Bitcoin is a digital currency that allows its users to make instant online transactions for a reduced cost. Bitcoin was introduced in 2009 and that is when it impacted the financial industry. Bitcoin has reached its all-time high in price now. Bitcoin’s usage has been growing for some time now. More and more online businesses are starting to accept it as a payment method.
However, not everyone knows what a cryptocurrency is. Similarly, even less people know about the blockchain technology that Bitcoin uses. Therefore, a lot of people are still confused and do not know how the cryptocurrency is different from traditional currencies. We are now going to explain some of these differences in as simple words as possible.
Anonymity:
Ethereum and Litecoin are two other examples of cryptocurrencies. Euro, Pound and US Dollar Pounds are examples of traditional fiat currencies. Traditional currencies are centralized. This means that they have some sort of a central authority figure such as a bank or a government institution overlooking the system.
On the other hand, Bitcoin is decentralized and the cryptocurrency has a peer-to-peer network system. Therefore, no central authorities or banks are working as regulators when it comes to Bitcoin transactions. It is important to remember that traditional currencies are under strict regulations by the banks and the governments.
Flexibility and transaction costs:
Traditional currency and the banking systems normally only function for fixed hours and for five days a week. The transactions are subject to restrictions and you have to rely on a bank in order to perform transactions. Not to forget that the banks or the government could even freeze your funds. Performing an international transaction can take as long as weeks to complete and there is a good chance that you will be charged a high transaction fee.
However, Bitcoin transactions can be performed at any time of the day, 7 times a week. In order to perform cryptocurrency transactions, you will not have to rely on a bank. There may be a reduced transaction fee on some Bitcoin exchange platforms, but in most cases you will not be required to pay any transaction fee at all. Many people are looking to invest in Bitcoin because of reduced costs and instant transactions. It is also because of these reasons that Bitcoin has been called the future of money.
Fraudulent Activity:
If you want to perform transactions with the traditional fiat currencies, you might be required to give out some personal details like name, phone number, address, and other private information. This makes it easy for the hackers and scammers to use that information and hack into your bank accounts. Another problem that fiat currencies and the modern banking system can suffer from is double spending. This is where a user uses the same money for more than one transaction. This is attributable to the slow and inefficient banking system.
However, when it comes to Bitcoin, every transaction is recorded as a block in the blockchain network, which is a large public ledger. The information that will be made public will not be personal at all. The transactions are maybe a little too under regulated. Bitcoin has been used for illegal activities as well. There is no government authority overlooking the transactions that are being added on the blockchain. It is a completely decentralized network.
However, Bitcoin is still a lot more secure. The transactions are made public and this only means that the transactions are transparent. Identities of the parties involved in each transaction can remain anonymous. All of your funds in the form of Bitcoin will be stored away in a digital wallet and no one will have access to that without the private access key or the password.
Opportunities for Traders:
The cryptocurrencies, including Bitcoin, are known for their volatile nature. Investors and traders are always looking to use the crypto market’s volatility to their advantage by buying when the price is low and selling later when the price rises up. This can be compared with the market of Foreign Exchange where the traders try to make money trading different fiat currencies.
However, many investors and traders have now entered the crypto market. They see more opportunities here. Even those who have little experience and knowledge of the crypto market can trade profitably with the help of automated trading platforms and automatic trading robots such as Bitcoin Era. If you are looking to start trading Bitcoin, visit the Bitcoin Era website and learn more.
As we have discussed, traditional fiat currencies have many problems that Bitcoin can help us get rid of. Using Bitcoin as a payment method online is relatively much easier. Bitcoin’s flexibility and potential growth has attracted a lot of investors and traders. If Bitcoin continues to grow, it could even become the global currency of our world in the near future.
