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The Advantages and Disadvantages of Using Bitcoin

Bitcoin

Bitcoin was first introduced in 2008 and has since become a leading digital currency. With it being so different to any other existing currency it holds a lot of unique benefits and uses. However, equally as a result of it being relatively new and digitised it also comes with a lot of uncertainties. Here we will look into both the advantages and disadvantages of using Bitcoin as currency.

Advantages

Throughout history one of the biggest problems seen with currency is the risk of inflation. This tends to happen over time with most currencies where they lose their power by a few percent each year because of money being overprinted. In this instance Bitcoin is seen as a much more stable source of currency as the system it is part of is designed to make Bitcoin’s finite. There will only ever 21 million Bitcoin’s released and it can be seen that the release of new Bitcoin’s is already slowing down.

The Bitcoin system is a lot cheaper and simpler than other online payment systems such as PayPal. With these types of systems people can find ways to take back their money and open disputes which is often very inconvenient and time consuming. With Bitcoin once you have received the money it is yours and there is no way of the person claiming it back or using an escrow service. Generally it is believed to be a lot simpler as it is a person to person transaction with no third party facilitating.

Whilst other currencies are dependent on their governments not to fail, Bitcoin has an extremely low collapse risk. With it not being regulated by any government and being a virtual currency, Bitcoin is not at risk of hyperinflation or collapsing and subsequently wiping out everyone’s wealth.

With it not being a physical currency you have no need to carry round any physical money with you. With other currencies you could not carry around large amounts of cash or gold with you without being a visible and obvious target. With Bitcoin you can very easily be carrying millions or even billions on you all stored on a memory stick without anyone knowing.

Disadvantages

As Bitcoin is untraceable it may be used as part of illegal activities in the same way that criminal use cash to avoid suspicion. With it being virtually untraceable by authorities if it over time does become a source of criminal activity it might draw unwanted attention and be potentially outlawed.

If your credit or debit card is stolen or your account is hacked you will more often than not be able to get back any money lost from your bank. With Bitcoin if your wallet is hacked, there is nothing in place for you to retrieve your lost/stolen Bitcoins. As a result, most people tend to store their Bitcoins on a disk or memory stick that is disconnected from the internet.

With Bitcoin being only a few years old still it is not yet widely used in the same way and to the same extent as other currencies. There is also the possibility that a new Cryptocurrency may be developed in the next few years that overtakes Bitcoin as the leading digital currency.

Regardless of where you go these days most places will accept all major debit/credit cards and other digital payments methods such as Apple Pay and PayPal. Unfortunately however there are still not a lot of places that will accept Bitcoin as a payment method. There is a comprehensive list available online stating which companies will accept Bitcoin but for now most people tend to use it as a means of investment.

Whilst many people invest in Bitcoin because their rates change daily and tend to be so high in value this can cause a lot of problems. It would be near impossible for any business to accept Bitcoin as a payment method unless they were willing to change their prices daily to match the exchange rate. It is not a convenient method of payment but again works very well for those looking to make investments.