In recent years the popularity of cryptocurrencies has been on the rise, and perhaps the most prevalent of them all is bitcoin. As a result, investing in bitcoin has become an increasingly popular hobby. It can lead to huge profits when done well with the proper preparation and planning; however, it can also lead to hugged losses, such is the nature of the investment game. Therefore, if you are considering getting into bitcoin trading, you must do your due diligence beforehand. Let’s start with the pros and cons.
Bitcoin: The Pros
Using bitcoin comes with several advantages for users beyond simply making profits. Perhaps one of the biggest pros of trading bitcoin is the freedom that it allows. You can trade with anyone, anywhere in the world. This is because there aren’t the same limitations as there would be if you were dealing in traditional money; there are no banks, exchanges rates, or delays due to processing times. In essence, this means that the investor or user is in total control of their bitcoin because there is no central authority. This is what makes it so easy to buy and sell Bitcoin; you can take advantage of peer-to-peer bitcoin marketplaces like Paxful, which also incidentally has a wealth of resources that can help you learn more about bitcoin trading too.
All transactions made on bitcoin form a block and become part of the blockchain. This means that all final transactions are available for the public to see. The information is completely transparent, although personal details do remain secure. Basic details can be seen, such as your digital wallet address, but personal details are not. This means that information on transactions is totally transparent, although the personal details being shielded does afford a certain level of security.
As mentioned above, using bitcoin does afford an increased level of control. All transactions have to be approved by the user who retains total control over their digital wallet. There are no hidden fees or additional from vendors. Everything needs to be discussed and laid out before any payments are made. Depending on where it comes from, the digital wallet that you use often boasts a high level of encryption or security capabilities. As the user, you can choose whether to add additional identity verification measures to ensure that your money stays safe. Personal information is not needed to make transactions which means that there is less of a chance of experiencing identity thefts as a result.
Finally, as briefly touched on above, there are no hidden costs or fees, and in general, the fees do tend to be lower. In other forms of payments, the fees will depend on the exchange itself; however, most of the time, there is little to no fees for bitcoin transactions. Fees imposed by vendors have to be pre-agreed by both parties by trading bitcoin themselves do not often come with fees. Again, this speaks to the transparency of the service. What you see is what you get.
Bitcoin: The Cons
As with all things in life, where there are pros, there are cons too. You need to be aware of them before you begin trading bitcoin or getting involved with cryptocurrencies. One of the most important things to consider when getting into cryptocurrencies is that there will be an element of risk, as with all investments. The Bitcoin market can jump up and down and in truth, the volatility can be both a help and a hindrance. It has both driven up the value and seen it crash too. The volatility comes from the fact that there is a finite number of bitcoins; they cannot be created at will. It is estimated that over three-quarters of the supply has already been mined. The increase in popularity of bitcoin can greatly impact the volatility of the price. In the future, if its use becomes more widespread, the price will likely settle and stabilize. However, until then, it is subject to daily fluctuations. This is why you need to analyze the market and consult experts or follow their reports so that you can grow your understanding. Following a set of rules can give you the upper hand in the world of crypto.
One of the other reasons that continue to put a lot of people off of investing in bitcoin is because it is still arguably in its infancy. Technologically speaking, Bitcoin has not been around for that long, and as such, some people would argue that it is a little underdeveloped, for lack of a better word. It’s important to note that crypto in some form has been around for a couple of decades, with new coins being developed each year. This means it’s more developed than some realize, you just need to know where to look and do your research.
Because bitcoin is still relatively new, it also means that not very much is known about it. For most people, it is the unknown. This is where a lot of people go wrong when it comes to investing in bitcoin. They are simply unprepared and either unwilling or unable to learn more. The information may not always be the most accessible, but it is vital; otherwise, you cannot expect to be successful. You would not invest in pieces of art with no knowledge of the art world; it is the same principle. Although due to its technical nature, it may be more inaccessible for some people to gain the understanding that they need.
The Bottom Line
The growing list of advantages speaks to its popularity, and an increasing number of businesses are accepting bitcoin as a form of payment. In the future, as bitcoin matures and strives towards reaching its potential, huge leaps in its applications may be made. The best thing that anyone considering investing n bitcoin can do is to educate themselves more on the intricacies of how it works. You must understand both the pros and cons before you get involved. Subsidize your understanding with more research using credible sources. Always try to verify the information that you are reading. Digital technology has taken over for the most part, and so it is not unrealistic to imagine that cryptocurrencies hold that potential too. Although this transition is likely to be an incredibly slow process.