The Bitcoin is a type of cryptocurency. Although many different varieties of cryptocurrencies are doing the rounds right now, the Bitcoin is by far the most famous of the lot. It has relative values to other currencies, much like any traditional, state-minted currency. It is by far the most stable of all the cryptocurrencies in the world because its complex algorithms make it virtually impossible for anyone to hack the source code and manipulate its availability or value. Besides, Bitcoin users can use their accounts and the currency that they hold in it using one or more private keys, which acts as passwords. This makes the Bitcoin even more secure. However, those are not the only reasons why the Bitcoin is gaining such wide popularity. In this article, we will look at the pros and pitfalls of the Bitcoin.
Pros of bitcoins
Let us begin with the advantages.
When you buy real property, you usually have to deal with a large number of hassles that include delays, and fee payments and delays in fee payments, not to mention third parties. The Bitcoin block chain can help you get rid of all these hassles preemptively. A Bitcoin contract can be manipulated and redesigned to add or remove approvals from third parties, as per your requirements. You can also revamp the contract to include external facts, and keep the contract on hold for completion on a due date and time. The whole procedure will take you a lot less time and headache, not to mention expenses than would be incurred on a traditional asset transfer procedure.
When you receive money in your PayPal account, you always have to pay a certain amount as fees to PayPal. Add to this currency conversion charges if you are dealing in multiple currencies, and the bank charges incurred while transferring money from your online account to the bank. The Bitcoin does away with all those issues. The miner usually receives new Bitcoins from the network as compensation for the hosting, and there is no transaction fee. However, if you are not managing your own account but conducting transactions through a third party system such as Coinbase, it is likely that you will be charged a transaction fee by the hosting platform.
The Bitcoin has opened up new markets for the financial community to explore. A large number of individuals in the world have access to a smartphone or a laptop, but do not have access to established exchange systems. The Bitcoin has made it possible for these communities to conduct transactions with the rest of the world. Take, for instance, the M-PESA from Kenya, which is one of the country’s leading micro financing and money transfer service that is completely based on mobile phones. Recently, M-PESA introduced the option of making transactions in Bitcoins, which made it easier for the company to conduct international business.
The chance of any kind of fraud becomes highly limited because of the secure algorithm that governs the Bitcoin. Since they are digital, fake money cannot be minted, and neither can the sender retrieve the money or stop payment once payment has been processed, as can be done in the case of cheques and e-cheques. Besides, it is the sender who controls the information that the recipient of the money would receive, as opposed to payments by debit of credit cards where the recipient decides which information it would take. This allows the recipient considerable window to commit monetary fraud and at least identity theft. Since Bitcoin transactions need no more than a digital wallet ID, all information stays secure.
Cons of Bitcoin
Downsides to the Bitcoin are few and far between.
- The Bitcoin is highly volatile, which might lead to a high risk of loss if you have a large number at your disposal and the price suddenly falls.
- It is not yet widely accepted in exchange of traditional state currencies, which is why it cannot be used for regular transactions. This also makes earning in Bitcoins a rather cryptic area.
- Bitcoins are not regulated by any international or federal financial authority, which is why it is preferred by illegal trades.
- It is completely digital, which means that if there is any technical glitch or human error, all your money will be lost forever or stuck in limbo.
The Bitcoin, despite its popularity, is attracting quite a bit of controversy. Many are of the opinion that it is a passing internet fad that cannot possibly replace traditional currencies or compete with them in usefulness. It is yet too early to say that for sure, but we cannot ignore the fact that this cryptocurency is currently the highest valued functional currency in the world.