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A previous Memeburn article on the well-known digital currency Bitcoin generated quite a bit of interest and debate from this site’s readers. The article focused on some of the challenges Bitcoin faced as a global currency. But here’s another side of the coin, so to speak. We now give some good reasons, ten of them in fact, why Bitcoin could be an option for the future.
- No transaction fees. Unlike many credit card or online payment gateways, moving money around isn’t going to cost you anything. This is due to the P2P nature of the system, which allows you to directly transfer coins to other users within the system.
- Safe and secure. Coins are signed with a public key, which states who they belong to. Owners of coins need to sign a transaction with a private key in order for the transaction to take place. The Bitcoin protocol’s behaviour is backed military grade cryptography, not by contracts with third parties.
- Your money is your own. Nobody can tell you whether or not a transaction can take place or not. You are able to transfer bitcoins to any other user within the network, directly. This means that no third-party can veto a transaction or freeze your assets.
- A tax haven. Bitcoin users make use of a Bitcoin wallet which is only accessible to themselves. No government body can review assets within your bank account. While all Bitcoins have a history of the ownership of each coin, there is no personally identifiable data within this information.
- A global currency of exchange. Bitcoin users are internationally spread and can exchange money without needing to worry about the logistics of bank transfers. There are numerous advantages to this, including opening up international trade.
- A strong currency. Built in scarcity helps to protect Bitcoin from deflation. Already, the Bitcoin exchange rate has begun to show that the coins are highly valued and the value of the number of transactions per hour help to show that it is unlikely to lose adoption.
- Protection against hyperinflation. Bitcoin is a globally floated currency with a recognised exchange rate. In countries where there is hyperinflation, trading in Bitcoins is likely to be safer than using local currency. Ultimately the global market will dictate the value of the currency.
- No possibility of a bank collapse. Since coins are not stored with any central bank, it is not possible for a bank run to cause a bank to collapse, as was the case with the sub-prime mortgage problem that hit mainstream banks around the world recently.
- Early adopters come out better. It is clear that due to the scarcity of coins, early adopters will come out wealthier than late adopters. Current indications are that Bitcoins are increasing in value at a rapid rate. There are many warnings about using the currency for speculation, but at this point it is clear that early adopters are holding onto a small fortune.
- Open Source. Bitcoin is an open-source platform. This means that if you want to improve how your digital wallet works or you want to use the source code to build your own mobile phone application, you can easily do it yourself. There is a level of protection built into the system in that in order to work, the whole network has to follow the same protocol, so simply hacking your own client won’t suddenly give you more coins.
If you’re keen to get your hands on some Bitcoins, you can get them one of three ways:
- Bitcoin exchanges already exist and you can find a local or a global exchange at BitcoinMe.com.
- Start accepting Bitcoin payments for goods and services. Once someone already using Bitcoins decides to buy your goods or services, you will start to collect Bitcoins in your wallet and can use them for your own transactions.
- Try mining coins. This is slow and it takes a long time for you to build up capital this way, particularly if you do it solo. There are ‘Mining Pools’ that you can join which will pay you for your processing contribution, but will also take a cut. Mining pools are more effective, since the profits are split between the pool, so you are more likely to see a quicker return on your investment.