Four Reasons Why Bitcoins Are Such a Big Deal

There is a lot of controversy around bitcoins. These are the top reasons why:

1) Bitcoins are not created by any central bank, nor regulated by any government. Accordingly, there are no banks logging your money movement, and government tax agencies and police cannot track your money. This is bound to change eventually, as unregulated money is a real threat to government control, taxation, and policing.

Indeed, bitcoins have become a tool for contraband trade and money laundering, precisely because of the lack of government oversight. The value of bitcoins skyrocketed in the past because wealthy criminals were purchasing bitcoins in large volumes. Because there is no regulation, however, you can lose out immensely as a miner or investor.

2) Bitcoins completely bypass banks. Bitcoins are transferred via a peer-to-peer network between individuals, with no middleman bank to take a slice.

Bitcoin wallets cannot be seized or frozen or audited by banks and law enforcement. Bitcoin wallets cannot have spending and withdrawal limits imposed on them. For all intents: nobody but the owner of the bitcoin wallet decides how their wealth will be managed.

This is really threatening to banks, as you might guess.

3) Bitcoins are changing how we store and spend our personal wealth. Since the advent of printed (and eventually virtual) money, the world has handed over the power of currency to a central mint and various banks. These banks print our virtual money, store our virtual money, move our virtual money, and charge us for their middleman services.

If banks need more currency, they simply print more or conjure more digits in their electronic ledgers. This system is easily abused and gamed by banks because paper money is essentially paper checks with a promise to have value, with no actual physical gold behind the scenes to back those promises.

Bitcoins are designed to put the control of personal wealth back into the hands of the individual. Instead of paper or virtual bank balances that promise to have value, Bitcoins are actual packages of complex data that have value in themselves.

4) Bitcoin transactions are irreversible. Conventional payment methods, like a credit card charge, bank draft, personal checks, or wire transfer, do have the benefit of being insured and reversible by the banks involved. In the case of bitcoins, every time bitcoins change hands and change wallets, the result is final. Simultaneously, there is no insurance protection of your bitcoin wallet: If you lose your wallet’s hard drive data or even your wallet password, remember: your wallet’s contents are gone forever.