Whenever the term cryptocurrency or digital currency is used, the first name that comes to mind is Bitcoin. It has been hailed as the next biggest thing since the invention of the Internet. Bitcoin is one of the most popular digital currencies ever. It is a decentralized, peer-to-peer electronic cryptocurrency, which has no governing body or issuing authority.
As bitcoin started gaining popularity, it inspired the development of several other cryptocurrencies that later became its competitors. No matter what, the trust and regular investment shown by stakeholders and people around the world in the world of digital currencies puts bitcoin ahead of all others. However, everything has two sides, i.e., negative and positive, and it is the same for bitcoin.
What Is Bitcoin?
Bitcoin (BTC) is a cryptocurrency, a virtual digital currency made to act as money and a form of payment outside the control of any one person, group, or entity. This means there is no involvement of third parties in any sort of financial transaction. It is rewarded to the blockchain miners for their work in verifying the transactions.
With time, Bitcoin has become the world’s largest cryptocurrency, with a market capitalization value of around $471.91B. The value of bitcoin and its user base has grown significantly ever since it entered the market. Also, there are several stores and online websites that accept bitcoin, and investment in bitcoin has grown exponentially. In the following sections, we will look at the benefits of digital currency as well as its disadvantages.
Advantages Of Bitcoin Digital Currency
Being one of the top digital currencies, there are several bitcoin advantages that we have listed below:
- Protection From Payment Fraud
Bitcoins are digital currencies that use an algorithm and cryptographic protocol. This makes copying impossible.
- No Legal Interference
No government authority or political party regulates Bitcoin. Thus, it is under any kind of political influence, which means no authority can freeze or seize it. - International Transactions
For international transactions, one need not worry about using bitcoin as a medium. It is one of the easiest methods to initiate an international transaction. Also, there are no extra fees for it, and it gets settled instantly for the receiver. - Greater Liquidity
In case the user wants to convert bitcoin to real-world currencies, bitcoin retains most of its value, while other cryptocurrencies lose value during the conversion process. - Security
Bitcoin has comparatively very strong security that makes it impossible for the fraudster to counterfeit or cheat the bitcoin payment network. Also, the bitcoin transactions are tamper-proof because of the blockchain.
With such a number of advantages, Bitcoin also possesses some drawbacks. Let’s see how these digital currency disadvantages can affect investors.
Disadvantages Of Bitcoin Digital Currency
Along with a certain number of benefits, there are some lists of bitcoin disadvantages too.
- Scams and Frauds
Bitcoin is technically not that easy to understand for common people, which gives a chance to fraudsters to fake people by selling bitcoin through unauthorised apps or websites in the name of bitcoin saving, bitcoin investment, and so on. - Price Volatility
The price of bitcoin skyrocketed when the FBI declared that bitcoin would be treated as other legitimate financial services, but after the breach in security happened in MT. On the Gox bitcoin exchange, its value dropped by more than 50 percent. Thus, there is high volatility in its value, which makes it difficult to choose it for investment. - Refund Issues
There is no refund policy. Once payment is initiated and completed, it won’t be transferred back. - Cyber Hacking
Due to bitcoin’s anonymous nature, some hackers and developers of illegal software fearlessly use bitcoin as a medium to extort money. - Piracy
Several pirated file-sharing services depend on bitcoin for their network to run.
Conclusion
In order to trade in bitcoin or any other digital currency, it is important to know every detail about it. There are several authentic websites like WazirX that offer Bitcoin Exchange in India and across the world as well. Do not invest until it’s trusted.
