November 24, 2021 10:23 am in Bitcoin

Common Bitcoin Myths

When there is a new area of investment opportunity, such as tech companies like Facebook or digital offerings like NFTs, investors may have questions about the viability of the resources or investment, and cryptocurrencies like Bitcoin are no exception. Potential investors have many questions about the nature of digital currency, especially since Bitcoin and other cryptocurrencies have grown in popularity over the last few years. The value of some cryptocurrencies has nearly doubled due to economic and Internet pushes, prompting rumors, myths, and untruths to circulate about the nature of cryptocurrency in general, and its viability as an investment opportunity. Here, we’ll look at some of the most common misconceptions about cryptocurrencies, as well as how much truth, if any, they contain. Bitcoin was launched in 2009 and received little attention for several years before becoming a hot commodity around 2013, resulting in a meteoric rise in value. Despite being around for nearly a decade, the following are some of the most common misconceptions about cryptocurrencies:

Debunking the Main Myths about Bitcoin

They are use mostly by criminals

This is one of the longest-running and, sadly, one of the most pervasive rumors about cryptocurrencies, the idea that it is mostly used for illegal online activities. It is true that they, like regular currencies, are used for this purpose, and those with criminal intent, as well as organized crime, make extensive use of cryptocurrencies. Regular currencies, on the other hand, are also used for this purpose, and one does not stop using regular currency simply because criminals do. The main driving force behind this rumor is that anonymous transactions are a cornerstone of most cryptocurrencies, and Bitcoin, as the first major digital currency, became the currency of choice on online black markets such as Silk Road.

The anonymous nature of Bitcoin transactions, as well as the difficulty, if not impossibility, of tracing them, have contributed to the myth that cryptocurrency is only used by criminals seeking to avoid detection. However, it is important to remember that it was the transactions that were illegal, not the cryptocurrency itself. Flat currency, such as cash, is also largely untraceable in certain circumstances, and criminals continue to prefer to use physical cash for a significant portion of their activities. According to research into cryptocurrency transactions, it was true that a lot of Bitcoin activity was focused heavily on black markets and gambling in its early days. Currently, however, illegal activity involving Bitcoin accounts for only a small percentage of its transactions.

Bitcoin is not a secure

One of the things that drew attention in the last decade as Bitcoin became more popular was the number of thefts and scams involving Bitcoin transactions, giving rise to the notion that cryptocurrencies are not as secure as traditional currency transactions. Because the majority of the thefts occurred on digital currency exchanges such as Coinbase, where criminals exploited vulnerabilities in cryptocurrency storage wallets, this does not imply that cryptocurrency itself is insecure. Naturally, investors would be concerned about the security of any digital assets they acquire, as such assets are vulnerable to hacking and theft; however, this is also true of physical currency in the case of bank robberies or identity theft.

Bitcoin, like any other asset, is vulnerable to theft depending on where points of failure in the network exist. In recent years, cryptocurrency exchanges and digital wallets have improved their security features to protect against left and hacking. Investors can take steps to protect and secure their investments by using physical USB wallets or securing their online wallet with additional authentication methods. It is also critical to purchase cryptocurrency from a reputable exchange, such as Coinbase or Robinhood, rather than from shady individuals.

Bitcoin is a scam

The concept of scams targeting potential investors is usually at the forefront of an investor’s mind when looking into any new venture, as history is littered with examples of scams against investors, such as multilevel marketing and Ponzi schemes. Given the history of fraudulent investments in new technologies and companies, the notion that cryptocurrencies are the latest scam is not unreasonable. This is exacerbated by the fact that, in the early days of cryptocurrencies, there were coin offerings that turned out to be fraudulent, as well as investment offers that ended up stealing legitimate coins from others. The wise investor, on the other hand, should approach Bitcoin and other cryptocurrencies with the same skepticism and research that they would any new investment.

Investors can be drawn into fraudulent scam opportunities with real currency in the real world as well, and the same level of caution should be applied to cryptocurrency ventures. If someone is interested in purchasing Bitcoin, it is worth researching the history of cryptocurrency, watching instructional videos produced by reputable sources, and thoroughly researching the nature of and security of whatever exchange will be used to purchase the coins. You can never completely eliminate risk in any investment, but the more information you have, the less likely it is that you will become a victim of a scam.

Bitcoin has no tangible value

The notion that one must have a physical item on hand for it to be valuable is rather antiquated. However, it is also true that digital assets such as Bitcoins are difficult to categorize under current laws and regulations that usually apply to physical assets. For example, it is difficult to classify digital currencies for tax purposes when filing with the IRS, and local laws regarding cryptocurrencies as taxable property are also unclear or out of date. Because they are difficult to tax, many people believe that digital assets and cryptocurrencies are just the latest bubble, fad, or craze that will fade or disappear over time.

However, taking into account that Bitcoins have been around for a decade now, and looking at the historical value of cryptocurrencies, it is clear that cryptocurrencies have been rising in popularity, and are integrating themselves into the real world in such a way that the risk of them becoming irrelevant or fading away is minimized. Cryptocurrencies can be exchanged for real-world goods and services; in fact, some local restaurants that offer delivery will accept Bitcoin payments. There is also some intrinsic value to cryptocurrencies given the cost of mining and producing them, which is now a complicated process, though it was simpler in the beginning. Currently, the cost of mining new Bitcoins is quite high due to the amount of electricity required, and as a result, Bitcoins do have a market value.

Cryptocurrencies negatively impact the environment

This rumor is based on the amount of electricity currently required to create a single new Bitcoin. This was not the case in the early days, when a single laptop could mine for Bitcoin, whereas now it takes an entire network of servers and powerful processors to do the same thing. Global mining operations for Bitcoin and other cryptocurrencies are now on a large scale, and in some cases require so much computational power and electricity to run that there is genuine concern that the demand for electricity will encourage the continued use of carbon-producing fossil fuels.

This can be offset by the use of renewable energy such as solar and wind power, as well as the fact that Bitcoin has a limit on the total number of coins that can be mined. That is to say, Bitcoin is a limited resource, and once all of them have been mined, no more will be created. It is also worth noting that Bitcoin mining does not require more electricity than modern banking systems and financial operations, such as the Wall Street Stock Exchange, or the amount of electricity required to run high-powered technological companies like Google and Facebook. While all of these have the potential to consume electricity at an alarming rate, which can have a negative environmental impact, it is also true that many energy companies are pursuing further developments in clean renewable energies to offset this, and that using already mined Bitcoins does not further harm the environment.

Investing in crypto is the same as gambling

In recent years, Bitcoin price fluctuations have been known to be volatile, often fueled by influencers or events both in the real world and on the Internet. As a result, cryptocurrencies have earned the reputation of being so volatile that investing in them is akin to gambling. Aside from the fact that this concept could apply to any traditional investment, such as a pumped up stock, one thing that is noticeable is that Bitcoin is now more than triple what it was only five years ago, and that any downturns in the currency value have often evened out over the long term, making investment in Bitcoin not only a sound decision, but also a profitable one. As Bitcoin is increasingly used for legitimate, real-world transactions and is taxed by strong governments with stable economies, the overall concept of Bitcoin and other cryptocurrencies becomes more stable. As time passes and the value rises, and legitimate taxable transactions serve as stabilizers, cryptocurrency becomes less volatile, less of a risk, and nothing resembling gambling and taking random bets on a rising value.