As a currency, bitcoin offers its users several benefits. Here is a look at some of these benefits.
Eliminates Chargeback Fraud
Once you send bitcoins to a recipient on the bitcoin network, you cannot get them back without the recipient’s consent. To put it another way, bitcoin eliminates chargeback fraud as well as other types of frauds associated with credit and debit card transactions.
When you make an online purchase with your debit and credit card, you typically have to fill out an online form and crucially, provide your sensitive credit/debit card data including your credit card number, CSV number and your card’s expiry. If such data falls into the wrong hands, you could lose your money. Unfortunately, with cybercrime becoming increasingly common, that could actually happen. Fortunately, unlike online credit/debit transactions, bitcoin transactions make use of a public and private key, preventing users’ from disclosing their sensitive financial data. You can share your public key with anyone, but you must keep your private key secret protect the bitcoins in your digital wallet. In essence, as long as you keep your private key safe, no one can get to your bitcoins. When you send bitcoins to a recipient, you use both your private and public keys to append your unique signature to the transaction. At the same time, the network encrypts and authenticates the transaction.
Deflationary in Nature
Unlike fiat money, bitcoin is not affected by factors such as war, disaster, and government policies. What’s more, only 21 million bitcoins will ever be created, meaning it is immune to inflation. With fiat money, a government can simply print more money to pay off its debts or boost the economy (quantitative easing). The problem with this approach is it causes the price of goods and services to rise (inflation). In contrast, being a deflationary currency, bitcoin would actually cause the price of goods and services to fall over time.
As mentioned earlier, bitcoin transactions make use of both a public and private key, which are essentially long alphanumeric codes. These keys allow you to maintain anonymity on the bitcoin network. In other words, unless you reveal your identity, no one would be able to link your bitcoin transactions to you, allowing you to transact anonymously on the Bit P2P network. Of course, you would not be able to maintain this level of privacy with a typical bank account. Still, it is important to note that the bitcoin P2P network is essentially a public ledger, meaning all members have a copy of the ledger.
Unlike in a conventional banking system where you have to trust third-parties including your banker, trust is inbuilt into the Bit network, eliminating the need to trust anyone on the blockchain. Especially, when you do a bitcoin transaction, the network signs and encrypts the transaction, making it secure. To complete the transaction, mining has to happen. Mining essentially entails adding verifying and adding the transaction to the blockchain.
Bitcoin (BTC) helps eliminate chargeback fraud, the need to trust third-parties such as banks and merchants and allows users to remain anonymous. Additionally, it is secure, deflationary in nature.