How to Gauge Bitcoin’s Downside
The unique nature of digital currencies makes this technology-driven world even more modern. Bitcoin is the most popular cryptocurrency that’s already used by over 80,000 businesses. This virtual currency opens a number of opportunities in different business verticals. Most importantly, Bitcoin doesn’t involve currency conversions in international payments and it’s easy to use. But like any other currency – be it real or virtual – Bitcoin has its drawbacks. Read on to find out if Bitcoin is worth the candle.
Benefits of Bitcoin
Being the first of its kind, Bitcoin offers a host of benefits, including:
- Safe. Before they’re sent to a blockchain, all Bitcoin wallet transactions are signed by an authentic digital signature. Due to this, the app is considered to be a safe place for exchanging and storing cryptocurrencies.
- Fast transactions and payments. Unlike credit or debit card transactions, Bitcoin payments are fast, so you don’t have to worry that your funds might be locked up for weeks in case of a chargeback.
- Easier international payments. Small businesses have trouble selling their services or products abroad due to the high cross-border transaction fees. In most cases, the fees are higher than the price for a service, so it’s definitely non-profitable. Being global, Bitcoin makes the payment process safer, cheaper, faster, and easier.
- The absence of a third party. Bitcoin transactions don’t involve any third party. No matter what, no one is able to claim, tax, or freeze your coins. Bitcoins aren’t seized by the government and the possibility of stealing is extremely low.
- You can use it in different countries. Bitcoin is popular worldwide, albeit not all countries allow it. The countries, such as Germany, Bulgaria, United Kingdom, Cyprus, Australia, Canada, and the United States. In these countries, you can use the same currency without going through the trouble of visiting a local bank for currency conversions.
- Low transaction fees. Bitcoin payments have significantly decreased transaction fees when compared with debit and credit card fees.
- Zero risks of inflation. When the government issues more cash throughout the year, reducing the buying abilities of the people, inflation happens. But not in case of Bitcoins. The Bitcoin system has the general purpose of being finite with the number being nearly 21 million. That’s why, there’s no possibility of issuing more cash. Therefore, the risk of inflation decreases to zero.
- Keep your personal information safe. When you make an online purchase, you need to provide a lot of personal information, including the one about your credit card. This boosts the fraud risk. With digital money like Bitcoins, your identity is concealed and protected.
What’s a Bitcoin fork?
When it comes to virtual money, a fork means a software change of the digital currency that forms 2 separate blockchain versions with a shared history. A fork can last for several minutes, be temporary, or become a permanent split in the network forming 2 separate blockchain versions like in the case with Bitcoins. Bitcoin split in two creating Bitcoin and Bitcoin Cash. Unlike 1MB for the original Bitcoin, Bitcoin Cash boasts an 8MB block size. Although Bitcoin Cash is memory-intensive, it ensures the faster processing speeds.
What are the downsides of Bitcoin?
Bitcoin has more perks than drawbacks, but still, it’s crucial to be aware of all the possible dangers related to this digital currency:
- It can be stolen and hacked. With cybersecurity issues and the high cost of Bitcoins, dark hackers don’t sleep and they find new ways to steal digital money. Reuters claims that, since 2011, over 9.8 million Bitcoins have already been stolen from different exchanges. That’s why, it’s highly important to take the proper cybersecurity cautions.
- It’s illegal in some countries. Russia, China, Ecuador, Columbia, Bolivia, and Vietnam say no to Bitcoins.
- It’s difficult to know when you should get out. Many people turn to Bitcoin to earn some easy money. Even if the market plunges, you might stay in and wait for your profit. Millions of investors pour their life savings into Bitcoins and do earn some money, but they have difficulty selling those Bitcoins even when they have to. Consider it as a digital currency addiction.
- It’s not widely accepted. Not all stores accept digital money, so you can’t even pay for your groceries in case you’re short on cash.
- It’s valuation fluctuates. Digital money is also constantly fluctuating, albeit those fluctuates aren’t so considerable.
Bitcoins definitely have the perks and are worth an investment, but keep in mind the drawbacks too. This will help you keep your digital money safe and sound and even earn pretty money.