Being a type of cryptocurrency, Bitcoin has taken the world by storm over the last decade. Its convenient, prompt and global nature makes it an ideal digital currency. However, have you ever wondered or considered the implications of using it – i.e. the pros and cons of Bitcoin? Read on to find out and choosing a bitcoin wallet for more details!
What is Bitcoin?
Bitcoin deploys cryptographic language to exchange money in the form of digital files. One can either send or receive funds this way. As this is categorised as ‘decentralised finance’, it’s exempt from either government or individual regulation. Many perceive this as a desirous trait, although others would argue that it creates a monopoly.
The advantages of Bitcoin
Bitcoin offers a myriad of benefits, including:
- It’s inflation agnostic: a fixed volume of Bitcoins have been issued (21 million thus far). Bitcoin is source code dependent, setting a guaranteed value. Hence as demand rises, so does the value, keeping abreast with market trends. Only popularity can drive its price up – nothing else!
- Bitcoin is both instantaneous and always accessible, making it live to all users, even by using smartphones or other mobile devices, such as tablets
- Independently governed and managed by developers using their own hardware. Transactions are processed fairly and accurately, as staff are incentivised by receiving their reward in the form of asset tokens, as a portion of the overall value – also known as ‘gas fees’
- Secure and confidential: Bitcoin runs on blockchain technology which utilises encrypted puzzles. These are almost impossible to decode, as are the pseudonyms to ensure and uphold user anonymity. Any data or account information remains private
- Universally exchangeable with multiple world currencies, using pocketbooks which allow easy trading with nominal transaction or conversion fees
- Being decentralised ensures that no one can control the flow or value of Bitcoin, making it both secure and stable
- It’s economical to use: Bitcoin is a direct method of transferring funds by eradicating any middleman. Moreover, with less checkpoints, its processing times are blazingly fast, as are the handling costs (being devoid of any third party intervention)
The disadvantages of Bitcoin
The problem with any platform is that there will always be some who exploit its features and subject them to abuse. Unfortunately, Bitcoin is no exception to this fact. Let’s take a look at what are Bitcoin’s cons (what a mouthful!) – and check out Bitcoin Era too:
- Often used for illegal activity, given its private and untraceable nature. This makes it difficult for law enforcement agencies to monitor suchlike. Be it drug dealing or purchasing over the dark web or smuggling black money via a ‘white’ creditor to conceal its tracks, there are endless wrong applications where Bitcoin can be misused
- Lack of any financial insurance backing, in case of theft or loss. Just in case one is duped online as part of a scam or cyber attack hack, there is no mechanism to prevent or compensate for any such consequential loss
- Although we mentioned earlier that Bitcoin is fairly flexible conversion wise, its versatility is limited for certain flat currencies. There is also a finite volume of Bitcoins out there. This means the compelling need to initiate another conversion transaction via an alternative platform. The result? Greater handling fees incur – unwelcome news for many users!
- Bitcoin isn’t exactly green or environmentally friendly: processing power zaps copious amounts of electricity to fuel all the server and hardware equipment required for blockchains. Somewhat paradoxically counterintuitive, right?
- No reversal or cancellation feature. Just suppose that someone erroneously transfers funds to another, as identities remain withheld, there is no way to recover or refund such transactions. Once something has been sent, it’s gone – forever!
- As many users are investing in Bitcoin rather than spending them, this creates some market value stagnation. Increasing awareness of how to use Bitcoins to trade or even make routine purchases online would boost the common adoption of this powerful currency. Till then, Bitcoin remains relatively volatile within the financial marketplace
Bitcoin remains an established blockchain based digital cryptocurrecy, as it offers many advantages, including quick and secure disbursal, is decentralised, accessible and maintains user privacy. Nevertheless, it also has its fair share of cons, including fueling illegal activity, spurious or vague operability (lacking user ergonomics to reverse wrong transactions, for example) and is quite energy intensive. Overall, Bitcoin is a blooming currency, yet further improvements can be implemented to refine its functionality for generations to come. Visit Bitcoin Era to find out more!