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 makes a U-turn, focus on 1.1900
EUR/USD’s recovery picks up further pace, prompting the pair to retarget the key 1.1900 barrier amid further loss of momentum in the US Dollar on Wednesday. Moving forward, investors are expected to remain focused on upcoming labour market figures and the always relevant US CPI prints on Thursday and Friday, respectively.
GBP/USD sticks to the bullish tone near 1.3660
GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.
USD/JPY declines as Yen strengthens after election win, overshadowing US jobs data
The US Dollar rose briefly after stronger-than-expected job creation but gave back gains against a firm Japanese Yen. The Unemployment Rate falls to 4.3% and wages accelerate, reinforcing expectations of a prolonged Fed pause. Sanae Takaichi’s election victory fuels demand for the Japanese Yen, pushing USD/JPY down for the day.
Editors’ Picks
EUR/USD makes a U-turn, focus on 1.1900
EUR/USD’s recovery picks up further pace, prompting the pair to retarget the key 1.1900 barrier amid further loss of momentum in the US Dollar on Wednesday. Moving forward, investors are expected to remain focused on upcoming labour market figures and the always relevant US CPI prints on Thursday and Friday, respectively.
GBP/USD sticks to the bullish tone near 1.3660
GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.
Gold holds on to higher ground ahead of the next catalyst
Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.
Ripple Price Forecast: XRP sell-side pressure intensifies despite surge in addresses transacting on-chain
Ripple (XRP) is edging lower around $1.36 at the time of writing on Wednesday, weighed down by low retail interest and macroeconomic uncertainty, which is accelerating risk-off sentiment.
US jobs data surprises to the upside, boosts stocks but pushes back Fed rate cut expectations
This was an unusual payrolls report for two reasons. Firstly, because it was released on Wednesday, and secondly, because it included the 2025 revisions alongside the January NFP figure.
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