This article written by David Pieper was originally published in the December 2013 issue of Traders' Magazine.
Some people compare the current hype with the historical tulip bubble, some people talk about a new currency age – the topic is the virtual currency called Bitcoin. This article shows the advantages of Bitcoins, how they work and what perspective Bitcoins have in the future.
One alternative might be Bitcoins. But what are Bitcoins? It is a virtual currency that consists of cryptographically coded data that is forgery-proof. Bitcoins enable the direct transfer from one user to the other and render intermediates like commercial banks and central banks redundant. Instead of a central third party – the central bank or commercial bank – you have a global P2P (Peer-to-Peer) network, where every user takes care of the control of the currency system. The decentralised structure avoids having single powerful players using the system in their favour or manipulating it. A major advantage of Bitcoins in contrast to the current monetary system is anonymity and cheap transaction costs.
- David Pieper has been busy studying the stock market since the late 90s. As early as during his business studies at university and later during a career as an investment analyst at a bank, he combined fundamental analysis with the benefits of technical analysis. Mr Pieper focuses on trading CFDs and works as a freelance writer in the field of technical analysis.
Some people compare the current hype with the historical tulip bubble, some people talk about a new currency age – the topic is the virtual currency called Bitcoin. This article shows the advantages of Bitcoins, how they work and what perspective Bitcoins have in the future.
Decentralised, Unregulated and Anonymous
The concept of Bitcoin was introduced publicly for the first time by Satoshi Nakamoto in 2008 – a time when the global financial world was on the edge. Since then our existing monetary system has been faced with a deepening crisis of confidence and therefore the call for an alternative has become louder.One alternative might be Bitcoins. But what are Bitcoins? It is a virtual currency that consists of cryptographically coded data that is forgery-proof. Bitcoins enable the direct transfer from one user to the other and render intermediates like commercial banks and central banks redundant. Instead of a central third party – the central bank or commercial bank – you have a global P2P (Peer-to-Peer) network, where every user takes care of the control of the currency system. The decentralised structure avoids having single powerful players using the system in their favour or manipulating it. A major advantage of Bitcoins in contrast to the current monetary system is anonymity and cheap transaction costs.
Money Creation in a Different Way
Bitcoins are not issued by a central institution but have to be created. All users within the network can take part. » Decentralised, Unregulated and Anonymous The concept of Bitcoin was introduced publicly for the first time by Satoshi Nakamoto in 2008 – a time when the global financial world was on the edge. Since then our existing monetary system has been faced with a deepening crisis of confidence and therefore the call for an alternative has become louder. insights 21 But it only makes sense if you have a high-performance computer because they earn Bitcoins for the resolution of a highly-complex arithmetic problem. The “Mining”, the money creation, is organised in a way that you need more performance power with time to create additional units of money – it is similar to the production of natural resources. The network creates about 25 new Bitcoins in ten minutes at the moment. In contrast to the current monetary system, where the big central banks try to out do each other by money printing, the Bitcoin money supply is limited from the beginning – to 21 million units which guarantees monetary stability Bitcoin supporters say.
Editors’ Picks
EUR/USD moves sideways below 1.1800 on Christmas Eve
EUR/USD struggles to find direction and trades in a narrow channel below 1.1800 after posting gains for two consecutive days. Bond and stock markets in the US will open at the usual time and close early on Christmas Eve, allowing the trading action to remain subdued.
GBP/USD keeps range around 1.3500 amid quiet markets
GBP/USD keeps its range trade intact at around 1.3500 on Wednesday. The Pound Sterling holds the upper hand over the US Dollar amid pre-Christmas light trading as traders move to the sidelines heading into the holiday season.
USD/JPY corrects further to near 155.80, gives up entire BoJ policy-led gains
USD/JPY surrenders its entire gains made on the BoJ policy announcement day, and retraces to near 155.80. Investors are in vogue over the outlook of the BoJ’s monetary tightening campaign. The Fed is expected to cut interest rates by at least 50 bps next year.
Editors’ Picks
EUR/USD Price Annual Forecast: Growth to displace central banks from the limelight in 2026 Premium
What a year! Donald Trump’s return to the United States (US) Presidency was no doubt what led financial markets throughout 2025. His not-always-unexpected or surprising decisions shaped investors’ sentiment, or better said, unprecedented uncertainty.
Gold Price Annual Forecast: 2026 could see new record-highs but a 2025-like rally is unlikely Premium
Gold hit multiple new record highs throughout 2025. Trade-war fears, geopolitical instability and monetary easing in major economies were the main drivers behind Gold’s rally.
GBP/USD Price Annual Forecast: Will 2026 be another bullish year for Pound Sterling? Premium
Having wrapped up 2025 on a positive note, the Pound Sterling (GBP) eyes another meaningful and upbeat year against the US Dollar (USD) at the start of 2026.
US Dollar Price Annual Forecast: 2026 set to be a year of transition, not capitulation Premium
The US Dollar (USD) enters the new year at a crossroads. After several years of sustained strength driven by US growth outperformance, aggressive Federal Reserve (Fed) tightening, and recurrent episodes of global risk aversion, the conditions that underpinned broad-based USD appreciation are beginning to erode, but not collapse.
Bitcoin Price Annual Forecast: BTC holds long-term bullish structure heading into 2026
Bitcoin (BTC) is wrapping up 2025 as one of its most eventful years, defined by unprecedented institutional participation, major regulatory developments, and extreme price volatility.
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