Bitcoin is extremely valuable as it is currently the most cryptographically secured mode of transaction so far. Recently, you must have heard a lot about bitcoin as its value has reached new highs. These days most of the institutions are adopting it. Some governments are even considering it as an official mode of payment.
Bitcoin has money-like characteristics that are based on mathematical properties rather than physical properties or trust in central authorities. before we move on to the characteristics of Bitcoin, let us understand what bitcoin actually is.
What is bitcoin?
Cryptocurrencies, such as Bitcoin, are a sort of digital currency. There are no physical bitcoins. From a user perspective, Bitcoin is pretty much like cash for the Internet. The Bitcoin blockchain uses a public ledger that everyone can see and stores all the transactions. Bitcoin uses a significant amount of computational power to verify every bitcoin transaction.
Bitcoin is the first digital currency to make use of peer-to-peer technology to allow for instant transactions.
Why is bitcoin’s value increasing?
In comparison to other payment systems, Bitcoin provides customers with a unique set of benefits.
When compared to transactions made with fiat currency, Bitcoin transactions provide various advantages, including lower transaction costs and faster processing. Also, international transfers benefit greatly from Bitcoin transactions.
Following technology breakthroughs such as the Lightning Network, the ability to make payments with Bitcoin has improved. It has increased the transaction speed in the bitcoin blockchain significantly.
Bitcoin vs Fiat
Bitcoin’s supply is finite, whereas, in the case of all other fiat currencies, governments print them on a regular basis. As a result, Bitcoin has a high value due to its increasing scarcity. This is also why the value of one Bitcoin in relation to multiple currencies skyrockets.
To avoid scarcity fiat currencies require a consistent supply, but an excess supply causes their value to fall.
Bitcoin is not only immensely more “durable” than fiat currency but is also safer. Bitcoin, for example, is based on a decentralized ledger system. Each individual ledger reviews it to increase accuracy As a result, Bitcoin’s chances of becoming a mainstream currency are slim.
Another major element in Bitcoin’s favor is its ability to be divided up to 8 decimal places. For easier transactions, 1 Bitcoin can be split into 0.00000001 bits, each dubbed a “Satoshi”. This is similar to a US dollar that may be broken down into cents, unlike other fiat currencies.
Bitcoins are currently accumulating tremendous value in the expectation of becoming the world’s future form of cash. They offer all of the advantages of traditional currencies, but they lack the approval and regulation of world governments.
Perks of using bitcoins over others:
a) Bitcoin Users Have Complete Control Over Their Funds:
Traditional fiat currencies are vulnerable to a number of constraints and dangers. Banks, for example, are prone to economic booms and busts. As has happened in the past, these scenarios can sometimes result in bank runs and crashes. This implies that users do not have complete control over their funds.
Nobody owns the Bitcoin network. Bitcoin guarantees user autonomy, at least in theory, because its price is unrelated to specific government actions. This means that bitcoin users and owners have complete control over their funds.
b) Transactions in Bitcoin are Anonymous:
Transactions in Bitcoin are not fully anonymous. In reality, all the transactions in the bitcoin blockchain are traceable. This makes Bitcoin transactions Psedoanonymus, as only the transaction is traceable and not the identity of the one who performed the transaction.
An individual can have many addresses for a single account, just as they can have various usernames and passwords. The transaction does not necessitate the use of IP addresses or other identifying information.
c) There are no additional costs in a Bitcoin transactions:
Bitcoin users are not subject to the litany of typical banking fees associated with fiat currencies. While fiat currency exchanges fees, as well as occasional deposit and withdrawal fees, Bitcoin users are not subject to these fees. There will be no account maintenance or minimum balance fees, no overdraft costs, and no overdraft fees.
d) You can do Bitcoin transactions on the go:
Like many other online payment systems, Bitcoin users can pay for their coins from anywhere they have Internet access. This eliminates the need for customers to visit a bank or a store to purchase goods. Users no longer require personal information to make any purchase, unlike online payments done using US bank accounts or credit cards.
e) Bitcoin Transactions are Final and Irreversible:
The immutability of Bitcoin’s blockchain is one of its features. As a result, blockchain transactions are irreversible and no third party can change them. It is also impossible to file a chargeback for bitcoin given to a third party. The only method to reverse in a spherical manner is to reverse in a spherical manner.
f) Bitcoin Transactions are Completely Safe:
Bitcoin isn’t a real-world currency. As a result, robbers will be unable to palm it off the bearer. Hackers can steal a person’s cryptocurrency if they have access to the wallet’s private keys. However, stealing bitcoin is technically impossible with sufficient protection. While there have been allegations of cryptocurrency exchanges being hacked, Bitcoin’s network has remained unaffected.
g) It is Accessible:
Bitcoin is available to a population of users who do not have access to traditional banking systems. This is because users can send and receive bitcoins using only a smartphone or computer.
Whether spending on Bitcoin is a smart choice?
Bitcoin has been criticized in the same way that the internet was originally viewed as a speculative investment. El Salvador became the world’s first government to make Bitcoin legal tender in 2021.
You can purchase Bitcoins through a number of controlled cryptocurrency exchanges. The safest exchanges will require, you to follow the KYC standards. Making an exchange account for tax purposes necessitates entering personal information such as your address and social security number.
Conclusion:
Bitcoin is a solid investment if someone wants direct exposure to the demand for digital cash. It appears to be a growing industry based on the pace with which it is being adopted. Bitcoins may help one diversify their portfolio because their popularity is predicted to rise over time. In the long run, it has the potential to become the first truly international currency. If one has decided to invest in Bitcoin, the best way to minimise risk is to conduct research.
