Since its launch in 2009 by Satoshi Nakamoto, the existence of Bitcoin has really created pros and cons. There have been a number of positive and negative views regarding the cryptocurrency due to the fact that it was only launched after the 2007-2008 financial crisis. In contrast to the current conditions, at first this currency was difficult to accept the market even though the mass media had paid dearly to the mass media to introduce and polish this beautiful side of Bitcoin.
The adoption of Bitcoin as a digital currency has led to awareness in a number of governments around the world that Bitcoin does not threaten economic sovereignty or is even another way to avoid taxes. The existence of Bitcoin actually shows almost limitless opportunities. Here are some of the advantages of using Bitcoin:
1. Stabilizing the market
Bitcoin provides a temporary solution to market stabilization efforts. This needs to be done, especially when ‘normal’ currency is not up to the task. The fact that Bitcoin can be used in electronic transactions makes this cryptocurrency able to make the government breathe a little relieved that it can ‘recalibrate’ the market by sparking buying and selling online.
2. Reducing inflation
The high circulation of currency makes the government helpless because it reduces people’s purchasing power. As a result, the economy is stagnant, motionless and possibly dead. The existence of Bitcoin is able to overcome this because it offers solutions in the form of healthier circulation and consumption of goods so that the economy continues to move.
3. Reducing transaction costs
Not everyone likes to transact through banks or connect with banks today. The fact that banks are increasingly greedy for withdrawing money from transaction fees makes people uncomfortable because they feel they are being subject to illegal fees just because the bank wants to increase their fee-based income. This is what Bitcoin is interested in, which offers transactions without additional fees. Bitcoin is an alternative solution for those who want to brighten up trading online.
4. Restoring public trust
By allowing Bitcoin as a currency to transact electronically, it means that the government understands what is needed by the community, namely alternative solutions when standard solutions stagnate. There are further advantages of using Bitcoin apart from moving the economy, namely the restoration of public confidence in the state. People’s trust necessitates a truly functioning government, right?
Will there be the next Bitcoin or any digital currencies capable of competing with Bitcoin in the future? Who knows. Despite the many advantages offered by Bictoin, the chances of it becoming an official currency are very slim – if not “impossible”. However, will Bitcoin continue to be used as an alternative in electronic transactions? May be.
As an unofficial digital currency, behind Bitcoin technology there is a kind of giant database called blockchain which is public and can be accessed by anyone as long as one is connected to the Internet. This technology allows anyone with Internet access to carry out electronic transactions without intermediaries such as banks. This has prompted a handful of “hot” banking people to study more deeply.
Just look at Credit Suisse. The global investment bank has launched a 135-page analysis report that reviews in depth about blockchain technology. The company laid out 13 points that make it difficult to implement Bitcoin as the mainstream currency and will remain a (minor) player in economic transactions. In other words, “Bitcoin is not as powerful as you think.”
The main reasons that make Bitcoin unsuitable as a permanent economic solution include:
1. Extreme volatility
Using the US dollar as a reference, Bitcoin is 11 times more volatile than the pound and 3 times more volatile than the price of petroleum.
2. Difficult regulations
Nothing makes government agencies nervous and nervous other than the popularity which involves money. This was felt the most by policy makers. So, when Bitcoin manages to reap a lot of users, countries like America and China – where similar currencies are used illegally in and out of these countries – will desperately find the right regulations for its use.
3. High security risk
This fact became valid when hackers managed to steal 119,756 Bitcoin worth 70 million US dollars in Hong Kong several years ago. Everything related to the Internet is highly vulnerable to cyber attacks. Even if the hackers steal from cyber merchant accounts – not from the blockchain system itself – the general public won’t understand the difference. All they know is that Bitcoin was stolen from merchants. That is all.
Admittedly or not, Bitcoin is now recognized as an innovative and contemporary way to make transfers anonymously without utilizing standard financial networks or services. One of the benefits of using Bitcoin is a reduction in transaction fees coupled with preserving the user’s privacy. Although Bitcoin has a few benefits, its popularity and market acceptance makes it a bit of a threat. It is a currency that has no center, in other words there is no control on the part of the government.
Therefore, a number of parties have indicated that the widespread use of Bitcoin has something to do with the increase in illicit activity so that it has become the main target of government agencies such as the FBI, DHS or SEC. User trust in Bitcoin only declined in 2014 and this has something to do with the decline in the value of the currency. Therefore, the use of Bitcoin is not completely reliable.
Whatever the prediction of Bitcoin in the future, one must consider a number of characteristics of the currency in general, such as the medium of transaction, the unit of value and also the value of the reserve money itself. Otherwise, a person switches from a user to a victim.