Why Use Bitcoin?

Bitcoin may be technically brilliant, but is that enough of a reason to use it?

Why Use Bitcoin?

Bitcoin is a form of electronic money like none we’ve seen before. It’s technically brilliant, but before most people decide to try it, they’ll need a good reason beyond mere curiosity. Here are some of the things that attract bitcoin users - often called bitcoiners - to this exciting electronic currency.

Bitcoin Puts You in Control

Some people use bitcoin because of their politics. They don’t like a central bank controlling financial policy (especially after the financial crash in 2009, which was caused by banks making bad loans, and then trading those loans with other banks).

Many bitcoiners don’t like banks telling them what they can do with their money, and where they can spend it. Bitcoin is a decentralized currency, meaning that no one person controls it. It puts you in charge of your money, and no one else.

Anonymity

Some people like bitcoin for its anonymity. Lots of people buy things or donate to causes that they don’t want others to know about. If they use bitcoin addresses properly, no one will ever know who they are, or that they’ve donated to Wikileaks, say, or bought an embarrassing item that they don’t want showing up on their credit card bill.

Sending Money Internationally

Another reason that people use bitcoin is for cheap money transfers. If you want to send money from your bank in London to your friend in the US, then you might have to pay your bank £30 for the privilege. You could reduce the fee by using a cheque, but then you might find the receiving bank holding onto that cheque for days or even weeks in many cases.

You could use PayPal, but then you have to pay between 1-3.9% in fees, depending on where you're putting money into PayPal from, and hope that PayPal doesn’t freeze your account for some reason.

With bitcoin, you can send money across the network almost instantly, for far lower fees. That’s a huge gain for individuals, and potentially for companies, too.

It’s Easier Than Cash

It’s just another day at the office. Eric draws the short straw for the afternoon coffee run. Ten people want in. They’re clearly not going to use their credit cards, as they're not accompanying Eric to the store.

Jack has a ten dollar bill. Alison wants a $5 latte, but only has three bucks on her right now. Bill has the cash, but only on a Starbucks card, and you’re going to Nervous Joey’s, the independent store down the street. Only half of the rest have the right change, and the others give notes in various denominations to Eric, who is developing a headache even without the caffeine. 

“OK guys,” Eric says. “Pay me back later”.

They will, but he’ll have to chase half of them, and remember who bought what.

Wouldn’t it be better to have them send you the money in bitcoin instantly, via their mobile phones? Eric would have the funds by the time he got down to the store. And it just so happens that Nervous Joey takes bitcoins, too. Man, that was easy.

Lower Merchant Fees

You’re the manager at Nervous Joey’s. If you had to take a credit card for Eric’s $35 coffee order, you’d have to pay a hefty fee. That’s really irritating. But if Eric pays in bitcoin, the transaction fee is practically non-existent, which means that you can pass on some of the savings to Eric, who promptly spends them on a doughnut.

Better Security Than Credit Cards

Eric also wants to buy tickets to a local sports game that evening. If he paid online with his credit card, he’d have to submit his details via the Internet. There’s enough detail in that submission to give a hacker the keys to his kingdom, enabling them to make fake online purchases of their own, or even to create a fake card and empty Eric’s account.

Hackers break into companies and steal credit card details everyday. Home Depot lost 53 million peoples’ card details, and Target lost up to 40 million.

When you send bitcoins, the recipient doesn’t even have to know your name (unless you tell them, so they know who the tickets are for).

Investing

Bitcoin is catching on, but it’s still accepted by a relatively small number of merchants. Other people use bitcoin because they want to invest in it.

Bitcoin’s price tends to bounce around wildly because it’s a young, fast-moving technology, and markets reflect that. Many people buy bitcoin hoping for it to go up so that they can make a quick profit.

These are just some of the reasons some people use bitcoin. To work out how to get yours, check out my articles on mining, and buying bitcoins.