Revolutionizing the international economic landscape, Bitcoin emerged in 2009 an intangible and virtual currency. Acts as any means of payment, with the difference that it is not monetizable. That is, we cannot go to an ATM and withdraw it in the form of physical money.
The main distinguishing feature of this currency is decentralization, no financial institution or government has power over it, contrary to what happens with other virtual payment methods such as Amazon Coins. So, how does it work? The value of Bitcoin is calculated according to the law of supply and demand.
If demand increases the price rises and vice versa, in addition, there is a finite number of Bitcoins in circulation and new ones are created at a decreasing speed so that you can control the level of inflation to maintain a stable price.
The control is carried out indirectly by its users, through point-to-point (P2P) exchanges, which is why it escapes the control and regulation of any institution.
As a guarantee, all transactions are public and unique, although users are anonymous, it is possible to consult the history of a currency, from its creation to the present, thus achieving that it cannot be used twice, that is, it is not worth copying and paste. Like everything, it has its good part and its bad part. Below we detail what their strengths and weaknesses are.
Advantages and disadvantages of Bitcoin:
Transaction costs are much lower than those associated with credit cards and even with PayPal, all intermediaries that are not desired are eliminated. They are also made in real time, in just under an hour the transaction will be completed.
It is practically impossible to falsify, as indicated above if the same coin is used twice, that is, if a double expense is made, the network detects it immediately.
As it does not belong to any government or institution, it can be used anywhere in the world. There are no barriers to this currency. In fact, not depending on any intervention of the Central Bank or any other body, you cannot create debt with this currency.
Transparency and security:
All movements are collected in a registry of free access for any user, also has a great cryptographic support to protect it from possible adulterations. Also, it is said that its security system is more reliable than that of many credit cards and banks.
Being a decentralized system, there is a high volatility. Thus, the prices can fluctuate in hundreds of dollars in short periods of time. For example, what happened in November 2013, when the price of Bitcoin exceeded $ 1200.
In case of any mishap, the law will rarely intervene since its use is not regulated. This could cause a certain feeling of mistrust in the user. The return of an item purchased with this currency, for example, can be problematic when there is the possibility that its value is different from the one it had on the day of purchase. This is why some merchants who work with this currency do not accept returns to avoid problems.
There is no guarantee that Bitcoin will end up being accepted by everyone. So, if the trend changes and users stop using this means of payment, its value will end up being zero. As a consequence, anyone who has invested in the virtual currency will lose their money.
There are people who have invested in Bitcoins and have managed to collect good sums of money, others who did the same thing but did not suffer the same fate. Finally, there are those risks adverse that do not trust and prefer not to use this instrument.
As we have seen, Bitcoin causes controversy by monopolizing criticism and praise. There are organisms that more than as a currency sees it as a speculative instrument, due to its occasional fluctuations. Thus, it leads to rejection in some countries such as Russia or China. In contrast, other experts say that its instability is logical because it’s a currency that’s just beginning to emerge and has a small number of users. So, do you think it will become the currency of the future?