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5 Things You Need to Know About Bitcoin

The word bitcoin is still not very commonplace and most people are not in the know about it. The biggest news about bitcoin has not been very favourable. It was used by a drug trafficker, Ross William Ulbricht, who earned millions accepting bitcoin as a means of payment for his drugs. So, it’s only understandable if people view bitcoin as a bit of a con instead.

The truth of the matter is that bitcoin is an extremely safe and reliable, software-based online payment system. To keep things simple, we can just look at it as a form of digital currency.
Bitcoin is not a payment system but it’s actually like money. Digital money, to be exact. Just like real money, it can be exchanged for goods and services. To understand how bitcoin works, you will need to understand the components that make bitcoin what it is.

Firstly, it is digital. There is nothing to see or hold. It is not tangible like paper currency or coins.

Secondly, it is peer-to-peer based. That means you are in total control. There are no banks, third parties or intermediaries to take a chunk of your bitcoin as fees. You send your bitcoin directly to the person you want it to go to. This is one factor that is seeing the rise in popularity of bitcoin.

Thirdly, bitcoin is not controlled by any one bank or financial institution. It is decentralized and run by a group of people worldwide. We live in a day and age where people want more freedom and wish to break away from the shackles of the top 1%. Bitcoin is a symbol of that freedom.

Fourthly, pseudonyms are used with bitcoin transactions ensuring ultimate privacy. This again makes this method of payment very popular with people who do not want others to know their financial transactions. The transactions are viewable but all you’ll see are a bunch of numbers and alphabets that really make no sense.

Lastly, the movement of bitcoin is protected by top of the line cryptography that ensures the digital currency is secure and can’t be abused by criminals.

Despite all the positive points about bitcoin, it is not all sunshine and rainbows. There are certain negative aspects associated with bitcoin.

For starters, while the transactions are safe and secure, bitcoin can be used to purchase illegal items such as drugs, child pornography and other illegal goods. The same positive points such as privacy and security become negative when people use bitcoin for illicit purposes.

Bitcoin has seen increased growth and merchants are slowly starting to accept it as a digital currency so that they can cut costs on fees imposed by payment processors. However, there is no consumer protection for bitcoin users. The bitcoin can be stolen with no possible means of recourse. For example, sellers may not deliver goods that may have been paid for with bitcoin.

Certain countries also impose restrictions on bitcoin purchase. Bitcoin still has some ways to go as far as becoming accepted like traditional currency. Nevertheless, as trends indicate, it is on its way there.

The Perplexed Investor: The Pros and Cons of Bitcoin

Bitcoin is one of those things that you either have a good idea about or you’ve heard of it but have no inkling what it really is. The media has portrayed Bitcoin in very a glamorous – or gloomy fashion depending on who’s writing the story.

In simple words, Bitcoin is a digital currency and a payment system. A two-in-one online currency solution that is gaining popularity all over the world. In this article, we’ll examine the pros and cons of bitcoin – a critical step before you plunk down your hard earned dollar for investment.

At the end of the day, you will need to decide for yourself if bitcoin and bitcoin investment is your cup of tea. Whatever your decision may be, bitcoin is here to stay and is gaining popularity with more and more people accepting it around the world.

Let’s look at the pros first.

1. Low transaction fees

Fees charged by online payment processors can be steep if the volume is high. Many merchants may balk at the fees and exchange costs over time. Since bitcoin is not controlled, it has very low fees and it’s still secure since it doesn’t rely on one point of failure as is common with normal payment processors.

It’s also much faster since there is no approval process or verification required because bitcoin is extremely private.

2. Bitcoin is deflationary

One of the unique features of bitcoin is that only 21 million bitcoins will be created. That is the limit. That means the value of the coins will grow over time.

3. No taxation

There are no taxes involved with bitcoin. This should be music to many people. No need to pay additional taxes on your purchases.

4. High degree of privacy

Almost all bitcoin transactions are extremely secure and very private. Users of bitcoin use pseudonyms for their transactions. This high degree of privacy makes the use of bitcoin very appealing to many people.

5. Simple to use

Bitcoin was made for the internet and it’s simply a dream to use. To send bitcoin to someone, all you will have to do is key in the receiver’s address and send. It’s as fast as sending an email. No hassle. No waiting times. An extremely flexible form of online payment.

6. Bitcoin is not regulated

That means there are no banks or financial institutions manipulating bitcoin to attain their own agenda. Bitcoin eliminates all third party interference in the transactions. Nobody can freeze a bitcoin account.

Traditional money relies on trust. The people need to trust the banks that they place their money in. With the collapse of financial institutions, dodgy practices, runs on the bank, etc. many people have lost faith in banks and actually view these institutions as detrimental to society in general.

Now we’ll look at the disadvantages and there are a few that we must bear in mind.

1. Bitcoin requires some learning

There is a learning curve involved when it comes to bitcoin. Unlike traditional money that we are accustomed to using from an early age, bitcoin is relatively new. The concept requires some study and understanding.

There are not many comprehensive guides on the subject. Users will need to understand the terminology such as block chain, cryptography, mining, etc. All these can be learnt by using Google. If you truly wish to understand bitcoin, there is more than enough information online to make you well-versed on the subject.

2. Not accepted in many places

Unlike PayPal which has been widely adopted, most merchants have not started accepting bitcoin as a means of payment yet. So, if you’re a buyer, you may not be able to make purchases from many places.

3. Difficult to obtain

In the beginning, it was relatively easy to mine for bitcoin. Now, as the number gets higher, it is getting extremely difficult to obtain bitcoin. Thankfully, there are more bitcoin exchanges opening with more willing sellers.

4. Bitcoin transaction can be slow at times

Most bitcoin transactions are fast but since this a peer to peer system, there is a time set for confirmation on the transaction. The bigger the transaction, the longer the wait. You can opt for zero confirmations and not have to wait as long but it would be wise to wait.

5. Bitcoin can be stolen

Even though bitcoin is a digital currency, it can still be stolen. Many bitcoin owners store their data in digital drives and secure these drives in safety deposits to ensure they’re not stolen. You will have a digital wallet to protect your bitcoin but you must know how to do it correctly.

After weighing the pros and cons, you’ll notice that bitcoin is worth considering as a means of payment online and definitely worth exploring. Take your time to understand the system and see if it will work for you.