Pros & Cons of Bitcoin as a Digital Currency

It’s been 15 years since Bitcoin became a thing, and it is safe to assume most people have at least a peripheral understanding of what it is. At the top of that market is Bitcoin, the originator of digital cryptocurrencies.

Every day, thousands of people check the price of Bitcoin religiously to see where the value is. If you give yourself time to look at it without objectivity, you will see that there are clear pros and cons to Bitcoin as a dependable form of digital currency.

Pros: Transparency and Anonymity

Without the blockchain, Bitcoin – and crypto, in general – would be just another pipe dream. Because of the blockchain, transactions are totally anonymous yet provide full transparency of what is happening so that there is no altered information that could compromise the transaction.

Even in the instance of something like your wallet address becoming public, a quick new address could be generated to keep everything safe. In the current system, information can be leaked, including sensitive personal information. User privacy is improved, keeping sensitive data safe throughout each transaction on the blockchain.

Cons: No Regulations

Creating decentralized currency is a big selling point of cryptocurrency and Bitcoin, in particular. Not having to go through a third party like a bank is seen as the wave of the future. But it also means that there is no government regulation involved, as there would be on something like a central bank. Those transactions on the blockchain don’t come with some kind of legal backing, and they aren’t reversible, either.

When you have a currency backed by a bank, you can at least guarantee some value. With crypto, there is no minimum value for cryptocurrency. As we’ve seen with several altcoins, they can fall apart and be completely worthless in as little as a day. While there is some certainty that Bitcoin is too big for that, it isn’t insulated against loss.

So, while the goal might be to escape the middleman that is the banks, they are also a safer option right now than cryptocurrency. As more major investment firms begin to accept Bitcoin as an option, that could change, but no regulations can sometimes be a bad thing.

Pros: Huge Potential

You can’t talk about Bitcoin without talking about the massive peaks and valleys from an investment standpoint. It’s no secret that Bitcoin prices are some of the most volatile in the investment world, creating huge gains for some and even bigger losses for others.

The first Bitcoins were traded for a couple of pizzas. By April 2021, it was worth $64,000 per coin. Bitcoin’s price has settled somewhere in the $27,000 range since then. Yes, that makes it valuable, but it also underscores how volatile it can be. Some experts think the price of coins could top the half-million mark as soon as 2025.

Cons: Volatility

On the other side of that (bit)coin, there is the volatility factor to consider. When it peaked in 2021, Bitcoin made a lot of people a lot of money. Knowing that there is a finite number of coins out there gives it an inherent value of some kind, it’s just a matter of how valuable.

Unlike other investments, Bitcoin is subject to things like headline news and value pumping from large investors. All you need to do is see the impact on crypto that someone like Elon Musk can have and watch prices shoot up in response. Riding the wave can be dangerous when you invest in crypto. 

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