What Bitcoin Mining Can Learn From Forex Traders
Bitcoin is the newest form of currency, making waves in the economic world. Since its inception in 2009, it has become more and more mainstream. But Bitcoin is subject to what is called Bitcoin “mining”. Bitcoins are discovered rather than printed, and since Bitcoin mining is so new, it can learn a lot from Forex trading.
What is Bitcoin mining?
Traditionally, money has existed in physical form. In the age of bartering, this was especially important. And before the modern age of cashless purchases, printing money was all important. In order to increase supply, governments print more money when necessary. That is how it’s always been.
Nowadays, however, most of our transactions are cashless. Credit cards, online banking, cellphone payments, etc. are all done with no notes or coins ever changing hands. Chances are, you’re never going to “see” or “touch” your money.
This is all the more true when it comes to Bitcoin. Bitcoin was created in an age of cashlessness. Bitcoins are entirely digital and cannot be printed. Instead it is discovered, by computers mining for coins.
Mining for coins is done by computers competing with each other. People send Bitcoins over the Bitcoin network, and a record has to be kept of these transactions. This record is called a block. Miners have to confirm these transactions and write them into a general ledger, which is a long list of blocks. This list is called the blockchain.
How to mine bitcoins
The blockchain has to be trusted, and miners do just that. When a block is created, miners take the information and apply a mathematical formula to it. It becomes a much shorter, “random” sequence of digits known as a hash. The hash is stored at the end of the blockchain.
This process makes it impossible to create fake Bitcoins, with any tampering easily detected. Tampering would cause a chain effect, throwing the rest of the chain off course.
This is how miners “get” Bitcoins. Miners compete with each other to create the hash, as every successful has is rewarded with 25 Bitcoins. This is the incentive to create hashes and keep the Bitcoin network working.
The Bitcoin network has made hashing purposefully difficult, so that computers can not effortlessly create hashes, mining all the Bitcoins immediately.
This, essentially, is how Bitcoins are “created”. Instead of being printed they are mined.
Learning from Forex traders
As Bitcoin is relatively new to the world of Forex - indeed to the world itself - the network still has a lot to learn. Mining itself is an area that still has much development to do, and can learn from Forex trading.
Supply and demand is still the foundation on which the Bitcoin currency works, and is the same foundation on which the Forex market works. The Forex market is heavily impacted by supply decisions - such as when a government decides to increase supply. Bitcoin can become ever more stable by implementing new ways to control Bitcoin mining.
Bitcoin miners can learn from Forex trading how to utilize supply and demand to make clever trades. Amassing Bitcoins is not all that easy, and is generally done by tech experts more than the layman.
But Forex has come into the mainstream world, and is accessible to beginners worldwide. Bitcoin has still to get there, but we can expect that such a development will be made in the coming years.