Are you unsure whether you should buy Bitcoin? There’s a good chance you’ve heard about the world’s most well-known cryptocurrency’s meteoric rise recently if you’ve been around any recent financial news.
And if you’re like a lot of people right about now, you’re probably wondering, “Bitcoin – yes or no?”
Is investing a wise decision? Furthermore, what exactly is Bitcoin?
Here are a few things about Bitcoin that you should know before making an investment. Also keep in mind that this article is only meant to serve as information and is not intended to be taken as financial advice of any kind.
What is Bitcoin?
A cryptocurrency or digital currency is what Bitcoin is known as. In essence, it is electronic cash. Like any other currency, bitcoin can be exchanged for other currencies (for example, you can buy bitcoins with US dollars or vice versa) and its value varies in relation to other currencies.
However, it differs from other currencies in that it is not controlled by a single central bank, nation, or government. It is therefore less vulnerable to poor management by the government or the central bank.
Pros of Bitcoin
#1 Easy To Send Money
Due to its decentralized nature, Bitcoin can be sent instantly to friends on the other side of the globe without the need to go through a bank intermediary (and pay the associated fees).
Bitcoin is very well-liked just because of this. You can send your payment in a matter of seconds or minutes rather than having to wait for a wire transfer, which can take several days.
#2 Limited Supply
Only 21 million Bitcoins will ever be mined. As a result, there can never be as much Bitcoin produced. To say that a government cannot print money because there is a finite number of bills available and they will not print any more would be equivalent.
Your purchasing power is maintained when there is a fixed supply, and the currency is protected from hyperinflation.
The price increase of Bitcoin has also been aided by its limited supply. People don’t want a currency that can be infinitely printed or inflated at the whim of an avaricious government.
#3 Private
The majority of people believe bitcoin to be 100 percent anonymous. However, it is more private and is not truly anonymous. The Blockchain, the open Bitcoin ledger, contains a record of every Bitcoin transaction ever made.
However, the transaction’s background does not reveal your name or any other personal information. Each transaction is associated with an address, which is a long string of text and characters. Therefore, even though people might see your address, there is no way to connect that address to you.
This privacy feature is popular with people who don’t like their banks tracking them (or telling them how much of their own money they can or cannot move).
#4 Cheaper to Transact
Today, in order to remain competitive, many businesses must accept Visa or MasterCard. These cards do, however, deduct some pretty significant fees from each purchase.
A business that accepts Bitcoin, however, avoids these significant fees, putting more money in their own pockets.
These are some of the main advantages of bitcoins. What about the cons?
Cons of Bitcoin
#1 Risky – Price Fluctuations
Bitcoin is renowned for rising gradually over months and then dropping 20–50% over a few days.
The price is constantly changing because it is traded every day, every week. And all it takes is some negative news to send the price plummeting, like the news of the Mt. Gox hack a few years ago.
In other words, it isn’t stable, and there are a lot of unknowables that could influence the price. Here, the golden rule is to never invest money in Bitcoin that you cannot afford to lose.
#2 Slowing Transaction Speeds
Slower transaction speeds and higher transaction fees are starting to cause issues for Bitcoin. There are now faster and less expensive cryptocurrencies.
Working to solve the issue are the Bitcoin miners. You should anticipate the price to fluctuate greatly, though, until these problems are fixed.
#3 Bitcoin Transactions Not Reversible
Bitcoin transactions are irreversible, unlike credit card charges. Therefore, if you send Bitcoin to the wrong address, you cannot get it back.
There are numerous stories of people who have misplaced their Bitcoin wallet addresses due to hacking, theft of phones, computer virus infection, etc.) and they’ve completely lost their coins. There is no way to get them back.
Because of this, if you want to invest in Bitcoins or any other cryptocurrency, you must be extremely knowledgeable and take the time to learn how to buy and store your coins safely.
So, those are a few things to think about before making a Bitcoin investment. In short, there is still a lot of risk involved with Bitcoin, despite the fact that it has a lot of great qualities and the potential to revolutionize financial transactions. There are still a lot of unanswered questions.
Take your time and weigh your options if you do decide to buy. Don’t purchase from any old vendor. Some of them are dependable and have successful businesses. Others, however, might overcharge you or fail to deliver your coins altogether.
Do your research first and practice safety. There are many trustworthy, well-regarded sellers out there; just find one. Additionally, always invest only what you can afford to lose. This is the golden rule.