The Inescapable Disadvantages of Bitcoins
Bitcoins are sometimes said to be a great investment, while others claim the digital currency is one of the best ways to send or spend money online. It’s true that there are a lot of benefits that come with using Bitcoins, but what are some of the Bitcoin disadvantages?
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Risks and Disadvantages of Bitcoin Ownership
These are the main risks of Bitcoin that you will have to take into account before using it:
1. Value fluctuations
Because there is no central governing body mandating the value of Bitcoin, they can rapidly increase or decrease in value based on the actions of those who own them. At one point, a Bitcoin owner dumped around 400,000 coins back into the market at once, causing the rapid loss of value of all other coins.
The currency recovered from this hiccup, but it took time for each coin to go back up in value again after the original decline. Even though the coins are back up to being worth a few hundred US dollars, it’s still unpredictable what they will be worth next month or even tomorrow.
2. Lack of payment protections
When you spend a currency made by a central bank, there are certain protections that can come with it. Among those protections is the use of an intermediary, such as a bank, to complete transactions on your behalf.
Doing transactions with bitcoins does not guarantee you any sort of protection and there is a chance that someone will accept your coins without giving you what you paid for. When this happens with physical currencies, you may get refunded. However, there is no way to reverse a bitcoin transaction.
Additionally, if you lose your Bitcoin wallet or accidentally delete the unique codes of your coins, you will not be able to recover them at any point and the money will be lost.
3. Potential for coding errors
At its heart, Bitcoin is just a software program. It’s been coded well and hasn’t shown any significant issues to this point, but that doesn’t mean there won’t be some sort of flaw in the code that will be figured out and exploited later on.
4. Fewer spending options
Overall, few merchants around the world are willing to accept Bitcoins as a form of payment. You might be able to find online stores that accept Bitcoin as a form of currency for their products and services, but there are few physical stores that will do so. Some people end up having to convert it to a separate currency in order to spend it.
5. Lack of general understanding
There are more people aware of Bitcoins than there used to be, but the number of people who are actually familiar with it and understand how it works is still quite small. This can be a hindrance for anyone who wants to pay via Bitcoins online or otherwise.
Disadvantages of Mining Bitcoins
Besides the Bitcoins themselves, there are also disadvantages of mining to get Bitcoins. This is what you might find to be a problem:
1. Cost of electricity
Mining involves running a lot of pretty high-powered computer hardware in order to work out lines of code from the so-called block chains. For your efforts, you will receive Bitcoins. All the electricity you use to run your hardware may make the Bitcoins less of an investment than you thought in the beginning.
2. Potentially low ROI
With a larger number of miners out there now, with more people joining mining groups that work together to gather a single block of coins, you are less likely to get as many Bitcoins as you received before.
These are the generally agreed upon disadvantages of both Bitcoins in general and Bitcoin
mining. Remember that you should consider both the advantages and disadvantages of Bitcoin before choosing to use it or not.
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