Bitcoin can be defined as a computerized currency legislated by a decentralized network of consumers and is not accountable to the apex banking government of any nation.
The unique characteristic of Bitcoin lies in its operation over a P2P (peer-to-peer) network without the aid of intermediaries. Different types of transactions can occur directly using your cryptocurrency wallet ranging from bitcoin transfer, payment for goods and services both locally and internationally.
The system is formulated to document bitcoin transactions publicly (for accountability) without giving away the identity of the parties involved.
Since it is a niche market, there is high instability in bitcoin, as its value is liable to a lot of fluctuation periodically. Investors, traders, and analysts have tried to study the bitcoin market to understand it. However, bitcoin forces are not dependent on certain standard market factors, for example, fluctuation.
Advantages of Using Bitcoin
Ease when paying
Bitcoin can send or receive money anywhere in the world at any moment. The usual limitations don’t prevail when transferring with bitcoin. You are the one in charge of your money as there is no controlling authority in the Bitcoin system.
Popular for a multitude of reasons, including its security and authenticity, Bitcoin is considered a safe network, because users are in control of their transactions, since transfers occur on incorruptible blockchains. This is particularly important for the online gaming aficionados, who enjoy playing on Ethereum casinos, as they guarantee punters’ games will be fair.
It is not feasible for people to discover your personal information, making Bitcoin safe from identity theft. What’s more, a private key protects your bitcoin wallet that you only know.
All finalized transactions are available to the public, but personal information is not accessible. Your public address is viewable, while your private data is not. The system cannot be meddled with by any individual or organization because Bitcoin is cryptographically protected.
Disadvantages of Bitcoin
Risks and Instability
Bitcoin is highly volatile due to the limited amount of Bitcoin available and the daily need for more. While Bitcoin’s instability occasionally gives short-term advantages to uncertain traders, it makes the currency incompatible for more careful investors with extended time horizons. And since Bitcoin’s buying power fluctuates from week to week, it’s unsafe for consumers to use it as a legal means of exchange.
Also, Bitcoin prices will evolve to be more reliable as more businesses and traders begin to approve of it as a means of payment.
Bitcoin is still in its initial stages of development, with many of its characteristics still in progress, so it is not fully developed yet.
To guarantee that digital currencies become safer and available, new services, including new tools and features, are being created and tested.
For a while now, governments of different countries have been trying to regulate bitcoin and put it under their control. If such a thing comes to fruition, it will destroy the sole purpose for which bitcoin was formed. However, there exists a probability of governments succeeding with their aim.
Can The Government Control Bitcoin?
It is essential to note that the influence of the government on bitcoin is restricted. This is because bitcoin transactions are stored in a decentralized ledger called ‘blockchain’ that is distributed amongst many locations, as the bitcoin network is digital and has no central seat of power.
Since bitcoin transactions always occur, the blockchain develops lengthier as time passes. This implies no perceived degree to how extended the blockchain can ultimately create. The government can therefore not be aware of how many bitcoin transactions occur over some time.
Also, the identity of the participants of bitcoin transactions is kept private, as privacy safety is entrenched in the bitcoin code. The system is formulated to catalog bitcoin transactions publicly for accountability purposes without disclosing the uniqueness of the parties pertained to.
Its users are depicted by public keys or numerical codes that point them out to other users and sometimes usernames. It is also feasible to further conceal the beginning and progression of bitcoin. This means that the government is not privy to the identity of bitcoin traders.
However, there are a couple of ways in which the government can influence the flow of bitcoin.
- First, it can govern bitcoin by taxing any fiduciary currency used to withdraw bitcoin. Many brokers trade bitcoin with fiat currency and any form of tax on it can discourage them from participating in bitcoin transactions.
- Secondly, the government can directly employ regulations on bitcoin, as recommended in some states in the U.S. Those states in the U.S need surety contracts or a corresponding amount in fiat currency for bitcoin exchanges within their localities.
The government is perturbed by what they cannot restrain, whereas people want more financial freedom, and bitcoin is a major proponent.
If bitcoin becomes regulated, it strips it off of its selling point. However, such a move will reduce the demerits of bitcoin, specifically in scenarios where bitcoin is used to perpetrate criminal offenses, as the identities of traders won't be private anymore.
Eventually, it will require a lot of resources to implement any form of global regulation on bitcoin owing to its decentralization format; it is yet to be seen if governments are willing to put up with that.