If you ask a lot of people what bitcoin is all about, most of the will likely say it is a virtual currency that has been on the forefront of news since 2010. But the reality there is that Bitcoin is more than what we think it is.
Do you know that lack of understanding about how it works, and perhaps its extreme volatility, has kept many investors from considering the crypto-industry to be investment worthy? But still, i won’t dispute the fact that many smart investors who recognized it for what it was at its earliest, have made thousands of dollars, and even millions from investing and/or trading bitcoin.
So, the question is what do you think bitcoin is? And are you still in doubt of its utility and money value? Or are you an enthusiasts?
Bitcoin have some fascinating advantages which are as follows : zero authority interference during any BTC transaction, fantastic transaction speed, very little transaction fee is involved, anonymity, transparency and its decentralized nature–giving its users control over their finance; but some people still strongly belief that bitcoin isn’t worth being called a currency while some sees it has a threat to the global economy.
Well, let’s look at the ultimate pros and cons of bitcoin. These will not just serve as a revelation of what bitcoin is, but it will also serve as a guide for investment.
The ultimate Pros of bitcoin:
It can not be feigned or counterfeited:
Technically, based on design, traditional currencies like the USD, NGN, YEN, EUR etc. can be counterfeited or feigned although their governments have inscribed on it some anti-counterfeiting features to make it very difficult to illegally reproduce them. But as for bitcoin or any other cryptocurrency, they cannot be counterfeited or faked since they are digital and virtual.
Another amazing reason why bitcoin cannot be feigned is because of the ‘setup’ of bitcoin’s blockchain — the blockchain have the list of all the entire transactions made with bitcoins. So, with all these sophisticated protocols designed to enhance security and validation of bitcoin blocks, do you think there will be any room for counterfeiting? Of course not. In fact, when you have let’s say 2 BTC and you transfer 1.5 BTC to someone, once you authenticate the transaction it will be automatically submitted to the network.
At this point, the network will further verify the authenticity of the transaction and will not accept any forged bitcoin and will automatically reject any participant that is trying to double-spend any bitcoin unit in this capped supply( 21 million). The network verify if your address ( or the sender’s address)) is valid; and if it has the proper value you want to transfer, the transaction will be successful. So from all indications, Bitcoin cannot be counterfeited.
Just be cautious of scammers. Since counterfeiting bitcoin is almost impossible to obtain ,the easiest fraudulent way they now use to rob people is through ponzi scheme. Anyone can start up a company tomorrow and call it “Bitcoin Golden Investment Opportunity.” Undeniably, they will run some powerful and attractive ads to confuse and convince potential investors. And most times they target crypto newbies with zero idea about cryptocurrencies and blockchain technology.
According to a news story in South Korea, it was reported that the IKsan Police Station in Jeonbuk caught six people violating the Act of Similar Reception Act. They were arrested for numerous charges including defrauding over 3,900 newbie investors. As the IKsan police department investigated further, they discovered that the scam group initiated a ponzi scheme by establishing a “ Bitcoin Investment Firm,” in Gangnam, Seoul in January of 2016. In the course of their ads, they were assuring investors a profit margin that is not possible to guarantee. Those who were abreast with the fundamental knowledge of bitcoin were not moved by their tactics but 3,900 people with no experience or knowledge of bitcoin were victims. Some of these investors confirmed that they were robbed of $4.1 million. They also claimed that they got involved thinking they were real, in other words, they invested thinking their money was invested on bitcoin. But unfortunately “Bitcoin Investment Firm” was fake. Report also confirmed that the value of the money was expected to have grown to $38 million by 2017.
Be very careful, for their are so many crypto investment companies in existence today, and most of them are scammers targeting new crypto investors with no underlying knowledge or idea of bitcoin and other altcoin.
It is transparent and neutral:
One of the ultimate benefits of bitcoin is that all its transactions are available and verifiable in the electronic ledger called the blockchain. This unmatched transparency and neutrality of bitcoin has contributed to the massive integration of using bitcoin to speed up business transactions. This is because it eliminates the need for the involved business parties to check and worry over balance. In other words, the technology on which bitcoin is built, does not give room for business parties to hide or engage any fraudulent move while running transactions.
Bitcoin’s high level of transparency and neutrality are powerful concept that has positively affected the cryptosphere solving our existing accountability problem in our financial system. Also the blockchain system on which this cryptocurrency is built is fully auditable and its ledger is indelible and unforgeable.
Here are few tips about bitcoin transparency;
- Anybody at anytime can verify transactions in the Bitcoin blockchain due its transparency.
- Bitcoin’s transparency enables your public address to be visible to anyone on the network. Thus, your ID isn’t tied to it.
- Bitcoin is cryptographically secure, therefore, its transparency can’t be manipulated.
It has safety measures and could be controlled easily:
Here is another fascinating benefits about bitcoin. If you are a bitcoin owner/user, you have full control over all your money. How you transact , who you transact with, the quantity of bitcoin you transfer or receive daily is under your control, and no government or any third party has no say on this.
Unlike the traditional payment system where there are strict rules and condition and sometimes limit to the amount of money you can transfer daily. With bitcoin you don’t have to worry over your money since you are in full control of your bank ( wallet). In other word, no one can withdraw any money from your account or even steal your payment information provided you didn’t give your wallet pass to anyone.
The safety of customers personal information and account details on traditional banking system could be easily compromised and leaked out by hackers or even criminal-bankers, but that isn’t the case with bitcoin.
Technically, in the cryptosphere, every BTC user has the ability to protect their money with backups and encryption. Their identities and personal information are always protected even during transactions between distinguish parties.
You can choose your own commission:
Another amazing advantage of using bitcoin is the possibilities of choosing your own transaction fee; or choosing not to pay at all — this is true in some cases, but sometimes a transaction fee of a few dollar is required. This transaction fees in question is a kind of reward that goes to the miners, to keep them mining which in turn keep the bitcoin network secured.
Meanwhile while sending bitcoin to anyone at a fast pace would require higher commission compared to the norm processing speed. So, as a bitcoin user, anytime you want to run a certain transaction, you’d be left with choices. If you want it quicker as possible, you’ll pay higher. But if you don’t want any special time constraints you will pay the “norm transaction fee.” Contrarily, your ability to choose your own commission fee isn’t the case with traditional banking system. It’s more of a protocol, and would definitely consume a lot of time.
It is highly portable:
One of the ultimate pros of bitcoin is its high portability nature. Compared to any traditional currency, bitcoin has proven to be one of the most portable coin you could ever imagine. The fact that its a digital currency make its more easy to not just move around but also spend without stress.
Literally, you can carry any amount of money on your flash drive, or perhaps your on phone. And with internet connection, you can have access to the money stored on your online wallet anywhere in the world. Meanwhile, just a scan of a QR-code or a click on your mobile wallet, it take little or or no time to send or and receive money to or from anyone in the world. Distant isn’t a barrier here, all you need is a strong internet connection.
Everyone loves freedom most especially from government authorities. When using bitcoin for your day-to-day transactions, you don’t have to worry over governing controllers, because bitcoin was designed to serve the purpose “freedom.’’
Transacting with bitcoin sets you apart. You don’t have to worry about government authorities or any third party regulator. In fact, when government imposes fees or takes charge of people’s money( USD, EURO, YEN etc.) you don’t have to lose sleep over it. Do you know that in recent years, buying things with bitcoin is as legitimate as any fiat currency? As a matter of fact, some online retailers prefers bitcoin payment option to other currency because it’s easier and faster.
It protects your identity and money:
When running any bitcoin transaction, disclosure of your personal identity isn’t necessary. Actually, Bitcoin is designed to protect your identity, and this anonymity is no doubt one of the features that skyrocketed its adoption worldwide.
Most companies, especially the big players, prefer using this medium for transaction to secure their clients intentions and identities. They’d not want their client’s identity to be exposed. Some other transactions especially illicit ones like drug deal, assassination fees, money laundering etc. prefer sending or receiving their money in bitcoin or other cryptocurrencies, because theft identity are not compromised and more importantly, they are backed up and encoded with encryptions.
It is highly volatile — the positive phase:
Bitcoin’s high volatility nature is one of the most crucial benefits about it. According to an analysis published on The wall Street Journal, by Campbell Harvey, a professor at Duke University, it was revealed that bitcoin has been 7.5 times as volatile as gold, and over 8 times as volatile as the S&P 500 over the last few years.
Based on the positive phase of bitcoin’s volatility, an investor has the ability of making double of what he or she invested in it within a week or less. Because bitcoin volatility nature makes its price value soar like crazy. Let’s consider the quantum leap in price value of bitcoin in the year 2017. If Tony had bought 1 BTC in January 2017 at $1500, and held his position without selling it, tony’s invested $1500 would have exponentially increased to about $19,000 plus by December 2017.
How, you may ask?
Well, this was because of the high volatility nature of bitcoin.
The ultimate Cons of Bitcoin:
Just like any other digital asset, bitcoin also has some cons too; you should get yourself abreast with them.
The risk of losing your keys:
Whenever you lose your private key — a unique alphanumeric password necessary to access your wallet, it simply means you’ve lost your bitcoin because there is no backup or restore mechanism to bring it back. You alone have the access to your private key. Although some wallet today have backup and restore mechanism, but still, users need to set them before they’d be able to use them.
There are several stories of how people threw away hard drives that contains hundreds of bitcoin, however, a survey by Chainalysis on lost bitcoin, affirmed that about 2% of transactional bitcoin is lost forever from the loss of private keys or carelessness.
Excessive instability and volatility — the negative phase:
For the record, bitcoin has been staggeringly unstable. Although it is the most liquid of all coins and could also be easily exchanged, but it is vital that you know that it remains susceptible to wild price swings over a short period of time. You can wake up one morning to see bitcoin’s price at $8400, before you go to bed , you check again and discover that its price has plummeted to $7100 — that’s to show you how unstable bitcoin price could be.
Let’s consider the first three quarter of 2018 has a case study. Considering the dramatic increase in price value and the ATH bitcoin kissed in 2017 ( December), If Tony decides again to invested early this year let’s say in January 2018; at that time 1 btc was at $12,000 plus. So, if Tony held his position again till August 2018 when bitcoin has dropped to $6100, then, statistically, Tony would have lost almost 50% of his investment.
How did it happen? This is due to the excessive volatility nature of bitcoin. Just as it can double your investment overnight, it could also swallow all you have invested if proper care is not taken.
Failing in its anonymity features:
The anonymity features of bitcoin is no doubt one of the core selling points of bitcoin. But on the contrary, there has been some controversies on bitcoin’s anonymity. Recently, a study was carried on the anonymity in bitcoin transaction, Fergal Reid and Martin Harrigan warned that Bitcoin’s boastful anonymity has some cracks : “Many organizations and services such as online stores that accept Bitcoins, exchanges, laundry services and mixers have access to identifying information regarding their users, e.g. e-mail addresses, shipping addresses, credit card and bank account details, IP addresses, etc. If by any chance these information are publicly accessible by, say, law enforcement agencies, then the identities of users involved in the transactions may be at risk.’’
In conclusion: before you put in your money in Bitcoin or any other altcoins, no matter how the marketers sweet talk you into investing in it, it is very advisable that you get yourself abreast with the pro’s and con’s of the currency in question. While bitcoin instability is very high, don’t be carried away by FOMO( fear of missing out) , in fact, experts advise that for the time being, we should treat bitcoin as you would treat any speculative asset. And again,don’t invest what you can’t afford to lose.