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These days it’s likely that even if you aren’t up on your cryptocurrency lingo and knowledge, you have heard of the famous BitCoin. BitCoin is a unique form of currency that is beginning to be widely used throughout the world both online and off to pay for goods and services through an untraceable, encrypted digital currency that allows more secure, private shopping online and in stores. BitCoin rose to prominence in 2017 and 2018 when it gained extreme value and became a form of investment for thousands of people around the world. Have you ever thought about using BitCoin – either as a form of currency – or as an investment? Here are some of the pros and cons of BitCoin for you to consider before you jump in.
One of the largest pros of BitCoin is the fact that the whole process requires encryption and different forms of authentication, such as two factor authentication to sign into various sites or even access your wallet. As a result the way that BitCoin works means that you receive a coin that has been developed with encryption and possibly even washed a few times through different buyers or sellers. It’s also untraceable, so you don’t need to worry about people tracking you, especially if you wash your coins after buying.
Con: Environmental Unfriendliness
The major downside to BitCoin is that the mining process takes an incredible amount of electricity. This has huge environmental implications as many of the bigger BitCoin mining companies are in countries that rely on electricity from coal burning plants, putting huge amounts of omissions into the atmosphere. As this is a cheaper form of electricity, it’s preferred by many poorer countries which happen to be where BitCoin is primarily mined, and so the result is higher rates of pollution as more electric is needed from these types of plants and factories.
Pro: Wide Acceptance
These days BitCoin is more widely accepted than other types of cryptocurrencies. Not only can you use it online to pay for purchases on some websites like Amazon, but you can also occasionally find BitCoin ATM machines around. The activity of the BitCoin ATM is similar to purchasing BitCoin from a miner online, but as BitCoin is a virtual currency, the ATM allows you to purchase BitCoin and put it in your own wallet online for use later. No physical cash is provided to you – instead it acts as a decentralised bank on the street which takes money from your account and directs it to a BitCoin exchange where you can purchase coins.
Con: Easily Replaced
With the development of BitCoin comes the technology for many other cryptocurrencies to be developed as well. As a result, many have been. This means that BitCoin, despite its rather tight hold on the top spot in lists of cryptocurrencies, thousands of new ones have been developed both by companies as well as individuals. Even Facebook has been talking about creating its own cryptocurrency for use on its platform. Due to the ability for anyone to develop their own type of coin, BitCoin has the potential to get replaced by a coin that could be more popular, resulting in a disastrous value crash.
Pro: Huge Growth Potential
Due to the immense interest in BitCoin the value skyrocketed to a whopping $20,000 per coin at the height of its fame. While this was short-lived, it nonetheless shows just how valuable BitCoins can become. While mass investments in one particular area can often spell disaster, with BitCoin, it managed to remain relatively stable, and although it did lose a lot of value following mass investment and a subsequent crash, it stayed relatively valuable at thousands of dollars per coin and has begun to gain value again.
Con: It’s Misunderstood
Many people don’t understand just how BitCoin works, and as a result are hesitant to get involved with it. Older people especially are very unsure of BitCoin and why they should invest in it or even just use it as an alternative form of currency, and while it can be a bit daunting to some people to understand, even if they’re up on tech, it seems that many people just don’t understand it and aren’t interested.
Pro: It’s Immune To Political Impacts
Everyone knows how currencies around the world work – they all seemingly affect each other in a giant global finance market. Political issues in various countries can drive down the value of the currency, creating hyperinflation and eventual complete devaluation of the currency which can cause a whole myriad of problems for the people of that country. The pro to BitCoin here? It’s completely decentralised, so it’s not affected by any political issue in any country and is only affected by the supply and demand of the coin itself.
Con: Use By The Blackmarket Can Undermine Usefulness Elsewhere
It’s no secret that BitCoin is immensely attractive to blackmarket uses such as using the DarkNet to purchase illegal substances, weaponry and forged documents. While many, many people have never had access to the DarkWeb (and don’t want to), many others do and use BitCoins as a way to remain untraceable when purchasing illegal items from less than reputable characters. This can make BitCoin look very shady for legitimate uses, leading to people questioning its legitimacy.
Pro: Blockchain Tech Allows Free Transactions Between Users
It’s true. When you send money abroad to friends or family, even through PayPal you have to pay a fee. If you’re sending money direct from your bank, forget about it. SWIFT transaction charges make sending money via banks internationally not worth it by a long shot. The bonus to BitCoin though is that you can send money overseas to recipients as much as you like – no fees attached.
Con: Transactions Are Slow
The downside to BitCoin transactions is that they are slow. Compared to centralised banking which can process as many as 2000 or more transactions per second, Bitcoin can only perform 6-7, making the speed of transactions a huge inconvenience. The decentralisation aspect of BitCoin means that the transactions take longer to connect, and so if wanting to use BitCoin to pay for certain things, it’s advisable to give enough time for transactions to be processed.
So whatever your needs for using cryptocurrencies and BitCoin, it’s a bit of a mixed bag. While there are a lot of great pros to the use of BitCoin, there are several cons as well that should be considered before investing huge amounts. Do your research and be sure to think it through before you put too much into an investment regardless of whatever kind it is. Good luck!