Keyboard key that shows the bitcoin symbol

Pros and Cons of Bitcoin

Introduced to the public in 2009, Bitcoin is a peer-to-peer payment system. Bitcoin is digital currency, also known as electronic money or digital cash, and there are no banks involved in any of the transactions.

You can acquire Bitcoins by buying them through marketplaces, known as Bitcoin Exchanges, receiving them from friends and family, or mining them yourself. Mining refers to using a computer to solve complex math problems, in turn winning Bitcoins. Regardless of how you choose to acquire Bitcoins, it is important to know the benefits and drawbacks of this type of currency.

Advantages

  • Anonymity Bitcoin has a few great benefits, but the one that stands out among the rest is the anonymity it gives users. When you sign up for a wallet, or in other words an online Bitcoin-storage account, you are not required to enter any personal information. This means that your transactions are private, and you don't have to worry about your identity being stolen.
  • Supply Another major benefit of using Bitcoins is that there will be only a limited number of them mined. No government agency or high-ranking authorities can create or influence the supply once the limit has been reached.

Disadvantages

  • Value Although Bitcoin has it's strong points, there are a few drawbacks to using this currency. The biggest worry among users is that the currency is not guaranteed. In the future, there is a chance that Bitcoins will hold no value.
  • Theft Unlike a bank, Bitcoins are not insured by FDIC or any other company. If, by chance, another person got ahold of your information and made transactions from your wallet, there would be no way to get your money back.

Bitcoin is still a relatively new currency, but if you are looking to invest some money, it is worthwhile to check into the pros and cons of Bitcoins. There is a chance to make a decent amount of money, but at the same time, there is nothing insuring your investment. Be sure to do plenty of research before making your decision.

Last Updated: November 17, 2014