We have seen that bitcoins are becoming more and more popular and their usage is increasing at accelerated pace geographically. We will understand this process if we study different useful features of bitcoin that make them what they are.
Features of bitcoins
One of the most direct benefits of Bitcoins is that they are out of purview of governments, banks and other intermediaries who cannot interrupt user transactions or freeze Bitcoin accounts. The users experience greater freedom vis-à-vis dealing in national currencies. There cannot be inflation in case of bitcoins by printing more money as in the case of fiat currencies. By design, the number of bitcoins that can be minted is limited.
Since there is no way to identify, track or intercept bitcoin transactions, one of the major advantages of bitcoin usage is that taxes are not added onto any purchases.
Bitcoin transactions are relatively faster as compared to bank transfers in traditional currencies. Bitcoin transactions are done with nominal or sometimes zero transaction charges. These transactions are anonymous with no names involved. Every transaction is a public record which anyone can see. Your private key is the only link between you and your bitcoins. As long as the private key is secure, your money is safe. It is very easy to send and receive bitcoins because of ease of operation of bitcoin accounts.
Small amounts of bitcoin that are used as alternative units are: millibitcoin (1 mBTC = 0.001 BTC), and satoshi (1 sat =0.000001 BTC) which is a millionth of a biticoin in value.
You can use different wallets and tools for transacting in bitcoins.
Drawbacks of bitcoins
Let us examine the cons or drawbacks of bitcoins. These limitations of bitcoins make them less attractive and makes us seek better options. We have to somehow overcome or eliminate these limitations of bitcoins to make them user friendly.
- Bitcoins are a new emerging currency whose work is still in progress.
- Their value is highly volatile and unstable seeing wild fluctuations.
- It is internet-based, without which it cannot function.
- It is totally virtual currency and money can be lost due to computer breakdown or the absence or failure of a backup.
- Losing your private key can result in losing your bitcoins.
- There is no way that the transactions can be reversed or cancelled once completed.
- There can be misuse of anonymity of bitcoin transactions for criminal activities.
- The benefits of bitcoins are skewed highly in favor of early adopters.
- Bitcoin can be replaced with a better similar product and there is uncertainty regarding its continuation over a long period of time.
- Governments can ban bitcoins and make transactions in bitcoins difficult.
- The slowness of transaction verification is also an issue.
- The current version of bitcoins is not fit to handle very high volume of transactions.