Most people have heard of the term Bitcoin but have no clear idea of what it really is. Bitcoin is simply known as a decentralized, peer-to-peer digital currency system designed to give online users the ability to process transactions via a digital exchange unit known as Bitcoins. In other words, it is a virtual currency.
The Bitcoin system was created in 2009 by an undisclosed programmer(s). Since then, Bitcoin has received a lot of attention as well as controversy as an alternative to the US dollar, the euro, and commodity currencies such as gold and silver.
A private network of computers connected by a common software is used to make transactions and process payments in bitcoin. The creation of bitcoins is based on increasingly complex mathematical algorithms and is purchased with standard national money currencies. Bitcoin users can access their coins through their smartphones or computers.
As a new and growing virtual currency, Bitcoin has some distinct advantages over traditional government fixed currencies. Here are 5 advantages you will enjoy when using Bitcoin
1) No taxes
When you make purchases in dollars, euros or any other fixed government currency, you have to pay an additional amount of money to the government as tax. Each purchasable item has its own specific tax rate. However, when you make a purchase with Bitcoin, sales taxes are not added to your purchases. This is a legal form of tax evasion and is one of the main advantages of being a Bitcoin user.
With zero tax rates, Bitcoin can be useful especially when purchasing luxury items specific to a foreign land. Such items, more often than not, are subject to heavy taxation by the government.
2) Flexible online payments
Bitcoin is an online payment system and like any other such system, Bitcoin users have the luxury of paying for their coins from any corner of the world with internet connection. This means that you can lie on your bed and buy coins instead of the pain of traveling to a particular bank or store to get your work done.
Furthermore, online Bitcoin payment does not require you to fill in details about your personal information. Hence, Bitcoin processing of Bitcoin transactions is much simpler than those made through US bank accounts and credit cards.
3) Minimum transaction fee
Fees and exchange costs are an integral part of standard wire transfers and international purchases. Bitcoin is not monitored or supervised by any intermediary institution or government agency. Therefore, transaction costs remain very low in contrast to international transactions made via traditional currencies.
Additionally, Bitcoin transactions are not known to take a long time as they do not have the complexities of typical authorization requirements and waiting times.
4) Hide the identity of the user
All Bitcoin transactions are separate, or in other words, Bitcoin gives you the option to anonymize the user. Bitcoins are just like cash purchases in the sense that your transactions can never be traced back to you and these purchases are never linked to your personal identity. As a matter of fact, the Bitcoin address generated for user purchases is not the same in two different operations.
If you wish, you have the option to voluntarily disclose and publish your Bitcoin transactions but in most cases users keep their identities secret.
5) No outside interference
One of the greatest advantages of Bitcoin is that it eliminates third-party boycotts. This means that governments, banks, and other financial intermediaries have absolutely no authority to disrupt a user’s transactions or freeze a Bitcoin account. As mentioned earlier, Bitcoin is strictly based on a peer-to-peer system. Thus, Bitcoin users have more freedom when making purchases with Bitcoins compared to using traditional national currencies.
Cryptocurrencies such as Bitcoin are relatively new and have not yet undergone major tests. As a result, many feel that there are some risks involved in using Bitcoin. Regardless of Bitcoin’s potential drawbacks, its advantages are clearly strong enough to make it a legitimate competitor to challenge traditional currencies in the not-too-distant future.