Top Reasons to Use Bitcoin
Why use Bitcoin? What are its benefits? Why is it better than cash or credit cards? We get asked these questions all the time so we thought we’d put together a quick list of five reasons why you, or anyone, will find Bitcoin to be beneficial to have and use.
It’s made for our generation
What we mean by that is Bitcoin is made for the Internet-generation. We are quickly moving past the days of carrying around paper cash or pulling out your credit card. Bitcoin goes several steps further than the convenience of credit cards by equipping users with a payment option that is significantly lower in fees, provides virtually instantaneous transaction time, and is accessible through the dozens of Bitcoin wallets.
On top of convenience, Bitcoin offers credit card users freedom from the concerns of fraud, identity theft, and crippling interest rates. It’s no surprise that a recent report from Goldman Sach’s discovered that 33% of millennials do not think they will need a bank account in 5 years.
It’s fast, secure and global
Bitcoin doesn’t discriminate. You can use it anywhere in the world, to send value almost instantly, nearly for free. Transferring bitcoins costs just a few pennies and you can send as much value as you want. It’s important to remember that bitcoins can’t be counterfeited or duplicated. The cherry on top is that transactions are conducted in a peer-to-peer method, without the need for a bank or third party to oversee it.
What’s that you say? Your credit card transactions are instantaneous too? Well, that’s true. But your merchant (and possibly you) pay for that privilege. Some merchants will charge a fee for debit card transactions too, as they have to pay a ‘swipe fee’ for fulfilling them. Bitcoin transaction fees are minimal, or in some cases free.
Central governments can’t take it away
Remember what happened in Cyprus in March 2013? The Central Bank wanted to take back uninsured deposits larger than $100,000 to help recapitalize itself, causing huge unrest in the local population. It originally wanted to take a percentage of deposits below that figure, eating directly into family savings. That can’t happen with bitcoin. Because the currency is decentralized, you own it. No central authority has control, and so a bank can’t take it away from you. For those who find their trust in the traditional banking system unravelling, that’s a big benefit.
There are no chargebacks
Once bitcoins have been sent, they’re gone. A person who has sent bitcoins cannot try to retrieve them without the recipient’s consent. This makes it difficult to commit the kind of fraud that we often see with credit cards, in which people make a purchase and then contact the credit card company to make a chargeback, effectively reversing the transaction.
People can’t steal your payment information from merchants
This is a big one. Most online purchases today are made via credit cards, but in the 1920s and ’30s, when the first precursors to credit cards appeared, the Internet hadn’t yet been conceived. Credit cards were never supposed to be used online and are insecure. Online forms require you to enter all your secret information (the credit card number, expiry date, and CSV number) into a web form. It’s hard to think of a less secure way to do online business. This is why credit card numbers keep being stolen.
Bitcoin was designed with your privacy in mind
Our Block Explorer, along with other Bitcoin block explorers, display the entire history of Bitcoin transactions for all to see. Bitcoin transaction history can be searched by anyone with online access. At first glance, you might consider this level of transparency the opposite of private. In reality, it means that users can choose whether they want to be completely transparent with their finances or keep them very private.
The Bitcoin protocol does not require people to identify themselves in order to transact though some businesses may need to for compliances reasons. Unlike a bank where people often have one or two accounts, you can create as many Bitcoin wallets as you like.
Bitcoin is not subject to inflation
The total number of bitcoins are capped at 21 million, which is different than other currencies. As the total number of dollars in circulation rises, this creates inflation. Inflation is where the value of your dollar for example, decreases over time due to an increasing supply. Bitcoin on the other hand is scarce and fungible, which gives it interesting properties.
Below is a chart of the average price of bitcoin year over year.
With an average price of less than a US penny in 2009, the Bitcoin price increased an average of over 3000% between 2010 and 2014.
Data source: https://blockchain.info/charts/market-price
Bitcoin provides financial freedom
If you don’t have access to a bank account, you are part of the “unbanked.” Bitcoin can allow you to be your own bank. Bitcoin is simultaneously an open financial protocol and a currency required in order to transact freely on the protocol.
Are you new to Bitcoin? Check out our series covering common Bitcoin terms with helpful explanations and information.
It isn’t inflationary
The problem with regular fiat currency is that governments can print as much of it as they like, and they frequently do. If there are not enough US dollars to pay off the national debt, then the Federal Reserve can simply print more. If the economy is sputtering, then the government can take newly created money and inject it into the economy, via a much-publicised process known as quantitative easing. This causes the value of a currency to decrease.
If you suddenly double the number of dollars in circulation, then that means there are two dollars where before there was only one. Someone who had been selling a chocolate bar for a dollar will have to double the price to make it worth the same as it was before, because a dollar suddenly has only half its value. This is called inflation, and it causes the price of goods and services to increase. Inflation can be difficult to control, and can decrease people’s buying power. Bitcoin was designed to have a maximum number of coins. Only 21 million will ever be created under the original specification. This means that after that, the number of bitcoins won’t grow, so inflation won’t be a problem. In fact, deflation – where the price of goods and services falls – is more likely in the bitcoin world.
It’s as private as you want it to be
Sometimes, we don’t want people knowing what we have purchased. Bitcoin is a relatively private currency. On the one hand, it is transparent – thanks to the blockchain, everyone knows how much a particular bitcoin address holds in transactions. They know where those transactions came from, and where they’re sent. On the other hand, unlike conventional bank accounts, no one knows who holds a particular bitcoin address. It’s like having a clear plastic wallet with no visible owner. Everyone can look inside it, but no one knows whose it is. However, it’s worth pointing out that people who use bitcoin unwisely (such as always using the same bitcoin address, or combining coins from multiple addresses into a single address) risk making it easier to identify them online.
You don’t need to trust anyone else
In a conventional banking system, you have to trust people to handle your money properly along the way. You have to trust the bank, for example. You might have to trust a third-party payment processor. You’ll often have to trust the merchant too. These organizations demand important, sensitive pieces of information from you. Because bitcoin is entirely decentralized, you need trust no one when using it. When you send a transaction, it is digitally signed, and secure. An unknown miner will verify it, and then the transaction is completed. The merchant need not even know who you are, unless you’ve arranged to tell them.
You own it
There is no other electronic cash system in which your account isn't owned by someone else. Take PayPal, for example: if the company decides for some reason that your account has been misused, it has the power to freeze all of the assets held in the account, without consulting you. It is then up to you to jump through whatever hoops are necessary to get it cleared, so that you can access your funds. With bitcoin, you own the private key and the corresponding public key that makes up a bitcoin address. No one can take that away from you (unless you lose it yourself, or host it with a web-based wallet service that loses it for you).
You can create your own money
In spite of the amazing advances in home office colour printing technology, most national governments take a fairly dim view of you producing your own money. With bitcoin, however, it is encouraged. You can certainly buy bitcoins on the open market, but you can also mine your own if you have enough computing power. After covering your initial investment in equipment and electricity, mining bitcoins is simply a case of leaving the machine switched on, and the software running. And who wouldn't like their computer to earn them money while they sleep?