The digital world of finances and investment is unceasingly changing. Knowing the operational process of cryptocurrency can be convenient and secure through various digital currency platforms.
The concept of digital money started in 1983 when Chaum released ecash and was later on coined as digicash. The quest for financial digitisation had continually grown since then, b-money, bitgold, and the catalyst of cryptocurrency, Bitcoin, was released back in 2008. Since cryptocurrency’s introduction to the public, developers and enthusiasts are continuously working towards its upgrade.
Before its mass popularity in the world of trade and investment, the primary purpose of cryptocurrency is to provide an alternative exchange system. The earliest innovator of this technology aims to create a decentralised system where people can exchange money, products, and services virtually. In this exchange system, transactions are intended to be secure, convenient, fast, and can be conducted anywhere in the world.
Aside from the substantial return of investment that cryptocurrency, particularly Bitcoin, can offer, what are the advantages of owning it? In this period of modernisation and digital revolution, is it significant to keep Bitcoin handy? For starters, here is a basic definition of Bitcoin:
Bitcoin defined
The cryptocurrency was popularised by the release of Bitcoin by the anonymous “Satoshi Nakamoto.” It is a peer-to-peer and decentralised virtual system that allows users to process transactions using the currency units, Bitcoin or BTC. Users are provided with a digital wallet where they can store their Bitcoins, buying and transferring funds is tracked in a public ledger called “blockchains.” As it is a decentralised system, BTC and all transactions revolving around it are not owned and controlled by any centralised institution like a bank or federal government. Its developer strengthened the safety and privacy of this virtual currency by using cryptography to secure the system’s encryption.
Bitcoin’s initial value started at $0 back in 2009; it then increased at 10 cents by October 2010. Technically, an investment of $100 can be equivalent to 1000 Bitcoins back then. Keeping this digital asset up to the present would mean gaining approximately $48 million. However, the future of cryptocurrency was uncertain back then. Only a minimal number of early adopters hold on to their initial Bitcoin investments.
Financial experts describe the cryptocurrency trade market as highly volatile, and market prices are rapidly shifting from time to time. But investors are converting this risk to their advantage, and they are venturing aggressively in cryptocurrencies, speculating massive returns of their investments. Currently, Bitcoin’s market price is $33,166, with its market capitalisation of approximately over $600 Billion, vastly different from its initial valuation of $0.
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Bitcoin payment: Is it advantageous?
1. Bitcoin users are autonomous
The virtual system adapted by Bitcoin is decentralised. Thus users can use their money without the control of intermediaries like the government or central banks. This attribute is probably the most advantageous feature of cryptocurrencies; users can be autonomous. Unlike fiat money, digital currencies allow users to have more autonomy when transacting with their own money.
2. Bitcoins are accessible
Bitcoins can be acquired, stored, and transferred in the digital realm. Users can enjoy the convenience of transacting at the comforts of their smartphones, tablets, laptops, or desktops. This feature eliminates the hassle of paper money and the traditional banking system.
3. Bitcoin transactions are discreet
The personal identity of Bitcoin users and their transactions are almost impossible to track. (Unless users choose to publish their transactions.) Unlike cash purchases that can easily be traced back to users, Bitcoin purchases and transactions can never be associated with their owner. This advantage is made possible by Stealth Addresses, which creates a one-time user address for all Bitcoin transactions.
4. Bitcoin payments can be made on your mobile
Like any new digital banking method, users can use Bitcoin transactions anywhere as long as users have an internet connection. The time and inconvenience of going to the bank, physical stores, and payment centers can be avoided when using Bitcoins.
5. Bitcoin ensures peer-to-peer focus
Bitcoin transactions are purely conducted peer-to-peer, which means that users can receive and send BTC with anyone in the blockchain. Exchange of bitcoins can be done anywhere globally, without the approval of any banking or government authorities.
6. Bitcoin has minimal transaction fees
Traditional money transfers and international purchases require exchange costs, fees, and documentation. As cryptocurrency is decentralised, transactions are not controlled by the government, thereby decreasing exchange costs. Using Bitcoins, the inconvenience of the waiting period and authorisation requirements can also be eliminated by users.
7. Bitcoin does not require banking fees
An online banking system and other digital currency would require extra charges paid to the app and system developers. However, Bitcoin transactions do not have these fees. Central banks, authorities, and the federal government do not own or control the system used by Bitcoin users, thus reducing the need for maintenance fees, balance fees, overcharges and deposit fees, etc.
Bitcoin neophytes would probably ask themselves, where can they use Bitcoin as the mode of payment? The popularity gained by cryptocurrency fueled by the global pandemic pushed big companies to adopt the virtual system. Amazon-owned company Twitch announced last June 2020 that they would give a 10% discount to subscribers to would opt to use Bitcoin as a mode of payment. Restaurant Brands International (parent company of Burger King and Tim Horton, Etsy, Yum Brands, PayPal) is starting to adopt cryptocurrencies. Coca-Cola Amatil Limited now has 2000 vending machines that accept Bitcoins as a mode of payment.
The digital world of finances and investment is unceasingly changing. Knowing the operational process of cryptocurrency can be convenient and secure through various digital currency platforms. Like any other financial investments and online banking systems, drawbacks and risks may be at bay, but technology advantages may outweigh the disadvantages.
