If you are reading this guide is because you want to know how to use Bitcoin (BTC). As we have seen that the largest virtual currency in the world expanded everywhere, it is also important to know how we can use it and what are its purposes.
When Bitcoin was created, the main goal was to offer a peer-to-peer electronic cash system. Thus, we could expect to process payments with it. However, as the cryptocurrency market reached trillions of dollars in value, it is now possible to use Bitcoin for other things.
In the next sections, we tell you how to use Bitcoin, what it can be used for and its advantages and disadvantages.
What is Bitcoin?
Bitcoin is the largest cryptocurrency in the world. It was created by the anonymous Satoshi Nakamoto during the 2008/2009 financial crisis. Although at the beginning it was simply a coin and a tool for cryptographists, it then became one of the largest currencies in the world.
Bitcoin has some particular characteristics. It is a virtual currency with a limited supply (21 million BTC) that has no centralized authority. Indeed, Bitcoin is totally decentralized. Miners around the world and nodes make sure that the network works as it should.
Additionally, to use it, individuals do not have to request permission from a centralized party. Everything can be done in just minutes using the network. You can send BTC from one country to another without being worried about your funds being blocked or frozen.
Bitcoin Use Cases
There are different Bitcoin use cases that we should cover in this section. However, we will focus on just two of the main Bitcoin use cases that we now have: Bitcoin as a store of value and Bitcoin to send and receive transfers.
Store of Value
Bitcoin became popular as a currency for cryptographic experts and enthusiasts. However, due to its digital scarcity and properties (decentralized and permissionless), it also became a store of value for many.
Although the price of the virtual currency fluctuates on a regular basis (every single day), it is possible to use it as a store of value from debasing fiat currencies. If you have a look at the price of things in terms of BTC, they have never been cheaper than now. If you have a look at the price of things in terms of fiat currencies, they have never been higher than now.
In the last years, several companies have been purchasing Bitcoin in order to replace cash in their balance sheets. This shows how things have changed in ten years. Indeed, companies and individuals know that their BTC are protected outside the traditional financial system.
Transfers
Bitcoin can also be used for transfers. As you can see in the chart below, the average Bitcoin transaction has skyrocketed in the last months to over $400k per transaction. This can be explained due to the price increase experienced by Bitcoin and also because smaller transfers become less efficient (due to the larger fees).
It is worth taking into consideration that Bitcoin transfers cannot be blocked and will always be processed. This is why it became so important for both companies and individuals. Being able to use BTC to perform transactions is one of the main use cases of this virtual currency.
At the moment, Bitcoin is not able to process as many transactions as centralized networks such as VISA. Indeed, it can process between 3 and 7 transactions per second. This shows how Bitcoin is currently working.
Users that want to buy a coffee with BTC should better do it with Litecoin (LTC), which has faster transaction times and it is cheaper to use.
Advantages and Disadvantages of Using Bitcoin
There are some advantages and disadvantages of using Bitcoin, and we will share them with you in this section.
Advantages of Using Bitcoin
● It is permissionless
● Bitcoin is decentralized
● You can use it as a store of value or as a coin to transfer funds
● It does not depend on local governments
● Bitcoin does not know borders
● It is easy to get access to, buy or sell
● This virtual currency is the most secure in the market
Disadvantages of Using Bitcoin
● It is expensive to transact small amounts (high fees) (if you do not use the LN)
● Bitcoin is not as fast and cheap as other blockchain networks (but it is the most secure)
● It requires large amounts of energy to operate (concentrating the efforts on just some miners)
