The Pros and Cons of Using Bitcoin for Payments

The Pros and Cons of Using Bitcoin for Payments

Daniel Hall 16/06/2021
The Pros and Cons of Using Bitcoin for Payments

Investors are concerned every time Bitcoin price fluctuations occur.

Just when more retailers began accepting Bitcoin for payments, it seems that there are rumors from government officials who are concerned about the use of cryptocurrency.

Since it's a decentralized currency, the government can't track transactions made with cryptocurrency, leading to laws and regulations being proposed and/or implemented.

If you're just starting to learn about digital currencies or are considering adding them into your investment portfolio, this guide can help you decide whether Bitcoin is a good choice for you.

There are pros and cons to Bitcoin – just like with any investment – that are worth considering. And before we go into these pros and cons, let’s take a look at what Bitcoin actually is from a high-level perspective.

What is Bitcoin?

Bitcoin is a digital currency that allows people to send payments from one person to another. It is not issued by any government or central bank, but instead is created and managed through an open-source software program.

It was created in 2008 by a man using the pseudonym Satoshi Nakamoto and went into use in 2009.

Bitcoin is not controlled by any single entity like a central bank or financial institution. Instead, the transactions are recorded on a public ledger that is shared among all the users of the currency. This public ledger is called the blockchain, and it verifies and records all transactions that occur on the Bitcoin network.

In order for a transaction to occur on the Bitcoin network, it needs to be verified. Due to the verification process, Bitcoin is viewed as being a very secure form of digital currency. People are using Bitcoin for international payments, to buy pizza and purchase real estate.

Lawyers are even accepting payments for legal services with Bitcoin.

Pros of Bitcoins

Why would you use Bitcoin? There are several pros to using this cryptocurrency that include but are not limited to, the following:

  • Bitcoin is anonymous, but not completely. While the way Bitcoin works is designed to keep your identity secret, anyone can check the public ledger and see your Bitcoin address. However, your identity is not linked to your address, so it is difficult to trace you.
  • Bitcoin transactions are irreversible. Once you send Bitcoin to someone else, it cannot be reversed. This is by design, and it protects the currency from fraud.
  • Bitcoin is fast. When you send Bitcoin to someone else, you can expect to see it in your wallet within minutes. This is a lot faster than traditional bank transfers, which can take days or even weeks.
  • Bitcoin is cheap. The fees for a Bitcoin transaction are far lower than those charged by credit card processors.

While there are a lot of great advantages of using Bitcoin over fiat currency, there are also disadvantages that you need to consider, too.

Cons of Bitcoins

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There are a lot of benefits to using Bitcoin, but with anything new, there are also cons that need to be considered, too.

  • Bitcoin is volatile. The price of Bitcoin has been known to fluctuate dramatically. In 2021, investors lost over 40% of their digital currency value in just a few months. This kind of volatility makes it difficult to use Bitcoin for everyday purchases, such as buying groceries or gas.
  • Bitcoin is not universally accepted. Although it can be used to buy things online, it is not widely accepted in brick-and-mortar stores. Most merchants that accept Bitcoin use a third-party service to process the transactions, which adds to the price of the items.
  • Bitcoin transactions are irreversible. This is both a pro and a con. Unlike credit cards, there is no way to dispute a Bitcoin transaction. If you send Bitcoin to the wrong address by mistake, you cannot get it back.
  • Bitcoin is not backed by any government or central bank. This means that it is not insured or protected. If the currency collapses, your wealth will disappear along with it.

As you can see, there are both good and bad aspects of Bitcoin. Once you know how to use Bitcoin for payments, you can begin buying goods with the currency.

But do not put all of your investments into crypto due to the high volatility of the coin.

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Daniel Hall

Business Expert

Daniel Hall is an experienced digital marketer, author and world traveller. He spends a lot of his free time flipping through books and learning about a plethora of topics.

 

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