A worldwide-accepted medium of exchange has always been a pipe dream. In 2009, Bitcoin was introduced, and it has now surpassed the market price of gold. Currently, its exchange rate with the point is around one Bitcoin to three hundred pounds. As a result, several individuals and companies have started buying up Bitcoins for the purpose of trading and investing.
Unfortunately, many of these buyers and investors are unaware of the advantages and disadvantages of Bitcoins. There is quite a bit of work needed before Bitcoin can become a globally-acceptable means of payment and revenue.
Below are some pros and cons of this online currency that will help you decide whether to take this plunge or not:
The usage of Bitcoin cuts the fees of the middleman from any monetary process. There are no bankers, agents, or money changers to go through. This not only saves on costs but also enhances the transaction experience. Transfers are more efficient and faster as a result of cutting such fees.
A transaction via credit card would automatically cut off a few percentages of the transaction itself. However, even if one used Bitcoin through an exchange center like Coinbase or BitStamp, the transaction fee goes down to 1% or even lower. This is especially beneficial for businessmen or corporations, who frequently have to process very large transactions.
The immediate transactions mean that payments are instant. This makes for a smooth dealing and less chance of fraud. Bitcoin could thus save on thousands of business hours every day. Internationally, this could result in trade between countries would become clear and open. This means that people in any country could have access to foreign products at little or no extra cost.
The implications of this are highly positive. Even small businesses and startups would have a way to showcase and sell their products abroad. This could immensely help in increasing the competition and hence the quality of products and services all over the world.
With the advent of the Internet, scammers have simply gone online and continued their nefarious activities. However, with the use of Bitcoin, these problems may go down for a time, at least. Most vendors and sellers face fraud at some point in their online selling and buying. A hacker or fraudster can reverse even credit card or PayPal transactions. Bitcoin payments are irreversible and final. This means that the verification of a Bitcoin payment is all you need.
Thus, there is less chance of getting fooled or facing financial difficulties if a vendor or seller deals in Bitcoin.
Certain countries do not accept or offer traditional payment services. This is due to the high fraud rates of such methods. However, Bitcoin reduces this risk as it is a decentralized method with direct links between the buyer and seller. Hence, more and more countries are opting for this method of payment. However, there are still some countries that haven’t yet declared Bitcoin as legal tender within their international limits.
Ability To Remain Anonymous
Apart from personal reasons, many customers do not wish to leave a trail of their transactions in order to maintain their privacy. Many online shopping websites now offer transaction methods which claim to preserve anonymity. However, with Bitcoin, one is assured of their credit information and personal details remaining private. This reduces the chance of identity theft and credit card fraud.
Transparency And Assurance
Many individuals would like to donate to a seemingly worthy cause but are not sure if their money is going to the deserving charities. There have also been several controversies where people have accused charities of pocketing their donations for personal use. With the use of Bitcoin on both ends, people can be sure of their money reaching those who actually need it.
In this manner, charities and non-profit organizations can also maintain good records of their financial activity. They can thus prove their sincerity to their patrons as well as draw on government grants and subsidies.
There are a few main points on which companies and individuals should think deeply before they start using Bitcoin. They are as follows:
Despite the lowered risk of fraud, there are some other risks involved which pertain to a Bitcoin user’s security. They system for Bitcoin is secure in theory, but Bitcoin wallets are vulnerable to attack. Since the Bitcoin runs on an unregulated network, no one can press charges, reverse accidental or unwanted transactions, or recover stolen currency. Anyone who has the public and private keys to opening and operating a certain Bitcoin account is technically the owner.
Hence, there is essentially no one you can blame if your Bitcoins go missing. With computer viruses, hackers, etc, there is no saying what problems may come up if the world switched over to Bitcoin.
Instability And Volatility
The value of Bitcoin is currently booming and stable. The fluctuation chart for Bitcoin is easily available online. However, there is no saying when the price of a Bitcoin may drop. In an ideal world, there would be no fluctuation. However, Bitcoin is still measured in terms of real-world currency.
Coinbase, one of the centers for Bitcoin, has admitted that the value of Bitcoin could very well drop to zero. If this happens, there would be very little that Bitcoin users could do about their lost wealth.
However, they could also ward off this problem by converting their Bitcoin to real money as soon as they receive their payments. No one has to hold Bitcoin reserves. Of course, this also means that one cannot safely hoard Bitcoin like they would do for a strong currency or gold.
There is no doubt that a cryptocurrency like Bitcoin is quite a useful tool. For now, though, it is best and wisest to use it as a tool and not a long-term investment. Bitcoin is best for use to avoid identity theft, stolen personal information, and fraud. Beyond that, one should not regard it as valuable in and of itself.