There’s no denying the fact that Bitcoin, the leading cryptocurrency, is revolutionizing the payment processing market. With Bitcoin, individuals can now complete transactions online without having to send money or go through the traditional financial institutions and networks.
The convenience and privacy that it offers are too difficult to ignore. Should you join the bandwagon and use this cryptocurrency as well? Before you decide to use this currency, make sure that you understand how it works, including its limitations.
Reasons Why Bitcoin Works
Bitcoin is the leading cryptocurrency for the right reasons. Here’s a look at the top reasons why you should also use it.
1] Offers privacy and anonymity.
Instead of the usual name of email addresses, users will rely on 34 random numbers and characters. This arrangement should give you the privacy you need since it’s too difficult trace where the transactions are coming from.
2] Highly decentralized.
One of the advantages of Bitcoin use is that it’s not controlled by a single financial institution. In short, there’s no third party or banks that will regulate or set the direction of the circulation and price.
There are no individuals who will take control of your funds or even hold your account. Instead of a single institution that will govern the procedures, the operations related to the use of the cryptocurrency are distributed among peers who communicate through the internet.
3] Always transparent.
At the core of the procedures of the Bitcoin is the blockchain. This blockchain is available to everyone who wants to inspect and trace back the transactions.
The moment the block has been confirmed, verified and added to the blockchain, then no one can change or update this. This makes the process open for everyone, but still protected,
4] Insulated from inflation.
Bitcoin is also not affected or adjusted for inflation. This means that there’s a chance that your Bitcoin will grow instead of being diminished.
5] Highly encrypted.
Everyone wants to have a highly secured account. And in Bitcoin industry, you can actually count on a highly secure platform thanks to the use of cryptography. The system of security is actually based on the proof-of-work script hat secures the transactions against potential fraud.
6] Unlimited number of transactions.
There’s no limit as to the number of transactions that you can make. You can send Bitcoin to anyone, anywhere in the world.
7] Features a fixed system.
This is a highly secured system with millions of interconnected units, mining machines and wallets. To bring down the network, a person will need to bring down the whole system which can be difficult.
Reasons Why Bitcoin Will Not Work
Although Bitcoin is the most popular cryptocurrency in the market, it is still not perfect due to its inherent limitations and problems. Listed below are some of the potential problems and limitations associated with Bitcoin:
1] Highly volatile.
This is a highly volatile currency where price tends to sway erratically. In 2017, the price of Bitcoin reach record highs but in just a few months, it dip into dangerous levels that made investors truly nervous.
There are a number of factors that affect the price and the overall value of the cryptocurrency. Most of the time, the statements and policies from different countries can have an impact on the price and overall valuation of the currency, making it more volatile.
2] Takes time and requires certain costs.
There was a time when completing a Bitcoin-related transaction costs cheap. Today, you need to spend a lot of time and spend lots of money just to mine and facilitate the transfer of Bitcoin.
3] No backing.
The official value of the Bitcoin is purely speculative, which means that it can rise and fall because of the speculations.
4] Heavily reliant on the internet.
Without the internet, there will be no Bitcoin.
If you read some of the latest news about Bitcoin, you will also discover that this cryptocurrency has been the subject of fraud. In fact, many criminal organizations have used this cryptocurrency to advance their interests.
However, the amount of Bitcoin used in illegal activities is still negligible compared to the amount in dollars used in these activities.
6] Bitcoin theft.
Since it’s the biggest and most valuable cryptocurrency, Bitcoin has become the favorite among thieves and hackers online. The Bitcoin exchanges and wallets are often exposed to hacking, thus making these unsafe.
And even the use of longer passwords will not help in preventing these hacks. With these concerns, it’s best for Bitcoin users to invest in premium cryptocurrency wallet.