With the advent of the internet comes sophisticated investment options which brings us to Bitcoin. A form of electronic cash, a decentralized digital currency without a central controlling system. Bitcoin uses peer-to-peer technology to function with no central authority or banks, supervising transactions, and dealings.
Nobody can claim ownership or controls Bitcoin as everyone is at liberty to take part. Through many of its distinct features, Bitcoin allows new uses that would not have been possible by any past payment systems.
Bitcoin is one of today’s exciting innovations, which is gradually changing the economies of developing and developed countries. As it has begun to reach astonishing highs, attracting new users all over the world.
It is worth getting to know the king of crypto-currencies. Here are ten things you may not know about bitcoin. And with all the noise about Bitcoin. it is worth getting to know more about the new darling of crypto-currencies. Below are ten must – know facts about Bitcoin.
Exorbitant Fees Even On Small Transactions
The transaction fees associated with trading on bitcoin is rather outrageous. The costs are charged per byte, so for small amounts, the fees can be more than the value of the transaction. This is unsatisfactory because a lot of the initial excitement was about bitcoin’s potential for ‘micro-transactions’ may not be valid.
Bitcoin is affected by its success because the transaction blocks (limited to 1MB) are full. So the laws of supply and demand are in effect, and only higher value transactions make economic sense.
However, solutions are on the way on how to implement a learner way of handling the data, called Segregated Witness. This will roll out across the group, and that hopefully will make a higher volume of smaller-fee transactions possible on bitcoins.
The entire network of traders see all transactions which are recorded into the ledge called the blockchain. It may happen that a deal is not confirmed within a block.
But on the broader majority, it is alright to accept a transaction as soon the network has a record of it. Unlike conventional payment systems. Bitcoin transactions are fast and they can send it to anyone all over the world
Increasingly Used As A Payment System
The use of Bitcoin has increased on a number of platforms and even on the black market due to its comparative obscurity. But there are plenty of places, especially in a developed nation like the U.S. where they use Bitcoin for payment transactions.
Major companies in the U.S. accept Bitcoin as a legal payment. As Bitcoin continues to increase in popularity, more places will get to allow its use for payment of transactions.
While the regulations for the operation of Bitcoin are still in progress. The U.S. government has accepted it as a genuine currency as the IRS has seen it as capital assets similar to stocks. And if transactions are not reported on it, you could be convicted for tax evasion.
Bitcoin Is Highly Volatile
The price of Bitcoin can be unpredictable and tend to fluctuate from a position of high to low. Therefore, saving with Bitcoin is not advised because of its risky nature.
Because the number of people using Bitcoin is small. The price moves sporadically daily and will continue to rise as more people use it. So no one should store money with Bitcoin for its high rate of volatility. But if payment is received with Bitcoin, service providers will convert them to local currency.
Lack of Privacy
Bitcoin is not anonymous. Because the transactions are stored publicly and permanently on the network. Which means anyone, anywhere can see the net balance and dealings of all Bitcoin addresses.
However, the identity behind an address will be anonymous until the information is revealed while a purchase is made. This is the reason why Bitcoin addresses should only be used once. Note that you have to be cautious and always protect your privacy.
Still, in Trial Stage
With all its raves and positive reviews. Bitcoin is still in its experimental and trial stage as a new digital currency that is always evolving. Each positive progress makes Bitcoin more attractive. Which also present new problems as more people across the web adopt it as a currency. Now, in its growth are issues such as increased fees, slower confirmations, and even more difficult problems. Be ready for problems coming up. And consult a technical expert before making any significant investments decisions. But keep in mind that nobody can predict Bitcoin’s future.
No Central Control
Bitcoin is independent of anyone, and no regulatory body or authority is in charge of it. The transactions on Bitcoin are irreversible. So no one, even the financial institutions or governments of countries, can stop anyone from sending and receiving Bitcoins.
With this liberty comes the risk of not having any central controlling system of authority to report to if a transaction goes wrong. So, traders of Bitcoins have to be extremely careful about who they deal with.
Bitcoin transactions cannot be reversed once it has been made. But the money sent can only be refunded by the receiver of the funds. That is, you should be cautious and careful of who you do business with on bitcoins. You must be sure that your business partners are trustworthy and they are of repute. So where something goes wrong, you can get a refund of your money.
Government taxes and regulations
Bitcoin is not yet an authorized currency. Most authorities still require the traders to pay income, sales, payroll. And capital gains taxes on any investment or transaction that have gained value, including bitcoins. It is your duty to conform to tax and other legal or regulatory rules issued by your government or local authorities.
Secures Your Wallet
In practical and real life, your wallet must be kept safe. Bitcoin enables value to be transferred anywhere and gives easy control of your money. Such impressive qualities also come with safety concerns. Bitcoin also provides high safety if used correctly. Keep in mind that it is your duty to keep good practices and to protect your money.