Many are attracted to Bitcoin because of its independence and supposed anonymity. However, the ease of use, speed and fees may not be as pleasant as desired. In this article, we summarise 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 a payment network. Bitcoin’s blockchain cannot workwithout BTC and vice versa. Such a system can operate without any brokers, government officials, monetary economists and other intermediary persons or regulatory persons. Basically, Bitcoin is the first successful implementation of global peer-to-peer money that allows anyone, no matter who they are or where they are, to store and exchange value with others.
However, Bitcoin has the regulatory oversight and convenience of traditional financial instruments. The Bitcoin price is highly volatile and is unlikely to change in the short term. Moreover, the network is still being developed, as well as offered by banks and related financial services; it does not match the efficiency and ease of use.
Pros of Bitcoin
Here are the most commonly offered Bitcoin advantages:
- Bitcoin is the most open financial system to date. Even without a banking system, you can make payments with Bitcoins 24/7 all over the world.
- International money transfers with Bitcoins can be faster and cheaper than traditional banking and banking services.
- Bitcoin is the only asset ever created that cannot be forcibly seized from you (if appropriate measures are taken). Also, BTC transactions are uncensored, so no one can stop you from making transactions.
- Bitcoin is anonymous and anyone can open their wallet online without any verification or credit history. It is especially useful in underbanked areas and third world countries where most people struggle to access money.
- You can spend Bitcoins just like you would spend traditional digital money from a desktop computer, a mobile phone or a debit card.
- Bitcoin is the most portable asset ever created, it can be transferred via satellites and even radio waves.
- Bitcoin also has valuable features for businesses, such as multi-signature authorisation and accounting transparency. Multi-signature means that several people must sign off on a payment, which provides greater security. And the nature of a blockchain, where all transactions are public, increases the transparency of a business.
- Compared to other cryptocurrencies, Bitcoin has the most brand recognition, liquidity, as well as the most developed ecosystem and the most acceptance among various retailers and organisations.
- Bitcoin introduces the concept of programmable money, which enables additional financial innovations such as ‘smart contracts’.
- Bitcoin breaks the monopoly of money by offering an alternative to people who do not trust their governments, some institutions, politicians or simply believe in decentralisation.
Bitcoin Cons Disadvantages
The most frequently mentioned Bitcoin cons are the following:
- When things go south, no regulatory oversight is sufficient.
- Despite attempts to enable offline Bitcoin payments, the use of the currency is still heavily dependent on internet availability.
- Since Bitcoin is still being developed, transaction speed and fees vary depending on mining efficiency and network congestion.
- Converting Bitcoins into fiat currencies incurs fees that are often expensive.
- Not every shop or service provider accepts Bitcoin as a means of payment. However, the number is increasing.
- Bitcoin transactions are immutable, meaning that once the funds leave your wallet, there is no way to get them back. Although many reputation management tools have been developed, ‘buyer’s protection’ is not yet a thing with Bitcoin. In contrast, accepting BTC can benefit traders as it eliminates the opportunity for fraudulent chargebacks.
- Most people are not ready to take full responsibility for their assets and cannot securely manage their private keys. Many private Bitcoin keys have been irretrievably lost, thus contributing to Bitcoin’s inflation and appreciation.
- Learning all the available information and outputs in the Bitcoin ecosystem presents a steep learning curve. The user interface in most Bitcoin applications is still imperfect and the network is not ready to serve everyone in the world.
- Securing Bitcoin requires basic cybersecurity knowledge and awareness for organisations and individual users, while the network is virtually open to attack.
- Bitcoin’s core ideology is against the most powerful institutions, governments, policies, banks, regulators, and censors, and it is likely to face a great deal of resistance before these players tolerate or endorse it.
Conclusion
These are the most common advantages and disadvantages (pros and cons) of Bitcoin. As you can see, the revolutionary technology behind Bitcoin cannot come without compromises. For every advantage, there is also a significant disadvantage. Despite this, Bitcoin is a system that does not stand still. The open-source developer community is actively looking for improved solutions.
Hopefully, this article has made things clearer for you and made you more interested in cryptocurrencies and traditional finance. Always exercise due diligence in such sensitive matters as money and investments.