Crypto Currency for beginners (From an ACCA's perspective)
Alright so i am going to guide the absolute beginners. Not to those who already are aware of what it is. I will be precise, to the point and cut all the unnecessary information.
So first things first. What is Bitcoin? Well, its simple. It is a future form of Shares of an Organization. Surprised?? Well keep reading.
How? Well, currently if you look at stock market. You will see that there are shares been traded of physical companies having a registered office and manufacturing/trading in some particular good or service. Similarly, Bitcoin is a new form of shares of a company. Having its offices in different places on earth (e.g. Luxembourg, USA, Russia, Australia).
Comparison? I will try to simplify it as much as i can. Well Shares of any Listed company are traded on that particular stock exchange at which it is listed. People go there or have their agents (brokers) to purchase or sell the shares.
Similarly, Bitcoin has its shares listed at numerous Exchanges like, Bittrex, Binance, Cryptopia, KuCoins etc etc. You can create you account there and trade in Bitcoin.
Why is it called a Currency? Okay so this is where comes the tricky part. Again, say you purchase 1000$ worth of Shares of a company, e.g. Google. So you own 1000$ worth of shares of Google. Further say the prices of shares of Google increase (because of increase in Demand i.e. Economics concept of Demand and Supply) say your holdings are worth 1200$ i.e. 200$ more than your purchase price.
Now what you will do, to realize that profit. You will sale your shares and get dollars, i.e. you sale your shares for 1200$. Now this cash can be used anywhere you want. Say you want to buy a laptop. You go to the market, give cash and buy a laptop.
Similarly in case of Bitcoin, its more like the same with one exception. Again, say you buy 1000$ worth of Bitcoins. Because of increase in demand, price per Bitcoin rises. Now your investment is worth 1200$.....
Now comes the tricky part. There are two ways to further the story now:
A. The Vision:
Well the vision is to cut the crap out of the currency conversion. And make the shares of a company, a mode of payment also. Remember Barter??? You give Almonds and get Honey. Similarly, you will instead of selling the Bitcoins. Put them into Wallets (Google = Bitcoin Wallets). Go to a market, transfer the Bitcoins as cash (dollars) and get the laptop.
This is the vision of Crypto Currency. To create a currency that is basically like shares of an organization and are also like cash.
B. The Present:
With some exceptions. You sale your Bitcoins in different currencies. Say Dollars. Get your 1200$ and go buy a laptop. But its changing, more and more markets and restaurants, showrooms etc etc. are accepting Bitcoins.
Got it? Happy Trading to you :)
(Disclaimer - This is absolutely based on my knowledge and perspective. And is been oversimplified to give you a TO THE POINT view of what is this Bitcoin fuss. After this information, you will be able to understand in a more convenient way that what it actually is?)