Before you buy Bitcoin ... Part 2
Bitcoin has a technology that brings with it: decentralization; security; resistant to inflation; resistant to censorship; transparency; anonymity; limitlessness; - these are qualities that inspire more and more trust in Bitcoin, and encourage both ordinary users (you and me) and professional investors and traders to buy Bitcoin and become its participant.
Before I buy or sell Bitcoin, I rely on "theory" which helps me look at the cryptocurrency market soberly; predict price movements and, of course, make money from it. When you buy Bitcoin and see its price going up, you lose touch with reality; you start believing that it will make you rich, but in the end it makes you poor. Bitcoin is a convenient tool to manipulate, especially if you have the bulk of the issue in your hands. Today let's talk about bitcoin tokenomics and its (transparency).
Bitcoin Tokenomics
When doing fundamental analysis, I always look at the tokenomics of a crypto project. And if you look at Bitcoin tokenomics (token economics), it seems simple and ingenious at first glance (coin scarcity + production complexity = creates price by supply and demand), this makes Bitcoin tokenomics transparent and predictable. Which encourages people to actually buy Bitcoin.
We know that Bitcoin's total issuance is predetermined at 21 million coins. I think everybody knows how new Bitcoins are created and put into circulation, it is not done by means of mining. Miners are checking and confirming the transactions that users want to make (you and me); then they make sure that the transaction is correct, complete nodes are sending information to the network (providing indirectly all participants with the same information), so the puzzle is put together and a new block is created and for its creation miners are remunerated in bitcoins. To date, 19 million bitcoins have been mined, which is 91% of the total circulation of coins. Less than 2 million coins remain to be mined.
As every 4 years the reward per block is halved; starting from January 2009, there were three times (2012, 2016, 2020) when the reward was halved - from 50 BTC to 25 BTC, then to 12.5 BTC and 6.25 BTC. That 2024 is believed to be the fourth reduction in the reward per block from 6.25 BTC to 3.125 BTC, and the last bitcoin will be mined around 2140.
Bitcoin's tokenomics also determine the transaction fees that are charged to the miner for confirming each new block. Commissions increase in proportion to the size of transactions and the load on the network. This prevents spamming of transactions and encourages miners to continue to confirm transactions, even if the rewards are decreasing. Bitcoin's tokenomics are brilliant, if you don't delve into the history of bitcoin mining of course...
Bitcoin tokenomics is just a beautiful story created by a group of people who probably knew what would happen to bitcoins in 10 years. Bitcoin is a great and convenient tool for manipulation, especially if you have the main part of Bitcoin in your hands, and we will talk about that in our next article: Before You Buy Bitcoin... A History of Bitcoin Mining | Part 4
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