What is Bitcoin? Bitcoin (BTC) is the world’s first cryptocurrency that paved the way for all other cryptocurrencies to follow. Created in 2008 by Satoshi Nakamoto, Bitcoin is currently the best-known and most popular cryptocurrency in circulation. Bitcoin is a decentralised, 100% digital currency The invention of Bitcoin is one of the first examples of applied blockchain technology Bitcoin is the world’s most popular cryptocurrency, both in terms of market capitalisation and brand awareness The Bitcoin price reached its all-time high on November 10, 2021, at around €66.233,02 Supply is limited to a fixed number of 21,000,000 Bitcoin What is Bitcoin? Bitcoin is a digital currency that was created to establish a peer-to-peer electronic payment system that enables one party to send a payment to another party without having to go through a central authority like a financial institution. Next to functioning as a currency, some treat Bitcoin as an investment and buy it on exchanges like they would stocks, with the expectation that the value will increase over time. Since Bitcoin is a decentralised community and an open source project, anyone can join and participate in its development. Bitcoin use cases Bitcoin is a digital currency that can be used for payments between peers and in some cases to pay for goods and services. Bitcoin is an investment that can be stored for value. Bitcoin’s open-source technology makes it a resource and inspiration for others who want to develop something similar. BTC definition BTC is the exchange code of Bitcoin. It’s often used in place of the full written out version, Bitcoin (BTC) because it’s space-saving. In the media you often see Bitcoin and BTC being used interchangeably. Bitcoin history The idea for Bitcoin was conceived by a person or a group under the pseudonym Satoshi Nakamoto. The open source project was outlined in a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. Within the first few weeks of January 2009, Bitcoin had completed the first major steps: mining, i.e. the creation of the first coins, had begun; the coins went into circulation and the first transaction using only Bitcoin was completed. Another big milestone was reached on May 22, 2010, when someone online paid someone else to buy them a pizza in Bitcoin, which is now known fondly as Bitcoin Pizza Day. How does Bitcoin work? Bitcoin runs on a technology known as a blockchain, which is a digital ledger where Bitcoin can be securely stored and exchanged. The trust in Bitcoin is vested in the fact that all transactions are recorded and visible in the Bitcoin blockchain. Mining and Proof-of-Work (PoW) Bitcoin transactions and the creation of new Bitcoin are validated through a process called mining. Mining relies on software applications that run on specifically designed computers. Transactions trigger the opening of a block, the transaction information is entered, and the block closes and creates a hash number that includes the encoded details from the transaction. Each new block contains information from the previous block to create a chain that cannot be manipulated or altered and ensures that no one can spend the same unit of the currency twice. A Proof-of-Work (PoW) system, in which the computers need to prove the energy expended in the mining process, ensures that everything is valid and correct. Bitcoin runs on a secure technology called blockchain Bitcoin transactions and the creation of new Bitcoin happen through a process called mining Bitcoin activity is validated through a Proof-of-Work (PoW) system For every 210,000 blocks mined, an event called the Halving is triggered. A Bitcoin halving is when block rewards for miners on the Bitcoin blockchain are cut in half to reduce the number of new coins entering the network. The initial Bitcoin block reward was 50 BTC. The current block reward is 6.25 BTC and after the next halving the block reward will be 3.125 BTC. The next halving is expected to take place in April 2024. You can keep track of the event with our Bitcoin Halving Countdown. How to buy Bitcoin? People who want to buy Bitcoin can do so through cryptocurrency exchanges like Bitpanda using fiat currencies, e.g. euros or U.S. dollars. It’s a good idea to first get familiar with the Bitpanda price history and the current exchange rate. Once purchased, your Bitcoin investment can be viewed and accessed in a digital wallet that acts similarly to a banking app. You then have the option to hold on to your Bitcoin or sell it again via the exchange. What is the Bitcoin price history? Bitcoin is considered to be a highly volatile asset and its price has fluctuated through many highs and lows throughout its existence. In 2011, the price for one Bitcoin started at around €0,29 and increased to around €5,13 that year. The price started at around €12,95 in 2013 and increased to €749,99 by the next year. After that, the cryptocurrency market experienced a turbulent dip. Though Bitcoin reached its first all-time high of circa €19.269 in December 2017, the price decreased by 81% by the start of 2019. At the moment Bitcoin is experiencing an average daily high of €19,945.70. The all-time high of the Bitcoin price was on November 10, 2021, at around €66.233,02. Where can you use Bitcoin? Bitcoin is primarily used as a peer-to-peer payment system between individuals, however, the places where you can use Bitcoin have expanded in recent years. More and more businesses, from large corporations like Expedia to small and medium-sized businesses (SMEs), accept Bitcoin as a digital payment. Countries are also slowly embracing Bitcoin: El Salvador is one of the first to have adopted Bitcoin as an official currency. Currently one of the easier ways to use Bitcoin is to load it onto a cryptocurrency debit card and use that on goods and services or to withdraw cash from ATMs. What are the risks involved with Bitcoin? The biggest concerns connected to Bitcoin are risks related to hacking, fraud and the lack of regulation. The cryptocurrency market is highly volatile and the Bitcoin price can fluctuate greatly. Due to its unprecedented boom, regulation for Bitcoin and other cryptocurrencies has also been slow to be developed, leaving large portions of the market unregulated. This can lead to pump and dump schemes, where small groups of investors put a lot of money into cryptos like Bitcoin to artificially inflate the price, only to later sell it at a profit before the price falls again. Though hacking is uncommon thanks to the security of blockchain technology, there are Bitcoin-related crimes where scammers will ask you to pay in Bitcoin or offer you a too-good-to-be-true way of making more Bitcoin. Here it is advised to use your best judgement and to only buy Bitcoin through verified exchanges. Why is Bitcoin popular? As the world’s first cryptocurrency, Bitcoin has retained its status of being the most widely known and therefore most widely accepted and used cryptocurrency. Bitcoin there receives nearly limitless attention, from its loyal followers and communities, neverending media coverage and high-profile celebrity endorsements. This is because Bitcoin has had time to establish itself and prove its worth as a viable alternative currency. When celebrities like Elon Musk talk about the coin, it only reinforces its credibility. This is how Bitcoin has become more than just a payment system. It’s now close to a lifestyle for some people, who spend most of their time trading and talking about Bitcoin online. Can Bitcoin be used for nefarious purposes? Just like traditional fiat money, Bitcoin is also used by criminals. However, unlike transactions with paper money, Bitcoin transactions can be viewed and traced by anyone. Despite Bitcoin often being associated in the media with the dark net and underground activity, the cryptocurrency is poorly suited for such purposes. There are specialised companies that help government agencies track shady cryptocurrency transactions. The fact that the Bitcoin public ledger is transparent and all transactions are visible creates trust in a world full of deception.

What is double-spending and why is it such a problem? Double-spending is a major computing problem that has to be solved by every cryptocurrency. If not, the cryptocurrency in question is essentially worthless because anyone can duplicate a transaction with the currency at any time. “Double-spending” means that the same units of a currency could be spent twice Double-spending would destroy the trust in a cryptocurrency Cryptocurrencies prevent double-spending by using a blockchain that combines an open ledger with cryptographic algorithms Double-spending means that the same units of a cryptocurrency could potentially be spent twice, thus it is crucial to technologically eliminate this possibility. Double-spending would basically destroy the technological grounding on which a blockchain is founded - a database that is not only tamper-proof, but also records every transaction that has ever taken place within the network. Thus, the potential to execute double-spending would fundamentally undermine the trust in a cryptocurrency like Bitcoin or any other blockchain database. A related analogy for explaining this conundrum is the “Byzantine Generals Problem”, which addresses the challenge multiple parties that do not trust each other face when they undertake a joint venture in which they need to cooperate to succeed. The Byzantine Generals Problem is a thought experiment to illustrate the issue of disagreement between players in a decentralised system. In this comparison, only a coordinated attack by all generals each controlling his own army leads to victory. As soon as one general defects or attacks another general, the battle is lost. Consequently, cryptocurrencies need to have Byzantine Fault Tolerance (BFT) built into their protocol. Byzantine fault tolerance (BFT) means that a computer system has to keep functioning to a level of satisfaction if errors or breakdowns occur, even if some participants don’t behave according to plan and try to cheat the system. Blockchain technology prevents double-spending through peer-to-peer file-sharing technology combined with public-key cryptography. In line with this, ownership structures of cryptocurrencies are recorded in the blockchain, a public ledger, while being simultaneously confirmed by cryptographic protocols and the cryptocurrency community. As all transactions are openly recorded and cryptographically secured in an open ledger running simultaneously on thousands of computers all over the globe, everyone sees the transactions that have already been made. In the case of Bitcoin, transactions are verified by miners who ensure that all transactions during the verification process are irreversible, final and cannot be modified computationally, thus successfully solving the issue of potential double-spending.

What's the difference between a cryptocurrency like Bitcoin and fiat money? Cryptocurrencies share many similarities with conventional fiat money, but also offer some interesting advantages. Both can be used for payments and as a store of value Both rely on widespread consumer trust in order to function as a means of exchange Fiat money is issued and controlled by (central) banks and governments Bitcoin is produced and distributed through a process called mining and is not controlled by a centralised authority Bitcoin can be trusted because it is tamper-proof and cannot be spent twice A Bitcoin transaction cannot be reversed, cancelled or charged back. Cryptocurrencies and conventional currencies have two essential features: they enable frictionless payments between two parties and act as a store of value. While trust vested in fiat currencies is ensured through the money supply issued by a central authority, the trust vested in cryptocurrencies is founded on the underlying technology - blockchain technology. When you buy something with fiat currency, you need to rely on a trustworthy authority such as the European Central Bank (ECB) or governmental institution to serve as an intermediary that vouches for the currency’s worth. Either way, buyer and seller trust that the currency will still sustain its value after a transaction. What is fiat money? Commodity money gets its value from its own worth, like with precious metals (e.g. gold and silver), salt, or even shells. Fiat money has attributed value because a government declares it legal tender - it has no intrinsic value. We can’t talk about fiat money without also discussing inflation . This term inflation refers to the rise in the general price level of goods and services over time, leading to a decrease in the purchasing power of money. Interest rates –relate to the cost of borrowing money or the return on savings and are another important factor in the world of fiat money. Central banks keep adjusting these rates to influence economic activity. Taking all these factors into account and finding a way to balance them is what monetary policy strives to do. This involves central banks managing money supply and interest rates to control inflation and promote economic stability. They can raise rates to combat inflation or lower them to stimulate borrowing and spending during economic downturns. This, in turn, affects borrowing costs, investment, and overall economic health. Balancing these factors is absolutely essential for a stable economy. The role of central banks Central banks play a crucial role in the issuance and management of fiat money within a country's monetary system. Their responsibilities include: Currency issuance: Central banks are typically the sole authority responsible for issuing physical currency, such as banknotes and coins. They ensure the quality, security, and quantity of these notes and coins in circulation. Monetary policy: Central banks have the authority to formulate and implement monetary policy. They use various tools to influence the money supply, interest rates, and the overall financial stability of the economy. One primary objective of monetary policy is to control inflation and maintain price stability. Lender of last resort: Central banks serve as lenders of last resort during financial crises. When commercial banks face liquidity problems and are unable to meet their short-term obligations, central banks provide them with loans or liquidity support to prevent a systemic banking collapse. Bank supervision and regulation: Central banks often oversee and regulate the banking industry within their jurisdiction. They establish rules and regulations to ensure the safety and soundness of banks, protect depositors, and maintain the stability of the financial system. Foreign exchange management: Central banks manage a country's foreign exchange reserves, which are holdings of foreign currencies and assets. These reserves are used to stabilize exchange rates, intervene in currency markets, and support the country's international trade and financial transactions. Interest rate control: Central banks have the authority to set benchmark interest rates, such as the federal funds rate in the United States. Changes in these rates can influence borrowing costs for individuals, businesses, and financial institutions, thereby affecting economic activity and inflation. Open market operations: Central banks conduct open market operations, which involve buying or selling government securities (bonds) in the open market. These operations affect the money supply and short-term interest rates, allowing central banks to implement monetary policy. Financial system stability: Central banks monitor and assess the overall stability of the financial system. They identify potential risks and take measures to prevent or mitigate financial crises. Payment system oversight: Central banks oversee and maintain the efficiency and security of payment systems, ensuring that transactions among banks, businesses, and individuals are smooth and secure. Currency reserves: Central banks hold foreign currency reserves to facilitate international trade, manage exchange rate fluctuations, and maintain the country's economic stability. In summary, central banks are the cornerstone of a country's monetary and financial system. They are responsible for controlling the money supply, regulating banks, ensuring economic stability, and playing a vital role in the overall health of the economy. Their actions and policies have far-reaching effects on interest rates, inflation, and the overall well-being of a nation's economy. Commodity money vs. fiat money The main difference between commodity money and fiat money lies in their intrinsic value. Commodity money has inherent value because it represents a tangible asset, while fiat money's value is based on trust in the issuing authority. Modern economies predominantly use fiat paper money because it offers greater flexibility and ease of use, but it also requires responsible management by central banks to maintain stability and prevent excessive inflation. Stablecoins – The intersection of cryptocurrencies and fiat money Stablecoins are digital currencies designed to maintain a stable value by pegging them to a specific fiat currency, such as the US Dollar (USD) or the Euro (EUR). They provide the benefits of cryptocurrencies, like fast and borderless transactions, while reducing price volatility. These stablecoins are typically backed by reserves of the fiat currency they're pegged to, and their value remains close to 1:1 with that currency, making them a reliable medium of exchange and a store of value in the world of digital finance. What are cryptocurrencies? Cryptocurrencies are digital assets that are a medium of exchange between two parties. They allow direct transactions between individuals without the intervention of an intermediary, such as a bank. While fiat money is subject to inflation and central banks can print more at any time, the leading cryptocurrency Bitcoin has a fixed supply of 21.000.000 units, making it even scarcer than gold. Are cryptocurrencies regulated? Crypto regulation varies from country to country and is constantly evolving. Some countries have embraced cryptocurrencies and have established clear regulatory frameworks, while others have imposed strict restrictions or bans and only trust Regulation of cryptocurrencies typically focuses on areas such as: Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements: Many countries require cryptocurrency exchanges and service providers to implement AML and KYC procedures to prevent illicit activities such as money laundering and terrorism financing. Licensing and registration: Some jurisdictions require cryptocurrency businesses to obtain licenses or register with regulatory authorities to operate legally. Taxation: Cryptocurrency transactions may be subject to taxation, including capital gains tax, income tax, or value-added tax (VAT), depending on the country's tax laws. Consumer protection: Regulations often aim to protect consumers by ensuring transparency, security, and fair practices within the cryptocurrency industry. Securities regulations: In some cases, cryptocurrencies and initial coin offerings (ICOs) may be subject to securities regulations if they are deemed to be securities or investment products. Financial market oversight: Regulators may monitor cryptocurrency exchanges and trading platforms to prevent fraud, market manipulation, and unfair practices. Payment services regulations: Some countries classify cryptocurrencies as payment instruments and subject them to specific regulations governing payment services. Blockchain and smart contract regulations: Some jurisdictions are exploring regulations specific to blockchain technology and smart contracts to promote innovation while addressing legal and compliance concerns. It's important to note that the regulatory environment for cryptocurrencies is still evolving, and new regulations may be introduced or amended in response to market developments and evolving risks. Cryptocurrency users and businesses should be aware of and comply with the regulations applicable in their jurisdiction to avoid legal issues and ensure their activities are conducted in a compliant manner. So make sure you keep yourself informed at all times. Are cryptocurrencies and fiat money the same? Yes and no. Cryptocurrencies are money insofar as they allow exchanges between two parties and act as a store of value. However, they also offer features which the traditional money system is unable to offer right now: cryptocurrencies can be spent and received by anyone, anywhere, at any time throughout the world and without the need for a bank or a government. This is the most revolutionary aspect of cryptocurrencies. Furthermore, fiat money basically equates to debt. When a central bank issues banknotes, it is simultaneously issuing you, the consumer, a percentage of your government’s debt. How is this the case, you might ask? Think about how, for example, the EU and the United States create money. Fiat money has attributed value because a government declares it legal tender - it has no intrinsic value. Most of the money a government creates is when loans are taken out. Banks create money when people borrow money. Take the case of the US dollar: if no loans were taken out, there likely wouldn’t be any dollars in circulation either. In other words, without consumers taking out debt to banks, the US dollar wouldn’t be out there in the world. While fiat money seems to get a major part of its value from debt, this is not the case with Bitcoin. Bitcoin has intrinsic value beyond the trust of its community. Bitcoin doesn’t lean on a system of debts, its value boils down to how effective it is as a medium of exchange. Bitcoin distinguishes itself from fiat currencies through mechanisms like the Bitcoin halving that controls its inflation. This event, occurring approximately every four years, halves the reward for mining new Bitcoin blocks. This reduction in new Bitcoin creation mimics the scarcity of precious metals, potentially increasing Bitcoin's value as its supply diminishes. For investors, understanding the timing of these events is vital. Our Bitcoin halving countdown provides a definitive exploration of the upcoming halving, giving investors additional context when making important decisions ahead of this market-influencing event. Cryptocurrencies can be spent and received by anyone, anywhere, and at any time without the need for a bank or a government. This is what makes them so revolutionary. Bitcoin has created a new form of trust for our future global monetary system. The system behind Bitcoin is completely transparent and based on maths and the actual consensus of the everyday user. With all this in mind, what do you think? Which s a better option for our future? Bitcoin or fiat?

What is inflation? Inflation means that you get less for the same amount of money you needed before. The prices of goods and services rise in price while your money’s purchasing power decreases. There are many theories and sometimes opposing views about what actually causes inflation and its effects on the economy. During a demand-pull inflation, demand is increased due to higher private and government spending. Cost-Push inflation happens because of a price increase during manufacture of goods that ultimately increases the market price to buyers. Built-In inflation leads to rising prices as a result of suppliers raising their prices. In today’s scientific view, the mainstream agreement is that inflation depends on the growth of the money supply relative to economic growth - inflation is the result once money is “printed” faster than it is demanded. An extreme form of inflation is hyperinflation which can happen when governments create too much money. Contents What is inflation? What causes inflation? What is Demand-Pull inflation? What is Cost-Push inflation? What is Built-In inflation? Why is inflation important for cash holders? Why is inflation important for investors? What is inflation? In simple terms, inflation measures the rate of price increase in the economy for general goods, services and many other areas. As prices increase around us, a certain amount of money will allow you to purchase fewer services and goods than before. Such a development impacts the general cost of living for many of us and can become a problem when it leads to the deceleration of economic growth. What causes inflation? Throughout history, the economy has been subject to periodic economic changes caused by inflation. The reasons and effects of inflation are disputed, but some popular distinctions are Demand-Pull inflation, Cost-Push inflation and Built-In inflation. What is Demand-Pull inflation? Demand-Pull inflation is a result of an imbalance between demand and supply and it’s the most common cause of inflation. When the total demand for goods and services by the public is much higher than the supply of said goods and services, then a gap is created. If many consumers want to buy certain goods, this results in higher prices and, in the end, leads to an overall higher cost of living for everyone. This development often happens during an economic upswing. A rise in employment in an economy means more disposable income to the general public, which leads to higher spending. This increase in demand ultimately leads to a rise in the price of goods and services. What is Cost-Push inflation? Cost-Push inflation is the result of an increase in price during the production or manufacture of goods. If goods cost more to manufacture, this ultimately increases the market price for buyers. For example, a company has to increase the labour cost of manufacturing their sunglasses by hiring more employees and getting more expensive materials. Since the company had to pay a higher cost for the production of the sunglasses, they increased the market price in order to make a profit from selling them. What is Built-In inflation? Built-In inflation occurs when prices in an economy rise and workers expect higher wages in order to support their cost of living. This causes a slippery slope of problems because higher wages lead to higher demand, higher demand leads to higher market prices which results in, you guessed it, inflation. Why is inflation important for cash holders? Inflation can be seen as either a good or bad thing, depending on your position. Inflation may not mean positive news for those who only save cash in their bank account, as inflation devalues their cash holdings, i.e. your funds end up with less purchasing power and won’t generate returns if the rate of inflation is higher than the interest rate for the savings account. Why is inflation important for investors? Inflation often favours those who invest. Investors with tangible assets such as stocks or commodities hope for inflation in markets that affect their investments, as it increases demand and they can then sell their holdings for a higher price. In turn, buyers of said assets would have to spend more money on what was once a lot cheaper. That is why, as an investor, it is a good idea to invest a fixed monthly amount of your disposable income in financial products of your choice to avoid your savings being the target of inflation. Link -

What is inflation? | Bitpanda Academy

When the general level of prices increases in the economy, a unit of currency can effectively buy less than it did before inflation. Here is a deep...

What is a savings plan? A savings plan is useful if your goal is to save money for a big-ticket purchase like a car, house or a vacation, or if you want to establish an emergency fund for unforeseen expenses. A savings plan is also good if you want to start putting aside money for investing. A savings plan involves putting aside a portion of your income over a fixed period of time in order to reach a specific financial goal. It’s also useful to set aside money not only for your savings account or emergency fund, but also for investing. Saving money can help you feel more financially secure. At one point or another during your personal finance journey, you will probably ask yourself the following: is it better to save or to invest my money? And how much money should I save and how much should I put aside for investing? The answer depends on your individual financial situation, and we will break down for you how you can tackle both. Saving vs. investing If you’re on the fence about whether you should be saving, investing, or both, it’s important to understand the benefits and drawbacks of each. Having a savings account is an essential part of good personal financial planning. Life can be unpredictable, so whether or not you’re saving for a specific goal, it’s a good idea to have money saved up in case you need to cover any unforeseen emergency expenses. While regularly paying into your savings is a smart idea, the drawback of savings accounts is that your money “just sits there.” Though your money will accumulate interest over time, unfortunately it won’t be that significant. On top of that, your funds could be at risk of inflation, i.e. you could actually be losing money over time. Inflation can quite literally eat away your hard-earned money. What is cost averaging? If done the right way, investing in assets other than just a regular savings account can put your money to work and produce better long term results. This is why many investors choose to set up a savings plan based on the principle of cost averaging. Cost averaging means that you invest smaller amounts of your money into an asset, such as Bitcoin or gold, in regular intervals and keep doing this over a longer period of time. This way you can reduce the effects of market volatility on assets that are subject to great price fluctuations. One of the advantages of using savings plans is that you invest with less emotion. You are happy when the price goes down because you get more for your money and happy when the price goes up because your investment is worth more than before. How to create a savings plan Now that you better understand the difference between saving and investing, you’re ready to create a savings plan. The first step is to consider your financial goals and then to figure out how much money and time you will need to reach those goals. If, for example, your goal is to save for a €100,000 deposit on a new home, then you should calculate what percentage of your income you want to set aside each month and then how many months or years it will take you to reach that amount. Or let’s say you want to invest 10% to 15% of your annual income in the stock market. If you earn 50k a year after deductions, you could make it your financial goal to save at least €500 per month. This works out to be roughly 12% of your monthly income. Short term savings plans A short term savings plan usually spans a timeframe of up to five years. This is a good amount of time to work towards big-ticket purchases like a car or a wedding, or to venture a first foray into investing. You could for example beef up your savings account by auto-depositing 20% of your income every month, or you could allocate 10% to 15% of your income to investing. You could also split them evenly and send 10% of your income to savings and use the other 10% to invest. Medium term savings plans A medium term savings plan lasts between five and ten years. A goal could be saving up to buy a home by depositing a part of your income into a savings account. Just remember that keeping your savings in a bank will put them at risk of both inflation and low interest rates, and you might end up with less money than you planned. Long term savings plans You should definitely consider investing if you are planning on growing your assets over the long term. You may want to look into dividend-paying assets, or if you are averse to risk, set up cost averaging plans for different assets to decrease loss risk through diversification. Historically, investing in securities yields higher profits than cash savings in the long run. Contrary to popular belief, there is no age from which you are too old to begin investing or even to start saving. However, If you’re over 30 years old, you could consider investing towards retirement along with your other investment plans. Link -

What is a savings plan? | Bitpanda Academy

Learn how savings plans help you reach financial goals – and why investing can strengthen your long-term security.