Bitcoin (English bit – a unit of information “bit”, English coin – a coin) is a rapidly gaining popularity of decentralized, convertible digital currency, a unit of account used for settlements in electronic payment systems. Some economists view Bitcoin as a phenomenon in the modern financial system, others as a dangerous financial pyramid. Despite the large number of studies conducted in this area, there is no consensus reflecting the public’s attitude to cryptocurrency, so it is advisable to highlight the features of Bitcoin that can be attributed to its disadvantages and advantages.
Bitcoin is a decentralized electronic currency, the release of which is not regulated or controlled. The issuance of new non-cash currency units is a programmed process as a result of the use of computer power to perform complex mathematical calculations and solve voluminous software problems.
The difference between cryptocurrency and ordinary money in electronic form:
For ordinary money to appear in the account electronically, it must first be physically deposited into the account, for example, through a bank or payment terminal.
That is, for ordinary currency, the electronic form is one of the forms of physical embodiment.
The cryptocurrency is issued directly on the Web and is not connected in any way with any conventional currency or with any state currency system.
Thus, we can say that “cryptocurrency is a kind of electronic money.
Bitcoin functions
Bitcoin functions are similar to the functions of money in any country in the world. Basic:
- Settlement means. They can be used to buy goods, as well as various services. Everything is paid for using a regular wallet, which is no more complicated than Yandex.Money or Webmoney.
- Savings tool. You can convert rubles and other currencies into Bitcoin and wait for the rate to rise. So, Bitcoin is becoming a good investment option.
- Medium of exchange. You can easily convert currency, as well as transfer funds to other users. This is done simply in a couple of clicks.
- Consider Bitcoin as an investment vehicle. It is best to use this option in the long run. Because in short periods the rate can rise and fall sharply. There is an interesting fact everywhere on the Internet: at the beginning of the system’s operation, an American bought a pizza for 10 thousand Bitcoins. Now it’s $ 5 million.
The main advantages of cryptocurrency
- Open-source. As in Internet banking, similar algorithms work here. Bitcoin theory is accessible
- Security and anonymity. All information on transactions is publicly available. But the data on the sender and the recipient are reliably classified. So, everyone will know how much funds were transferred when it was done. The rest cannot be calculated.
- No inflation. This cryptocurrency cannot be influenced by political forces or any organization. The amount of currency grows at the rate of gold mining. And the maximum amount is limited to 21 million Bitcoins.
- Peer-to-peer system and no supervisory authority. The state, banking, and other organizations cannot influence the exchange of currency between wallets or do anything with it. There is no single server; the system uses wallets installed by users.
- There can be a huge number of transactions, which is not limited. Everyone can pay any amount of funds. A huge number of wallets around the world have been created with free exchange options.
- No commissions. There is no need to make deductions to some organizations and pay taxes and duties.
- Protecting Bitcoin. It cannot be faked or used twice. All transaction information is stored in code. It is also impossible to cancel operations with it.
- Speaking about the differences from other cryptocurrencies (Litecoin, etc.) – Bitcoin is the most popular and has gained the greatest momentum.
Disadvantages of Bitcoin
- Attempts to ban mining and the use of cryptocurrency. In many states, it is prohibited. In some countries, the state partially or completely recognizes it. But there is still debate about the need to recognize the importance of cryptocurrency to the modern economic system.
- High volatility. Bitcoin prices can rise or fall sharply. The reason is the news affecting Bitcoin, as well as the reaction of Internet users to them. Therefore, investment risks remain.
- Limited use. On the one hand, this cryptocurrency can be used in any way, and you can buy anything. On the other hand, you cannot use it in stores, online stores are also not ready to add such an opportunity. It largely depends on politics.
