Bitcoin pros and cons

Many are attracted to Bitcoin due to its independence and pseudo-anonymity. But its convenience of use, speed, and fees may not be as pleasing as one would like. In this article, we outline the most common pros and cons of Bitcoin.

Bitcoin Pros and Cons

The main advantage of using Bitcoin is that it is both digital money and the payment network. Bitcoin’s blockchain cannot function without BTC, and vice versa. Such a system can operate without any middlemen, government officials, monetary economists, and other intermediaries or regulators. Essentially, Bitcoin is the first successful implementation of global peer-to-peer cash that lets everyone store and exchange value with others, no matter who or where they are.

However, Bitcoin does have regulatory oversight and the convenience of traditional financial instruments. Bitcoin price is quite volatile, and that is unlikely to change in the near-term. Besides, the network is still being developed and does not match the efficiency and ease of use offered by banks and related financial services.

Bitcoin Pros

Here are the most commonly brought up Bitcoin advantages:

Bitcoin is the most open financial system to date. You can make payments with Bitcoins 24/7 all over the world, even where there’s no banking system.
International money transfers with Bitcoins can be faster and cheaper than with traditional banking and services.
Bitcoin is the only asset ever-created that cannot be seized from you by force (if taken proper precautions). Besides, BTC transactions are uncensorable, so no one can stop you from conducting transactions.
Bitcoin is pseudonymous, and anyone can open its wallet via the internet without any verification or credit history. It is especially beneficial in underbanked regions and third-world countries where most people struggle to get access to money.
You can spend Bitcoins in the same ways you spend traditional digital money – from a desktop computer, a mobile phone or a debit card.
Unlike fiat currencies, Bitcoins are deflationary, meaning that their value is set to appreciate by design.

Bitcoin is the most portable asset ever-created and can be transferred through satellites or even radio waves.

Excited to learn #bitcoin can be transferred not only through internet but also satellite 🛰 @Blockstream and radio waves 📻! Still experimental phase but the future is there! Amazing pace of technological advancement 🙌 💕

Bitcoin Cons

The most commonly mentioned Bitcoin cons include:

Little to none regulatory oversight when things go south.
Despite attempts to enable offline Bitcoin payments, use of the currency still largely depends on internet availability.
As Bitcoin is still in development, the transaction speed and fees tend to vary depending on mining efficiency and network congestion.
Converting Bitcoins into fiat incurs fees which are often costly.
Not every shop or service provider accepts Bitcoins. The number is growing, though.
Bitcoin transactions are immutable, meaning that once the money leaves your wallet, there is no way to get them back. Although many reputation management tools are being developed, “buyer’s protection” is not the thing with Bitcoin yet. Conversely, it can benefit merchants since accepting BTC eliminates the opportunity of fraudulent chargebacks.
Most people are not ready to take full responsibility for their assets and could not manage their private keys securely. Many private Bitcoin keys have been lost beyond recovery, thus contribution to Bitcoin’s deflation and appreciation in value.
Learning all the existing ins and outs of the Bitcoin ecosystem presents a steep learning curve. The user interface in most Bitcoin apps is still not foolproof, and the network is not ready for serving everyone in the world.
Securing Bitcoin requires basic cybersecurity knowledge and awareness. While the network is virtually unhackable, organizations and individual users are.
The core ideology of Bitcoin goes against the most powerful institutions, governments, politics, banks, regulators, and censorship, and is likely to meet much resistance before these players can tolerate or approve it.

These are the most commonly brought up advantages and disadvantages (pros and cons) of Bitcoin. As you can see, the revolutionary technology behind Bitcoin doesn’t come without tradeoffs. For every advantage, there is a considerable disadvantage, too. Despite that, Bitcoin is an evolving system which doesn’t stand still. Its open-source developer community is actively seeking for improved solutions.

Hopefully, this article has made things clearer for you and sparked further interest in cryptocurrencies and traditional finance. Always do your due diligence when it comes to sensitive matters like money and investing.

Have any suggestions about this entry? Let us know.

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Bitcoin pros and cons: are cryptocurrencies the future of money? Will they replace traditional currencies?

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Bitcoin and other cryptocurrencies have been proclaimed dead many times, but are still here. Learn about Bitcoin’s pros and cons and join the discussion on the future of money.

Bitcoin controversy

Bitcoin prices are skyrocketing. In December 2017, bitcoin set a new record surpassing $15,000 for the first time. Despite warnings and an increasing feeling among analysts that the digital currency is an asset bubble, investors continue bet on it. The Guardian suggested recently that Bitcoin could produce one of the most important «outburst of irrational exuberance» in the history of financial markets. In six years this cryptocurrency has multiply by 15,000 its value. Is this sustainable in the long run? Who will suffer the consequences if the bubble bursts? Could this accelerated increase in the price of Bitcoin mark the the beginning of a new global financial crisis or that of a paradigm shift and the replacement of traditional governments-backed currencies?

Technology, once more, is shaking the foundation of social and economic activities. Bitcoin is the first and most popular of a fast-growing number of cryptocurrencies available for trade in online markets. These crytocurrencies are gradually becoming an alternative to traditional forms of payment. They have also been hailed as an attractive investment product. However, there are also many uncertainties about the cryptocurrency market. Regulation is incipient and the rapid changes in their values has led many to think that cryptocurrencies are merely high-risk speculative products. What do you think about them? Can cryptocurrencies replace traditional currencies in the future or are they just a fad?

Short history of Bitcoin

Bitcoin was released as an open source software in January 2009, a few months after the publication of a research paper called «Bitcoin: A Peer-to-Peer Electronic Cash System» by Satoshi Nakamoto (the name was believed to be a code name representing a group of people).
Beginning of 2011: one bitcoin is worth one dollar.
November of 2013: bitcoin reaches its peak price (for the moment) around $1,000.
In April 2016: one bitcoin is worth approximately $450. Craig Wright, an Australian businessman, reveals himself as Satoshi Nakamoto, but his claim has yet to be proven.
On 29 November 2017: one bitcoin worth $10,889
On 7 December 2017: one bitcoin worth $15,156

How does bitcoin work?

Bitcoin is a peer-to-peer system, where users deal directly with each other without intermediaries. Network nodes verify transactions, which are recorded in a public distributed ledger or transaction dababase called the block chain. The ledger uses bitcoin as its unit of account. The system works as a decentralized virtual currency. Bitcoins are generated through a «mining» process. They are awarded as payment for a processing work in which users offer their computing power to verify and record payments into a public ledger.

List of cryptocurrencies and main alternatives to bitcoin

Bitcoin is the oldest of the existing virtual currencies, and has the biggest market value. Nearly 16 million bitcoins were worth nearly $9 billion in late November 2017 (excluding Bitcoin Cash and Bitcoin Gold).
Ethereum is one of the main competitors or alternatives to bitcoin. Launched in July 2015, Ethereum had a market capitalization of almost $2 billion (without including Ethereum Classic), the second largest after bitcoin.
Tether, a Chinese cryptocurrency that has revolutionized the market and has reached a market capitalisation of over $1 billion.
Litecoin, launched in November 2013, has the fourth biggest market, $690 million
Ripple, released in 2012, is the third cryptocurrency by market value, its capitalizartion exceeds $670 million.
Dash, hit the market in January 2014 and, in late November 2017, has a total market value of over $313 million
There are other alternatives to bitcoin, such as IOTA, Cardano, EOS, Stellar Lumens and Monero, which they all surpass $100 million in market capitalization.

Bitcoin pros and cons

Here are a few advantages of using bitcoin and other similar cryptocurrencies:

It is a decentralizedsystem, therefore it cannot be manipulated by governments and institutions.
Privacy is protected (transactions are anonymous).
There are very low fees.
It is always available and has no borders.
Bitcoins cannot be stolen.

Nevertheless, some disadvantages are also mentioned by critics:

Because transactions are anonymous, cryptocurrencies could be easily used for illegal purposes.
Although an incresing number of shops and markets accept payments in bitcoins, they are still a very small percentage of the total.
Your wallet can be lost forever if the data is lost or corrupted.
Bitcoin and other virtual currencies have been use by speculators, and their prices suffered from high volatility.
The bitcoin system was designed with a limit of close to 21 million units. This could cause a deflation problem.

Is bitcoin dead? Are cryptocurrencies the future of money?

Every few months, some media proclaim bitcoin is dead or that it is a bubble about to burst. However this cryptocurrency is still there, more than 8 years after its creation, and stronger than ever. Will it finally disappear? Will another virtual currency replace traditional ones? What will be the future of money? Would you recommend investing in or mining cryptocurrencies?

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The Pros & Cons Of Bitcoin

Bitcoin remains to stand out and stay on top within the over decade-long history of cryptocurrencies. Unsurprisingly, by December 2019, more than 42 million bitcoin wallets have been set up by cryptocurrency users globally.

As we have learned about the basics of Bitcoin, we are now aware of the unique characteristics of the Bitcoin network and its native digital currency. It dominated the cryptocurrency space, signaling the Great Crypto Bull Run of 2017, and continuously proves to be a powerhouse.

If you have decided to invest in Bitcoin, you must be mindful of the advantages and disadvantages associated with this digital asset. It is logical to consider it as a high-risk yet high-reward investment in your financial portfolio. Make sure to hodl and trade at your own risk.

In this comprehensive guide, learn about the major benefits and drawbacks of bitcoin investments. Understand what makes bitcoin ideal for today’s generation and why should it be handled properly to avoid risks and losses.

Advantages of Bitcoin

Convenience and Accessibility

Created to become an electronic cash for payments, Bitcoin allows seamless transactions within a matter of seconds. Unlike traditional remittances, you can transfer bitcoins to your peers and other recipients through a crypto wallet address.

No cut-off, no holidays, no hidden charges. When using bitcoin and other altcoins for payment and money transfers, you can easily do so at any time or date, without any unnecessary charges. Decentralized by nature, using bitcoin allows you to be in control of your money.

Wherever you are located, you can easily send or receive bitcoins as long as you have your crypto wallet ready. For those who are abroad and cannot easily access any banks or remittance centers, they can take advantage of smooth and stable transactions and payments with crypto.

Guaranteed Security

Bitcoins are produced and stored within the blockchain, a type of a distributed ledger that proves to be highly secured because of cryptographic encryption. All bitcoin transactions are processed within its blockchain and confirmed within minutes through crypto mining.

Unlike opening a traditional bank account that requires proof of your identity, cryptocurrency transactions are pseudonymous in nature because the identity of the owner is unknown. You can simply use a person’s public wallet address to complete one transaction process.

Any bitcoin transaction is irreversible once sent. This removes any chance of alteration within the system. Buying, selling, and storing bitcoins may be the risky part but the digital asset itself is secure. Its origin blockchain makes any form of cheating highly unlikely to happen.

A bitcoin’s wallet private key protects your bitcoins from any hacking attempts. Without this private key, no one can access your wallet and bitcoins without your knowledge. This is the reason why we suggest you choose a bitcoin wallet that you can rely on.

Verifiable and Transparent Transactions

To keep track of any bitcoin transaction, use a blockchain explorer. It is publicly accessible, without the need to disclose any personal information like name and address. Hence, you can verify any transaction at any time.

Transactions are tamper-proof as the network cannot be manipulated by anyone unless they get control of 51% of the total servers (mining hash rate) maintaining the network. The Proof-of-Work (PoW) mechanism prevents the possibility of 51% attacks within Bitcoin’s network.

Cheaper Fees

There are numerous ways to transfer money around the world. Despite this, Bitcoin remains to be one of the cheapest and fastest methods of sending funds. Unlike the fees of credit/debit cards, Bitcoin transaction fees are flat and market-based.

Considering this, regardless of the amount you are using per transaction, the amount you will pay will generally be less than traditional payment channels. This will not include exchange rates, margins, and other hidden fees and costs.

Miners consider transaction fees as a basis for the priority of block confirmation. Those who want their transactions to be confirmed instantly must pay a surcharge to push their transaction in front of the queue.

No Gatekeepers

In a traditional banking setup, a user may be required to go through various middlemen before conducting a successful transaction, especially one that involves a huge amount of money. In terms of cryptocurrency, you can send your bitcoins and altcoins directly to a merchant or peer.

Without anyone to double-check your transaction details, you have to be responsible upon sending or paying with bitcoins. Anyone who has a crypto wallet can receive bitcoins without any difficulty.

Greater Liquidity

In terms of trading, bitcoin leads the crypto market with the highest market cap and among one of the highest daily-traded assets. Accordingly, Bitcoin is known to be one of the most liquid cryptocurrencies, making it ideal for crypto-fiat conversion.

The subject of liquidity has many aspects to consider such as the ability of an asset to be converted to fiat, a lower bid-ask spread price, and the flexibility of entering or exiting the market. In fact, liquidity affects the price of Bitcoin.

The increase in the number of trusted Bitcoin exchanges, growing acceptance of bitcoins by merchants, and further availability of bitcoin ATMs worldwide are also some of the important factors that result in this asset’s great liquidity.

Independent from Any Issuing Entity

The Bitcoin network as a whole is not controlled by any central entity. Therefore, acquiring bitcoins is not strictly monitored by any personnel. The network is powered by interconnected servers or nodes that ensures the system’s efficiency.

Even so, cryptocurrency whales are traders or exchanges that hold a huge amount of digital currencies. As the Bitcoin network exists outside any political authority, acquisition of these digital assets including bitcoins are possible and cannot be stopped by any means.

Resistant from Inflation

Unlike fiat currencies that can be subject to inflation as no fixed supply is set, Bitcoin has a built-in scarcity feature assuring that only 21 million BTC will ever exist. This will likely support the long-term value of Bitcoin against other altcoins.

Looking at the basic concept of economics, Bitcoin’s inflation-resistant nature makes it a viable alternative for traditional currencies. With its recent block halving event in 2020, the rate of bitcoin creation has been slowed down as it marches closer to its limit.

Disadvantages of Bitcoin

Degree of Acceptance and Understanding

One of the known problems when it comes to cryptocurrency adoption is the level of awareness and understanding of people. With more than ten years of existence, a lot of people are still not fully aware and well-informed about cryptos.

For mainstream acceptance to happen, people must be willing to take the risk of buying cryptos and actually using it in real-life transactions. Once this has been the norm, bitcoin and altcoins will be widely recognized by the general public.

More and more businesses now accept bitcoin as payment. Despite this, the ratio in terms of fiat to crypto transactions is still relatively low. Soon, more merchants and customers would embrace crypto payments.

Volatile in Nature

Daily price fluctuations are apparent in the cryptocurrency market, especially with Bitcoin and other leading cryptocurrencies. Since BTC is one of the most liquid and traded crypto assets, it influences the price movements of its altcoin pairs.

For this reason, traders should invest in bitcoins cautiously. They should be careful enough to anticipate any risk of losses. Once again, we are reminding you to only invest in money you can afford to lose.

Legal Risks

Bitcoin is not flawless. Although it boasts of heightened security, faster transactions, and low-cost charges, in terms of regulations and usage, Bitcoin is still on a blur line. Governments are still hesitant to accept crypto processes.

Many countries still restrict the business use and sale of bitcoins. Moreover, they usually associate this asset to illegal fundings and money laundering activities. Despite certain rules and appointed individuals focused on combating crypto-crime, cases are still increasing.

Black market activities damage the good reputation that cryptocurrencies are based upon. Due to the digital and unregulated nature of bitcoin, it has been utilized for dark web marketplaces. This results in the hesitation of authorities for approval.

Irreversibility of Transactions

Another downside of bitcoin is that any transaction that has been done cannot be taken back, in any way possible. Once you have sent or paid using your bitcoins, it cannot be refunded back to your account unless the sender gives it back.

In the traditional banking system, a safety net is available in terms of any risky or massive transactions. In a blockchain, there is none. It is your responsibility to verify your peer or merchant’s wallet address before hitting send.

Scams and Frauds

Being the most popular cryptocurrency in the sphere, Bitcoin is one of the most used baits by scammers on different platforms. Tricking people to participate, anonymous people and posers announce unreasonable offers online.

Because of the high profit that can be gained with BTC, people are often deceived by frauds that broadcast fake airdrop events and trading competitions. This can lead you to lose your digital assets without any possibility of return.

Unsustainable Bitcoin Mining Process

The process of Bitcoin mining requires a vast amount of electricity to do. An analysis revealed that in 2018, Bitcoin’s carbon footprint generated 17.3 megatons of carbon dioxide. At the same time, the Bitcoin network has consumed 31.3 Terawatt-hours of electricity.

Mining equipment has the most environmental impact in this scenario, with minimal contribution to recycling. China is known to be one of the main contributors, with major mining companies located in this area. As a result, the demand for efficient mining hardware is increasing to address this problem.

Vulnerability of Crypto Wallets

If you lose access to your bitcoin wallet, you can say goodbye to your bitcoins. Unless you have backed up your wallet or mnemonic phrase, a lost private key cannot be recovered. Unlike a stolen credit/debit card, a file for replacement is not valid.

Your bitcoin will be lost once your wallet file has been corrupted. In the same way, forgetting your private key will let your assets be abandoned in the network. This can easily cause any Bitcoin investor a huge loss of their investment. That is why every user must be solely responsible for their crypto wallets.

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