How deep you know about Bitcoin? You know it is the world's first decentralized digital individual-to-individual cryptocurrency and is recognised to be a reconstruction in present currency/financial market.
Bitcoin was begun in 2009 by an anonymous programmer under the pseudonym “Satoshi Nakomoto”. This digital currency is getting immense reputation worldwide and mass approval. As the fame of Bitcoin and other cryptocurrencies are growing, so is the excitement of people to understand more about it.
Bitcoin has many advantages and apparently some disadvantages also. We shall go through these merits and demerits of bitcoins briefly in this blog.
Originally, Bitcoin saw huge criticism from everywhere and was thought to be a fraud due to its conflicting features. Eventually, when experts from different areas started studying Bitcoins and its technology, they realised the potential of digital currencies and began to look it in a positive way.
Although Bitcoin has many advantages as compared to the existing system of Paper Money, it also bears many disadvantages as well.
Bitcoin activities are totally indistinguishable and private. Unlike in payments through the bank, where the transactions can be traced and named, transactions of bitcoins cannot be recognised.
A person can only understand the addresses of the bitcoin wallet on which the payment has been transmitted and collected. But to whom these addresses was transfered will be unknown. But the case will be different if the person continues to use the bitcoin for a longer duration.
Paying through bitcoins provide the utmost freedom. Bitcoin can be transferred to any person in any part of the world. No intermediaries in between. No bank holidays/strikes. No boundaries or borders. No payment limit also.
Fund transaction through Bitcoin has very inexpensive and sometimes no charge at all. After all, everything depends on the person’s priority. If a person wants his/her transaction prepared quick, he has to pay a transaction fee which is still very low as contrasted to any monetary agent or digital wallets.
Bitcoin transactions are said to be safe, constant, and does not carry any customers’ delicate or private information. This safe guard the merchants from damages affected by fraud or fraudulent chargebacks.
Bitcoin deals are very quick compared to banking channels. A bitcoin transaction is easy and fast like emails. Also, it can be immediately processed in certain conditions like if they are “zero-confirmation” transactions, which means that the merchant takes on the risk of receiving a transaction that hasn’t yet been approved by the bitcoin blockchain.
The confirmed transactions usually take a minimum of 10 minutes to process. Credit Card or digital wallet services also delivers instant approved transactions services, But they usually charge substantial fees, which is not in Bitcoin. The transaction that is processed within a short period also charges the least or nothing.
In India recently we have seen what the demonetization has done to the society. The value of some of the paper money suddenly became zero. Consumers lost their financial worth and credibility.
In the case of bitcoins, the Government cannot get back your Bitcoins as it is decentralized and no one has authority over it. But they can ban it, still, your bitcoins has some value in those places where it is still allowed and so it can be redeemed.
This feature may be the biggest advantage of Bitcoin, even merchants cannot give the individual data of people participating in the transaction. Unlike the credit card details which we need to submit while doing a purchase, bitcoins don’t require that. Credit card details are easily misused due to these kinds of actions.
Bitcoin transactions, though, do not want you to yield any confidential information. Rather, they employ two keys: a public key, and a private key. The public key, as the name implies is public and anyone can view it which is really your bitcoin address, but your private key is hidden.
When you send a bitcoin, you ‘sign’ the transaction by joining your public and private keys together, and employing a mathematical function to them. This produces a certificate that confirms the transaction originated from you.
This is one reason why Bitcoin is designated as Future finance. Usually, the central government can get currencies printed as much as they want. When the economy is reducing down it is not capable to pay off its national debt, the government orders to issue more currency and add it into the economy.
This creates the value of the currency to decrease as larger people have extra currency. Also printing more notes produces inflation and increases the costs of the commodity. Because in this situation people are ready to pay for a particular commodity and the seller has to raise the price in order to get the sale.
Thus, the person who had achieved when the government introduced more currency can now buy more but those people who were not served from having inadequate currency and now the prices of the commodity has also raised.
At the same time what happens with bitcoins are, only a fixed amount of Bitcoins will ever be produced and this is understood to everyone. This means that after all the Bitcoins have grown to maturity, more number of bitcoins cannot originate and thus inflation won’t happen.
The new Bitcoins generation process is called Mining.
Anyone can create bitcoins. This can be done by mining bitcoins through computers. Bitcoin mining is done by running the mining software and keeping the system on.
Obviously, Bitcoins have disadvantages also,
Many people are still oblivious about Bitcoin. Every day, more trade organisations are acquiring bitcoins but still, it is a small group and that needs to improve in order to avail benefits from network results.
Bitcoin prices are very volatile and raise/declines at a very high speed. Critics wish to take advantage of it but some investors think of it as too unsafe and therefore all the investors do not invest in Bitcoins.
Bitcoin software is with many unfinished features in ongoing development. New tools, highlights, and services are being produced to make Bitcoin more reliable, available and easy to the crowds. Some of these which started earlier are still not active. Most Bitcoin businesses are brand-new and still, allow no insurance.
The government may not grab your Bitcoins away but there is a possibility to ban it in any country, which demands bitcoin wallets and firms to shut down. The bitcoins in the wallets become frozen and a way to them becomes difficult though not closed.
I explained that how Bitcoin being non-inflationary can be an advantage to the market. But one potential negative factor associated with Bitcoin due to its deflationary behaviour is that if it gets in the hands of huge stockholders a large recession can happen in Bitcoins.
Bitcoins are few in number and if the significant mass is held by stockholders and investors, they will keep it for a longer period of time and won’t issue it in the market. When the amount of bitcoin is short and demand remains to grow, it will raise the price of Bitcoins and then the speculating investors may get profited.
A small loss will be like a total loss. The thing is, it cannot be recovered until and unless you have backed up the wallet with a backup phrase code. This backup phrase code can be utilised to revive the lost bitcoin wallet balance.
In case if you lost credit card/debit card, we can call the trader to remove the card and request for a new one but in case of Bitcoins, as it is decentralized and no one has authority over it, It is impossible to ask someone.
Initially, bitcoins were utilized for the concealment of the origins of illegally obtained money and people working in black markets, which did not desire to disclose their personal information and get payment settled.
In money laundering, intermediaries would accumulate money from one source and carry it to another source through Bitcoins.
Overall Bitcoins may have many advantages and disadvantages but it is up to the people and society in which ways do they utilize it. Comment your thoughts about bitcoins in the comment section.
NdimensionZ offers Online Portal development Services which is much cost effective and simple for the users to handle.