Many cryptocurrencies have been born on the Internet in recent years, and Bitcoin is definitely the most prominent among them all. Bitcoin is the leader of the digital currency movement and is gathering mainstream media attention around it. However, a lot of Internet users still don’t understand what Bitcoin really is and why they should be using it. You have a credit card and Skrill/Neteller already, so why would you even bother switching to Bitcoin? Read this to see why.
Transactions Are Quick
Bitcoin is slowly starting to replace traditional means of transferring value from one place to another. Cheques, wire transfers, and bank transfers frequently suffer from delays and human error, as different people get involved in the process from both ends of the transaction.
Bitcoin transactions are much faster and, if a user opts to select “zero confirmations,” the payment can be processed instantly. “Zero confirmations” can be dicey, as users are able to reverse transactions before the payments have been validated in the block chain, but, even with just a few confirmations from the block chain, a transaction of any amount can be completed in a matter of minutes. Larger transactions often need more time, as it’s recommended that there are no fewer than five confirmations before the funds are accepted. Nevertheless, even the biggest transfer of money would take no longer than a few hours.
Transfers Are Cheap
One of the major pros of using Bitcoin as a way of payment is that the fees are much cheaper than a regular bank transfer or online payment system like Skrill. Why pay for moving your hard-earned money in the first place?
Bitcoin dominates the entire market, when it comes to competing on fees. It would be unfair to say that Bitcoin transfers are free of charge, as merchants may choose to charge an admin fee from their customers, but it may be a few cents. That is not even close to the $50 fee that you might encounter when using a bank.
No Government/Institutional Control
We have seen many examples so far, where central banks and human speculation have turned economies upside-down—just like in March 2013, when citizens of Cyprus who were in possession of uninsured savings accounts larger than $100,000 had their money seized by the Central Bank to offset their own economic crisis. This type of outrageous economic policy is a result of central banks and individuals being unable to take full control of what rightfully belongs to them. The money that you have in your bank may well be safe for now, but it is never truly your own.
Bitcoin is different, though. The Cypriot crisis would have never happened, if those savings accounts had been stored in Bitcoin. Bitcoin is owned by the people, and it is maintained for the people, with no strings attached.
When a Bitcoin transaction takes place, it’s done, and there are no chargebacks. However, a crook can reverse a transaction using illegal software, but only if the transaction has not been confirmed by the block chain, as mentioned above. The overwhelming majority of transactions are completed and can be refunded by the recipient, once the transaction has taken place. This makes it almost impossible to commit fraud—something that occurs regularly when using credit cards or other money-processing systems like Skrill.
Security and Anonymity
These are probably the biggest advantages of Bitcoin. Most online purchases made through credit cards are unsecured; online forms reveal the credit card number, expiry date, security number, and personal details that can be exploited to commit fraud and theft. These forms have been subject to being exploited by hackers in dozens of high-profile data thefts.
Such a high level of insecurity does not apply to Bitcoin. When a Bitcoin transaction occurs, a security certificate is created that combines public and privately-held information on both users, so that the two parties can see the data they require to finish the transaction. If the certificate isn’t openly shared, those who aren’t a part of the transaction will not be able to see any sensitive information whatsoever.
No Extreme Fluctuations in Value
Governments and/or central banks supervise the money supply in their own economy, meaning that they can print or remove currency from the market whenever they want. This type of “monetary policy” is often used to decrease or increase inflation for the benefit of short-term gains.
The Bitcoin designer had this in mind when creating the Bitcoin protocol. Only 21 million Bitcoins can ever be in circulation on the global economy, and this supply cannot be affected in any way. While the price of Bitcoin fluctuated heavily in its early years, this certainty on supply gives investors confidence and ensures stability.
There are times when transactions simply need to be private, and Bitcoin is perfect for that. Obviously, all transactions are made public on the block chain, but this information only relates to how many Bitcoins were moved and to which address. Compare this with what you would expect from a card-based transaction, where a full paper trail can be linked back to your name, ultimately leaving you with no real privacy as to how you spend your money.