Quote from: stiffbud on August 13, 2018, 10:38:07 PM

Quote from: Buttermellow on July 20, 2018, 02:57:31 PM

I just wonder how bitcoin really works on local exchange around the world because if you will going to need a real money and you have bitcoin definitely you can sell your bitcoin and exchange it with real money in your local to be used. Well if all people around the world would exchange their bitcoin holdings is it possible because bitcoin is being back up by real money?

No bitcoin isn't being backed up by real money. The sole purpose of the value of Bitcoin is supply and demand, the supply of bitcoin is limited i.e. 21 million coins to be formed ever and out of which about 17 million are mined already. So when a person buys bitcoin he creates demand and makes the market and that increases the price so when bitcoin become popular the market rises and vice versa.

Using Bitcoin in a transaction doesn't do anything for supply or demand necessarily. Those Bitcoins have already been bought or sold, so transacting in BTC shouldn't affect the price. The replacement of those Bitcoins by someone who spent them in theory is how that would come into play. On the flip side, it's more likely that transacting in btc has a negative pressure on price than someone buying with btc and then eventually buying more btc to replace what was already spent. That's because businesses are unlikely to hold btc, they just accept it as an accommodation, but are likely using a processor who instantly credits them with a USD equivalent amount. Holding it for any period of time threatens to erase the profit margin of the transaction due to price volatility, so purchases are likely to be instantly sold and converted to USD.