Bitcoin is a decentralized, peer-to-peer electronic cryptocurrency. There is no governing body or issuing authority for Bitcoin. Bitcoin network operates on cryptographic protocol and the public database is fault-tolerant and resistant to corruption.
Bitcoin network operates without a central repository or a centralized administration and the transactions directly take place between users.
From the invention of Bitcoin, its value and user base has grown significantly. Most stores and online websites accept bitcoin and investment in bitcoin also grown remarkably.
Websites as coindesk, zebpay, etc provide bitcoin exchange and offer auction system for buying and selling bitcoin.
Bitcoin mining has become competitive and people are using advanced hardware to mine it. This competition also has the drawback of returning less profit.
1. Protection From Payment Fraud
Bitcoins are digital currencies. It uses an algorithm and cryptographic protocols. This makes them impossible to counterfeit.
2. Reduced Possibility of Identity Theft
Bitcoin transactions are completely anonymous. Bitcoin transactions do not require personal details or any sensitive information from either sender or receiver.
It helps prevent identity theft. Credit cards or debit cards use a pull mechanism where they request your credentials and initiate a payment then pull an amount from your account.
Bitcoins use a push mechanism where you initiate the payment and can send any amount to the receiver.
3. Immediate Settlement
Bitcoin does not involve a third party to facilitate the transactions. Funds are settled immediately and once initiated cannot be put on hold or can be refunded.
4. Direct Transfer
Transactions directly take place between users that is the sender and receiver. No third party involved there. Thus, it eliminates the fees for involving an intermediary.
5. Greater Liquidity
While converting to other real-world currencies bitcoin retains most of it values while other cryptocurrencies lost their value.
6. International Transactions.
Bitcoin is the easiest method to initiate an international transaction. It does not charge any extra fees and settle immediately to a receiver.
Any political or governing authority does not regulate Bitcoin. It does not have political influence. Neither government nor any authority can freeze it or seize it.
Bitcoin has very strong security and it is impossible to counterfeit or cheat the bitcoin payment network. There will be 21 million bitcoin ever exist. It makes bitcoin value a long-term promise against other real-world currencies.
Bitcoin transactions are tamperproof thanks to Blockchain.
1. Scams and frauds
Bitcoin is technically difficult and not easy to understand for a common citizen. It leads to in the name of bitcoin savings, bitcoin investment, and other bitcoin-related activities. Fake websites and apps are selling bitcoin and faking people.
2. Black market activity
Bitcoin is popular in the black market and criminals. Due to the complete anonymous feature, bitcoin is used in cyber hacking, drug deals, and black-market arms deals.
International and national legal systems do not yet have proper laws and authority over bitcoin making it harder to stop bitcoin-related black market activities.
3. Price volatility
After the FBI declared that, it would treat bitcoin as other legitimate financial services, bitcoin value skyrocketed. When a security breach happened in MT. Gox bitcoin exchange, bitcoin value fall more than 50 percent. This price volatility makes bitcoin investment difficult.
4. No refund.
Once payment is initiated and complete bitcoin cannot be held and refunded. It takes place directly between users and without an intermediator. So bitcoin cannot be transferred back.
5. Future Cryptocurrencies.
Bitcoin may be replaced by some other future cryptocurrency, which can address the disadvantage of bitcoin while retaining a superior secure network.
6. Cyber hacking
Hacking and illegal ransomware use bitcoin as a payment system to extort money from affected victims. This makes them untraceable due to bitcoins anonymous nature.
Pirated file-sharing services rely on bitcoins to run their networks.
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Websites like Expedia, WordPress, overstock are accepting bitcoins. Stores in Europe and the US started accepting bitcoins. Bitcoin has the potential to become the most valued and used cryptocurrency.
But there is no guarantee that these unregulated currencies will ever be a viable alternative to real-world currencies.
Arogyalokesh is a Technical Content Writer and manages content creation on various IT platforms at Mindmajix. He is dedicated to creating useful and engaging content on Salesforce, Blockchain, Docker, SQL Server, Tangle, Jira, and few other technologies. Get in touch with him on LinkedIn and Twitter.