Bitcoin is a new form of currency which has come into existence only a few years back but it has managed to grab the attention of all types of people in the world whether its economist, speculators, investors, programmers, central banks and much more. Bitcoin is a virtual currency which is not regulated or controlled by any central bank and also there is no restriction on its movement from one country to another country, in order to understand this concept better let’s look at advantages and disadvantages of Bitcoin –
Advantages of Bitcoin
- The first and foremost advantage of Bitcoin is that it can be transferred to any part of the world which makes it easy for anybody to transact in bitcoins. So for example, if a person is sitting in the USA and wants to transfer money to a remote village in Africa or Asia than there is no problem of currency exchange or following regulations, operational difficulties like bank holidays, technical problems and so on if one is making payment in bitcoin.
- Another merit of bitcoin is that there is very fewer fees and transactions cost as compared to another medium of transfer of currency, so for example if one wants to send $1000 from the USA to the UK than transaction cost and fees will be between 3 to 10 percent of transaction whereas in case of bitcoins it is less than 1 percent of the transaction value making it a cost effective option.
- One of the pros of bitcoins is that it is fully secured and there is no chance of any identity theft because it does not reveal who is paying the money and who is the beneficiary besides due to the absence of any central bank individual has full control over his or her money.
Disadvantages of Bitcoin
- The biggest disadvantage of Bitcoin is that it is very volatile and price of bitcoin keeps changing very fast and sharply which is not the case with other currencies which are very stable. In simple words, bitcoin is not for weak hearted and conservative people and that is the reason why many people stay away from doing transactions in bitcoins.
- One of the cons of Bitcoins is that lack of awareness among people and also the lack of technology in many parts of the world makes it very difficult to make bitcoin a globally accepted currency. So in developed countries, there is not much problem but when it comes to developing nation’s lack of technology is a big factor against the application of bitcoin.
- Another limitation of Bitcoins is that it is not well regulated and the fact that no central bank has approved its usage makes it very difficult for people to accept or make payment in bitcoins because no matter how beneficial a thing is if it not legal then it is very difficult to make people accept the technology or new currency.
As one can see from the above that bitcoins has advantages as well as disadvantages but one thing is clear that is challenging the old age methods of paying money and going forward if its disadvantages are mitigated than it can be a single universal currency for the whole world.