The word “bitcoins” has many people talking. Just what is it? Can you just start buying some and forget about it? After all, if something is worth money, why not use it for trading currencies? In a world where money flows around the world like a river, it’s more important than ever to be able to trade between different currencies.
The short answer: In a nutshell, bitcoins are virtual currency that can be used to purchase actual goods from online stores. The value increases or decreases depending on events in the global economy, news stories, or other external variables. So far, this is the only way to buy things with the virtual currency without actually having to pay for them using your pocket money.
However, in 2021, the hype around bitcoins will no doubt reach new heights as more businesses try to take advantage of its potential to increase their profits by using it instead of traditional currency.
The hype around bitcoins in 2021 will be centered around two things.
First, the decentralized nature of the technology itself. Unlike traditional banks, which operate according to strict rules set by the government, miners decide how much to charge for their transactions and have the power to change the supply of the digital currency to keep it fresh in buyers’ minds. This gives theblockchain an ability to remain stable even when there is high activity on the part of miners. If the price of a currency goes up, miners have the option to change the amount they are paying out so that they can make profit.
Secondly, the potential for large scale profitability will drive the price of bitcoins skyrocketing. Like gold, the price of bitcoins is likely to increase over time as investors see this technology’s value in the long-term. There are two factors that will influence the future price of this currency; the price of electricity for mining, which are limited by the amount of computing power that a single computer system can utilize, and the speed with which transactions are processed by the network. If we were to figure out a way to exploit these two factors to our advantage, then the transaction processing mining sector could produce a large profit for investors. However, all the research that has been done to date indicates that it is impossible for electricity to be made cheaper or for the network to process more transactions than it already does.
Imminent growth of the network
Despite the fact that there is not yet any concrete plans to incorporate proof of balance in the bitcoin protocol, one thing that can be assured is the imminent growth of the network. Although the activation of segregated witness is still on the horizon, most experts agree that it will happen in 2021. Segregated Witness is the upgrade that will allow users to transact without worrying about extra third party fees that might make the transaction processing costs skyrocket. Once segwit2x activates and starts to be used by real users, we can expect a significant increase in the amount of transaction processing fees that can be avoided.
One of the most exciting aspects of this digital currency bitcoin is that it has the potential to scale effectively.
If we look at the proof of work that is embedded into the blocks of the main network, then we can see that there are unlimited possibilities for the future growth of this system. There are more advanced and sophisticated strategies that are being developed, therefore, the scope for future growth is also unlimited.