Date posted :08-16-2020

Date updated:

What are the advantages and disadvantages of using Bitcoin (BTC)? Introducing tips for safe operation

Although some people may be interested in Bitcoin, but they may be embraced with worries that "Is it really safe to use?" "Will it lose its value?"

Indeed, Bitcoin is a currency that has attracted a lot of attention from many people.

It has a technology that fundamentally changes the financial system, such as low fees and instant overseas remittance.

In order to solve such a problem "I would like to use Bitcoin, but what are the advantages and disadvantages...?", I will introduce the advantages and disadvantages of using Bitcoin in detail.

Advantages of holding Bitcoin

Although interest in Bitcoin is often targeted as an investment target, there are also convenient use cases in daily life.

Low remittance fee, remittance everywhere and a system to prevent leakage of personal information, that is highly practical in daily life.

The remittance cost overseas is low

The cost of remitting Bitcoin overseas tends to be low compared to other remittance methods.

With conventional overseas remittances, legal tenders such as yen and dollars are exchanged before remittance, which requires a high fee.

It also takes a long time to transfer money, like several days to complete the transfer.

In addition, due to the effect of exchange rates, there is a possibility that the value may have dropped significantly when the remittance was completed.

However, if you use Bitcoin, you will only be charged a fee to maintain the trading network, so you can send money with a uniform fee in Japan and overseas.

Since it is not easily affected by exchange rates, you can convert it into your own currency after receiving it in Bitcoin.

However, caution is required, there is a limit to the processing by the blockchain, and if a large amount of money is sent, the miner fee may be high to ensure the money transfer (miner fee is fees required for transfer proof of work).

Can be used in all countries and regions beyond national borders

Bitcoin is gradually becoming recognized around the world as a new form of money.

The areas where bitcoin usage is particularly high are developed countries in Europe and North America, and it is analyzed that more than 1% of the people use it on a daily basis.

In addition, in Asian countries as well, due to migrant workers, the number of cases where it is used for small personal remittances and payments is increasing.

In addition, Bitcoin is rushing in popularity in some countries in Venezuela and Africa due to credit uncertainties in its own currency.

We can see the trend of people seeking digital assets to be traded around the world because there is no national collateral.

Although interest in bitcoins varies from each country, in some countries, such as the United States and Singapore, bitcoin settlements at stores are accelerating.

Can be used for transactions that use large price fluctuations (volatility)

Investing in Bitcoin gives you the opportunity to make a big profit.

The reason why investing in Bitcoin is attractive is that profitability tends to be high due to high price fluctuations.

Stocks and currency markets move 1-2% a day and market analysts announce a rough market. However, the price fluctuation rate of Bitcoin is very high, and there are days when it moves more than 5% a day.
Not only that, but there is no stop high or low like the trading rules of the stock market, so if a one-way trend occurs, a big trend is likely to occur.

A currency that allows small investment and can be traded at any time

Bitcoins available on the exchange can be purchased from 0.0001 BTC.

For example, when 1 BTC = 1 million yen, the price of 0.0001 BTC is 100 yen. You can start trading with a small amount of money, and of course you can sell it.

In addition, there are many exchanges that can carry out leveraged transactions, so even a small amount of money can be traded several times to several tens of times the amount of money (Loss cuts can lead to the loss of valuable assets, so be sure to trade with excess funds).

Also, the trading hours is open 24 hours a day, 365 days a year, so make effective use of your free time.

Invest in the potential future of the cryptocurrency market

The high level of volatility is an investment target with high expectations as a financial product.

The price that Bitcoin was first traded was less than 100 yen. Currently, it is traded in a large price range from several hundred thousand yen to several million yen.

Cryptocurrency is still at risk of hacking, the current situation is that it has not been popularized yet.

However, the price fluctuations of Bitcoin are increasing year by year, and many people expect the price to rise.

What are the disadvantages of owning Bitcoin?

Bitcoin is a currency that makes full use of new technologies such as blockchain, so it has disadvantages.

What are the disadvantages of using Bitcoin?

There is a risk of chargeback

Due to illegal transactions and fraud on credit cards, if an arbitrary withdrawal process is performed, there is a chargeback function that it can be recovered.

However, in Bitcoin, if the transaction is approved, the chargeback function cannot be used.

Therefore, if there was a hacking damage, it will be difficult to recover even if the money is sent to another address. Please note that the compensation system is not currently available.

There is no official guarantee from the state or financial institutions

Legal currencies such as yen and dollars are supported by the value of currencies issued by central banks under the jurisdiction of the country. So, people can rest assured to use it as a valuable currency.

However, Bitcoin has no credit or guarantee to support its value as a currency.

In the first place, the bitcoin mechanism is not a centralized system, but a decentralized system using blockchain has been introduced. This is because there is no clear administrator, and Bitcoin holders manage each other by the network.

Against this background, even if you lose the bitcoin that you had deposited due to the bankruptcy of an exchange, you cannot receive the compensation system from the state.

Strong speculative aspects

Bitcoin price fluctuations are attractive for those who invest or trade for a short period of time.

For that, it may be possible to pursue a large profit, but there is a speculative side that you may suffers a significant loss.

Keep in mind that the currency value is not yet stable and there is a high risk of a crash.

Also, in leveraged trading using Bitcoin Forex, if you can buy and sell the market of sharply rising and falling prices, you will accumulate large profits. However, if you are trading at high leverage, the gambling factor is stronger and you will lose more than your margin.

Tips for safe operation of Bitcoin

Keep private key securely to prevent theft

With Bitcoin payments, the risk of personal information being leaked is extremely low.

This is because of the Bitcoin money transfer system, which maintains anonymity by using a private key and public key.

The private key is a code known only to you, and you can give permission to transfer money by digitally signing it.

On the other hand, the public key is recorded in an open trading ledger, but you can issue a Bitcoin address.

So to speak, the Bitcoin address serves as the transfer destination information, and the private key plays a role like a personal identification number.

Make sure you keep the private key and make a note of it so that it won't get out of your sight.

Use an exchange with strong security management

The private key acts as a secret code because it becomes the lead information. Make sure you keep the private key and make a note of it so that it won't get out of your sight.

In order to trade Bitcoin, it is necessary to buy and sell on a cryptocurrency exchange.

However, in recent years, multiple exchanges have also been damaged by hacking, and users must carefully choose which exchange to use.

In addition, pay attention not only to the security performance of the exchange, but also to the low fees, currencies handled, and ease of handling.

To check if security measures such as hacking are being managed, use an exchange that has been directly approved by the Financial Services Agency.

Security measures have been taken steadily at overseas exchanges, but in the unlikely event of a hack, it is not possible to respond quickly.

Make My Rules and trade with reasonable cash management

I explained that the large fluctuation of the price of Bitcoin is an attractive investment target. Especially, if you apply leverage, you can trade bitcoins with several times to 100 times more than the original funds.

However, it is not possible to deal with price movements that swing up and down like a rough wave, and there is a possibility that a large loss will occur.

If you are a beginner, make your own investment rules, such as trading only in kind, trading with a low leverage of 2 to 4 times.

Summary

This time, I introduced the advantages and disadvantages of every aspect of Bitcoin.

Bitcoin has low remittance fees, and prevent leakage of personal information. You can trade and make payments through a secure network.

On the other hand, there are cases where compensation is not provided at all if you lose bitcoins due to hacking damage.

The cryptocurrency market, including bitcoin, is still immature, so be sure to understand the advantages and disadvantages.

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