What can Bitcoin be used for?

Bitcoin is a virtual currency that doesn’t require much introduction. It is a P2P electronic cash system that was developed to replace fiat currencies and over the years, it has really being a competitor for fiat money. The adoption of virtual currency keeps increasing day by day and more people are looking to buy bitcoin.

While a lot of people have an idea of what bitcoin is, many don’t know the limitless uses of digital currency. There are various ways you can use virtual currency and below are some of the uses of bitcoin.

Find out 10 Bitcoin calculators you have to know about in 2021.

Uses of Bitcoin

Low-cost money transfer

This is one of the common uses of bitcoin. You can use Bitcoin to send and receive money at a very low cost. This implies that with a minimal transaction cost, you can make and receive payments, unlike other online payment methods. The low transaction cost of bitcoin is particularly an advantage for international transactions as they can be very expensive. Bitcoin transactions don’t involve any financial institution, so the transaction fees are at the barest minimum.

Payment for goods and services

Bitcoin is an alternative currency to fiat. It was developed to serve as an alternative means of payment that is independent of any financial institution. Due to the increase in the size of bitcoin markets, several individuals, firms, and businesses now accept bitcoin as a means of payment for goods and services. People are seeing more reasons why they should embrace digital assets as a form of payment for services rendered. The low cost of transactions explained earlier is also one of the reasons why bitcoin serves as a great tool for payment.

Online Trading

Most people choose to buy bitcoin to make money from the crypto asset. Online trading is one of the ways you can use bitcoin to make money. Due to the high volatility of bitcoin, you can make money from buying and selling the digital currency, taking advantage of the price fluctuations. To make money from bitcoin trading, you have to buy the asset at a low price and sell it at a higher price. The success depends on how you can predict the movement of bitcoin’s price. Online trading can be done on different crypto exchanges.

Making private transactions

With bitcoin, you can make discrete transactions. Bitcoin provides a level of privacy that the traditional payment system doesn’t. Transactions cannot be traced back to you, and your deals are not linked with your real identity. However, the anonymous nature of bitcoin transactions could also be a disadvantage as it can be used for illegal deals and transactions.

As a tool for Wealth Management

Every fiat currency is backed by a central authority. The central bank of each country is in charge of its currency. This implies that the government has some power over your money. However, bitcoin is not regulated by any third party or authority. The bank can freeze your bank account at any given time or your assets confiscated by the government due to the power and control it has over it. Such can never happen with Bitcoin. Once you buy BTC and store it in your wallet, with your private keys, you alone have absolute power and control over your money without the involvement of any external body.

Where to buy bitcoin

Let’s take a look at some of the places we can buy bitcoin since we now already know what we can use bitcoin for.

Centralized exchanges (CEX)

A centralized exchange is the most common crypto exchange. It is a type of exchange that is handled by a third party. The third party is in charge of all transactions that take place on the platform. CEXs are known to have the largest trading volume and liquidity. In a CEX, users cannot trade amongst themselves because a central body controls all assets. Binance and Kraken are examples of CEX.

Decentralized Exchanges (DEX)

The DEX is the opposite of a CEX. It is a type of exchange that does not require a third party to control customer assets. No central body is in charge of transactions and trades. DEX users have control over their assets and trades. The exchange only serves as a platform to bring traders together. It is just like an online market where buyers and sellers trade between themselves. DEX uses an order book to connect buyers and sellers and also transfer funds between users’ wallets using a kind of protocol called a smart contract. It operates on the blockchain network to guarantee a safe transaction without a third party. IDEX and Waves DEX are examples of DEX

Peer to Peer exchanges

A P2P exchange is an online platform that connects buyers and sellers of crypto and it isn’t controlled by any central body. The difference between a DEX and P2P exchange is that a P2P exchange does not require or use an order book, so buyers buy directly from the seller. The platform only performs the function of an escrow for safe and secure transactions between traders. For instance, if you want to buy bitcoin using a P2P platform, you transfer the worth of BTC you want to buy to the seller and the seller transfers your crypto. However, the platform will temporarily hold the coin in escrow and won’t send it to you until the seller confirms that you have sent the Naira equivalent. One of the most popular examples of a P2P exchange where you can easily buy BTC is Remitano.

Bitcoin has had a great impact on the global money system and more ways to use bitcoin will definitely arise as adoption grows.