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The latest buzz word, in the world of digital currency, is Bitcoin.
Bitcoin is nothing but a virtual currency or a medium of conducting digital transactions, just like any other digital currency. So what make it better than our conventional currency?
Lately, the global interest in bitcoins has grown. So, it becomes extremely important to understand the base of this and all other forms of virtual currencies. Bitcoin, and its alternatives are all based on cryptographic algorithms which are encrypted. This makes the currency decentralized giving ownership to the user.These can be purchased through an online exchange or a Bitcoin ATM. Landmark feature of a bitcoin is that it can curb the chances of fraud and identity thefts, and hence is considered a safe mode of holding money.Bitcoins allow buying of goods and services online, as well as transferring money.
Below are a few benefits of using bitcoins which make it better than any conventional currency:
- Bitcoin is digital and decentralized – With Bitcoin people get the liberty to exchange value without intermediaries which translate to greater control of funds and lower fees. It's faster, cheaper, more secure and immutable. Cash is controlled by banks while bitcoin has owners.
- Ease of online shopping: As we already know, Bitcoin can help us do online shopping. It's like an e-wallet which can be created blockchain technology to store, track and spend digital money.
- Less volatile than cash: Bitcoin has a global acceptance and is less volatile than cash / local currency. Due to this feature, it becomes easier to conduct transactions across boundaries and online.
- No real way of keeping a track of conventional currency- The underlying technology behind bitcoin, which is, blockchain is what makes or breaks it. Thousands of computers in a distributed network use cryptographic techniques to create a permanent, public record of every single Bitcoin transaction that has ever occurred. This record will be very valuable for various things besides tracking payment. While there is no real way of tracking cash.
- Great tool for investment- Bitcoin can be used all over the world without going through a conversion process. It is considered at par with Gold and combines the best of cash and gold while providing an open market and no restrictions imposed by banks or governments.
- Bitcoin is peer-to-peer and open, yet secure and nearly frictionless - Bitcoin allows exchanging value over the internet without any intermediary and gives its users access to their balance through a password known as a private key. So it's private, secure and at the same time,open.
- Duplication impossible - There is no way of duplicating a bitcoin, unlike cash.
- Great way of maintaining records for tax purposes: Once transferred, a bitcoins' ownership also gets transferred. This means that two people cannot be transacting on the same value and this will help keep records healthy and simpler, especially for tax purposes.
- Transnational digital currency – There are no boundaries to Bitcoin or cryptocurrency. No exchange values and no third party interventions. Bitcoin allows seamless transactions across nations with a ledger getting maintained at the backend.
FAQs
Below are a few benefits of using bitcoins which make it better than any conventional currency: Bitcoin is digital and decentralized – With Bitcoin people get the liberty to exchange value without intermediaries which translate to greater control of funds and lower fees. It's faster, cheaper, more secure and immutable.
Why is Bitcoin better than currency? ›
Portability: Bitcoin can be used across borders, allowing any consumer with an internet connection to participate in the global economy and access financial services. Durability: As it occupies a digital space, a bitcoin can last as long as there is a digital area for it to be stored in.
What are some of the advantages of Bitcoin over regular currency? ›
What Are The Advantages of Cryptocurrency?
- Inflation Protection. Due to inflation, the value of many currencies decline. ...
- Transactional Speed. ...
- Cost Effective Transactions. ...
- Decentralization. ...
- Diversity. ...
- Accessibility. ...
- Safe And Secure. ...
- Transparent.
Gold's supply can increase with demand shocks, while Bitcoin's ultimate supply is capped. Bitcoin is easier to store, transport, and transact with. Over the past few years, Bitcoin has been able to significantly increase one's purchasing power.
Why would someone want Bitcoin instead of normal money? ›
Hiding one's wealth- Some people simply do not want Nations to know everything about their assets, therefore, they use Bitcoin. Banking the unbanked- By living in a highly industrialized country, one may tend to forget that some people in the world still do not have access to banking services.
Could Bitcoin go to zero? ›
It is theoretically possible. Bitcoin has been around for close to 15 years now, and although it has survived several dramatic crashes before making new highs, its extreme volatile nature puts investors at risk of losing all their money.
Why is Bitcoin better than banks? ›
Banks have the ability to duplicate deposits, which can ultimately lead to inflation. Bitcoin has a fixed maximum supply, with only 21 million bitcoin eventually in circulation. This means that bitcoin is not susceptible to inflation and is actually considered a deflationary currency.
What is Bitcoin backed by? ›
Bitcoin is not backed by any asset or physical commodity. Bitcoin does not require backing since it is sound money because of its inherent monetary properties that allow it to be a good store of value, medium of exchange, and unit of account.
Why is Bitcoin used for illegal purchases? ›
It isn't easy to trace the provenance of a transaction or the identity of an individual or organization behind the address. Besides this, the algorithmic trust engendered by Bitcoin's network obviates the need for trusted contacts at either end of an illegal transaction.
Can you spend Bitcoin like regular money? ›
Yes, Bitcoin and other cryptocurrencies can be spent much like regular money for various goods and services.
Instead of relying on physical properties (like gold and silver) or central authorities (like government-issued fiat currencies), bitcoin relies on the world's most powerful computer network to mathematically enforce the rules that make it the first truly digital form of cash.
Who owns the most Bitcoin? ›
Who owns the most Bitcoin in the world? The top Bitcoin holder is still believed to be Satoshi Nakamoto, the anonymous creator of Bitcoin, who reportedly holds around 1.1 million BTC across many wallets. Despite this large holding, the top 10 holders collectively only possess about 5.5% of the total Bitcoin supply.
What are Bitcoin's advantages and disadvantages? ›
Cryptocurrency in India offers financial inclusion, protection against inflation, remittance benefits, new investment avenues, fast transactions, and decentralization. However, it faces regulatory challenges, volatility, fraud risk, power consumption, and impact on traditional banking.
