Pros and Cons of Trading in Bitcoin

Charlotte Miller

Updated on:

 

Bitcoin was the first cryptocurrency. Ever since its emergence back in January 2009, it has been the cryptocurrency that receives the most media attention. While this may not always remain the case, for the time being, it seems to be the way. So, what are the pros and cons of trading in Bitcoin?

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Advantages

  • Security. By its very nature of being a cryptocurrency, Bitcoin is incredibly secure. When compared to traditional financial transactions, we see it as a different beast. All transactions follow encryption by work on the peer-to-peer network with the miners of new coins providing the mathematical answers to encryption problems. 
  • Ease of Transfer. Being the largest and most accessible cryptocurrency, using Bitcoin is as easy as using any traditional payment method. Funds can be instantly transferred from a regular currency and back again.
  • Potential for Large Investment Returns. As Bitcoin becomes more popular, the opportunity for huge gains becomes more limited. Limitations are especially true in the mining side of the industry. This does not mean there is no chance of good returns, the price does still fluctuate at times, and if you time it right, a significant return can be made.
  • Greater Acceptance. Bitcoin is not only accepted by obscure online stores any more. There are a variety of retailers that accept payment with Bitcoin.

Disadvantages

  • Unregulated. Bitcoin, like every other cryptocurrency, is unregulated. Although, there are some advantages to this. One such advantage is secrecy from tax authorities. It does leave the user vulnerable in a legal sense. If you have a disputed transaction and have paid via Bitcoin, you may find it more difficult to challenge the seller in court. The reason for this being that most countries do not recognize cryptocurrencies as currency. Any transaction is an exchange of goods and not a purchase in the traditional sense. 
  • Choose a Good Exchange. Most of us need to get our hands on Bitcoin to be able to trade in it. There are two ways of obtaining coins; mining for them or buying them. Most users buy them through a currency exchange that specializes in cryptocurrency. Be careful to pick an established and well-regarded exchange when trading Bitcoin online, look for online reviews from other users. Selecting a dodgy exchange site could risk losing your funds. Price Volatility. Although there is more information available, such as financial forecasts. As Bitcoin becomes more popular, it is still a risky investment. Bitcoin, like any other investment, can rise as well as fall. Care should be taken when investing to follow the value fluctuations regularly and to react to any changes. 

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In conclusion, we can see that the advantages and disadvantages of using Bitcoin are not that different from many of the newer cryptocurrencies. One advantage of Bitcoin is, due to its high profile it is accepted in many more locations. It has greater support in terms of transaction processing providers.

This article has been contributed on behalf of Paxful. However, the information provided herein is not and is not intended to be, investment, financial, or other advice.