For many people who are unaware, “bit coin” is just another way of saying “bit.” A “bit coin” is also called a “coin with bits.” What do these bits do? In a very simple explanation, a bit coin is worth something only if someone is willing to sell you a specific number of bits for that coin. A lot of people aren’t aware of this simple feature, but this has become the backbone of the modern financial system. If you are interested in learning more about this little piece of technology, then this article is for you.
Basically, bitcoins is a form of currency which has been created with a different approach. Generally, currencies are backed up by actual assets such as gold and this is how they work. With bitcoins, however, there are two bits involved instead of one. It goes without saying that the value of a single bit cannot be compared to that of a traditional currency.
However, there are several reasons why the value of a single coin cannot be compared to that of a physical asset. First of all, there are no legal backing for the currency. On the other hand, two bits can easily buy a lot of things such as food, drinks and even cars.
The other reason is simple – the number of Danish West Indies coins which can be bought at any given time is limited to around 21 million. So, it is understandable why there are not many people who would want to invest in this type of investment. But there are still some traders out there who have become very rich from using bit coins.
How does a bit coin actually work? Simply put, when a buyer wants to purchase a bit of this currency, then he will first send a request for the right bit coin. This request will be matched with a similar request from another buyer who has a matching key. Once both requests are matched, then this creates a competition between buyers who wish to purchase the bit coins and sellers who want to sell them.
In order for a seller to win the competition, then he must offer a higher price to the buyer than the other buyer. The winning bidder will then give a contract to the seller. The contract will specify the terms and conditions of the sale. Basically, it will allow the seller to take back the purchased bit should the buyer cancel his bid within a few days after the completion of the contract. The seller will also get his money back but will not get the key.
How does the bidding process work? Once the bid has been created, then the buyers will start playing. The buyers will place different bids depending on the value of the bit coin. The more the value of the bit coin, the higher will be the bids made by the buyers. The highest bidder will take the deed to the buyer’s property.
To determine the value of the coin, a formula is used. The formula is made according to the weight and size of the coin. There are certain rules, which will be followed by each bidder before the auction starts. During the auction, if the coin which was purchased gets out of the auction on the first round, then the bidder will lose his bid, and if the coin is out in the second round, the bidder will win.
Auctions for bit coins are usually held monthly, weekly or daily. For a fixed auction price, all bidders submit their bid, which is then compared with the other bidder’s bids. If the auction is won, the payment is made through PayPal, credit card or bank transfer. The payment is usually done within a week after the auction. However, some auctioneers prefer to accept checks or money orders as well.
Once the auction is over, the winning bidder will sign a sale agreement. The terms and conditions between the coin dealer and the owner will be clearly stated in this agreement. The coin dealer may demand for the return of the bit coin should the owner decide to sell off the coin in the future. Before selling off the coin, the owner should inform the dealer in advance.
Selling a coin to a reputable coin dealer is very important. A good coin dealer will appraise the coin based on the current market value of that particular denomination. For instance, if you are selling a Spanish coin, your bit dealer will not give high prices to older Spanish coins, while he will give high prices to common mint issues. On the other hand, a good bit coin dealer will offer reasonable prices to uncommon Spanish coins and will also be willing to provide an excellent buyer service. Before buying a Spanish coin, one must first know the value of the coin.
