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Two major advantages of using Bitcoin as a currency

by , 18 September 2014

If someone had said to you a couple of years ago about using a digital currency to pay for goods, you might have dismissed the idea.

But Bitcoin is now growing in popularity and the idea of using a digital currency is no longer such a strange concept.

With Bitcoin the most popular digital currency out there, what would be the advantages of using it?

Let's take a closer look…

Bitcoin removes banks from the equation

Bitcoin allows people to deal directly with each other. It removes the need for a bank as an intermediary. In other words, this digital currency has recreated an ancient barter system.

This has a number of benefits…

Using Bitcoin as a currency provides security

One of the very reasons why people use banks is the security they provide. Keeping your money under the mattress is a lot more risky than letting a bank take care of it for you.

The vast majority of people are happy leaving their savings in the bank.

Bitcoin provides a safe alternative to using banks for your cash. Yes, you need to trust Bitcoin, but you need to trust any currency you use.

Trust is the basis of all currencies.

Bitcoin removes leverage from the equation

At the end of the day, banks are businesses that want to make money. When times are good, they leverage their balances sheets and they do more deals to generate profits.

By lending money to people and offering other financial solutions, banks effectively create money.

But Bitcoin is different, Bengt Saelensminde in The Right Side explains.

The maximum number of Bitcoins there can ever be is 21 million. That’s part of the code written into Bitcoin.

At the moment, there are around 13 million. It will probably take around 20 years for Bitcoin miners to create the rest.

The number of Bitcoin is fixed

What makes Bitcoin different from paper currencies is that central banks can’t increase the number in circulation.

As there is a finite number of Bitcoin, this means you end up with a currency that appreciates in value. That’s one of the main reasons people buy Bitcoin. They believe the value of Bitcoin will rise over time.

So unlike your money in the bank, Bitcoin doesn’t earn interest, but it should appreciate in value.

Bitcoin has the potential to become the currency of the 21st century.

So there you have it, two major advantages of using Bitcoin as a currency.

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Two major advantages of using Bitcoin as a currency
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