Most people have heard of the term Bitcoin but don’t have a clear idea of what it actually is. Simply put, Bitcoin is a decentralized, peer-to-peer, digital currency system designed to allow online users to process transactions through a digital unit of exchange known as Bitcoins. In other words, it is a virtual currency.
The Bitcoin system was created in 2009 by an undisclosed programmer(s). Since then, Bitcoin has attracted much attention and controversy as an alternative to the US dollar, the Euro, and commodity currencies such as gold and silver.
Bitcoin uses a private computer network connected to a shared application to conduct transactions and process payments. The creation of Bitcoins is based on increasingly complex mathematical algorithms, and its purchase is carried out with standard national monetary currencies. Bitcoin users can access their coins with their smart phones or computers.
As a new and growing virtual currency, Bitcoin has certain advantages over conventional fiat currencies. Here are 5 benefits you will enjoy when using Bitcoin
1) No tax
When you make a purchase in dollars, euros or any other national currency, you have to pay an additional fee to the government as a tax. Each purchasable item has its own designated tax rate. However, when you shop with Bitcoin, sales taxes are not added to your purchase. This is considered a legal form of tax evasion and is one of the main advantages of being a Bitcoin user.
With zero tax rates, Bitcoin can be especially useful when buying luxury items that are exclusive to a foreign country. Such products are often heavily taxed by the government.
2) Flexible Online Payments
Bitcoin is an online payment system and like any other system, Bitcoin users have the luxury of paying their coins from anywhere in the world with an internet connection. This means that you can buy coins from the comfort of your bed instead of going through the agony of going to a specific bank or store to do your business.
In addition, online payment with Bitcoin does not require you to fill in details about your personal information. Thus, processing Bitcoin transactions is simpler than transactions through US bank accounts and credit cards.
3) Minimal transaction fees
Fees and exchange costs are part of standard money transfers and international purchases. Bitcoin is not controlled or moderated by any intermediary body or government agency. Therefore, transaction costs are kept very low compared to international transactions with common currencies.
Furthermore, transactions in Bitcoin are not known to be time-consuming, as it does not involve the complications of typical authorization requirements and waiting periods.
4) Hidden User Identity
All Bitcoin transactions are discrete or in other words Bitcoin gives you the option of User anonymity. Bitcoins are like cash-only purchases in that your transactions can never be traced back to you, and those purchases are never linked to your personal identity. In fact, the Bitcoin address generated for user purchases is never the same for two different transactions.
You have the option to voluntarily reveal and publish your Bitcoin transactions, but in most cases users keep their identities private.
5) Absence of outside interference
One of the biggest advantages of Bitcoin is that it eliminates third-party interruptions. This means that governments, banks and other financial intermediaries have no authority to disrupt user transactions or freeze a Bitcoin account. As mentioned earlier, Bitcoin is strictly based on a peer-to-peer system. Thus, Bitcoin users enjoy more freedom than using regular national currencies when making purchases with Bitcoin.
Digital currencies like Bitcoin are relatively new and have yet to undergo major testing. As a result, many believe that there are certain risks involved in using Bitcoin. Regardless of Bitcoin’s potential shortcomings, it is clear that its fundamentals are strong enough to make it a legitimate contender to challenge conventional currencies in the not-too-distant future.