Because of the unique nature of virtual currencies, there are some inherent advantages to transacting through bitcoin that users of other currencies do not achieve. Digital currencies are still relatively new and uncharted medium of exchange. That means users should be prudent with enjoying the benefits they can get and the risks they’re fairly unfamiliar with. That being said, here are some of the main advantages of using bitcoin as a mode of payment.
An Brief Introduction to Bitcoin
Bitcoin is a decentralized, peer-to-peer “cryptocurrency” system made to allow online users to process transactions through digital units of exchange called bitcoins. It was started in 2009 by an elusive and unknown programmer, and has since then generated plenty of interest as well as controversy as a “third” type of currency and an alternative to government fiat currencies like the US dollar or the euro or pure commodity currencies such as gold or silver coins.
Bitcoin payments are processed through a private network of computers that are linked through a shared program. Each transaction is at the same time recorded in a “blockchain” on every computer that updates and informs all of the accounts.
Bitcoins are either “mined” by a computer through a process of solving increasingly complex mathematical algorithms or purchased with standard national money currencies and placed into a “bitcoin wallet” that is accessed through a smartphone or computer.
Anonymity of the User
Bitcoin purchases are quite discrete. Unless a user wants his bitcoin transactions to be published, his purchases are never associated with his personal identity, much like cash-only purchases, and cannot be traced back to the user. As a matter of fact, anonymous bitcoin address that is generated for user transactions changes with each transaction.
No Interruptions from Third-Party
One of the most widely publicized benefits of bitcoin is that governments, banks, and other financial intermediaries have no way to interrupt user transactions or place freezes on bitcoin accounts. The system is 100 percent peer-to-peer; users can experience a greater degree of freedom than with national currencies.
No Tax on the Purchases
Because there’s no way for third parties to identify, track, or intercept transactions that are denominated in bitcoins, one of the major benefits of bitcoin is that sales taxes are not added onto any of the purchases.
Transaction fees are very Low
Standard and conventional wire transfers and foreign purchases usually involve fees and exchange costs. Since bitcoin transactions have no intermediary institutions or government involvement, the expenses of transactions are kept very low.
This can be a major advantage of travelers. In addition, any transfer in bitcoins takes place very quickly, eliminating the inconvenience of typical authorization requirement s and waiting periods.
Like with many online payment systems, bitcoin users pay for their coins anywhere they have internet access. This means that buyers never have to travel to a bank or a store to buy a product. On the other hand, unlike online payments made with US bank accounts or credit cards, personal information is not required to complete any kind of transactions.