Introduction to Advantages of Bitcoin
Bitcoin is a kind of cryptocurrency (i.e., a virtually created currency) that allows peer-to-peer transactions. It was brought into existence in 2009 by Satoshi Nakamoto. The bitcoin aims to have control over the number of bitcoins generating and flowing, protecting the transactions and making the user’s identity anonymous.
How does Bitcoin Work?
Here we will see the working of bitcoin which are as follows:
- The bitcoin uses public digital ledger creation to record and verify transactions in an encrypted manner.
- This is done by generating complex computer algorithms that people mine in exchange for small bitcoin paid as fees.
- There is verification on both ends of the validity and integrity of the receiver. Miners (algorithm creators and coders) who first verify this transaction get a small chunk as fees
- The updated transaction is spread across the entire blockchain network for future verification and added to the shared ledger.
Advantages of Bitcoin
Bitcoin has revolutionized the mode of payment in several ways; let’s look at the advantages one can benefit from:
- The best feature of Bitcoin is that it is not under some centralized system like the government or banks. At un-stable times there is no fear of the money being seized or locked, which had happened in Greece where only the $67 per day limit of the transaction was limited by the government.
- Bitcoin proves to be exceptionally useful in countries that have an unstable government or nationalized banks, due to which there is ongoing or onset of hyperinflated economic crisis (E.g.: Venezuela or Poland). This causes prices to rise and fluctuate where bitcoin serves relatively fair rates of exchange.
- Moreover, this also effectively reduces the transactional cost that is involved while making payments through a third party. Being a decentralized system where all the transactions are transparently done and controlled unanimously. Over time, there is constant appreciation and depreciation in the currency rate, which especially hampers the transaction fluctuation over boarding costs borne during cross-currency transactions.
- Being encrypted having a Unique Identification for each and every cryptocurrency unit, there can be no counterfeiting of this currency, and it serves to be a more secure form of making monetary transactions. This also makes it difficult for people with malicious intentions who do not have the technical expertise to cause threats to the system.
- As conventional money is made out of either paper or metal, it is contributing to the utilization of natural resources in its manufacturing process. Bitcoins are digitally signed and authenticated after digitally encrypting the transaction, which is sent by the blockchain or digital ledger. This way, only electronic data is being created, which is taking up space in the cloud network and not utilizing any raw material for making financial transactions. With the on growing pollution and degradation of the natural resources, they use Bitcoin to reduce the impact on the trees and Minerals, which are limited.
- Compared to other modes of a transaction: its physical form of banking cards or debit cards, transactions made through Bitcoins prove to be much quicker. This proves to be essentially true for a higher amount of International transactions which involve a change in currency. As Bitcoins are limited in number and are not influenced by external factors such as the government’s stability.
- A very important aspect that positively affects the users if they make purchases using bitcoin is that there are no taxable deductions made in terms of sales or service tax. Only a very small amount is credited to the “miners” as a fee for their role.
Now making purchases through bitcoin has become really easy as large companies have started accepting it for payment. One of the prominent companies accepting bitcoins are:
- Microsoft is for its Online X-Box Store.
- Namecheap and Go Daddy – online domain name provider.
- Overstock is for an online retailer that allows multiple cryptocurrencies.
- Hotel chains such as Hilton and Marriott Bonvoy.
- Walmart and Macy’s have bitcoin payment options available in both store locations and online mode.
- Fashion and personal aesthetics brands like GAP and Sephora allow purchases through bitcoin.
- Using bitcoin increases the ease of doing transactions. There is no necessity of identity verification and providing various personal details such as address proof, age proof, and other material facts related to the individual’s financial status. All one needs to do is download a digital wallet that aids bitcoin transaction (like Coinbase, Trezor or Robinhood) and make or receive payments. However, there is a possibility of this mode being utilized for the illicit transaction which is illegal or fraudulent in nature. But at the same time, with the numerous data breaches happening at a financial institution, you have a chance at protecting your personal data from being mishandled.
- Vendors with unscrupulous intentions cannot cheat the other party by saying that the payments have not been made or received and the transactions made not only appear in all the blocks in the network but also are not changeable by anyone in the blockchain.
- Similar to the stock market, bitcoin and other cryptocurrencies can be traded. People who had initially invested in bitcoins and later sold them have gained huge benefits from their financial decisions. Taking the example of the famous millionaire Mr Erik Fineman who had made an investment of USD $1000 at the age of 11 years, borrowed from his grandmother. At that time, the cost of 1 unit for $12 and by 2013, it rose to $1200 per unit, which made Erik’s fortune, giving him 1000 times return on his investment. Many famous believe investing in the cryptocurrency market is a very wise decision as it is in its initial stage, especially the other cryptocurrencies like Etherium.
It can be understood that both corporate and retail customers can reap numerous benefits by embracing cryptocurrencies like bitcoin that use blockchain technology to give safer, faster and more convenient as an alternative to conventional fast money, which will give consumers the power and freedom to access and control their finances in their own hands.
This is a guide to the Advantages of Bitcoin. Here we discuss the introduction and working of bitcoin along with its advantages in detail. You may also look at the following articles to learn more –