What a Bitcoin is and how it works

Bitcoin

It’s already 2018 and if you’re still wondering what a bitcoin is and how its value fluctuates from time to time, here is a quick explanation:

A Bitcoin is a decentralized, peer-to-peer, “cryptocurrency”, designed to allow online users process transactions through digital units of exchange. Bitcoin payments are processed through a private network of computers through a shared program. Following are the pros and cons of using bitcoins:

Pros: 

1. User Anonymity – Bitcoin purchases are considered discrete. Transactions by holders are never associated to his personal identity.

2. No third party interruptions – Banks and other financial intermediaries have no way to interrupt user transactions or place freezes on bitcoin accounts.

3. Purchases are not taxed– Sales taxes are not added on purchases.

4. Very low transaction fees – Since there is no financial intermediary interference, transaction fees are kept low.

Cons: 

1. Financing immoral and illegal activities – Since bitcoin holders are not associated with the transactions, this creates the tendency of processing illegal or fraudulent activities.

2. High Risk of Loss – There’s no safety net or perfect way to protect bitcoin from human error, technical glitches and/or fiduciary fraud.

3. Excessive volatility – Bitcoins are considered 7.5 times volatile as compared to gold.

So there it goes for Bitcoins. Do you think it is a good form of investment?

For any additional information regarding bitcoins and other financial-related matters, feel free to contact us.

Happy changing lives, fellow finance advocates!

– Paul, Your Partner in Decision-Making

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