Want to Know What is Bitcoin? The Advantages and Risks Need To Be Noticed!

 What is Cryptocurrency

A cryptocurrency is a digital or virtual currency which is used as a medium of exchange. It is similar to real-world currency but for the fact it does not have any physical embodiment and uses cryptography, which makes it nearly impossible to counterfeit or double-spend.

Knowing what Bitcoin is, the advantages and risks at the same time .For beginners who live in cyberspace who want to do business in cyberspace, they certainly know the popularity of bitcoin. But it is possible that some of them have little knowledge of the transaction system. Of course there will be questions about what bitcoin is, its advantages and risks.

Bitcoin is a virtual currency that is now popular enough to be used as a transaction around the world. Payment systems with bitcoin can generally be done virtually. Because the bitcoin turnover system is controlled through open system software.

Everyone can use bitcoin to transact and even invest for profit without the hassle of asking for permission. Cryptocurrency or bitcoin results are indeed very promising, especially if you are already an expert at doing it. Huge profits can be earned overnight as the price increases.

Advantages and Risks

Promising results and benefits are reaping the increasing interest of most users of the virtual world. Besides being easy in doing business, investing using bitcoin has competition that can be easily overcome. After you know what bitcoin is, the benefits and risks also need to be studied (quoted from the Duwitmu.com blog ).

1. Advantages of Investing with Bitcoin

Want to know what Bitcoin is, the advantages and risks need to be considered

a) Ease of Peer to Peer or P2P System

Business or investment with bitcoin is considered a secure system and can be controlled easily. All bitcoin transaction history will be recorded in detail and verified via the network. The cryptographic system in it is recorded in a large data vault owned by the public.

This advanced technology uses a peer to peer system because it is carried out by direct transactions. While the storage technique is commonly referred to as blockchain. Everyone has their data and transaction history securely.

b) Massive Flowing Profits

The first person to be able to take advantage of bitcoin was Hal Finney who was a scientist in the computer field. Purchase of bitcoin is done by exchanging 10 pieces given by Nakamoto. Even with these bitcoins several people can exchange them for one pizza pan.

The exchange price is around 10,000 coins per pizza. Meanwhile, when bitcoin first appeared in Indonesia, you could exchange it for only 451 rupiah for one piece. Such exchange systems can generate massive profits when the exchange rate rises.

c) Accessibility and liquidity

Liquidity means how quickly you can get your hands on your cash. In simpler terms, liquidity is to get your money whenever you need it.

d) User anonymity and transparency

On the one hand, cryptocurrency is entirely anonymous. On the other, it is completely transparent and trackable.

It is anonymous in the sense that you can hold a crypto address without revealing anything about your identity in that address. One person could hold multiple addresses, and in theory, there would be nothing to link those addresses together, or to indicate that the person owned them.

Sending and receiving virtual currency is like writing under a pseudonym. If an author’s pseudonym is ever linked to their identity, everything they ever wrote under that pseudonym will be linked to them.

e) Independence From Central Authority

Bitcoin is a decentralized currency, meaning it’s not regulated by a single government or central bank. This means that authorities will likely not freeze and demand your coins. There’s also no viable way that a taxation would be implemented for Bitcoin.

2. Risks of Investing with Bitcoin

Want to know what Bitcoin is, the advantages and risks need to be considered

a) Its Potential Could Trigger an Economic Bubble

An economic bubble or an economic bubble can occur when the price of bitcoin increases and its function as a medium of exchange becomes increasingly unbalanced. This event is a phenomenon of the collapse of the price of goods due to a drastic increase in accordance with the exchange rate on bitcoin.

b) Limited Use

Even though there’s a growing number of companies that accept Bitcoin, such as Microsoft and some Subway franchises, it’s still not widely accepted. This puts a limit on where you can spend your money, unlike using a credit or debit card.

c) Irreversible

Since Bitcoin transactions are anonymous and unregulated, another disadvantage is the lack of security. Transactions done through Bitcoin are irreversible and final, so nothing can be done if the wrong amount is sent or if it’s sent to the wrong recipient.

Going through a list of pros and cons of Bitcoin is only the first step. It’s also a good idea to study how cryptocurrencies and crypto wallets work, how accessible the market is, as well as the expectations and risks associated with it.