At first, one bitcoin (1BTC) traded at a few cents, to later raise to a few dollars. Many companies realized the prospects of cryptocurrencies, including bitcoin, which brought a sudden surge in interest.
The rise in interest in cryptocurrencies was on par with the rise in their value. The record price in December 2017 hit 19 891 American dollars for 1 BTC (at the end of 2020 BTC finally broke that record, and went over $60,000). The subsequent bitcoin market turbulence caused small traders who were susceptible to dramatic changes in value to resign from bitcoin.
The ones who continue utilizing bitcoin surely realize how unpredictable the currency is. It does, though, give an opportunity to get rich quickly or to buy goods at a bargain price (especially when goods are paid with bitcoin which was bought for cheap and its value has risen considerably above the purchase price).
What are the advantages of paying with bitcoin?
Many bitcoin holders keep their virtual portfolios for weeks, months, or even years. It is due to the fact that they are waiting for an opportunity to make a lucrative, from their point of view, deal. In a situation when bitcoin has been bought at a knockdown price, paying for goods with it when its value is rising, is an excellent solution.
The ratio of bitcoin price to American dollar (the main converter currency to bitcoin) helps to give a clearer idea of how much is finally spent on the product. Of course, one can always sell their cryptocurrency and buy goods by means of other, traditional currency, but the cost of purchase may be disproportionally high when compared to that paid by bitcoin or another cryptocurrency.
The holders of digital currencies should also bear in mind the taxation on the conversion of cryptocurrencies to fiat currencies (which automatically reduces the portfolio value and increases the cost of purchase) and the consequences of failing to report such transactions.
One needs to realize that the supply of bitcoin is limited, therefore aggregation allows for better risk management, stabilization of the exchange rate, and control of the resources held. This kind of currencies was not considered in classical economics, thus they don’t operate by the same laws, for that reason is a much more favorable means in numerous business transactions.
What is important, transactions utilizing bitcoin are not subject to any regulations, which means the currency is not controlled by any country’s government. The lack of regulations certainly poses some risk, however, in the age of common control, the use of cryptocurrencies in transactions allows for increased privacy.
Card payments, as well as common bank transfers, always leave some trace that enables the government administration to check the movement of means. That may cause a lot of trouble. Buying goods by means of bitcoin guarantees privacy (especially at exeno); neither the tax office nor the government of any country or any other institution control who spends their means on what.