If you invest in something, it is prudent to learn everything you can about it. Investing, in general, is risky but if you are doing it blindly, it will be riskier. If in this case you are thinking about Bitcoins, you need to learn the advantages and disadvantages to make an informed decision.
Introduction to Bitcoin
Bitcoin is one of a kind digital currency. It is, in fact, the predecessor of other cryptocurrencies in the world. When you hear about cryptocurrency, it means computer codes that offer monetary value. High-performance computers generate the computer codes. The truth is, there are no central banks or governments that manipulate the creation of cryptocurrency. This is the reason why it is massively appealing.
Bitcoins are like gold – they possess value at the same time you can trade it and cash out. You can use it to pay for goods and services online. You can even choose to store them and hope its value will increase over time. Trading basically happens from one personal wallet to another. The wallet is your personal database and you store it on your computer, smartphone or cloud storage.
You have to know that Bitcoins are tracked. Despite its decentralisation, it can be tracked using a public ledger called blockchain. The blockchain is a virtual data ledger that logs all the Bitcoin transaction. This is available to the public, which ensures the authenticity of the Bitcoins.
What are the advantages of Bitcoin?
Now that you know basics about Bitcoin, it is time to consider its advantages. Here are the advantages of Bitcoins:
1. Freedom in payment: with the coming of Bitcoins, it is now possible to send and get
money from anywhere in the world. Aside from that, there are no limitations or restrictions established by banks or other financing institutions. If you are a consumer, using Bitcoins will give you control over your money.
2. Security: every Bitcoin records the digital address of every wallet through the blockchain. Although this is the case, the consumers should not worry because the system does not record the names of the people who own the wallets. This can protect the identity of the people using Bitcoins. To put it simply, every Bitcoin transaction can be verified but it is completely anonymous. Bitcoin network is backed up and encrypted protecting the investments and the people.
3. Transparent: as mentioned earlier, the blockchain allows the public to view every transaction for authenticity but at the same time it can protect the identity of the consumers.
4. Low fees: in a Bitcoin transaction, there are either no fees or very low fees. If you want to hasten your transaction, you need to pay higher.
What are the disadvantages of Bitcoin?
Here are the disadvantages of Bitcoin:
1. Lack of awareness: there are still many people who are not aware of this current
digital currency. To make this accessible, people need to be educated.
2. Volatility: as with any investment, there is always volatility. In Bitcoins, the volatility is due to the fact that there are a limited amount of coins but the demand increases over time.
3. New: since it is new, the system should develop new features, services, and tools to make it more secure and accessible.