PAPER BITCOIN: HOW IT WORKS AND WHY IT EXISTS.
🇰🇷 A few days ago, a large exchange in Korea, Bitthumb, made an impressive mistake:
Instead of distributing 620,000 wons, which is about 500 dollars, to the winners of a raffle, they distributed 620,000 bitcoins.
▫️ Obviously, Bitthumb does not have that many bitcoins, so what was distributed was ARTIFICIAL Bitcoin, or as we call it, paper Bitcoin.
▫️ This does not change the actual supply: the maximum Bitcoin remains 21 million and there will never be more.
What happened was an internal mistake of the exchange and it was quickly corrected.
But beyond mistakes, there exists a synthetic Bitcoin that is deliberately generated through financial instruments.
🏦 When large institutions entered, they began to use futures contracts, perpetuals, options, and bundles that allow investing with exposure to Bitcoin without having the actual asset.
🪙 With a single Bitcoin, several instruments can be generated that simulate its price, what we call paper Bitcoin.
▫️ These instruments allow betting on the future price, leveraging, and creating multiple positions, but they are not real Bitcoin.
To understand it better, there is a real historical example:
In ancient times, a farmer who had a cow and wanted to exchange it for a pig the following month. For that, he could create a paper that said “I will give you the cow for a pig in a month.”
▫️ That paper transaction represented the future agreement before there was a real exchange.
Thus, futures contracts were born, and today they function similarly with Bitcoin: they represent the asset, but they are not real Bitcoin.
👉 This explains why, sometimes, the price can be kept controlled despite real accumulation of Bitcoin.
📌 Understanding the difference between real Bitcoin and synthetic Bitcoin is mainly to know what we are buying and how the market works.
#BTC #PaperBTC #SpotTrading. #cryptouniverseofficial $BTC