Everything you need to know before investing in Bitcoin

December 19, 2017

19 Min Read

Everything you need to know before investing in Bitcoin

We have seen many incredible technological revolutions throughout the history of mankind. Guttenberg’s press helped bring books to the masses. The telegraph in its time allowed rapid communication over great distances. More recently, personal computers have greatly increased human productivity, leading to the creation of the Internet, digital communications and the advent of citizen journalism, as photos of the main events are almost instantaneously uploaded to Twitter and other social networks through of smart phones, which are small computers. Until relatively recently, however, the monetary system had remained somewhat unaffected by a breakthrough.

Before getting into what bitcoin is, it is important to know what money is and what gives it its value?

Money is either active or generally accepted as a means of payment. Some examples of money are: coins and banknotes, debit cards, and electronic transfers, among others. The value of money is the support given by the issuing entity, government, central banks, currency houses, etc.

The money must have certain properties which are:

A medium of transaction or exchange, an accounting unit, is portable, it is durable in a certain way, it is divisible, one unit has the same value to another unit, that is, you can buy the same with a ten peso coin that you have that with the ten pesos that someone else has, and it is a means of storing value over a long period of time.

Below I leave a table with the comparison of the properties that money should have, and the properties that have the money that we know, gold and Bitcoin.

If you are a lover of gold you will say that if you can store it, but it will have an additional cost to be able to store it and that it remains safe, which if it cannot be easily argued is that it is portable, since for example you cannot send or transport easily say $ 50 thousand dollars from Mexico to the United States or any other country, however, with Bitcoin, you can send that amount of money anywhere in the world in just minutes. And one of the biggest differences that Gold and Bitcoin have against any fiduciary currency is that Gold and Bitcoin are scarce, however, any other currency such as Peso or Dollar is not, central banks and the government can create the amount of new money that came into circulation as they see fit, thus creating the well-known inflation, even in some countries have come to create hyperinflation, if you were not in one you can ask your parents.

I understand that changing the paradigm of cash and having something tangible in your hands to have it in a digital medium that you still do not understand is scary, that is why this article will be very useful to understand this new and innovative financial system that grows by leaps and bounds, and although you have not noticed, you have been moving little by little to that paradigm, nowadays, in the bank you have only a numerical amount that represents the money you own, but what percentage of it Do you have at the same time in your hands?

Did you know that only 8% of the world’s money exists in physical form, the rest is in electronic form?(30 interesting facts about money) Interesting, do not you think? To begin to understand a bit of what Bitcoin is about you have to understand a couple of concepts.