There are certain Bitcoin advantages and disadvantages that not everybody is familiar with. If you intend on investing in this new phenomenon, you’ll want to know the facts. This is exactly why we are here! To lay down everything that is right and wrong with this cryptocurrency.
If you are not familiar with Bitcoin or its history, learn more about it before continuing. Click here and read the full article on the history of Bitcoin now!
Since Bitcoin is the first and most popular cryptocurrency, we will focus on it in this article. Taking into consideration all of the Bitcoin advantages and disadvantages will result in a better understanding of the cryptocurrency. Without blabbering any longer, let’s take a look at the pros and cons of Bitcoin!
The Advantages of Bitcoin
1. High popularity and easy transactions
Now that Bitcoin has been around for almost 10 years, it has received a pretty wide global acceptance. You can use Bitcoins on various websites, but there are a few restaurants and shops that accept it as a payment method too.
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Sending and receiving Bitcoins is also very simple. There are no international transaction fees that you have to pay. Even the regular transaction fee doesn’t cost more than 1% of the sent value. This means that you’re saving a lot by sending money through Bitcoins. Usually, there’s only a small time period that is required for the payment to be sent. There are no holidays or weekends when it slows down, as it’s all automated.
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Bitcoin transactions are also safe. If you are paying someone, you have to enter the amount that you want to send. This means that there cannot be any extra charges without you knowing about them. If you notice a raise in the price, you can simply ask the merchant about it.
2. User identity is kept safe with Bitcoin
Unlike other payment methods, Bitcoin transactions don’t show your name, address or any other personal information. This means that if you choose so, you are left anonymous and nobody can trace the transaction back to you. This can be helpful for many different reasons. For example, you might want to make a purchase that you don’t want your name next to. Now you can simply use Bitcoins and get the item without leaving any virtual trace.
Even though Bitcoin is still in development, its security is close to flawless. If a user chooses not to enter any personal information, it’s very hard to connect that account to an actual person. The transactions between the users are visible, but no personal information is shown.
If you are sending a Bitcoin payment to another user, you won’t know anything personal about them. All they’ll give you is either their wallet or email address that you can use to send Bitcoins. Not being tied to a bank and giving them all your information is also a huge plus. If privacy and anonymity is your main goal, Bitcoin is one of the best options you have.
3. Bitcoins are not regulated
One of the main advantages of Bitcoin is that there’s no government agency overseeing the currency. This means that if you have a Bitcoin, it’s only yours and nobody can take it from you. There are no fees that you have to pay for it or anybody keeping it from you. You can send or spend it wherever you are, whenever you want to.
There are also a finite number of Bitcoins that can be mined. This means that more can’t be simply made or printed, like dollars for example. This is also the reason why so many people call Bitcoin the digital gold. Learn more about why it’s called like that by checking out this article!
With only so many Bitcoins being in circulation, its value constantly fluctuates. The price can drop, but it can also go very high within a few weeks.
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The Disadvantages of Bitcoin
1. Bitcoin’s price constantly fluctuates
Even though as of today, the price of a Bitcoin is in the $4,000 range, it can drop at any minute. There have been multiple instances in Bitcoin’s history where the price reached record heights, just for its value to plummet down in a day or two afterwards. This is due to many people suddenly realizing the potential of this cryptocurrency.
They hear about it through the news or social media and they want in on the fun. Unfortunately, the price can’t go upwards forever. It will drop sooner or later and stabilize over a few month period.
The easiest way to understand this would be to imagine a rocket (Bitcoin price) and the fuel (Bitcoin buyers) that powers it. Until there’s fuel, the rocket will go up, but as soon as there’s no more left, it will fall back down to Earth.
The same goes for Bitcoin price. Until people are buying up coins when they are already at a high value, the price will go up. But when there are no more buyers, the price will fall down, just like the rocket. This can be dangerous, especially for people who have invested money into mining rigs and are waiting for an investment return.
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2. Bitcoin wallets’ undiscovered flaws
Bitcoin wallets are constantly being updated and worked upon, but there are certain flaws that are not yet discovered. Hackers are hard at work to find a breach and they won’t stop until they find it.
The problem with this is that if you lose a Bitcoin, it’s gone forever. Hackers could diminish all of your earning within a few minutes if they gained access to your Bitcoin wallet account. And as there is no government agency behind Bitcoin, you could never get those coins back.
Even though the Bitcoin network is quite safe, there could always be breaches in their security systems. This could be devastating for anybody who spent time mining and even more so for those who bought Bitcoins to sell them later.
Of course, a simple malware could also be used to steal login information or to corrupt the data, which is always a risk. Anybody could simply log in to your wallet and send the Bitcoins that are available to their own account. Waking up and seeing thousands of dollars vanish is not something that you want to experience.
3. Bitcoins are used for illegal activities
One of the main reasons why many people despise cryptocurrencies is because they can easily be used for various illegal activities. Since the transaction cannot be linked to an actual person, nobody can find out who actually sent the payment. On the other hand, government agencies can track almost every other type of transaction. This makes Bitcoin the perfect currency for the black market.
Bitcoin is one of the most widely used online currencies for illegal activities.
Of course, there have been a few major arrests, but many illegal transactions stay under the radar. The Silk Road was a marketplace for criminals that used Bitcoin as the currency. People could easily buy drugs, medical supplies, steroids and various other illegal items on the website.
Learn more about this Silk Road, the anonymous Bitcoin marketplace through this Wikipedia article!
Silk Road was on the dark web, which means that users could browse it without leaving any virtual traces. This is why many people though that it would be impossible to track down the criminals. However, in 2013, the founder of the Silk Road website, Ross Ulbricht was arrested. Since then, there have been a couple of copy-cat websites that tried to achieve the same as Silk Road.
Conclusion
There you have it! These are some of the most important Bitcoin advantages and disadvantages that you should be concerned with. Of course, there are many other things that you can learn about Bitcoin, and you are highly advised to do your own research too. Cryptocurrencies and Bitcoin in particular are very complex. Still to this day, a lot of people are not familiar with some key aspects of this virtual currency.
Bitcoin and all other cryptocurrencies are based on the blockchain technology. If you do not know what this is, be sure to read about it in this article!
This should be more than enough to decide whether Bitcoin is something that you want to invest into or not. There are certain risks, but high rewards too. Ultimately, you need to decide if you are interested in it or not. We are only here to lay down the facts and tell you everything you need to know about this cryptocurrency.
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