Do you know what is bitcoin? At this point, you have to know the basic things about cryptocurrency and bitcoin. We live in the e-world, and no matter what is our field of expertise, we have to learn more or less about every tech-related topic. Cryptocurrency is digital money that doesn’t involve any middleman. Bitcoin is one sort of cryptocurrency.
In the previous article on Bitcoin, I mentioned how Bitcoin works and some terms related to bitcoin: bitcoin miners, blockchain, public and private keys, and digital wallets (cold and hot wallet).
In this article, I will show you the picture of advantages and disadvantages of bitcoins.
The Pros and Cons of Bitcoin
2020 has been a year to remember. Investment has been one of the most talking topics of 2020. Because, people are more concerned about their future and want to invest safely.
It led people into cryptocurrency, and it helped to spike in bitcoin investment in the last year. We live in a third-world country, and that is why we are not aware of it.
Around 40 million users of cryptocurrency users and $6 billion worth of transactions are going on bitcoin every day. The current market cap of bitcoin sits at 144.96 billion US dollars.
The researchers expected that the global block-chain market size would reach $57 million in 4-5 years. Even Elon Musk gave his blessings. And, Tesla has recently invested a large amount of money in this.
To use bitcoin or invest your financial assets in bitcoin, you must know the benefits and disadvantages of bitcoin. You can be worried about the cons of bitcoin as it is risky.
I will draw some scandals at the end of this article, but there are advantages too, and some people got rich because of investing in bitcoin. If you can understand the security issues, then you can expect a return on your investments. Let me explore the pros and cons of investing in Bitcoin.
Pros of Investing in Bitcoin
First let me draw the advantages of investing in Bitcoin one by one.
#1. Reducing the risk of identity theft: You guys know how a credit card works. When you try to pay using your credit card, you provide that other person or merchant with a complete credit line, right? It requires your name and other personal information, which is risky.
On the other hand, If you use bitcoin as the medium of payment, whatever you pay with bitcoin, only that information will pass on to the other merchant. He or she will not know your name or any other personal information. It is more secured than a credit card in this sense.
#2. Save you from payment fraud: Other than the risk of identity theft, it also saves you from payment fraud. Bitcoin is a digital currency, so the senders will not make any vital manipulation in it.
Manipulation can be done in paper currency but not in a bitcoin transaction.
#3. Great potentiality for significant growth: Bitcoin’s value is already growing more than ever, and recently Tesla has invested millions of US dollars in bitcoin. Many investors have already bought bitcoin and holding it with the hope that it would grow.
And trust me, it will! Once bitcoin fully matures, people all over the world, especially South Asians, will trust it.
#4. Liberty to pay: Once you get your hands on bitcoins, you can sell or transfer them to anyone and anytime. You get the full freedom to pay and sell it.
It is one of the most significant advantages of bitcoin. It also reduces the transaction time, and many people accept it as a better mode of payment than credit cards. This borderless transaction is saving the extra effort and time of owners of bitcoins.
#5. Block-Chain Tech: Block-chain technology is the best part of the bitcoin transaction. It makes it easy to check the accuracy of every transaction.
It also ensures that the public is watching every transaction, but it doesn’t show any personal or sensitive information.
#6. Avoid intermediaries: When the financial crisis hit in 2008, people were trying to find a decentralized currency. After the pandemic that hit last year, people are seriously trying to embrace an alternative like bitcoin.
People want this decentralized currency which is outside the control of government and regular banks. It is also outside the control of any third party. But if you want to buy bitcoin, you may need to link your bank account. It will not be a problem, though.
#7. Trading costs are low: At this point, people are getting tired of the traditional bank payment system. The cost of the transaction is high when you want to send someone across borders.
Bitcoin has a lower trading cost than these banks when it comes to high-value transactions or payments. Many investors, tiny business owners, are getting benefitted by this.
Cons of Investing in Bitcoin
It is good to know the benefits before you invest. However, you need to check the coins too before analyzing them. Let’s talk about the coins.
#1. Higher the value, higher the risk: You may think Government or third parties cannot get their hands on bitcoin is a good thing, but in a way, it is also a problem.
There is no regulating body that can control the activities and functions of bitcoin. There will always be some human errors or technical glitches, and you won’t report them to anybody.
It would help if you were careful when you want to invest in bitcoin. If any problem occurs, you may face a significant loss.
#2. Rapid changes of price: It doesn’t matter if it is a digital currency; you never know when the value of bitcoins can fall. The value of bitcoins changes way faster than standard currency. You have to be updated about the market 24/7.
For example, there was a spike in bitcoin’s price in 2017, which led to many individuals investing in it. But it was great for those who bought it in 2018.
NerdWallet staff writers said that those who bought it in 2017 had to wait until 2020 to recover the losses. It is incredibly volatile and complex. So if you are mentally prepared to take the risk, then invest in it.
#3. Illegal activities and immoral financing: As there is no governing body involved, many people conduct criminal activities through bitcoin investment. Many people said that bitcoin is mostly responsible for many antisocial activities and anti-Government acts.
#4. Still limited use: (In May 2019, telecommunications giant AT&T joined companies such as Overstock.com, Microsoft and Dish Network in accepting bitcoin payments. But these companies are the exception, not the rule.)
#5. Insurance not covering cryptocurrency: The insurance companies do not protect people who invest in cryptocurrency, including bitcoin. But The Securities Investor Protection Corporation (SIPC) covers investors up to $500,000 if the funds are stolen but not in the case of bitcoins.
#6. Hackers can attack: Block-Chain technology is the most vital part of bitcoin and gives protection from thefts, but it also attracted hackers.
Bitcoin’s hot wallets have been the primary target of many hackers. One of the worst hacks has been in May 2019 where hackers stole more than 40 million US dollar worth of bitcoin.
Some mixed stories you need to know
There is some excellent example of people who turned rich by investing on bitcoin.
Let’s talk about Roger Ver, who now lives in Tokyo. He invested a lot of money in startups related to bitcoin, and now he’s net worth $520 million. He was given the name ‘Bitcoin Jesus’ in the cryptocurrency world.
Another person I want to mention about is Charlie Shrem, whose net worth is $450 million. This New Yorker is one of the most influential bitcoin millionaires. He calculated every single possible outcome, and before the price exploded, he made his move. Bitcoin investment and other activities made him worth this much money.
Then, Jerad Kenna bought 20 cents/bitcoins and sold them for over 200 US dollars per coin! He is worth 300 million US dollars.
Dave Carlson, who is exceptional than other bitcoin millionaires. He earned $350 million worth of fortune only by mining bitcoins. He got into bitcoin in 2010, and now, he is one of the wealthiest bitcoin guys in America.
There is another story you need to know.
It is about the Winklevoss Twins, who is worth $150 million. They were born in New York, and they graduated from Harvard. They were the ones who sue the founder of Facebook, Mark Zuckerberg, for stealing their idea.
If you watched ‘The Social Network’ movie, you would see Armie Hammer portrays them. Anyway, they realized the value of bitcoins earlier and founded some bitcoin-based firms like Charlie Shrem’s Bitlstant.
They had invested a lot in bitcoin with precaution and got $150 million worth of fortune.
Some horrible incidents happened. Due to lack of carefulness, thousands of people forgot their keys, and therefore billions worth of bitcoin had been locked.
According to Cryptocurrency data from Chainalysis, 20% worth of bitcoin has been lost, worth almost 140 billion US dollars. Wallet Recovery Services mentioned that it had gotten 70 requests every day from people who wanted to recover their keys.
These people had suffered from tension, and their mental health has been suffered because of this.
So as I said at the beginning, that calculates every possible outcome and then invests in bitcoin, and people in our country need to be aware of this.
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