Crucial advantages and disadvantages of Bitcoin to consider!
With the development of advanced technology and industrialization, cryptocurrencies are gaining heights and are given more preference than traditional currencies. An invention has been made, i.e., Bitcoin, which has changed the demand and supply graph of digital currencies. It is the tenth anniversary of bitcoin, but still, some people are unknown about it. Those who are known to bitcoin’s terminology get confused about its working, and its way of handling transactions from Fast Profit and learn about trading.
Bitcoin is a digital currency that follows a peer-to-peer network and is widely used as an electronic exchange medium. People widely accept this as a payment method because it follows the decentralized system independent of central authorities. Individuals are choosing digital currencies over traditional currencies because of some amazing factors of the bitcoin network. But do you even know what the advantages and disadvantages of bitcoin are? Does Bitcoin make a great investment opportunity?
If you are one of them that has plenty of questions going in mind, then you are in the right place. We will mainly focus on the bitcoin network as a cryptocurrency and understand its advantages and disadvantages.
Advantages of Bitcoin Self-controlled and governed
The main factors for the development of a currency include maintenance and governance. The bitcoin transactions are carrying out by miners on their equipment and hardware. The miners are members of the bitcoin community who are rewarded for solving complex mathematical algorithms. Its bitcoin community controls the Bitcoin network, and miners do the verification of bitcoin transactions to keep the records accurately. This keeps the integrity of the bitcoin network and secures the records.
No risk from Inflation
Inflation is when the price of goods and services increases, and the purchasing power of currency decreases. Inflation has made many currencies lose their value. This is not the case of cryptocurrencies as these currencies are launched with a fixed amount. It is not affected through Inflation because bitcoins are finite in number. Even if the demand for cryptocurrency increases, its value will keep on increasing to keep up with the bitcoin market.
Secure and confidential
The main concerns for a currency are security and confidentiality. The bitcoin network is entirely confidential and secure because each transaction is recorded in a distributed public ledger, i.e., blockchain. The blockchain uses cryptography to secure the transactions and data of users. This is the main factor that secures the bitcoin network and makes it more secure than other electronic mediums.
Disadvantages of BitcoinUsed to carry out illegal transactions
Bitcoin is a decentralized network, which means no government or banks can know the cashflow or track the transactions. It is impossible for the government or any other institution to track the wallet address and know their transactions. This has led to a rise in exchanging bitcoins for illegal deals, including buying illegal weapons, drugs, and more. A large number of people tend to use bitcoin to hide their real identity and exchange money using anonymous identities.
Still controlled by central authorities.
Undoubtedly the cryptocurrencies are decentralized and are different from fiat currencies. Still, sometimes the amount and flow of cryptocurrencies are controlled by organizations. The governments can ban the bitcoin or can control their supply in the market. The creators and organizations tend to manipulate the bitcoins to increase their price in the market. This is the reason why the value of bitcoin has reached its peak.
Vulnerable to hacks and attacks
Despite cryptocurrencies being secure and private currencies, the exchanges done through it are not secure. Some bitcoin exchanges tend to use the wallet of users to operate their wallets and deal in exchanges. This may lead to hacks of users’ accounts and stealing of personal sensitive information.
The hackers always keep an eye on user accounts and tend to attack wallets to access private keys. Through this, the hackers get access to your funds and can transfer them anywhere. The most popular bitcoin exchange, Mt. Gox, was hacked by hackers, and a large number of people lost their bitcoins. It is important to choose the right exchange, and you must never provide them access to control your wallet and funds.