The word bitcoin is still not very commonplace and most people are not in the know about it. The biggest news about bitcoin has not been very favourable. I was used by a drug trafficker, Ross William Ulbricht, who earned millions accepting bitcoin as a means of payment for his drugs. So, it’s only understandable if people view bitcoin as a bit of a con instead.
The truth of the matter is that bitcoin is an extremely safe and reliable, software-based online payment system. To keep things simple, we can just look at it as a form of digital currency. Bitcoin is not a payment system but it’s actually like money. Digital money, to be exact. Just like real money, it can be exchanged for goods and services. To understand how bitcoin works, you will need to understand the components that make bitcoin what it is.
Firstly, it is digital. There is nothing to see or hold. It is not tangible like paper currency or coins.
Secondly, it is peer-to-peer based. That means you are in total control. There are no banks, third parties or intermediaries to take a chunk of your bitcoin as fees. You send your bitcoin directly to the person you want it to go to. This is one factor that is seeing the rise in popularity of bitcoin.
Thirdly, bitcoin is not controlled by any one bank or financial institution. It is decentralized and run by a group of people worldwide. We live in a day and age where people want more freedom and wish to break away from the shackles of the top 1%. Bitcoin is a symbol of that freedom.
Fourthly, pseudonyms are used with bitcoin transactions ensuring ultimate privacy. This again makes this method of payment very popular with people who do not want others to know their financial transactions. The transactions are viewable but all you’ll see are a bunch of numbers and alphabets that really make no sense.
Lastly, the movement of bitcoin is protected by top of the line cryptography that ensures the digital currency is secure and can’t be abused by criminals.
Despite all the positive points about bitcoin, it is not all sunshine and rainbows. There are certain negative aspects associated with bitcoin. For starters, while the transactions are safe and secure, bitcoin can be used to purchase illegal items such as drugs, child pornography and other illegal goods. The same positive points such as privacy and security become negative when people use bitcoin for illicit purposes. Bitcoin has seen increased growth and merchants are slowly starting to accept it as a digital currency so that they can cut costs on fees imposed by payment processors. However, there is no consumer protection for bitcoin users. The bitcoin can be stolen with no possible means of recourse. For example, sellers may not deliver goods that may have been paid for with bitcoin.
Certain countries also impose restrictions on bitcoin purchase. Bitcoin still has some ways to go as far as becoming accepted like traditional currency. Nevertheless, as trends indicate, it is on its way there.