Most of the people have heard of the term Bitcoin but do not have a clear idea of what it really is. Simply defined, Bitcoin is a decentralized, peer-to-peer digital currency system designed to give online users the ability 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 the year 2009 by undisclosed programmers. Since then, Bitcoin has attracted a great deal of attention and controversy as an alternative to the US dollar, the euro, and commodity currencies such as gold and silver.
A private network of computers connected by shared software is used to transact and process payments in Bitcoin. The creation of Bitcoins is based on increasingly complex mathematical algorithms and their purchase is made with standard coins of national money. Bitcoin users can access their coins with their smartphones or computers.
As a new and growing virtual currency, Bitcoin has certain distinct advantages over conventional government flat currencies. Here are 5 benefits you will enjoy when using Bitcoin
1) Tax number
When you make purchases through dollars, euros, or any other government flat currency, you must pay an additional sum of money to the government as tax. Each purchasable item has its own designated tax rate. However, when you make a purchase through Bitcoin, sales tax is 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 come in handy, especially when buying luxury items that are unique to a foreign country. Such items, in most cases, are heavily taxed by the government.
2) Flexible online payments
Bitcoin is an online payment system and like any other such system, Bitcoin users have the luxury of paying for their coins from anywhere in the world that has an internet connection. This means that you could be lying on your bed and buying coins instead of having to travel to a specific bank or store to get your work done.
Also, an online payment via Bitcoin does not require you to fill in details about your personal information. Therefore, processing Bitcoin transactions is much simpler than those made through US bank accounts and credit cards.
3) Minimum transaction fees
Exchange fees and costs are an integral part of standard wire transfers and international purchases. Bitcoin is not monitored or moderated by any intermediary institution or government agency. Therefore, transaction costs are kept very low unlike international transactions made through conventional currencies.
In addition to this, Bitcoin transactions are not known to be very time consuming as it does not involve the complications of typical authorization requirements and waiting periods.
4) Hidden user identity
All Bitcoin transactions are discreet or, in other words, Bitcoin offers you the option of user anonymity. Bitcoins are similar to cash-only purchases in that your transactions can never be traced back to you and these purchases are never connected to your personal identity. In fact, the Bitcoin address that is created for user purchases is never the same for two different transactions.
You have the option to voluntarily reveal and publish your Bitcoin transactions if you wish, but in most cases users keep their identities secret.
5) No external interventions
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 interrupt user transactions or freeze a Bitcoin account. As mentioned above, Bitcoin is strictly based on a peer-to-peer system. Therefore, Bitcoin users enjoy more freedom when making purchases with Bitcoins than when using conventional national currencies.
Digital currencies like Bitcoin are comparatively new and have yet to undergo any major testing. As a result, many feel that there are certain risks involved in using Bitcoin. Regardless of Bitcoin’s potential drawbacks, it is clear that its merits are strong enough to make it a legitimate contender to challenge mainstream currencies in the not too distant future.