Why Use Bitcoin?

Last updated: 28th January 2018

Bitcoin was originally created as an alternative, decentralized payment method. Unlike international bank transfers at the time, it was low-cost and almost instantaneous. An added benefit for merchants (less so for users) was that it was irreversible, removing the threat of expensive charge-backs.

However, the improvement in domestic payment methods and the rapid development of alternative (non-cryptocurrency) forms of international transfers has reduced bitcoin's advantage in this area, especially given its increasing fees and frequent network bottlenecks.

Furthermore, the increasing oversight and regulation to prevent money laundering and illegal transactions have restricted the cryptocurrency's use for privacy reasons.

In some parts of the world, bitcoin is still a more efficient and cheaper way to transfer money across borders, and several remittance startups make use of this feature. Bitcoin's cost and speed advantages, though, are being eroded as traditional channels improve (and the network's fees continue to increase), and liquidity remains a problem in many countries.

Also, a number of large and small retailers accept the cryptocurrency as a form of payment, although reports suggest that demand for this function is not high.

And many individuals feel more comfortable holding a part of their wealth in securely-stored bitcoin, where a central authority cannot block access or take a cut.

Recently bitcoin seems to have assumed the role of investment asset, as traders, institutional investors and small savers have woken up to the potential gains from price appreciation.

According to some sources, bitcoin is increasingly being used for money laundering. But we know that you wouldn't do that. And anyway, bitcoin is not, as is commonly believed, a good vehicle for money laundering, extorsion or terrorism financing, since it is both traceable and transparent – as a spate of recent arrests can attest.

Authored by Noelle Acheson. Payments image via Shutterstock. Source coindesk

 
NEXT: HOW CAN I BUY BITCOIN?
 

INDEX: A BEGINNERS GUIDE TO BITCOIN AND BLOCKCHAIN TECHNOLOGY



What is Bitcoin?
It's a decentralized digital currency


Why Use Bitcoin?
It's fast, cheap to use, and secure


How Can I Buy Bitcoin?
From an exchange or an individual


How to Buy Bitcoin in the UK
Buying bitcoin in the UK


How to Store Your Bitcoin
Use a digital or paper wallet


What Can You Buy with Bitcoin?
Spend your bitcoins


How to Sell Bitcoin
A guide on how to sell your bitcoins


How to Accept Bitcoin Payments for Your Store
Learn about bitcoin POS systems


How do Bitcoin Transactions Work?
Bitcoin addresses and private keys


Is Bitcoin Legal?
The current regulation around bitcoin


Who is Satoshi Nakamoto?
The founder of bitcoin


How Bitcoin Mining Works
By confirming transactions


How to Set Up a Bitcoin Miner
Generate bitcoins yourself


What are Bitcoin Mining Pools?
What are pools how and how to join them?


How Does Cloud Mining Bitcoin Work?
Alternative bitcoin mining solutions


How to Calculate Mining Profitability
Can you make a ROI?


How to Make a Paper Bitcoin Wallet
Creating an unhackable bitcoin wallet


Can Bitcoin Scale?
A look at the debate and the tech


What is SegWit?
A new way of storing transaction data


What is the Lightning Network?
Off-chain transaction channels


What is Bitcoin Cash?
Same blockchain, different characteristics.


Hard Fork vs Soft Fork
Why and how do blockchains split?


What is the Difference Between Litecoin and Bitcoin?
It's the silver to bitcoin's gold


How to Buy Litecoin
How to buy the bitcoin alternative litecoin


How to Mine Litecoin and other Altcoins
How to generate your own altcoins


Understanding Bitcoin Price Charts
A primer on bitcoin price charts


Bitcoin E-Commerce Services for Merchants
How to accept bitcoin at your business


What is Blockchain Technology?
A system of distributed data and logic


How Does Blockchain Technology Work?
Cryptographic keys, distributed networks and network servicing protocols


What Can a Blockchain Do?
Identity, recordkeeping, smart contracts and more


What is a Distributed Ledger?
A dynamic, independently maintained database


What is the Difference Between Public and Permissioned Blockchains?
Can anyone read or write to the ledger?


What is the Difference Between a Blockchain and a Database?
It begins with architectural and administrative decisions


What Are the Applications and Use Cases of Blockchains?
Tokenization, auditing, governance, settlement and more


How Could Blockchain Technology Change Finance?
Cross-border payments, new asset classes, regulatory compliance and more


What are Blockchain's Issues and Limitations?
Complexity, size, costs, speed, security, politics and more


Why Use a Blockchain?
To manage and secure digital relationships as part of a system of record


What is Ethereum?
A blockchain application platform and 'world computer'


What is Ether?
The 'fuel' of the ethereum network


How to Use Ethereum
Wallets, trading and ‘dapps’


Who Created Ethereum?
Vitalik Buterin


How Ethereum Mining Works
'Proof of Work' and 'Proof of Stake'


How to Mine Ethereum
GPUs, mining software and pools


How Ethereum Works
'Turing-complete' programming, 'state' and the 'EVM'


What is a Decentralized Application?
A distributed 'smart contract' system


What is a DAO?
A 'decentralized autonomous organization'


How Do Ethereum Smart Contracts Work?
Code, transaction fees and 'gas'


How Will Ethereum Scale?
‘Sharding’ and ‘off-chain’ transactions


What is an ICO?
Initial Coin Offerings refer to the distribution of digital tokens.

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