As Bitcoin, Ethereum and other markets have entered a bull market, many people want to invest in Bitcoin, but most people still don't know much about Bitcoin as a digital currency. For example, when it comes to cloud mining for Bitcoin, why there are only 21 million Bitcoins? Will be halved every time? Where does the value of Bitcoin come from, and why is it so recognized by the market? Today we will share some knowledge about cloud mining for Bitcoin!
Why are there only 21 million Bitcoins?
Bitcoin is a special solution finally produced through a series of complex calculations. According to the algorithm design principle, its final special solution totals 21 million, which also corresponds to the issuance limit of 21 million Bitcoins. The rate of Bitcoin issuance is gradually decreasing, and the number of newly generated bitcoins will be halved year by year until the total number of bitcoins reaches 21 million.
In countries and regions that accept Bitcoin as a legal payment method, users can obtain Bitcoin through electronic transactions. In addition, users can also purchase Bitcoin through virtual asset service providers including cryptocurrency exchanges. Users can also use the computing power of specialized hardware to cloud mining for Bitcoin.
How does cloud mining for Bitcoin work?
The computer that a Bitcoin user uses to run the client software is called a node, and the interconnection of the node computers composes a huge Bitcoin network. The Bitcoin network shares a public ledger. This decentralized public ledger that does not rely on a central server is called a blockchain. After the transaction takes place, the "miners" who are closer will spread to the distant place through the blockchain network, and the confirmation of the blockchain network will be obtained to complete the transaction.
The significance of decentralization is that everyone can participate in bookkeeping, and as the number of nodes increases, the possibility of blockchain being tampered with decreases, decentralization becomes more thorough, and in theory, the entire network becomes more secure.
Bitcoin has the advantage of the freedom of payment. Its technical design supports cross-regional and cross-currency capital circulation, and there is no limit on payment limits. Bitcoin reduces service fees through decentralized management. Currently, Bitcoin-based payment processes do not charge or only charge very little service fees. At the same time, Bitcoin has high-security performance, and users do not need to bind personal information during the transaction.
What’s the determination of Bitcoin’s price
Bitcoin is supported by mathematical characteristics, such as durability, interchangeability, scarcity, etc., and does not rely on the physical characteristics of the credit endorsement of the currency issuer.
Since July 2018, the negative correlation between gold and Bitcoin has shown that the upward risk aversion in the market constitutes an obstacle to Bitcoin investment. The strong U.S. dollar will also make Bitcoin investment more cautious.
However, due to the existence of a circulation limit of 21 million, the cost and profit of cloud mining for Bitcoin will be balanced with the overall market. The mining behavior gives the initial cost, but the value of Bitcoin comes directly from the trust of users. The price is determined by market supply and demand.
The security of Bitcoin and cloud mining for Bitcoin
Blockchain technology and the protocols and cryptography rules it uses to provide technical security for Bitcoin. However, there are still security loopholes in the process of software operation. Therefore, under the premise of technical upgrades and bug fixes, Bitcoin transactions will have certain general risks. As the size and price of Bitcoin fluctuate upward, the risk from hackers should also be taken into consideration.
In addition, as a kind of currency, Bitcoin will inevitably have the risk of participating in illegal activities, so the pressure from the regulatory level may constitute a certain investment risk. Regarding the regulation and security of Bitcoin, one who clouds mining for Bitcoin must know is that the United States treats cryptocurrencies with the idea of financial supervision, and by incorporating cryptocurrencies defined as “securities” into the current financial regulatory system, it is subject to Securities law supervision. Japan and Australia have adopted relatively loose policies on Bitcoin.