Last Updated on February 15, 2024 by Nasir Hanif
Bitcoin is the cryptocurrency that started it all. First launched in 2009, Bitcoin has since become the most popular and valuable type of digital currency in the world. As its popularity has increased, so too has the number of merchants who accept it as payment for their goods or services. There are now more than 100 million active Bitcoin wallets around the world.
However, just as there are many benefits to buying Bitcoin, there are also some downsides to watch out for if you will be investing in the cryptocurrency. This post highlights some common pros and cons of buying Bitcoin to help you make an informed decision about your investment. Let’s take a look at them.
Table of Contents
The Pros of Buying Bitcoin; Some Benefits That It Offers
#1: It is the most decentralized cryptocurrency
Bitcoin has become the most popular cryptocurrency because it is a decentralized digital currency. This means that no central authority controls the flow and issuance of Bitcoin, nor can anyone stop you from using it. No government or company can print more Bitcoins or stop you from spending your own coins. It’s truly independent of any government or financial institution.
The decentralization of Bitcoin makes it an interesting and unique investment opportunity for those who want to get involved in cryptocurrency but aren’t sure about which of them to go for.
#2: It is extremely divisible
Bitcoin is extremely divisible, meaning you can use it for small transactions. Each bitcoin can be divided into 100,000,000 pieces (known as satoshis). This makes it easy to buy and sell bitcoins in fractions of a single BTC. Bitcoin is the most divisible cryptocurrency, which means you won’t have trouble buying or selling even if your bank account only has a few bucks.
#3: No middlemen or third parties are required for transactions
The main reason why Bitcoin is so useful for small payments is that it’s very easy and fast to transact with other people using this payment method. Unlike fiat currencies such as Dollars or Euros, which require third parties like banks and credit card companies for their transactions, Bitcoin doesn’t need any middlemen to process payments between two people. All transactions are recorded on a public ledger called Blockchain, making them immutable by design.
#4: It provides a high level of privacy
Unlike credit cards and cash, Bitcoin transactions are not linked to your real-world identity. This protects you from the prying eyes of hackers, marketers, and other data-hungry entities. It also means that it’s impossible for anyone to freeze or seize your funds without your permission. And since Bitcoin is a decentralized currency (meaning no central authority controls its supply or creation), no one government can stop its use internationally.
#5: It allows for cross-border payments
Bitcoin is a global currency, and as such, it can be used to send money to anyone in the world without having to worry about exchange rates or transfer fees. This can be particularly useful for individuals who would like to send money back home but don’t trust local banks. For example:
Your uncle lives in Mexico and has been saving up his life savings for retirement. It’s worth $20,000 USD, but he doesn’t trust Mexican banks or their currency exchange rates. So he sends you Bitcoin instead when you go on vacation there next week. You then use your uncle’s Bitcoin account as a way of sending him his money so that he can retire comfortably, knowing it won’t be lost or stolen by government corruption.
#6: Potential for high returns
As the price of Bitcoin has skyrocketed in recent years, many people have cashed out and made a good return on their investment. But while bitcoin can be extremely lucrative, it’s also a high-risk investment that should not be taken lightly.
The upside is that if you invest wisely and manage your risk appropriately, you could make a lot of money from this investment. But you will need to do your research before investing in Bitcoin, especially if you are investing to make some quick gains.
#7: Protection from payment fraud
You can’t be cheated out of your money. Bitcoin is decentralized, which means that no single authority controls it. As such, there’s no risk of a hacker stealing your information or trying to use a credit card chargeback to get back their own money – it’s impossible.
There are no chargebacks or overdraft fees on transactions. Additionally, No need to worry about identity theft with Bitcoin either! Because of its encrypted nature and lack of personal information attached to each transaction, there’s little chance that anyone would hack into someone else’s computer system just so they could steal another person’s bitcoins.
Some Cons of Buying Bitcoin That You Should Be Aware of
Buying Bitcoin is a great way to invest in the next big thing. However, there are some cons that you should be aware of before diving in.
#8: High volatility
A lot of people are wary of Bitcoin because it’s been known to be volatile in the past, which means that its value can fluctuate wildly. This can make it difficult for investors to get a sense of what the price will be, making it hard for them to plan their investments or make informed decisions about when and where to invest.
#9: Not regulated
Because Bitcoin isn’t regulated by any government agency or central bank, there’s no way for anyone who owns this cryptocurrency to know what kind of fees they’ll have to pay when they cash out their investment or how fast they’ll be able to do so once they decide they want out. This can make things a bit unpredictable for investors who want more control over their money than just letting it sit around in a digital wallet until something better comes along (which might never happen).
#10: Limited consumer options
While there are many ways that people can spend Bitcoin online these days – from using it as payment at popular retailers like Overstock and Expedia to buying gift cards or even converting some into real cash, there aren’t many places where you can use Bitcoin directly. Not all merchants and stores accept Bitcoin as a payment method. So it can’t still be compared with fiat currency when it comes to acceptability.
#11: It’s a very risky investment option
There is so much risk associated with investing in Bitcoin. There’s the risk of losing all your money if something goes wrong with your purchase transaction or investment. You could quickly become bankrupt if someone steals your Bitcoin or if there’s an error when transferring funds from your bank account.
#12: Transactions are irreversible
One of the biggest draws of Bitcoin is the fact that transactions are irreversible. There are no chargebacks, so you can’t claim a payment didn’t go through after you’ve already received the money. This makes it risky for merchants, who may be unaware that their customer isn’t interested in paying them back if something goes wrong.
Conclusion
Bitcoin has a lot of potential benefits and risks that you should take into account before making any investment decisions. This is especially true if you are new to investing in cryptocurrencies and want to learn more about what it means for your personal finances and society.
Read More: Property investment in Melbourne: Here’s what you need to know.
