Have you heard about the barter system that was done in ancient times? The barter system was to exchange things face-to-face and with no involvement of third-parties. In today’s time, there’s a process somewhat similar to the barter system. The growth of the internet and advanced technology has provided digital transactions that are more preferred than traditional currencies.
With digital currencies, transactions have been possible internationally in a few minutes. The limitations of security risks, high expenses, and time delays have been eradicated. We have been introduced to cryptocurrencies, the digital currencies that can be used like traditional currencies.
The most trending cryptocurrency is Bitcoin. It is a digital virtual currency that is widely used as a medium of exchange in person-to-person. It is similar to the barter system because it doesn’t have the involvement of any third-party. Being a decentralized currency, no bank or government governs or controls the supply and demand of bitcoin.
Why do people prefer bitcoin?
Although after having volatile bitcoin, bitcoin has attained heights and got popular across the world. In recent years, the price of bitcoin has reached its peak, which benefitted plenty of people. Some people consider the volatile market a benefit because they make an investment when the price is down and sell when the price increases.
Some people still hesitate to invest in bitcoin because of an unpredictable market. But it is important to understand both pros and cons before investing in bitcoins or any other cryptocurrency. Let us now discuss the pros and cons of investing in bitcoins:
Pros
Freedom of transferring money
Unlike traditional currencies in which banks and governments keep track of transactions; bitcoin transactions don’t involve any hurdles. Because of no third parties’ involvement, users can easily transfer money to anyone and anywhere in the world. No fee is charged while making bitcoin transactions.
High liquidity
Bitcoin has become the most liquid asset that makes it easier to convert them into fiat currencies. The other cryptocurrencies are struggling to get liquidity because no government or individual accepts them. Bitcoin has become the first modern cryptocurrency, and this is the reason for increasing liquidity of it. Bitcoins can be exchanged for fiat currencies without losing any of your funds. This has been possible because no government is involved.
Investment opportunity
While some people only consider the negative factors, others use their skills and see the opportunities. Even after having a volatile bitcoin, many investors have invested their funds in bitcoin. They see it has an easy way to earn a great amount of money. The investors took advantage of investing at lower prices and sell them when prices get high.
To be a lucrative money maker, you must gain knowledge on trading algorithms as this will help you analyze the market and make a profit. You can get good returns on your investment, but you must carefully observe the market and then invest in it. People who want to trade bitcoins must find a website or app and visit the bitcoin trader to make their account and start trading.
Cons
Unpredictable market
The fluctuations in bitcoin’s price can occur any minute, and you may lose all your funds in seconds. The bitcoin market is chaotic because the price fluctuations scare people from investing in it. The unpredictable market makes people think it is not a legal form of exchange and prevents them from investing in it.
Security concerns
Any financial institution or central government does not oversee the bitcoin network, leading to a high risk of theft or attack. The bitcoins are stored in digital wallets, and some wallets used hardware devices while some operate with internet connectivity; this increases the risk of malicious attacks. There are many thefts and attacks recorded, which makes a millionaire a poor person.
Also, bitcoin wallets provide the private key to send bitcoins to other users. If a private key or a bitcoin wallet is lost by mistake, the user may lose all his funds. There are no ways discovered to recover the lost private keys or funds of users. There are many security concerns, and therefore people must consider these before securing their funds in bitcoin wallets.
