Cryptocurrencies, bitcoin, in particular are a practical alternative to fiat currencies. In fact, paying with bitcoin is becoming a common practice because many businesses started accepting bitcoin payments. You can find Microsoft, Overstock, Planet Express, Expedia, eGifter, and a vast number of companies on that list.
Hence, if you’re thinking about buying, accepting, or sending bitcoin payments we’re here to explain why that’s an excellent idea.
What is Bitcoin?
Bitcoin is a decentralized digital cryptocurrency that allows users to send and receive bitcoin payments through the peer-to-peer bitcoin network. The keywords here are decentralized and peer-to-peer which means your bitcoins are not controlled or regulated by any central authority. Plus it’s almost impossible to steal them.
Bitcoin vs. Fiat Currency
There are several key differences between bitcoins (or any cryptocurrencies) and fiat currencies like the dollar and the euro. However, the most prominent one is who controls the currency itself.
With a fiat currency the answer is obvious, the government. The dollar is not backed by gold or silver; it has value because it’s issued by the U.S. government. On the other hand, bitcoins are controlled by their owner.
Bitcoins are decentralized and they are stored in your crypto wallet until you choose otherwise. Their value is dictated by the market not by the government. Furthermore, fiat currencies can suffer from inflation and their use is restricted by territory. Bitcoins, on the other hand, are limited to 21 million and you can perform transactions anywhere in the world.
Advantages of Paying with Bitcoin
1) Decentralization and Autonomy
Bitcoins are not controlled or issued by any government which means they are controlled by the owner. That’s decentralization and autonomy. You can do whatever you want with the bitcoins in your crypto wallet and the price of the bitcoin is not dependent on the value determined by a government.
Furthermore, the states don’t have control over the purchase or sale of bitcoins. Anyone can buy or sell bitcoins freely. The only thing you need is an internet connection and a crypto wallet for storage (it’s digital currency).
Another huge plus, when it comes to cryptocurrencies is discretion. Purchases are not public; on the contrary, they’re anonymous. Unless, of course you decide to disclose this information yourself. You can think of this like a cash-only transaction just in the digital world. There’s no digital footprint.
In fact, for each bitcoin transaction an anonymous and unique bitcoin address is generated. We’re not saying that it is impossible to trace the trade but it is extremely difficult to do so. Hence, if you want some privacy cryptocurrencies are a good idea.
Undoubtedly the most ingenious part of the cryptocurrency ecosystem is the peer-to-peer system. That means that you don’t require any external approval to send, receive, purchase, or sell bitcoins. And you can do this around the globe without involving banks. In fact, the peer-to-peer network cuts the middle man, the bank, and it allows people around the world to perform financial transactions among themselves.
The peer-to-peer network utilizes blockchain technology. There’s no central server and anyone can set a bitcoin node if they want to participate in the distribution chain.
4) No Fees or Very Low Fees
Bitcoin users don’t pay traditional banking fees per each transaction because bitcoin is not a fiat currency. And even though cryptocurrency exchanges sometimes charge a small fee for their services the costs don’t compare. For example, with bitcoins you avoid:
- account maintenance fees
- minimum balance fees
- returned deposit fees
- overdraft charges
Plus, when it comes to international transfers the banks impose fees for international wire transfers and for currency exchange. And because transferring bitcoins doesn’t involve banks, the international transfers are cheaper. Hence, you can keep the cost low.
Plus, you won’t have to wait for a couple of days to get the money and as we said above, no third-party approvals needed.
Another great feature of bitcoins is that the infrastructure for payments already exists across the globe. And you don’t need a traditional banking system to receive or send bitcoins. You can complete a bitcoin transaction with a smartphone and an internet connection.
Plus, you can stay anonymous if you want. For online payment with a credit card, you know how to give your personal information to complete the transaction. That’s not the case when you’re shopping with bitcoins.
The security of the bitcoin network is defined by the blockchain. Because the blockchain ledger is based on complex mathematical cryptograms and each of them is unique for every individual transaction; your coins are pretty safe. Plus, once a block (data bit) is added to the chain, it’s impossible to change it!
For comparison, blocking a credit card transaction is always a possibility but once a bitcoin transaction is made it becomes part of the blockchain and it’s not reversible. Moreover, each crypto wallet transaction is signed by an authentic digital signature and encryption is used for processing the data.
That makes the use of bitcoins safe and nearly impossible to counterfeit.
Fiat currencies have political and territorial barriers. You can’t shop with euros in Australia or with dollars in Germany. Bitcoins, on the other hand, have the same value anywhere in the world and they can be used anywhere. There are no political or territorial barriers because they are not issued by a single government.
The global circulation of bitcoins is unrestricted. Bitcoin transactions don’t involve additional approvals, restrictions, or third-party interference. In fact, the bitcoin payment is wholly dependent on the bitcoin owner. This gives bitcoins the unique characteristic of universality which makes them very easy to use and practical.
8) Real-Time Transactions
Because there are no barriers to cross, cryptocurrency transactions are lightning-fast. They happen in real-time which means you can get your bitcoins in a matter of minutes instead of waiting for your dollars for days. Plus, it doesn’t make a difference if the transaction is domestic or international.
9) Inflation Protection
The risk of inflation with bitcoins is practically zero. Almost every fiat currency in history has suffered inflation and has struggled with decreased value.
Perhaps the most popular cautionary tale about inflation comes from the Roman Empire. By the time of Claudius II Gothicus, the amount of silver in the silver denarius was only .02%. That can never happen with bitcoin because its value is determined on the free market.
Furthermore, the bitcoin was presented on the market with a fixed amount. There are only 21 million bitcoins in the world which means it’s impossible to create more and flood the market. The fixed supply keeps the volume in check and it doesn’t allow arbitrary issues.
Using bitcoins has many benefits; however, like any cryptocurrency the bitcoin tends to be volatile on the market. The prices go up and down every couple of hours. But, as you can deduce from the article the bitcoin seems to be worth the trouble.
If you’re a business owner or a freelancer it might be prudent to give bitcoin payments a chance. You never know how much a bitcoin can be worth tomorrow.