Baskadia

Nakamoto originally designed bitcoin as an alternative to traditional money, with the goal for it to eventually become a globally accepted legal tender so people could use it to purchase goods and services.

However, bitcoin’s utility for payments has been stymied somewhat by its price volatility. Volatility is a word used to describe how much an asset’s price changes over a period of time. In the case of bitcoin, its price can change dramatically day to day – and even minute to minute – making it a less than ideal payment option. For example, you wouldn’t want to pay $3.50 for a cup of coffee and 5 minutes later it’s worth $4.30. Conversely, it doesn’t work out great for merchants either if bitcoin’s price falls dramatically after the coffee’s handed over.

In many ways, bitcoin works in the opposite way as traditional money: It is not controlled or issued by a central bank, it has a fixed supply (which means new bitcoins cannot be created at will) and it’s price is not predictable. Understanding these differences is the key to understanding bitcoin.