Bitcoin is an open-source project - the developers devote their free time to work on it and don't necessarily do it for profit. Other crypto currencies sometimes come pre-mined, or the developers don't share them too quick in order to create a supply of coins for themselves only to sell it for profit later. Dec 07, · She was in good company. JPMorgan Chase CEO Jamie Dimon recently called bitcoin a "fraud" and suggested people who buy it are "stupid." Warren Buffett called bitcoin . Jun 30, · In aggregate, our estimate for the global value of stores of value comparable to bitcoin, including savings accounts, small and large time deposits, money market funds, and gold bullion, come to.
Where do bitcoin profits come fromI bought $ in bitcoin. Here's what I learned
From what I know, this wasn't the case for Bitcoin. However, the developers can be getting money from various donations. In case of Bitcoin, the Executive Director of the Bitcoin Foundation has claimed that one of the goals of the Foudation for is to.
Which can imply that the future development of the Bitcoin project will be funded at least partially by the Foundation. Sign up to join this community. The best answers are voted up and rise to the top. How does bitcoin make profit? Ask Question. Asked 8 years, 2 months ago. Active 3 years, 1 month ago. Viewed 38k times. Griffin Harris Griffin Harris 41 1 1 gold badge 1 1 silver badge 2 2 bronze badges.
Active Oldest Votes. From the bitcoin wikipedia page : Bitcoins are awarded to Bitcoin "miners" for the solution to a difficult proof-of-work problem which confirms transactions and prevents double-spending.
Stephen Schrauger Stephen Schrauger 3 3 bronze badges. ThePiachu ThePiachu The Overflow Blog. Podcast A Very Crypto Christmas. Featured on Meta. New Feature: Table Support. Thanks to the complicated, decentralized blockchain ledger system, bitcoin is incredibly difficult to counterfeit. Doing so would essentially require confusing all participants in the Bitcoin network, no small feat.
The only way that one would be able to create a counterfeit bitcoin would be by executing what is known as a double spend. This refers to a situation in which a user "spends" or transfers the same bitcoin in two or more separate settings, effectively creating a duplicate record.
While this is not a problem with a fiat currency note—it is impossible to spend the same dollar bill in two or more separate transactions—it is theoretically possible with digital currencies. What makes a double spend unlikely, though, is the size of the Bitcoin network. By controlling a majority of all network power, this group could dominate the remainder of the network to falsify records. However, such an attack on Bitcoin would require an overwhelming amount of effort, money, and computing power, thereby rendering the possibility extremely unlikely.
Generally, Bitcoin holds up fairly well in the above categories when compared against fiat currencies. So what are the challenges facing Bitcoin as a currency? One of the biggest issues is Bitcoin's status as a store of value. Bitcoin's utility as a store of value is dependent on its utility as a medium of exchange. We base this in turn on the assumption that for something to be used as a store of value it needs to have some intrinsic value, and if Bitcoin does not achieve success as a medium of exchange, it will have no practical utility and thus no intrinsic value and won't be appealing as a store of value.
Like fiat currencies, Bitcoin is not backed by any physical commodity or precious metal. Bitcoin has exhibited characteristics of a bubble with drastic price run-ups and a craze of media attention. This is likely to decline as Bitcoin continues to see greater mainstream adoption, but the future is uncertain. Bitcoin's utility and transferability are challenged by difficulties surrounding the cryptocurrency storage and exchange spaces.
In recent years, digital currency exchanges have been plagued by hacks, thefts and fraud. In those cases, however, regulation is much more settled, providing somewhat more straightforward means of redress. Bitcoin and cryptocurrencies more broadly are still viewed as more of a "Wild West" setting when it comes to regulation. This article will not make a case for what the market penetration will be, but for the sake of the evaluation, we'll pick a rather arbitrary value of 15 percent, both for bitcoin as a currency and bitcoin as a store of value.
You are encouraged to form your own opinion for this projection and adjust the valuation accordingly. The predominant medium of exchange is government backed money , and for our model we will focus solely on them.
Roughly speaking, M1 which includes M0 is currently worth about 4. M3 which includes all the other buckets minus M1 is worth about 45 trillion U. To this, we will also add an estimate for the worldwide value of gold held as a store of value. While some may use jewelry as a store of value, for our model we will only consider gold bullion.
The U. Since there has in recent years been a deficit in the supply of silver and governments have been selling significant amounts of their silver bullion , we reason that most silver is being used in industry and not as a store of value, and will not include silver in our model. In aggregate, our estimate for the global value of stores of value comparable to bitcoin, including savings accounts, small and large time deposits, money market funds, and gold bullion, come to If Bitcoin were to achieve 15 percent of this valuation, its market capitalization in today's money would be This is a rather simple long term model.
Perhaps the biggest question it hinges on is exactly how much adoption will Bitcoin achieve? Coming up with a value for the current price of Bitcoin would involve pricing in the risk of low adoption or failure of Bitcoin as a currency, which could include being displaced by one or more other digital currencies. Models often consider the velocity of money, frequently arguing that since Bitcoin can support transfers that take less than an hour, the velocity of money in the future Bitcoin ecosystem will be higher than the current average velocity of money.
Another view on this though would be that velocity of money is not restricted by today's payment rails in any significant way and that its main determinant is the need or willingness of people to transact.
Therefore, the projected velocity of money could be treated as roughly equal to its current value. Another angle at modeling the price of Bitcoin, and perhaps a useful one for the near-to-medium term, would be to look at specific industries or markets one thinks it could impact or disrupt and think about how much of that market could end up using Bitcoin. Commodity Futures Trading Commission.
Accessed May 13, Congressional Research Service. Board of Governors of the Federal Reserve System. Buy Bitcoin Worldwide.
Federal Reserve Bank of New York. Bitcoin Wiki. Accessed March 12, Consumer Financial Protection Bureau. Accessed Mar.
National Science Foundation. Federal Trade Commission Consumer Information. Office of the Director of National Intelligence. The Law Library of Congress. Federal Reserve Bank of St. Geological Survey. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Bitcoin Basics. Bitcoin Mining. How to Store Bitcoin. Bitcoin Exchanges. Bitcoin Advantages and Disadvantages.
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