Why Do People Use Bitcoin?

August 05, 2020

You might be wondering, why do people use Bitcoin? In 2009, Bitcoin was launched to the public by a mysterious entity by the name of Satoshi Nakamoto. It is one of the top cryptocurrencies in the market with a market value of over 9,405 USD.

What Can Bitcoin Be Used For?

Bitcoin can be used for multiple purposes. People use Bitcoin to pay for goods and services or hold on to them to sell for a huge margin of profit. It also can be exchanged such as traditional currency via digital wallets.

The most common uses include:

  • Buy and hold strategy
  • Day trading
  • Purchases
  • Transfers

Buy and Hold Strategy

This is one of the most common uses of Bitcoin. People purchase a definite amount of Bitcoin with their savings and hold on to it, and later, sell for a profit when the prices skyrocket.

The main reason for a buy and hold strategy is that in a couple of years, the price of Bitcoin may increase, so buying it at a low cost and selling it later will provide huge profits.

People generally buy and hold Bitcoin in offline or cold storages such as encrypted hard drives or USB drives. However, if these drives get corrupted or get stolen, then they may lose all their Bitcoins.

Day Trading

With the increasing popularity of cryptocurrencies, various crypto exchanges emerged where people could buy and trade crypto coins.

Day trading is where you keep track of the price charts and execute trading strategies to maximise profits off of price changes for Bitcoin. If you do it right, you may make quite a lot of money with the profits.

A day trader requires knowledge and experience in the crypto market, a decent amount of capital, and the right trading strategy. Zipmex is a crypto trading exchange which is a great choice for trading online. It’s simple, easy and free to start.

You can purchase a small amount of cryptocurrency from Zipmex to begin trading. However, Bitcoin is highly volatile; that is, you can never expect when the price will drop or rise. Bitcoin analysts and researchers can only predict future price movements from patterns in the price chart, but they can still be wrong.

Purchases

One of the main reasons why Bitcoin was launched was to provide an alternative or to replace the fiat currency issued by the government. 

Bitcoin is considered as a method of payment in many marketplaces. Many vendors, shopkeepers, and online websites accept crypto payments for their purchases. With the help of the public key of the recipient, you can pay with Bitcoin for the product or service provided.

Transfers

Another major use of Bitcoin is peer-to-peer transfers. You can transfer bitcoins easily from one wallet to another with the help of public keys. The transfer is only successful when it is verified via the process of mining, which can take at least 10 minutes.

Bitcoin is generally stored in wallets that contain a private key and public key. The public key is necessary to send or receive Bitcoins. In contrast, the private key is used for authentication and encryption for the transactions.

The transaction history is stored in a public ledger called the blockchain. With the help of a public address, you can view past transactions to verify the authenticity of users.

Why is Bitcoin Better Than Conventional Currency?

One of the main reasons for the origin of Bitcoin is for it to be better than the conventional currency. Satoshi Nakamoto wanted to build a digital currency that wouldn’t be influenced by real-world factors such as the government, economy, and stock market.

Bitcoin emerged after the financial crisis of 2008 (also known as the great recession), where many people lost their jobs, and stock markets collapsed.

There are many reasons that make Bitcoin better than conventional currency. Let’s have a look at three of these reasons:

Decentralised

Bitcoin is a decentralised digital currency, meaning, no government institution has control over its functioning. The centralised currency is controlled by the government, whereas Bitcoins are owned by people.

This provides more liberty to the users to exchange coins without any intermediaries or control over the amount and also leads to lower fees. This makes Bitcoin faster and more secure.

Frictionless

Bitcoin is a peer-to-peer cryptocurrency, so you can transfer Bitcoins easily from one person to another. This is what makes it frictionless.

You only require the public address of the recipient to transfer Bitcoin. Using the public address, you can also view their transaction history to verify their authenticity.

There are no limits or boundaries for Bitcoin. There is no exchange value or third-party intervention. You can transfer Bitcoin from one corner of the world to another without any restrictions or extra transaction fees. The public ledger will maintain the transaction details.

Traceable

One of the main disadvantages of fiat currency is not being able to trace or keep track of the cash. It may have serial numbers, but unless someone keeps track of them, you never really know the origin or source of the money.

Bitcoin is built on a blockchain that contains a distributed network of computers that create a permanent public record of every Bitcoin transaction. This way, you can keep track of the coins and know who owns how many Bitcoins.

Final Thoughts

Bitcoin, being a decentralised currency, has quite a volatile market. Huge investors and Bitcoin holders hugely influence this. Some consider Bitcoin as a safe haven for their funds, whereas some are still reluctant to use it.

Bitcoin can be a modernised currency where the people have total control over their coins. With no government or intermediary taking control, the fees of transferring Bitcoins will be low as well. With a limited supply of Bitcoin, its market value is expected to skyrocket in a couple of years. This may lead to a more influx of users and a more stable market.

People are still wary of cryptocurrencies and have not noticed its benefits yet. So, if you are reading this take advantage of the current price of BTC by signing up for a Zipmex account today.

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