What is bitcoin, why do we need it, the pros and cons of cryptocurrencies

In simple words, bitcoin is a new kind of digital money, a virtual currency protected by cryptographic encryption keys. But cryptocurrency is not on a bank card because it has no bank at all. This money can never be seen or touched with your hands, nor can it be withdrawn or put into a classic wallet. Bitcoins can be stored in special cryptocurrency wallets with serious protection against hacking and fraud. What do I need to know about bitcoin before trying to work with it?

Why bitcoin is so popular

People use bitcoin for a variety of reasons. Some have always been enticed by the opportunity to make quick and easy money. Just on the fluctuations of bitcoin some people are trying and some people have already earned a fortune. For others, working with cryptocurrency makes many operations much easier: there are no strict accounting and control from state structures, there are no limits for transferring funds, many kinds of commissions, taxes, etc.

Also, many believe that the cryptocurrency system is more reliable, protected from inflation. When there is an economic crisis, some central banks order the printing of new bills, due to which, over time, paper money can fall in value or depreciate at all. This leads to inflation. Bitcoin, on the other hand, has a fixed supply of 21 million coins. Because new coins cannot get into circulation, it is more resistant to inflation. Instead of a sense of uncertainty, bitcoin provides a sense of relative stability, although it is fair to say that its exchange rate can fluctuate wildly. In the last year alone, bitcoin has gone from $67,000 (in November 2021) to $20,000 (now). Based on how much bitcoin has fallen in the last six months, bitcoin could be a very good investment.

Pros and cons of cryptocurrencies

Cryptocurrency has a number of advantages, such as:

• It gives complete anonymity in fund transfers.
• To use cryptocurrency, you only need an Internet connection, a laptop or a smartphone.
• You can use and exchange cryptocurrency anytime, anywhere and all over the world.

Some disadvantages of cryptocurrencies:

• Bitcoins can be both earned and lost due to falling exchange rates.
• If you accidentally transfer funds to the wrong address, the transaction can no longer be reversed and returned.
• Bitcoin exchange rate is not stable. The more popular the cryptocurrency is, the more expensive it is, but it is affected by many factors that are hard to predict. The rate can go up or down just because of one tweet from Ilon Musk or another influential person.
• Bitcoins are limited in quantity and are called digital gold for a reason.
• So far, not all stores can pay with cryptocurrency.

To date, not all countries in the world have fully legalized bitcoin. In some states, this cryptocurrency is recognized as an official payment system. There are countries that are trying to put it into circulation, and somewhere it is still prohibited. Therefore, before you start using bitcoin, you need to know how things stand on this issue in a particular state, get acquainted with taxation and rules of use.