Pedro Luis Martín Olivares - Money is nothing more than an information system that serves to solve the problem of the coincidence of desires. It establishes an element of information about the value of a good or service and, when making a transaction, the data system allows knowing what is received and how much, as well as how it is valued.
That said, we have to be aware that Bitcoin is a currency, but also a digital system. A currency that does not physically exist and this is where we establish the main difference with fiduciary currencies.
Each Bitcoin is unique because the transaction is publicly recorded in a digital accounting book elaborated with complex cryptographic structures called blockchain or chain of blocks. And that is why it is called cryptocurrency.
We illustrate it so that Bitcoin is a large fish tank where, from the outside, you can see what's inside if you have the keys to move them. But nobody can ever enter or take anything out of the fish tank, so the total amount of Bitcoin in this fish tank will be unalterable, but the possession of the Bitcoin will be. We understand, then, that Bitcoin is a distributed database, that is, an information system in which we know who are senders and who are recipients of an element that represents value.
With the concepts already clear about this new currency, some people believe that it is a new financing system, although it is still too early to make such a claim. It is true that many cryptocurrencies are allowing people and companies to finance themselves more quickly and flexibly, so financial institutions and central banks should review their loan policies to deal with this new movement.
The Bitcoin is positioned against the currencies that are devalued and with a questionable value. In addition, we must not forget the constant issuance of currency that is made, far beyond the ability of countries to respond to the volume issued and the debt contracted in that currency, which is not paid and continues to increase. For this reason, Bitcoin can be a safe haven since there are no political decisions that intervene in its blockchain or distributed accounting.
The advantages that Bitcoin refers to are that it extends the flexibility of the system so that it works efficiently on a very high scale, while maintaining the security and fundamental properties of decentralization. Security is based on the very nature of the blockchain, which is maintained by many nodes and miners around the world without anyone having the power to control and approve or not, transactions according to their criteria. It receives the name of decentralization because the power is distributed among many parties that must reach a consensus, and thus avoid being hacked. All operations are regulated and recorded as any financial operation but it is true that it is a high risk investment.
Receiving the money generated by the investment in Bitcoins is simple and there are more and more applications and virtual wallets that allow it to do so. It would be enough to have a Bitcoins portfolio from which to carry out the sale operation and the subsequent conversion to euros. The amount that we want to have will be able to be taken out in our account and the smartphone will arrive two codes that we will have to enter to authorize the operation and complete the process with obtaining the money. Thus, the Bitcoins that were previously in your possession, would go back to being in the market at the price they have at that time. Except for the disappearance of the cryptocurrency, the procedure is as simple as changing currency when you go to another country.
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Pedro Luis Martín Olivares
Economy and Finance
