No matter where you are in the world and how you view money and investments, there’s a good chance that you’ve heard of Bitcoin by now. With the astronomical rise of Bitcoin’s value in the last decade and its growing adoption among businesses and people, many worldwide are thinking about dipping their toes into the crypto market. But, most people don’t have enough information on Bitcoin to make a firm decision.
Like any other type of investment, you should consider your risk tolerance and investment goals before investing in Bitcoin. You should also carefully weigh the benefits and drawbacks of Bitcoin before making an informed decision on whether or not to buy Bitcoin. We’ve provided this article to help you out on this journey!
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Benefits of Bitcoin
Bitcoin has emerged since 2009 and become a new type of currency that people use more and more to pay for goods and services. There are significant benefits to using Bitcoin, here we are going to mention some of them:
1. Independent Governance
Perhaps the biggest distinction of Bitcoin from traditional currencies is that it is not controlled by a central financial or political authority. That’s a great selling point as governments can’t freeze or freely mint coins whenever they want. It’s also the main difference between gold and Bitcoin.
Stocks and shares are heavily regulated and controlled by financial and legal agencies like the U.S. Securities and Exchange Commission that oversees the stock market to establish fair trading and order. Thanks to its system of governance, all Bitcoin transactions are transparently verified and authenticated through blockchain ledgers without a third-party involved.
One of the regular items on the benefits and drawbacks of Bitcoin is its worldwide usage. As you already know, Bitcoin is not limited by any borders and people from anywhere can use it to invest or trade. For people who may wonder, how long does it take for Bitcoin to transfer? The short answer is not a lot.
Since you can send Bitcoin to others in a short period, it’s a viable way to purchase goods and services from a long list of stores that are growing longer by the minute.
3. Transparency and Privacy
Bitcoin users rarely experience any problems with privacy because their Bitcoins are protected and encrypted with several public keys and codes. While their transactions are always there on the public ledger to see, blockchain technology completely keeps them safe from any type of fraud. Plus, only the wallet owner knows how many Bitcoins they possess.
Even if your wallet’s address becomes public, you can always create a new wallet address to protect your sensitive details. That’s an added layer of security and privacy to the existing measures. Traditional systems like banks are notorious for being vulnerable to hacking and personal info leaks, but that problem is nonexistent with Bitcoin because you don’t need to provide personal info for Bitcoin transactions.
Drawbacks of Bitcoin
Despite a long list of benefits to using Bitcoin, there are some drawbacks to consider before investing in the first-gen cryptocurrency. The more you know about the benefits and drawbacks of Bitcoin, the more informed you are to make a profitable move. Here are some disadvantages of Bitcoin:
Perhaps the most well-known drawback of cryptocurrencies, including Bitcoin, is that their price is highly variable. One of the primary reasons for Bitcoin’s significant value is the total supply cap of 21 million coins. However, that limit also leaves price the only factor that can respond to changing demands.
On top of that, Bitcoin is influenced by news events perceived as bad among investors. These news and unexpected events can heavily affect the price of Bitcoin.
2. Not Enough Regulations
The decentralization factor can be a double-edged sword since it can lead to the lack of solid regulations about how the currency should work and be taxed. The lack of regulations doesn’t provide legal protection for the asset and cannot guarantee a minimum valuation. So, if a large number of Bitcoin owners decide to sell the crypto, it can significantly lose value.
3. Lack of Clarity over Tax
The lack of established regulations over trading and taxing Bitcoin can create problems for traders and investors. While it’s nice not to pay taxes sometimes, Bitcoin owners struggle with the lack of a unified approach to taxing their assets.
Many complain that the existing tax rules are imposed without considering the nature of the crypto. Plus, they don’t know if they will be taxed in the near future or not, which leaves them confused as they don’t know if they should sell or keep their Bitcoins.
Bitcoin Can be the Future
There’s no denying that, like any other asset, Bitcoin has its unique upsides and downsides. Also, similar to other investments, you have to do your research before deciding if Bitcoin is the right choice for you.
A good starting point is to review the benefits and drawbacks of Bitcoin, understand how crypto wallets work, and how long does it take for Bitcoin to transfer. Overall, you can’t deny that Bitcoin is thriving year by year, and it is probably a good idea to have a slice of that growing pie.
Secure Digital Markets is a Bitcoin OTC broker who provide the perfect platform for you to easily invest in Bitcoin while having no troubles with unnecessary fees and long delays. If you have more questions, contact us and let our team of experts help you come onboard.