What is Bitcoin Economy (Relationship between Bitcoin and Economic Situation)

What is Bitcoin Economy? Bitcoin is a type of cryptocurrency designed to address issues in traditional markets. It is supported and managed by a token called Digital Assets, which is pegged to fiat currency or other legal tenders.

By categorizing encrypted assets into two types: decentralized encrypted assets and non-custodial cryptocurrencies, as well as the intermediary between them. For example, Bitcoin can be seen as a global ledger. This non-custodial blockchain network has lower costs and higher user experience because it can handle a large volume of transactions without causing any loss to users. Both systems use a consensus mechanism with a single node to ensure security, but there are also some special features, such as the network cannot be used as a means of payment; the other two methods also allow the creation of new smart contracts.

First, Bitcoin’s economic incentive model allows developers to design scalable and user-friendly solutions and apply them to various aspects of the Bitcoin ecosystem. Secondly, over time, the Bitcoin economy will also face demands for support from government regulators, central banks, and other stakeholders. Therefore, in order to further develop the Bitcoin economy, it is necessary to understand the concepts of how to establish the Bitcoin system. Bitcoin economics is based on the defined Bitcoin Improvement Proposal (BIP), which includes three core components:

1. Block rewards. Miners are responsible for verifying the ownership and status of each block on the Bitcoin chain.

2. Rewards. Miners decide to distribute Bitcoin to specific addresses instead of obtaining this information from a particular entity. The most important part of this is provided by mining pools to network service providers for miners, and they will receive 10% of the fee income as a fee.

3. Voting rate. Participants must determine whether their proposals on the block comply with the Bitcoin Business Act. Once the threshold is reached, the corresponding procedures need to be executed. If not, miners will be punished. In addition, newly mined blocks will be destroyed. Due to the block size limit, miners can only receive the data with the largest number of transactions in the block, which is about 21 million bitcoins (currently worth over 2 billion US dollars). “Blocks” refers to a new message generated every 10 minutes, and “block” refers to the number of transactions recorded in the block space.

Bitcoin economic theory is based on Bitcoin’s inflation model, which is the total supply of all producers. According to the current price of Bitcoin, when demand increases, supply will decrease, and Bitcoin will also grow. However, this is a positive factor for those who want to create more wealth. (AMBCrypto)

The author of this article, Michael O’Rourke, is a member of CNBC host Jimmy Fallon. He posted an article about the Bitcoin economy on Twitter, saying, “I like the idea of the Bitcoin economy because I know it is simple-The Bitcoin economy is a completely transparent process.”

Relationship between Bitcoin and Economic Situation

According to CCN, Bitcoin has a very close relationship with the macroeconomic situation in the bull market at the end of 2017. Historically, when the Federal Reserve starts to raise interest rates, or when there are major events like the U.S. election, global markets often experience drastic price fluctuations. And after the stock market crash, the correlation between Bitcoin and gold prices continues to expand; if the correlation and liquidity of Bitcoin with other assets are not considered, there may be a major economic recession, causing Bitcoin to be viewed by investors as a speculative hedge tool. However, now, this may not be a coincidence.