If you are reading this, you have probably already heard about Bitcoin, a digital currency people are investing in that hasn’t yet become widely used.
There is no doubt whatsoever when it comes to the practicality of using such a currency – just imagine not having to deal with bank accounts or depend on the fluctuations in the values of standard currencies. For many reasons, actually being able to use Bitcoin sounds like a dream come true, but the question remains if that particular dream will ever really come true.
On the one side, you have people who own Bitcoin and make very favorable forecasts when it comes to the changes in its popularity.
And on the other side, you have the skeptics. Who should you trust?
In the following paragraphs, we bring you a list of reasons to invest in Bitcoin, as well as reasons not to do it. This should help you make an informed decision that best suits your needs and circumstances.
As we have already mentioned, Bitcoin is a digital currency that can be used to send and receive money. The transaction can be completed regardless of where the parties involved are located, and it is done almost instantaneously.
Apart from that, sending and receiving money using Bitcoin is both cheap and safe – the network makes the middleman obsolete, which in turn lowers the cost of the transaction, and there is practically no chance for the sender to turn out to be a counterfeiter.
There is a cap on the supply of Bitcoins. This means that the system itself is limited when it comes to creating new units. The number in question is 21 million, and it has been predicted that it will be reached somewhere around the year of 2140. Although this is a feature that we will be mentioning in the cons section, it is one of the things that might ensure the stability of the currency’s value, which is a pretty good thing.
Although we are now talking hypothetically, it is still a valid reason for investing in Bitcoin. And why are we only talking hypothetically? Because all of this depends on how popular the currency will become.
Assuming it becomes widely known and used, the experts predict that its value will skyrocket. And it might just turn out that they are right, especially considering the fact that the value of Bitcoin has already managed to climb from zero to over $400.
It sounds completely counterintuitive, right? It should say that the more people use it, the cheaper it gets. But it is actually not true.
Experts are saying that a rise in price could make people start using the currency more, which in turn would make it more valuable.
It is because the market in question is a developing one, which makes the number of people involved in it a key factor for determining the value.
There are charts you can find online that show the changes in the volume of daily Bitcoin transactions. What they tell us is pretty straightforward – Bitcoins are actually becoming a widely used currency. Since most of the reasons in favor of investing in Bitcoin depend on this factor, it might be safe to conclude that you really should invest in this odd digital currency. This, however, leads us to our list of reasons against investing. So before you make any final decisions, make sure to read it as well.
Right now, they say that the number of Bitcoins will stay limited to just above 20 million units. There will be a change in the number of released units every four years – the number will be decreased by half.
Although things still haven’t changed, some very important people have already started saying that in time this cap could be removed, which could in turn result in some very important changes. This is a good reason against investing in Bitcoin since it means the market might become less stable.
The Bitcoin system is a decentralized one. This means that the network is run by many individual entities from all around the world.
The good thing about this is that it makes it a lot more difficult for people to organize a successful attack, but there is no guarantee that things won’t change, that is, that the network will remain decentralized.
If it becomes centralized, the level of security will drop significantly, meaning that your investment will become a lot less protected. Although these are only speculations, they are worth taking into account when making the final decision.
When it comes to payments, the majority of them consists of something called block rewards and not transaction fees. In order to switch to the transaction fee system, the fees themselves would have to increase significantly – by a whopping 330 times.
In the meantime, there are some issues concerning the current system, mainly the problem of mining becoming less profitable, as well as the one of miners starting to overinvest in infrastructure. It seems safe to conclude that it is still unclear how the network will actually operate if it becomes widely used.
The Chinese firewall is very powerful and can be used to block traffic. This means that the global network could be split into two individual networks – the Chinese and the rest of the world – while the Chinese miners would still be able to mine within their own network.
If this happened, there would be no way to bring them back together without having to choose which side is the winning side and which side is the losing side. In the end, this would compromise the integrity of the network as a whole.
Although this is very good in terms of safety, the decentralized nature of the Bitcoin network could prove to be the main hindrance for its progress. It is only logical that a problem is harder to solve when you don’t have any kind of central authority involved.
This results in inertia, even when it comes to changes that could hardly be called controversial. Considering all this, it seems safe to say that it would be very hard for the Bitcoin network to progress without endangering its own safety.
These were the main reasons in favor and against investing in the Bitcoin currency. Before you make any final decisions, you should weigh them and do some additional research on what the process of investing looks like. But if you do all that, you should have no trouble coming to the best possible decision for yourself and the future of your assets.