Bitcoin: The Why, The Why Nots!
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Bitcoin has been in the news for the past year, and a clear understanding about how the cryptocurrency actually works and its volatility has kept many professional investors and traders from considering it worthy.
There surely is plenty of money to be made, but investors must be willing to manage the risk and weather the waves.
Below is a look at the Whys and Why Not of Bitcoin.
Why: Growth Potential
The most appealing element about Bitcoin is that the technology is so new that the growth prospects look compelling. Bitcoins offer a new way for people to exchange funds instantly without going through a 3rd party intermediary.
Bitcoin functions on a technology know as blockchain, which allows people to transfer assets for just a fraction of the time and money it would take to make the same transaction through traditional financial institutions.
For many blockchain is seen, as one of the most important technological advances in the past 10 years. Blockchain is useful not just for cryptocurrency transfers, but as a ledger-like technology. And it is applicable to several other industries too. Everything from the way stocks are traded to how contracts are negotiated could be changed via blockchain.
Bitcoin itself also has a large growth runway as people get more comfortable using it.
We have already seen everything from Bitcoin ATMs to big-name retailers accepting the cryptocurrency as a payment.
That is good news for Bitcoin investors. The coins will become more valuable as the cryptocurrency grows in popularity.
The Why Not: Misunderstood
The biggest Why Not for Bitcoin is the public’s overll lack of understanding surrounding the cryptocurrency. Several studies have shown that people, including bitcoin users do not really understand how the cryptocurrency works and whether or not it is secure.
That is a problem.
In order for more people to adopt and become comfortable with Bitcoin, they will have to understand, protect and use Bitcoin wisely is Key to it’s expansion.
Why and Why Not: Safety
When discussing the Why and Why Not of Bitcoin, safety is Key in both categories.
Bitcoin is considered transformative, in that the blockchain protects against things like identity theft and payment fraud more thoroughly than a credit-card transaction ever could. As the coins are digital, they cannot be counterfeited. This takes a way some risk that traditional transactions carry.
Plus payments via Bitcoin are more secure for buyers than credit card charges. Paying with Bitcoin allows a buyer to send exactly the amount required, giving the merchant no access to any more of their funds.
Credit card payments give merchants access to an entire line of credit for any amount. This leaves the door open for hackers and dishonest merchants to pull as much as they want from a buyer’s account.
Bitcoin transactions require just the buyer’s coin wallet ID, rather than their name and contact details. So, they offer a degree of anonymity that traditional transactions do not. While some see this as a Why for Bitcoin, others see the cryptocurrency negatively.
Many people, mostly beyond the world wide millennial demographic worry that cryptocurrencies are becoming a sort of ‘underworld’ where dark dealings can take place because this anonymity.
That has contributed to some consumer’s hesitation to adopt it, and has given regulators reason to warn against getting involved in Bitcoin without fully understanding it.
Remember, in all cases your money is your responsibility, the Key is Knowledge.
Currently, Bitcoin is trading at: 9,007.9951,-316.72, or -3.40%, as of 6:33a BST, the market is open.