Bitcoin is an international electronic currency. This is a new
form of money created on the basis of the program code.
Bitcoin is not owned by any state, companies or individuals.
Bitcoin is an international electronic currency. This is a new
form of money created on the basis of the program code.
Bitcoin advantages:
1. High safety
level
No one can block a Bitcoin wallet. Bitcoin does not depend on
central banks, local and international laws, religion and other things.
Banks and the government do not control your bitcoins — they are
only available to you. The wallet is created anonymously. Cryptocurrency cannot
be faked, and payments cannot be cancelled.
2. Cheap
transactions anywhere in the world
Transfer fees do not depend on the amount or location. They make
up less than US$1 (regardless of the amount). You can transfer money to anyone
from anywhere in the world.
3. Convenience
Unlike bank transactions, bitcoin transactions may be carried
out on a 24/7 basis. You can decide independently when to transfer money.
4. Instant
transfers
Bank transfers take 3–5 working days on average. The speed of
transfers via Bitcoin is a few seconds, or, when you are dealing with large
amounts of money, — 10–60 minutes.
5. Protection
against inflation
National currencies depreciate annually by 1–20 % (sometimes
more). Bitcoin is backed by a limited number of units (21 million) and
protected against inflation.
Cryptocurrency is becoming more and more popular, since people
do not spend money on fees and instantly exchange money. In the future, the
world national currencies will be merged in a single digital Bitcoin currency!
MMM and Bitcoin have a similar vision: they strive to overthrow social
inequality, free people from the banks’ oppression and make the world a more
just place.
6.
No Third-Party Seizure
Since there are multiple redundant copies of the transactions
database, no one can seize bitcoins. The most someone can do is force the user,
by other means, to send the the bitcoins to someone else. This means that
governments can’t freeze someone’s wealth, and thus users of Bitcoins will have
complete freedom to do anything they want with their money.
1.
No Taxes
There is no way for a third party to intercept transactions of
Bitcoins, and therefore there is no viable way to implement a Bitcoin taxation
system. The only way to pay a tax would be, if someone voluntarily sends a
percentage of the amount being sent as tax.
2.
No Tracking
Unless users publicize their wallet addresses publicly, no one
can trace transactions back to them. No one, other than the wallet owners, will
know how many Bitcoins they have. Even if the wallet address was publicized, a
new wallet address can be easily generated. This greatly increases privacy when
compared to traditional currency systems, where third parties potentially have
access to personal financial data.
3.
No Transaction Costs
Sending and receiving Bitcoins requires users to keep the
Bitcoin client running and connected to other nodes. Essentially, by using
bitcoins users will be contributing to the network, and thus sharing the burden
of authorizing transactions. Sharing this work greatly reduces transaction
costs, and thus makes transaction costs negligible.
4.
No Risk of “Charge-backs”
Once Bitcoins are sent, the transaction cannot be reversed.
Since the ownership address of Bitcoins will be changed to the new owner, once
it is changed, it is impossible to revert. Since only the new owner has the
associated private key, only he/she can change ownership of the coins. This
ensures that there is no risk involved when receiving Bitcoins.
5.
Bitcoins Cannot be Stolen
Bitcoins’ ownership address can only be changed by the owner. No
one can steal Bitcoins unless they have physical access to a user’s computer,
and they send the bitcoins to their account. Unlike convential currency
systems, where only a few authentication details are required to gain access to
finances, this system requires physical access, which makes it much harder to
steal.
DISADVANTAGES OF BITCOIN
1.
Bitcoins Are Not Widely Accepted
Bitcoins are still only accepted by a very small group of online
merchants. This makes it unfeasible to completely rely on Bitcoins as a
currency. There is also a possibility that governments might force merchants to
not use Bitcoins to ensure that users’ transactions can be tracked.
·
Fact is many people are
still unaware of digital currencies and Bitcoin.
·
People need to be
educated about Bitcoin to be able to apply it to their lives.
·
Networking is a must to
spread the word on Bitcoin.
·
Businesses are accepting
bitcoins because of the advantages, but the list is relatively small compared
to physical currencies.
·
Companies like
Tigerdirect and Overstock accepting Bitcoin as payment is great. However, if
they do not have a knowledgeable staff that understands digital currencies, how
will they help customers understand and use Bitcoin for transactions?
·
The workers need to be
educated on Bitcoin so that they can help the customers. This will definitely
take some time and effort. Otherwise, what is the benefit of such large
companies accepting Bitcoin if its staff doesn’t even know what digital
currencies are?
2. Wallets Can Be Lost
If a hard drive crashes, or a virus corrupts data , and the
wallet file is corrupted, Bitcoins have essentially been “lost”. There is
nothing that can done to recover it. These coins will be forever orphaned in
the system. This can bankrupt a wealthy Bitcoin investor within seconds with no
way form of recovery. The coins the investor owned will also be permanently
orphaned.
3.
Bitcoin Valuation Fluctuates
The value of Bitcoins is constantly fluctuating according to
demand. As of June 2nd 2011, one Bitcoins was valued at $9.9 on a popular bitcoin
exchange site. It was valued to be less than $1 just 6 months ago. This
constant fluctuation will cause Bitcoin accepting sites to continually change
prices. It will also cause a lot of confusion if a refund for a product is
being made. For example, if a t shirt was initially bought for 1.5 BTC, and
returned a week later, should 1.5 BTC be returned, even though the valuation
has gone up, or should the new amount (calculated according to current
valuation) be sent? Which currency should BTC tied to when comparing valuation?
These are still important questions that the Bitcoin community still has no
consensus over.
4.
No Buyer Protection
When goods are bought using Bitcoins, and the seller doesn’t
send the promised goods, nothing can be done to reverse the transaction. This
problem can be solved using a third party escrow service like ClearCoin, but
then, escrow services would assume the role of banks, which would cause
Bitcoins to be similar to a more traditional currency.
5.
Risk of Unknown Technical Flaws
The Bitcoin system could contain unexploited flaws. As this is a
fairly new system, if Bitcoins were adopted widely, and a flaw was found, it
could give tremendous wealth to the exploiter at the expense of destroying the
Bitcoin economy.
6.
Built in Deflation
Since the total number of bitcoins is capped at 21 million, it
will cause deflation. Each bitcoin will be worth more and more as the total
number of Bitcoins maxes out. This system is designed to reward early adopters.
Since each bitcoin will be valued higher with each passing day, the question of
when to spend becomes important. This might cause spending surges which will
cause the Bitcoin economy to fluctuate very rapidly, and unpredictably.
7.
No Physical Form
Since Bitcoins do not have a physical form, it cannot be used in
physical stores. It would always have to be converted to other currencies.
Cards with Bitcoin wallet information stored in them have been proposed, but
there is no consensus on a particular system. Since there would be multiple
competing systems, merchants would find it unfeasible to support all Bitcoin
cards, and therefore users would be forced to convert Bitcoins anyway, unless a
universal system is proposed and implemented.
8.
No Valuation Guarantee
Since there is no central authority governing Bitcoins, no one
can guarantee its minimum valuation. If a large group of merchants decide to
“dump” Bitcoins and leave the system, its valuation will decrease greatly which
will immensely hurt users who have a large amount of wealth invested in
Bitcoins. The decentralized nature of bitcoin is both a curse and blessing.
IN SUMMARY
There you have it folks. With this, you now have both sides of
the coin. Bitcoin, as you can see, is not perfect. It does have many advantages
that physical currencies do not provide its users; however, it also has its
disadvantages. This is mostly due to the fact that Bitcoin is still a
relatively young and new currency. People are just beginning to become more
aware of it. In order for Bitcoin to succeed, more people need to understand
what it is and not let their preconceived notions distort the concept of
digital currencies.
There are always pros and cons to any situation in life. To be
able to make a good decision, you need to weigh the good and bad thoroughly
before finalizing your choice. Do the same for Bitcoin. Understand what it is,
and decide what you want to do with it. We, at Coinreport give you the facts;
you are the ones who make your decision.
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