Bitcoin, the world’s first viable cryptocurrency that attained success, saw prices shoot through the roof in late 2017 and has enjoyed considerable fame since then. Although it continues to enjoy the limelight even now, the demerits of this popular cryptocurrency seems to have caught up with it. You might be wondering, “what is Bitcoin?“. To answer it simply, it is a peer-to-peer currency that is based on cryptographic principles and run on a blockchain network that promotes transparency, immutability and accountability. Now let’s have a look at all the things that make Bitcoin so great and the factors that take pose problems for it.
Pros of Bitcoin
To start off on a positive note, let us first have a look at all the pros of Bitcoin and all the reasons why it is a better alternative than fiat currencies in many ways:
1. Decentralization of Bitcoin:
Even though concerns about centralisation have been mounting of late, Bitcoin still has a rather decentralized structure compared to fiat currencies. No central authority controls the blockchain underlying this currency and it works on the basis of a consensus protocol used in blockchain.
2. Low Transaction Fees of Bitcoin:
Compared to traditional avenues of payment such as using a credit card or even as service such as PayPal, Bitcoin is much cheaper to use. This makes it much more convenient to use for a variety of transactions.
3. Peer-to-peer Cryptocurrency For Cross-border Payments:
As it is a peer-to-peer cryptocurrency that eliminates the need for having middlemen and offers rather low transaction fees, it is extremely useful for economic migrants to send money to their families back home. They can do this without losing a large portion of the transaction value in transfer charges or administrative costs. This makes it a great option for a large number of unbanked people as well, situated especially in the developing countries of the world.
4. High Popularity of Bitcoin:
Bitcoin is an extremely popular cryptocurrency that is listed across all crypto exchanges and can easily be converted to fiat currency such as the USD upon demand. It is the cryptocurrency people know and trust the best and hence it becomes easier to liquidate it at a short notice.
5. Scarcity of Bitcoin:
Bitcoin supply is fixed at a hard cap of 21 million. This makes sure that with the supply being low, its value is largely incremental. To put it simply, the scarce nature of Bitcoin makes it an even more valuable offering.
Cons of Bitcoin
Despite its many advantages, Bitcoin also comes with its fair share of demerits. These cons pose questions about the viability of Bitcoin in the long run.
1. Scalability Issues of Bitcoin:
Since Bitcoin has a maximum block size of just 1 MB, it slows down transaction processing and pushes costs up somewhat, especially if we compare it to that of Litecoin or Ripple. Because of this, it is difficult to scale Bitcoin and adopt it across industries and use cases. The scalability issue is one of the biggest problems of Bitcoin.
2. Susceptible to Privacy Breaches:
Since it stores the public keys of users on the public domain, it might become possible for hackers to travel the origin of transactions and intercept them with the information.
3. Danger of Being Replaced by Altcoins in Functionalities:
Many of Bitcoin’s own forks have tried to come up with faster, cheaper and more efficient alternatives like Litecoin(LTC) or Bitcoin Gold (BTG). These, and other cryptocurrencies like Ripple (XRP) or Stellar (XLM) pose a threat to the supremacy of Bitcoin (BTC).
However, despite its flaws, Bitcoin remains the leading crypto player in the market and you can definitely choose to go for it. If you do invest in it, make sure to check out our list for the best cryptocurrency wallets of 2018 so you can keep them safe.