It might not be official yet but for all intents and purposes, Bitcoin is effectively a third currency, sitting alongside debit cards and traditional money.
It might be totally digital but Bitcoin is becoming more and more popular all the time, with steep rises every year in its usage.
With more and more people using Bitcoin every year the benefits and risks grow alongside it. Bitcoin isn’t quite as simple as going into a shop and handing over some money or scanning your card but it’s not as complex as it might appear either.
But before you go about buying and trading Bitcoins it’s always a good idea to read up on the benefits and risks involved. Even if you’re well-versed in how Bitcoin works a refresher on the main benefits and risks is always a good idea.
So, let’s take a closer look at the benefits and risks of using Bitcoin.
Untraceable – A Benefit and a Risk
The anonymity and un-traceability of Bitcoin as the unusual distinction of being both a benefit and a risk. One of Bitcoins founding principles was that it was to be completely anonymous to stop organisations or groups from tracing your funds.
And unlike holding money in escrow there are no long wait times or complex sending and receiving methods, the un-traceability also prevents government outlets from defrauding you.
However, un-traceability does mean that using Bitcoin to purchase illegal materials like drugs is a possibility, in fact, some governments have outlawed Bitcoin due to its potential to attract criminals.
Practically Immune To Inflation – A Benefit
Bitcoin as a huge advantage over other currencies because it is practically immune to inflation, while real-world currencies like US dollars, pounds and euros can all be affected by a wide array of events Bitcoin carries a very low inflation risk.
And as governments print more and more money every year all real-world currencies lose value each year. Bitcoin, however, is designed to be a finite currency, only an estimated 21 million Bitcoins will ever be produced which means inflation can’t really have a huge effect on it.
Less and less Bitcoins are produced each year which in turn could make it more valuable over time.
Limited Outlets – A Risk
Bitcoin might be growing in popularity year on year but the marketplace hasn’t exactly been quick to adapt to this new digital currency. While an estimated 100,000 different places accept Bitcoin as a payment method many of these are web-based platforms only.
This might not be a serious issue due to the increase in digital shopping, but it does limit the number of places you can actually use your Bitcoins to buy things.
Very Volatile – A Risk
Bitcoin might be very popular at the moment and worth a lot but who knows what the future holds? Another competing currency could emerge in future which massively impacts the value and popularity Bitcoin is now experiencing. The current volatility of Bitcoin also means that it is difficult for some outlets to accept them as payment.
It’s Very Fast – A Benefit
There’s a lot of online payment methods but they do have their limits and the speed of the transaction is usually a problem. Bitcoin transactions are much easier and much faster, Bitcoin might seem complicated but once you’ve got an understanding of the basics it’s actually very simple.
Once a payment has been made it’s done and then your goods are shipped to you, part of the reason Bitcoin is so popular with Shopify stores is because of its ease of use and quickness when compared to other payment methods.
Complete Freedom From Third-Parties – A Benefit
Bitcoin is officially the only payment method that is free of any third-party control, the government can’t freeze your Bitcoins, your data can’t be stolen and no personal information can be tracked back to you. With Bitcoin, you have complete freedom with your money and there’s no paperwork or paper trail involved.
Hacking and Cyber Crimes – A Risk
Bitcoin is a digital currency which means it as all the benefits and drawbacks of being digital, while this makes Bitcoin very fast when making transactions online it does have some problems. Most notably is the potential for hacking and other cybercrimes and due to the anonymity of Bitcoin tracking down who exactly hacked or scammed you is incredibly difficult, if not impossible.
No Reversals – A Benefit and a Risk
Once a payment has been made that’s it, there’s no reversal of charges when you pay with Bitcoin. This is both good and bad, there’s no risk of chargebacks since the ownership of the Bitcoins changes after each payment.
However, this is also a potential risk because once a payment has been made you can’t correct it or change it. If you accidentally buy the wrong item with traditional money you can cancel it or send it back in the majority of cases, but that’s something that’s not yet possible with Bitcoin.
Bitcoin is Decentralized – A Benefit
You own your Bitcoins which means there’s no risk of you losing your money due to economic disasters or your bank taking your money back.
While such events are rare there have been a number of difficult economic events all around the world in the past few decades which have made people wary of trusting banks with their money.
With traditional banking being riskier these days the control you have with Bitcoin is a big plus to many people.
So, Is Bitcoin Worth The Risk?
Bitcoin is the first digital currency and as seen a big rise in its popularity since its introduction in 2009. Many people today are investing in Bitcoin but because of its volatility, there’s no way to know for sure how those investments will pay off.
But what we do know about Bitcoin is that it as a number of benefits: it’s fast, untraceable, anonymous and decentralized making it stand out from the other payment methods available today.
There are risks to be aware of and it’s not accepted everywhere. But I think the majority of people should at least consider Bitcoin because we might be seeing a lot more of it in the future.