Bitcoin: All That You Need To Know
After hearing Bitcoin's name time and again, if you are wondering what on the earth is Bitcoin, continue to read.
Started in 2009 right after financial crisis, Bitcoin is best known as digital currency. It's a peer-to-peer payment system, which doesn't require middle men or banks to facilitate the transaction. This minimizes transaction costs for the parties involved. When you pay or get paid in Bitcoin, the transaction will be recorded on the ledger and then confirmed by the computers after its complex verification process. Meaning, there are no parties tracking your Bitcoin transactions.
To use Bitcoin, you need to install a Bitcoin wallet app on your phone or computer, and then buy Bitcoin currencies from a Bitcoin exchange. Once you have Bitcoin currency in your wallet, you are set to initiate Bitcoin transactions.
As Bitcoin was established in the wake of financial crisis, many believe that it was sort of a critique of the modern financial system. The jury, however, is still out whether Bitcoin is safe. Let's have a look at pros and cons of Bitcoin.
Pros:
- Low transaction costs: As no middlemen or banks are involved in the transaction, merchants - specifically small businesses - can lower their bank transaction costs.
- Privacy: The information about the transactions are only known by the parties involved. So none of the authorities, including IRS or federal agencies, have access to the transaction details.
- No bank accounts needed: As Bitcoin do not need bank accounts, it can be used by people in developing countries who might have cell phones but no bank account.
Cons:
- Security: Recent cyber-attacks on Bitcoin has highlighted the fact about how vulnerable Bitcoin is to hackers. Also, once you lose your money to a hacker, there's no way of getting them back as it can't be traced easily.
- Insurance: As Bitcoin is not regulated by FDIC, there's no FDIC insurance to cover your losses in case you lose money.
- Unregulated: Bitcoin is relatively unregulated, making it a hothouse of illegal activities, including tax evasion and money laundering.
- Volatility: Bitcoin price is highly volatile. Couple of years back, it was trading at about $5, a year ago at $100, few months ago more than $1,000 and now $448. So you never know what will be the value of your bitcoins after a month from today.
Until the recent cyber-attacks, the future of Bitcoin was quite bright. However, that's not the case anymore. Apart from the fear of hackers, various regulatory authorities are mulling if they can regularize the exchange. The Treasury is worried about the illegal activities that can be done through Bitcoin; while IRS considers Bitcoin as property and not currency. Federal Reserve Chairman Janet Yellen has been very vocal about Fed's jurisdiction, stating that it doesn't have any authority to regulate it.
Bitcoin Acceptance by eCommerce Merchants:
Usually when customers are purchasing products from anywhere on the planet, they are worried about the acceptance of currency and then the prevailing exchange rate. Here are the Pros and Cons, if you planning Bitcoins for your eCommerce website or business. There are many open source Bitpay Plugins are available that can be integrated with your existing custom eCommerce platform (e.g. e-Smart eCommerce Suite) to allow Bitcoin for payments.
Pros:
- eCommerce business can increase their customer base with this universally accepted payment solution.
- You online store should not be limited by Bitcoin. Instead of accepting the Bitcoin, consumers are also looking for more than this electronic currency.
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