As virtual currencies have their unique nature, there are various advantages for transacting using bitcoin as compared to fiat currencies. Virtual currencies are decade old now, but their landscape is continuously changing. Most of the tokens are not tested in the medium of exchange. So, users have to carefully weigh the risks and benefits of these digital currencies before investing. With that, bitcoin is designed to offer the users a unique set of advantages over other methods of fiat and crypto payments. Below we will take a closer look at the benefits, but before we do this, let us first understand what BTC is.
What is Bitcoin?
Bitcoin is a peer-to-peer, decentralized cryptocurrency system that is made to allow users to do online transactions using digital currency exchange. This currency was initiated in 2009 by an entity known as Satoshi Nakamoto. Since then, the bitcoin network has defined and dominated the cryptocurrency space. The coin spawns a legion of followers of altcoin and is an attractive alternative to government fiat currency such as euro, UDS for many users. It can also be used to replace commodity currencies such as silver or gold coins.
Why choose bitcoin if there are lots of traditional ways to make payments?
The main element associated with BTC is the decentralized status of the exchange. This means that it is not regulated or controlled by any centralized governing authority. This is the main distinguishing factor from fiat currencies. The payments using this platform are processed using a private computer network which is linked using a shared ledger. The transaction is then recorded in a blockchain on every computer that keeps updated and then informs all the accounts. The blockchain works like a distributed ledger, and so there is no need for any centralized authority to keep a record of these transactions.
No government system or central bank issues this BTC, just like fiat currencies. On the other hand, they can be mined using a computer via a process of solving mathematical algorithms that are highly complex to verify the blocks of transactions that are added to the blockchain. Or they can be purchased using the standard fiat currencies and then stored into a wallet which is most commonly accessed using a computer or smartphone. It is traded using exchanges such as Bitcoin’s Price Rise.
Benefits of transacting using Bitcoin:
Now, as we know what BTC is and how it works, we can now understand how using this currency can provide benefits to its users.
- User autonomy: the main draw of bitcoin is generally its autonomy. Digital currencies provide this feature to a greater extent as compared to fiat currencies. Users can control the way that they spend the money without the need for an intermediary system like a government or bank.
- Discretion: purchases of these decentralized currencies are discreet. Unless someone publishes his transactions for these currencies voluntarily, there is no association with the identity of the person, just like cash purchases, and this cannot be traced to that person. The bitcoin address is anonymous, and it is generated uniquely for every purchase that the user makes. This makes these transactions entirely untraceable and anonymous in the true sense. It is less linked to any particular person as compared to other traditional means of payment.
- Peer to peer focus: the transaction is completely peer-to-peer, and users can receive and send payments to any person on the network globally without approval from any external authority or source.
- No banking fees: there are taker and maker fees charged by cryptocurrency exchanges. Some also charge withdrawal and deposit fees occasionally. But there are no traditional fees imposed by banks associated with fiat currency transactions. There are no fees for account maintenance, overdraft, minimum balance, or returned deposit charges.
- Very low charges for global payments: there are costs associated with foreign purchases and wire transfers. There is no government involvement in the case of bitcoin transactions, and so costs of international transactions are minimal. The transactions are quicker too.
- Mobile payments: it is possible to make payments with any device that has an internet connection. There is no personal information needed to complete the transaction.
These are some of the benefits that one can get by transacting using Bitcoin currency.