Some things you should know
If you are about to start exploring the world of Bitcoin, there are a few things you should know. Bitcoin allows you to exchange money differently than you normally do at the bank. Therefore, it is advisable to take some time to inform yourself before using Bitcoin for significant transactions. Bitcoin should be treated with the same care you would treat your wallet, or in some cases, even more!
Protect your wallet
Just like in real life, your wallet must be protected. Bitcoin allows you to transfer money anywhere easily and gives you control over your money. These great features also come with security risks. At the same time, Bitcoin offers high levels of security if used correctly. Always remember that it is your responsibility to take the appropriate measures to protect your money. More information on how to protect your wallet.
The price of Bitcoin is volatile
The price of a bitcoin is unpredictable; it can increase or decrease in a short period of time due to its young economy, its novelty, and occasionally illiquid markets. Therefore, keeping your savings in bitcoin is not advisable. Bitcoin should be considered a high-risk asset, and you should never store money that you cannot afford to lose with Bitcoin. If you receive payments in Bitcoin, many service providers allow you to convert them instantly to your local currency.
Bitcoin payments are not reversible
No Bitcoin transaction can be reversed; they can only be refunded by the person receiving the payment. This means you should be careful to do business only with people or organizations that you know and trust or that have a good reputation. For their part, companies need to control the payment requests they show to their consumers. Bitcoin can detect typos and usually will not allow you to send money by mistake to an invalid address. In the future, there may be services that offer more priority and consumer protection.
Bitcoin is not anonymous
Protecting your privacy with Bitcoin requires some effort. All Bitcoin transactions are publicly and permanently stored on the network, meaning anyone can see the funds and transactions of a Bitcoin address. However, the identity of the user who owns the address is not known unless revealed during a purchase or by other circumstances. This is one of the reasons why Bitcoin addresses should be used only once. Remember that it is your responsibility to adopt good practices to protect your privacy. Read more about how to protect your privacy.
Instant transactions are less secure
A Bitcoin transaction is generally received within a few seconds and starts to be confirmed in the next 10 minutes. During this period, the transaction can be considered authentic but can still be reversed. Fraudulent users may try to deceive you. If you cannot wait for a confirmation, you can pay a small fee or use a system to detect unsafe transactions. For amounts greater than 1000 USD, you should wait for 6 confirmations or more. Each confirmation exponentially reduces the risk of reversing a transaction.
Bitcoin is still experimental
Bitcoin is a new experimental currency that is under active development. Although it is becoming less experimental as its use grows, you should keep in mind that Bitcoin is a new invention exploring ideas that have never been attempted before. As such, its future cannot be predicted by anyone.
Taxes and regulations
Bitcoin is not an official currency. That said, in most territories you will have to pay income, payroll, and capital gains taxes on everything of value, including bitcoins. It is your responsibility to ensure that you apply the taxes and other regulations published by your government or municipality.