Bitcoin could become the dominant method of payment in digital times: Bitcoin transactions are virtually free, making it a cheap alternative to credit or debit cards. Bitcoin is also a global currency, making it a good platform for international transactions. Transactions are virtually instantaneous.
Bitcoin is more secure than most existing financial services because the technology behind Bitcoin can be trusted if users want to know how it works, including network protocols, cryptography, IT security and payment systems. However, there are two key technological risks associated with the use of virtual currencies:
Security risk because virtual money is equivalent to cash in digital form. Security concerns relate to how people and services process and store their bitcoins, not the bitcoin protocol itself. Vulnerabilities in wallets and exchanges with loopholes can cause security breaches or be subject to cyberattacks.
For example, to protect its assets, 99% of SpectroCoin’s digital currency is stored in secure offline storage. In addition, SpectroCoin strongly recommends that all customers take preventative measures and frequently change account passwords and back up their data. Users are advised to check their accounts for suspicious activity, always exercise caution and avoid clicking on links or downloading attachments from suspicious emails.
Stability risk, because the payment system’s uptime should consistently increase by nearly 100%. Bitcoin transactions require the Internet to work. Although the recipient does not need an active Internet connection to eventually receive bitcoins, it is necessary if they want their wallet to reflect the funds received.
The biggest trust problem with digital currencies is speculation and price volatility, because currency owners are not guaranteed when the price will fluctuate and whether it will make a profit or a loss. By learning why prices can fluctuate and while users invest responsibly in the cryptocurrency market, it is easier to understand the reasons for growing trust in cryptocurrency: bitcoin payments can be verified, ability to choose commissions, increased security and control, transparency , reduced risk to sellers for everyone, including industry professionals, students and researchers.
While bitcoin addresses are not tied to users’ identities at the protocol level, and no one needs to provide any personal information during a transaction, complete anonymity is very difficult to achieve. Bitcoin is an alias because each transaction is recorded in a public block chain that contains only the public key and the amount of assets transferred; however, it is still associated with an email address.
Legal status and regulation
Because cryptocurrency is decentralized and has no central authority tied to any government, this peer-to-peer payment system attracts the attention of law enforcement and financial agencies. The legality of digital currency is a very common issue among many countries that are trying to determine how to handle cryptocurrency. The fact that bitcoin is an alias allows governments to accuse it of being a tool for criminal activity. However, the situation is changing rapidly, with many countries announcing new laws on bitcoin and cryptocurrency in general. Some are friendly, while others are trying to be more cautious.