Bitcoin is the first decentralized and uncontrolled currency. Since no central body owns the process for issuing new units, new coins are created at a fixed, predetermined rate. Unlike many government-issued currencies, this means that Bitcoin is immune from inflation, and is in fact a deflationary currency. Bitcoin also has the un unique property of “transparent anonymity”- meaning that despite all transactions and wallets being public through the Blockchain, all actors in a transaction are only identified by their bitcoin wallet address. Thousands of addresses are generated daily – this means that the user stays anonymous until they register both their personal details and their bitcoin wallet address somewhere (for example on a Bitcoin exchange). Bitcoin’s unique makeup also creates other strengths from the users perspective- the digital nature of Bitcoin makes it highly divisible and the lack of a central authority ensures that transaction fees are near-zero.
Bitcoin’s digital nature and lack of central body also shape Bitcoin’s weaknesses - lost Bitcoins are non-recoverable (meaning that if you lose your private key or the hard drive with your wallet gets corrupted or if you lose your bitcoin wallet seed, those Bitcoins are lost forever!). Take the case of a British man, who in 2009, threw away the hard drive that contained his 7500 Bitcoins. At the end of 2013, the value of Bitcoin was nearing $1200, meaning there was a hard drive at a dump with over 8.25 million USD stored on it! Stories like this are not uncommon as early miners have been known to mine thousands of new coins, which would have made for a small fortune even with todays weak Bitcoin exchange rate.