Would You Use Bitcoin?

One of the recent trends in money is bitcoin. Bitcoin is a cryptocurrency that is created out of computing power. It’s pretty much the definition of a fiat currency, since it isn’t backed by anything — not even the word of a government.

Bitcoin is completely digital. You keep your bitcoins in a special wallet, and you pay others by transferring bitcoins (or a portion of a bitcoin) to product and service providers. You can even make transactions in person, as long as you know the digital address of the recipient’s bitcoin wallet.

As bitcoin gains in popularity, it’s possible to use it for more purchases. Some service providers accept bitcoin, and you can even buy a house with bitcoin. There are even online retailers, like Shopify, that except bitcoin. It’s also possible to buy and sell bitcoins on exchanges set up. These convert various currencies to bitcoins and vice versa.

But would you use bitcoin?

Advantages of Bitcoin

Right now, with bitcoin considered “valuable,” it’s possible to use bitcoin as an investment (although some think that it’s more of a speculative investment at this point). However, if you want to use bitcoin as money, it has advantages beyond the fact that it could increase in value over time and provide you with a way to exchange your bitcoins for a large amount of dollars (or another currency).

One of the biggest advantages of bitcoin is that there are no fees associated with it. You don’t have to worry about foreign transaction fees if you deal with someone in another country. Additionally, it’s somewhat difficult to trace, so if that’s important to you, you can use that to your advantage and enjoy the increased privacy.

Downsides to Bitcoin

There are some downsides to bitcoin, though. Other than the fact that you could lose money if you decide to use bitcoin as an investment, there are other things to think about.

First of all, you are responsible for the security of your bitcoins. You keep them in your digital bitcoin wallet on your computer. However, if someone hacks you and steals your bitcoins, you are out of luck. Likewise, if your computer crashes and you lose the information, you could end up in trouble, losing your bitcoins. You should back up your wallet regularly if you don’t want to lose your bitcoins.

Once your bitcoins are gone, they are gone. It’s just like if someone steals cash from your wallet. You’re not getting that money back.

Another downside to using bitcoins is that you might be limited in terms of where you can use them. While the number of merchants and people accepting bitcoins is growing, finding those that accept them is still difficult in many cases. You will still likely need more conventional forms of money to function in today’s world.

For those willing to take a chance, bitcoin offers a new way of spending money. What do you think of bitcoin? Would you use it? Would you accept bitcoins as payment for products and services you offer?

About the Author

Miranda writes about financial topics for several web sites. Her blog is Planting Money Seeds, and her book, Confessions of a Professional Blogger, is available on Amazon.