Bitcoin is a digital currency secured through encryption, which is traded outside the jurisdiction of a central authority. This commodity or currency? Bitcoin was initially created as a method of payment, and in some specific cases, it functions exactly as intended. However, it lacks widespread adoption and is currently experiencing significant volatility, making it difficult to consider it a true alternative to fiat currency: sellers need to constantly adjust their prices to deal with the fluctuating values.

This means that Bitcoin is primarily used as an investment similar to gold and other precious metals, rather than as a traditional currency. Like commodities, the currency transcends the direct impact of a specific economy and is not significantly affected by changes in monetary policy.

Keep in mind that while Bitcoin is not influenced by many factors that affect traditional currencies, there are a number of unique influences to consider.

How does Bitcoin work?

Bitcoin requires two fundamental mechanisms to operate: blockchain and mining.

Blockchain is a shared digital ledger consisting of all Bitcoin transactions executed to date. These transactions are grouped together in 'blocks' that are secured through encryption during the mining process.