Bitcoin trading has been on the rise in the recent past, besides there being no bank in any country that uses it as a medium currency. It is governed by demand and supply laws in business like any other commercial activity. From the video, profit, and loss occur depending on the amount of interest charged as a transaction fee (Ramzan, 2013). There is proof of having conducted an endeavor that is recorded as a digital signature. It charges a certain amount of cost that is used later in determining the remaining number of bitcoins. The discussion elucidates the important factors to consider when choosing to buy bitcoins and an investment.
The law of supply and demand applies to the cryptocurrency sector since it relies on the rate of interest charged in the market. It also depends on the available bitcoins to be bought on the online trading platform. In business activities, when orders for goods or services increase, their costs go up. This is because customers for that item will multiply and force the marketplace to flood and could run short of raw materials if it involves production (ÄŒuljak et al., 2022). This happens to bitcoin trading, whereby the relationship between need and availability determines the fees of the coin.
In the marketplace, producers can increase the amount of production when demand is high to make increased profits. The same applies when there are low levels of need for an item or service. This makes manufacturers reduce the size of manufacture to suit wants in the market (Othman et al., 2019). This is, however, not possible in cryptocurrency since there is a limited number of digital currencies in the bazaar.
A friend who intends to begin conducting business in cryptocurrency would enjoy several benefits. Therefore, I would recommend buying Bitcoin to a friend as a worthwhile investment. Transactions in Bitcoin are very fast, unlike in fiat currencies which could take days or weeks for a deal to be completed. No one would like to have a slow agreement process since if it is fast, it means more profit is amassed. According to Ramzan (2013), peer-to-peer money also offers free negotiation fees to both parties conducting business. Thus, one is only charged a small amount of money for miners who complete the process.
Bitcoin businesses offer a high level of privacy to owners and traders. Many people do not like to be known publicly and love their profit-making activities to remain a secret. In a credit card transaction, details of a customer are needed, unlike in these virtual coins making it a better choice. Cryptocurrency is decentralized and offers a trading forum that cannot be interfered with by any government (Gwartney et al., 2021). This makes it impossible to impose taxation on the dealings since no country owns the online enterprise.
Moreover, cryptocurrency is free from the recently increased cyberattacks that prove hard to contain. This is because this online business forum is posted in an open ledger with digital signatures being used to keep records. It is also free from inflation, unlike other trading activities that can be interfered with by demand and supply. This is because there is a finite number of coins in the market. One has no reason to worry about increases and decreases in prices, and therefore it is advisable to purchase a Bitcoin and get involved in this endeavor.
References
Čuljak, M., Tomić, B., & Žiković, S. (2022). Benefits of sectoral cryptocurrency portfolio optimization. Research in International Business and Finance, 60, 101615.
Gwartney, J. D., Stroup, R. L., Sobel, R. S., & Macpherson, D. A. (2017). Economics: Private & public choice (16th Ed.). Cengage Learning.
Othman, A. H. A., Alhabshi, S. M., & Haron, R. (2019). The effect of symmetric and asymmetric information on volatility structure of crypto-currency markets: A case study of bitcoin currency.Journal of Financial Economic Policy.
Ramzan Z. (2013). Bitcoin: Overview | Money, banking and central banks | Finance & Capital Markets | Khan Academy [Video]. YouTube.