Benefits of bitcoin

Bitcoin is a currency that appeals to a variety of different people for hugely differing reasons.

For its growing base of consumers, it offers a currency that is not controlled by any central bank, and can be spent freely across borders with little regulation or limitation.
For economists and technology enthusiasts, it represents a hugely significant step towards the digital age.
For financial traders, it is a new area for investment that brings huge volatility and behaves differently to flat currencies.

Transaction benefits

For many, the biggest draw to bitcoin is its low cost, high speed and complete freedom when it comes to transactions. Bitcoin is completely global and subject to few laws and restrictions from central or other banking institutions.

So sending money to someone can only take up to ten minutes, the only charge is what is levied by the exchange used, and transactions can be any amount, made at any time and go anywhere. Because of that, the cost of transferring money around the world via bitcoin is usually cheaper and quicker than other methods that can incur fees, impose restrictions and take several days.

Bitcoin’s downsides

Bitcoin is able to offer such speed and low cost because it exists only online, with no central regulator or economy to encumber it. That freedom does come with a downside, however. Bitcoin’s security is still some way from perfect, and with several notable hacks on exchanges anyone keeping large amounts of bitcoin on an exchange is at risk.

As a fledgling currency, many merchants are still reluctant to accept bitcoin. For consumers who are interested in trying crypto-currencies, that can represent a real problem: even those who want to use bitcoin can find their options extremely limited.

Why invest in bitcoin?

The key reason for bitcoin’s attractiveness to investors is the volatility it has seen in its early years.

In late 2013, investors enthusiastically took to bitcoin as a vehicle for investment. Bitcoin took off in a big way, increasing massively in value from $200 per bitcoin in November 2013 to over $1000 a month later.

Since then, bitcoin’s price has seen huge levels of volatility. There are two key reasons for this:

Scarcity of supply

Firstly, bitcoin still has a relatively small number of total coins in circulation. Because of how bitcoin is designed, a certain number of bitcoins are released every ten minutes until the maximum 21 million are in circulation. That point will only be reached in 2140, so volatility is a key feature in bitcoin’s early years.

Early days

Secondly, bitcoin is still facing questions surrounding its legitimacy and security. As investors and adopters fear a major government taking decisive action against the currency, any signs that government figures are considering regulation can impact its price. Major scandals surrounding bitcoin were rife for much of 2014 and beyond, with the collapse of Mt. Gox and Bitstamp amongst other troubles.

That volatility can make bitcoin an attractive area for investment, especially in times when other currencies have their movements flattened. However, similar to traditional investment options, with increased volatility of Bitcoins comes increased risks.

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