What is this Bitcoin thing everyone is talking about?
8 Jan 2018 FINANCE
By Zuko Komisa
There is a common consensus throughout the world that this year is a year to be savvier with money and finding new ways to invest it. It’s not a bad idea to explore new ways to do so. Enter Bitcoin, an increasingly popular cryptocurrency that is gaining traction from millions of people across the world.
What is bitcoin?
Bitcoin is the first decentralized digital currency, they are digital coins you can send through the internet. It also happens to be one of the first digital currencies to use peer-to-peer technology to facilitate instant payments
Bitcoins have a number of advantages:
- They are transferred from person to person via the internet without going to the net or clearinghouse.
- This means the fees are much lower.
- You can use them in every country.
- There are no prerequisites to acquiring them
Bitcoins are kept in your digital wallet on your mobile device or desktop computer. Sending bitcoin is as simple as sending an e-mail and you can purchase pretty much everything with it. After every transaction, it gets verified and put into a transparent public ledger. The bitcoin software is open source and anyone can review the code.
This revolutionary invention is changing the finance and banking industries in the same way the internet changed publishing. It’s also a great way for businesses to minimise transaction fees. Other advantages for many South Africans include it being a definitive way of investing your money outside of the country at this stage. There are still tax laws that apply to these returns so be sure to read up on them.
Some disadvantages of Bitcoin
While bitcoin is revolutionary, there are a few disadvantages worth mentioning about this currency. Right now, its pretty much unclear that international law and regulations systems are properly equipped to tackle this under-regulated currency. The currency is also unpredictable if you are a long-term investor. Transaction fraud is also a problem as there are no chargebacks or refunds, the Bitcoin system has no dispute resolution structure for affected parties.
The big question remains, however, are digital currencies the future? There have been many inventions in the past that have made life simpler and more convenient. The common prediction is that Bitcoin could potentially be a much faster no fee payment system for transactions across the world, cutting out banks by making a transacting democratic.