Friday, 27 November 2015

Benefits and Risks of Bitcoin from a consumer’s point of view

Bitcoin is a decentralized crypto-currency that doesn’t fall under any traditional payment regulations. It is getting more and more popular for consumers but it is less popular for banks and governments. Being based on a person-to-person structure means no affiliation to banks, governments or central authorities. They aren’t issued by central banks, they are generated digitally. The strength of bitcoin industry is growing which results in a larger user base
Why is it so popular for consumers around the world? Let’s see some main benefits of this crypto-currency.

  • Bitcoin transactions provide anonymity, so it protects the user’s identity
  • Mobility and real-time payments
  • Cost saving as there is hardly any cost to send or receive bitcoins
  • People are provided with the control of their own funds
  • Transactions can be made by anyone with a cellphone or internet
  • Universal currency that can be used in any country
  • No need for a credit/debit card or bank accounts to make transactions

There are benefits of bitcoins but they come with risks too. Some of them are:

  • Transactions are irreversible. Once it’s done, it’s done. If a transaction is accidentally made to the wrong recipient only that person can return or void the funds.
  • There is a high risk of financial instability and liquidity
  • Volatility of changing values - no guaranteed value
  • Increasingly used by criminals and money launderers

Before starting buying or selling bitcoins it is highly advisable to take pros and cons into consideration. 

There is a debate on whether bitcoin or other digital, virtual currencies can take over physical money, coins and bills. At the moment future can’t be precisely predicted on this matter. There are constant technological changes so there is a chance that the physical money we know will eventually disappear but that doesn’t mean banks or other financial institutions will also vanish.

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