The boom of the Bitcoin has opened the door to the world’s first decentralized money and cryptocurrencies. Like any currency, bitcoins can be exchanged for goods and services but unlike conventional currencies there is no physical place of exchange, there is a virtual exchange…the internet.
Some say that something great has begun – an era of monetary innovation that is free of government affiliation, central authority or banks. It’s designed to be completely decentralized, anonymous and free from external or internal management. It’s based strictly on peer-to-peer technology.
No one knows the future of the Bitcoin but let’s explore some present Pros and Cons for small business and the consumer: Bitcoin provides protection of your identity and money — individuals are able to make payment without sharing personally identifiable information, (anonymous Bitcoin addresses are used with every transaction) this may help prevent fraud.
Bitcoin may help reduce transaction fees — credit card payments often face fees per swipe, plus two to four percent on the transaction total. Merchant processors for Bitcoin charge fees of one percent or less and you don’t pay a foreign transition or exchange fee.
Transactions are irreversible — if a payment goes to the wrong address or an unreliable vendor there is no recourse – unlike credit cards, there is no liability protection on bitcoins.
Increased market exposure — as Bitcoin has gained media attention, so may the first small businesses accepting bitcoins as payment.
E-wallets are not immune to hackers — third party services that create wallets for storage generally do not provide protection for consumers in the case of loss or theft. If a wallet is hacked and coins stolen, they are lost.
Volatility — the Bitcoin has seen extreme volatility since its inception.
Future Regulations are uncertain — the IRS issued a ruling that it would treat the digital currency Bitcoin as property and not currency. Any gains in Bitcoin value can now be subject to capital gains taxes. This may only be the beginning of future federal and state regulations imposed on Bitcoin.
The future of the Bitcoin is still unclear, is this digital currency the wave of the future or a craze to avoid? Only time will tell. So before you invest in digital currency, do your homework, seek professional advice and be aware of all the risk involved.
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