Do We Really Need Bitcoin? Weighing the Risks & Benefits

We are technological beings, and we come up with something new every once in a while. Innovation is embedded in our DNA, and that’s what makes us achievers. This time, the newcomer is Bitcoin (and cryptocurrencies).

Some consider Bitcoin as an inevitable development in our financial system. Never before did we have an intangible currency that isn’t governed by any central bank or government. Because of this, many people remain skeptical about Bitcoin.

But do we need to be skeptical? Our economy is in dire need of an upgrade, as recent history has taught us. For some, Bitcoin is the “upgrade” we’ve been waiting for. However, everything has its pros and cons — including Bitcoin.

Benefits

  1. Little to No Risk of Inflation

Purchasing power is lost as more fiat currency is printed. The result? Inflation. This remains one of the most significant problems with regular fiat currencies. Prices just keep rising as a result of inflation.

But you don’t have to worry about this when you’re dealing with Bitcoin. Bitcoins are finite. There will only be 21 million released or mined. As of now, 16.7 million Bitcoins have been mined, leaving just 4.3 million BTC left.

  1. Decentralized and Affordable

The exciting thing about Blockchain is that it runs on a peer-to-peer (P2P) system, which means that it’s decentralized.

There are no intermediaries that manage transactions. This makes the process of sending and receiving payments simpler and faster. Transaction fees are also lower, compared to credit cards and other online payment systems like PayPal.

  1. The Market is Unlikely to Collapse

No government or any financial institution don’t own Bitcoin. This means that its value shouldn’t be affected by a national crisis or economic breakdown like the Great Recession of 2008.

  1. Convenient

Bitcoins are digital assets. They’re intangible, yet a Bitcoin wallet can hold vast amounts of wealth. You could carry a Billion dollars worth of Bitcoin in your pocket on something as simple as a flash drive.

Risks

  1. Untraceable

Though the untraceable nature of Bitcoin is a two-sided coin, it can still be considered a risk. In fact, this is the main reason why criminals prefer using Bitcoin and other cryptocurrencies for illegal activities.

As a Bitcoin user, you are at risk of financial crime (hacking, theft) and the chances of having your funds returned, in this case, are slim to none.

  1. Little Buying Power

Bitcoin isn’t yet widely accepted. You can’t use Bitcoins in many shops. Though there are now online shops that accept Bitcoin payments, they’re still too few. This is why Bitcoin is mostly used as a store of value rather than a currency.

  1. Extremely Volatile

Volatile is the best word to describe Bitcoin’s value. Significant price fluctuations can happen anytime. You might be a crypto millionaire today, and a thousandaire tomorrow.

Conclusion

Bitcoin was created to make a better world. It’s convenient, simple, and secure. The current system for handling financial transactions is slow and old, and much reliance is placed on banks and other institutions. In a Bitcoin world, this power will be returned to everyday people, and the economy could thrive as a result.

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