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Bitcoin: Advantages and Disadvantages of Cryptocurrency

20.10.2021
Bitcoin: Advantages and Disadvantages of Cryptocurrency

What is Bitcoin: the advantages and disadvantages of cryptocurrency

The cryptocurrency market has grown significantly and doesn’t provoke skepticism and mistrust. Cryptocurrency is developing so rapidly that there are issuing many types of electronic coins. One of the most famous and demanded types of digital currency is Bitcoin.

Bitcoin was the first currency on the market and produced an incredible furor caused by its rapid growth. In 2021, its growth reached a historic high of $58,400 per 1 bitcoin. Let’s take a look at what Bitcoin is, its disadvantages/advantages, and what are the alternatives to this digital currency.

 

Bitcoin: meaning, advantages, and disadvantages

As we have already said, bitcoin is the first digital currency that was released in 2009. The founder of Bitcoin is Satoshi Nakamoto, but accurate information about this person is completely lacking. There are suggestions that Bitcoin was created by a whole group of people. Also, the location of this person is not known. The origin of the name is Japanese, but the perfect English knowledge has made many people believe that this person is from an English-speaking country.

Bitcoin is the digital equivalent of fiat money. However, it differs from the ordinary currency in that government authorities, and the central bank do not control it. Instead of this, the bitcoin financial system is operated by thousands of computers located around the world. In fact, every person has the opportunity to take part in the work of the ecosystem of this currency. To do this, you need to install certain open-source software.

This type of currency is not subject to censorship, and transactions can be made 24/7  from any part of the world. Of course, all these facts make Bitcoin a very attractive currency to use.

Let's consider all the advantages and disadvantages of using Bitcoin.

Advantages

  • Low fees for bitcoin transfers (in some cases, there are no fees at all, but transfers may take longer).
  • Anonymity.
  • Bitcoin is considered a deflationary currency.
  • Cryptocurrency transactions can be carried out regardless of location and time of day.
  • A simple procedure of creating a bitcoin wallet without the need to provide your personal data.
  • There is no taxation.
  • It is impossible to cancel transactions (this fact is also considered a disadvantage).

Disadvantages

  • Possibility of illegal transactions.
  • Volatility.
  • The risk of tightening regulation of this currency by government authorities.
  • In some cases, transactions in banks from card to card are carried out much faster than a bitcoin transfer. It all depends on the amount of money and the size of the commission.

 

How is it possible to get a bitcoin?

There are different ways to get bitcoins. The most demanded ways are:

  • buying or exchanging bitcoins for any fiat money;
  • receiving a reward (bitcoins) for completing some tasks;
  • mining.

 

 

Other types of cryptocurrency

In addition to Bitcoin, there are other types of cryptocurrencies:

Altcoins are a cryptocurrency that was created as an alternative to Bitcoin. Today, there are more than 500 types of such coins. Here are some of them:

  • Ripple (XRP)
  • Litecoin (LTC)
  • Ethereum (ETH)

Tokens are digital assets. These coins differ from bitcoin and altcoin by the absence of their own blockchain. As the tokens do not have their own blockchain, they are installed on the blockchain of Omni, Tron, Ethereum, Neo. It is worth noting that most of the tokens are installed in the Ethereum blockchain.

The most popular tokens are:

 

DBX tokens

Despite the fact that DBX tokens were recently issued, they have been already attracted investors' interest. This is due to the fact that these digital assets are installed on two blockchains: Quark and ERC-20. These two blockchains have been significantly improved; in this regard, the team of developers managed to make transactions fast, secure, and confidential. The idea of ​​creating a DBX token was to eliminate all the disadvantages and inconveniences of using different types of cryptocurrencies, including bitcoin. As you know, the main disadvantages of using cryptocurrencies are their high volatility and the possibility of imposing a ban on the use of cryptocurrencies by the government. Thus, the DBX team could create their first token, which eliminated these problems and meets all the requirements of users of cryptocurrencies.

 

Advantages of the DBX token:

  • Anonymity and confidentiality.
  • Fast transactions.
  • Hacking protection.
  • Decentralization.
  • Interchangeability of coins, etc.

Polkadot (DOT)

Polkadot is a platform that was developed to bring all existing blockchains together into one global ecosystem. The internal tokens of the Polkadot platform are called DOT. The owners of these tokens can control the protocol, including managing the renewal process and the ability to fix the protocol.

 

Cardano (ADA)

Cardano is a decentralized protocol that was created to eliminate any shortcomings of Ethereum. The main advantages of this currency are that it consumes much less energy, and users can receive passive income of 5% for keeping tokens in the wallet.

 

Uniswap (UNI)

 Uniswap is a decentralized financial protocol that operates on the Ethereum blockchain and is used to exchange digital currency. This protocol was created to eliminate liquidity problems. The advantage of this protocol is that users do not need to register or verify their identity to conduct transactions, as other exchanges require.

 

Compound (COMP)

The Compound is a decentralized Lending platform that underpins the Ethereum blockchain. The platform was founded by Robert Lechner and Jeff Hayes in 2017, and a few years later,  the company released the COMP token. This coin allows users to earn a percentage of using the products of this platform. Moreover, any investor can provide a loan to other users or become a borrower by himself and get a loan from the system.

Conclusion

To summarize, we can say that altcoins and tokens are created in order to offer users safe and more profitable conditions for using cryptocurrencies. Although bitcoin has a huge number of advantages, this currency is not perfect, and it also has its drawbacks. Nevertheless, Bitcoin and the cryptocurrency market have gained recognition in one way or another, as most countries in the world began to create laws that regulate cryptocurrency and introduce taxation. According to Cambridge University, the number of people who use cryptocurrency has increased from 25 million to 100 million over the past four years. This fact indicates promising prospects for cryptocurrencies.