Bitcoin Wallets – All You Need to Know

Why might you want to use a cryptocurrency like Bitcoin, foremost?


Bitcoin has numerous benefits over fiat currency, but not everybody is aware of them. Read our detailed overview and discover all the advantages that a cryptocurrency poses for the end-user.

All You Need to Know About Bitcoin Wallets

In the last couple of years, the term cryptocurrency has been appearing in the media rather often. And when somebody is talking about a cryptocurrency, he is most likely to be talking about Bitcoin.

In 2013 Bitcoin reached its peak rate of $266, having had grown in value 10-fold in just a couple of months. But shortly after, it fell to a lower price with staggering speed. So, naturally, it has ignited a lot of debates regarding the future of the cryptocurrency on the global financial market.

Ever since Bitcoin has been increasing in its value though at a comparatively steadier rate. However, its fluctuations are still enormous when compared with traditional currencies. Being a digital money in the age of globalization, it shouldn’t come as a surprise that the number of wallet apps, which are used for Bitcoin transaction, has risen dramatically.

But let’s start from the beginning. Why might you want to use a cryptocurrency like Bitcoin, foremost?

Advantages of Bitcoin Network

Anonymity

First of all, all of Bitcoin payments are discreet. In order to perform any kind of transaction in a wallet application you only need a designated Bitcoin address of the recipient. It usually looks something like 8HkoawfiaRMN7jhbfiuHslpP9. The major benefit of these apps is that you can produce an unlimited amount of these addresses. Therefore, you stay completely anonymous, because knowing only the address is not enough to identify an account associated with a particular transaction.

No third-party interrupts

This is some of most widely discussed issues when it comes to Bitcoins. Governments, banks or any other financial institutions are not able (as of this moment) to interrupt a transaction or in any way affect an account. So, the nature of a cryptocurrency provides a greater degree of freedom to the end-user than any national currency in the world.

The reason why so much attention is drawn to this aspect is that it makes it particularly easy to commit fraud. Some government officials even referred to Bitcoin as a giant “money laundering scheme”. But we are not here to discuss politics.

And since there is no third party to identify or intercept a transaction, Bitcoin payments are free from sales taxes.

Simple, fast and reliable

Bitcoin is simply a superior candidate for cross-border money transfers, as it is essentially quicker and not as costly when compared with traditional currencies. And, the best of all, the exchange rates do not apply to a cryptocurrency, so any transfer has a very low cost. Plus, Bitcoin wallets eliminate any need for authorization requirements and confirmation delays.

But this is a double edge sword. On one hand, the nature of a cryptocurrency ensures that identity theft is impossible (since there is no identity associated with your account, to begin with). But, at the same time, it maximizes personal responsibility and, therefore, increases risks. Let us elaborate on this a little bit more.

Wire transfers operate on the so-called “pull” principle, where merchant charges you with a certain amount, and by providing your credit card, you essentially give out an access to a full credit line, and then a certain amount is pulled from your account. A cryptocurrency, on the other hand, utilizes a “push” system, where an account holder sends out an amount of money that he or she wants, with no additional data.

So here is a tricky part, with no personal information it is virtually impossible to create a safety net around Bitcoin wallets that would prevent you from accidentally making a wrong payment. Every transaction is completely irreversible and there is no bank that can freeze an account or withhold the money.

And to clarify something very important, you can lose your Bitcoin wallet, unlike bank account. All the data of your wallet is stored in a “wallet file” on devices. So, if you lose the file, you lose the money.

The Future of Bitcoin

The number of people who actively use or just hold the cryptocurrency is unknown, but it is undoubtedly rising. There are companies today, which accept payments in Bitcoin, and these are not “small fish” by any stretch of the imagination. Wordpress, Amazon, Zappos, Bloomberg and others are now offering Bitcoin as a payment option.

Of course, there is a risk associated with using any type of cryptocurrency: it is its unstable value on the market, although this drawback can be almost completely neglected with the use of Payment Service Providers (PSP) which allow account holders to momentarily exchange digital money into a fiat currency.

In its very essence, Bitcoin is an “American Dream” currency that implies maximum responsibility and absolute privacy for an individual. The fact that Bitcoin is still around and gaining popularity suggests that people want this new money system that ultimately relieves them from inconvenience associated with traditional financial institutions. It is practically impossible to predict the future of a cryptocurrency…

Will it replace the traditional means of money exchange? Will it be integrated with already existing model? Will government regulate it eventually?

No one can say for sure. But it will be exciting, to say the least, to see how the cryptocurrency market will shape itself in the next decade, because for now it seems like it’s on the verge of great changes.