value both changes. We have recently witnessed the split of Bitcoin. That is something similar to split of share in the currency markets. Companies sometimes split a stock into two or five or ten depending upon the market value. This can increase the level of transactions. Therefore, while the intrinsic value of a currency decreases over a period of time, the intrinsic value of Bitcoin increases as demand for the coins increases. Consequently, hoarding of Bitcoins automatically enables an individual to produce a profit. Besides, the initial holders of Bitcoins will have a huge advantage over other Bitcoin holders who entered the market later. In that sense, Bitcoin behaves like an asset whose value increases and decreases as is evidenced by its price volatility.

When the original producers including the miners sell Bitcoin to the public, money supply is reduced in the market. However, this money won't the central banks. Instead, it goes to a few individuals who is able to act like a central bank. In fact, companies are permitted to raise capital from the market. However, they are regulated transactions. This means as the total value of Bitcoins increases, the Bitcoin system will have the strength to hinder central banks' monetary policy.

Bitcoin is highly speculative

How do you buy a Bitcoin? Naturally, somebody must sell it, sell it for a value, a value decided by Bitcoin market and probably by the sellers themselves. If you can find more buyers than sellers, then your price goes up. It means Bitcoin acts like a virtual commodity. You can hoard and sell them later for a profit. Imagine if the price of Bitcoin boils down? Of course, you will lose your money just like the way you lose money in stock market. There is also another method of acquiring Bitcoin through mining. Bitcoin mining is the process by which transactions are verified and put into the public ledger, referred to as the black chain, as well as the means through which new Bitcoins are released.

How liquid is the Bitcoin? It depends upon the volume of transactions. In stock market, the liquidity of a stock is dependent upon factors such as value of the business, free float, demand and supply, etc. In case of Bitcoin, it seems free float and demand are the factors that determine its price. The high volatility of Bitcoin price is due to less free float and much more demand. The worthiness of the virtual company depends upon their members' experiences with Bitcoin transactions. We would get some useful feedback from its members.

What could be one big problem with this system of transaction? No members can sell Bitcoin if they don't have one. This means you will need to first acquire it by tendering something valuable you possess or through Bitcoin mining. A large chunk of these valuable things ultimately would go to a person who is the original seller of Bitcoin. Needless to say, some amount as profit will surely go to other members that are not the original producer of Bitcoins. Some members may also lose their valuables. As demand for Bitcoin increases, the original seller can produce more Bitcoins as is being done by central banks. As the price of Bitcoin increases in their market, the initial producers can slowly release their bitcoins into the system and make a huge profit.