Bitcoin is a cryptocurrency, a form of digital cash. It is a completely decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
Pros and Cons of Bitcoin
BTC was designed with freedom in mind. Most importantly, freedom from governing authorities controlling the transactions, imposing fees and being in charge of people’s money. When it comes to buying things, cryptocurrency became just as legitimate as flat currency in recent years, and considering the existence of numerous deep-web markets that only accept Bitcoins, you may be able to buy some things easier with BTC than with any other currency.
One of the distinct characteristics of money is portability, meaning it should be easy to carry and use. Since Bitcoin is completely digital, practically any sum of money can be carried on a flash drive, or even stored online.
Cryptocurrencies give people freedom to send and receive money with just a scan of a QR-code or a click of an online wallet. It takes little to no time, there are no outrageous fees and the money goes from person to person without any unnecessary intermediates; all you need is Internet access.
Choose your own commission
Another indisputable advantage of the Bitcoin network is a possibility of choosing the transaction fee amount, or choosing not to pay it at all. The transaction fee is received by the miner, after a new block is generated with a successful hash. Usually, the sender pays the full fee, while deducting this fee from the recipient could be considered an incomplete payment.
Transaction fees are completely voluntary and they serve as an incentive for the miners to make sure that the particular transaction will be included in the new block being generated. This incentive also works as an income source for the miners, often bringing them more money than the traditional mining would have, especially considering that the mining activity will stop completely in the future, when the limit of Bitcoins will be reached.
Thus, the cryptocurrency market asks users to chose between the cost and the waiting time. Higher transaction fee would mean quicker processing, while users without any time constraints can save money.
PCI stands for Payment Card Industry and it denotes the debit, credit, prepaid, e-purse, ATM and POS cards and associated businesses. It consists of all the organisations that store, process and transmit cardholder data, there are strict security regulations in place and most major card brands are part of it.
While unified rules and regulations can be good for big companies, they might not be taking every person’s needs into consideration. When using Bitcoin, there is no need to comply with PCI standards, which can allow users to branch out into new markets, where credit cards are not available or the fraud levels are unacceptably high.
As a result, users get lower commissions, an opportunity to expand their markets and lower their administrative expenses.
Safety and Control
Bitcoin users are able to control their transactions; no one can withdraw money from your account without you knowing and agreeing to it, like sometimes happens with other ways of payment, and no one can steal your pay information from merchants.
BTC users can also protect their money with backup copies and encryption. Moreover, their identities and personal information are always protected, as none of it needs to be disclosed to make a payment.
Transparent and neutral
Every single transaction as well as every single bit of information about it is always available for everyone in the Blockchain, which can be checked and used in real time. The BTC protocol is encrypted, hence why no human being or an organisation can control or manipulate it. The network is decentralised, so no one will ever fully control it. This is why Bitcoin is always going to be neutral, transparent and predictable.
It can’t be counterfeited
One of the most popular ways of counterfeiting in the digital world is using the same money twice, rendering both transactions fraudulent. It is called a ‘double spend’. To counter this, Bitcoin, just like most other cryptocurrencies, uses Blockchain technology as well as the various consensus mechanisms built into all BTC algorithms.
Cons of Bitcoin
Bitcoin’s legal status varies drastically from country to country. In some countries the use and trade of BTC is encouraged, while in others it is banned and outlawed.
There has been a lot of concerns regarding Bitcoin’s appeal to criminals, some news outlets have even stated that its popularity rests entirely on the ability to spend it on illegal goods. Indeed, when the infamous web black market Silk Road was shut down, Bitcoin instantly decreased in value (wired.com).
Level of recognition
Bitcoin is recognised and is perfectly legal in a lot of countries, however some of the world’s governments still don’t have any regulations regarding BTC, while others have outright banned it.
The majority of businesses, no matter how big or small, are still completely oblivious to it. It is nearly impossible to abandon all other currencies and start using BTC exclusively.
A key is a unique alphanumeric password necessary to access a Bitcoin wallet. Losing that key essentially means losing your wallet. However, most current wallets have backup and restore mechanisms, but obviously the user needs to set them up before being able to use them.
The price of Bitcoins has had its ups and downs, going through various cycles of skyrocketing and plummeting, referred to by some as bubbles and busts. Throughout its history BTC has been conquering new heights, only to sustain a massive drop straight after. Its value is unpredictable, it changes rapidly and drastically, which can cause significant financial damage to an imprudent investor.
The future of Bitcoin is rather unclear. Currently, governments and banks are not able to control BTC, it’s almost unregulated. However, the bigger and more popular it gets, the more world governments will try to take it under control. A regulated and governed Bitcoin would be an entirely different sort of currency.