It seemed like a good moment to examine some of the most prevalent myths and misconceptions people have about the world’s first cryptocurrency because social media platforms and news channels are flooded with fake news about bitcoin and you should not make any decision due to such myths.
With Bitcoin reaching new all-time highs and significant news breaking nearly every day. This guide is for you if you believe, for example, that Bitcoin’s value is “based on nothing” or that it is too unstable to be used in the real world.
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The first myth: Bitcoin is a bubble
While it is true that some buyers of Bitcoin do so in the hopes of making large profits, this does not imply that Bitcoin is a bubble that will fade away in the future. Economic cycles known as bubbles are characterized by unjustified increases in market value.
Investors finally discover prices are significantly greater than an asset’s intrinsic value, causing them to burst. Bitcoin has occasionally been compared to the infamous Dutch “tulip frenzy” of the 17th century.
Speculators drove up the cost of some tulip types 26-fold in 1637. The bubble burst after six months, and never fully recovered.
Second myth: Bitcoin has no practical applications.
Bitcoin’s detractors frequently assert that it has little practical application in daily life or, if it does, that usage is mostly related to illegal behavior. Both of those claims are untrue. Bitcoin has a long history of being used to send payments to anyone in the world without any bank or custodian authority. Major institutional investors are also increasingly using it as a gold-like hedge against inflation. Even, large businesses and retail stores now accept bitcoin as a valid payment mode. You can use your coins for cross-border transactions and you can even buy goods and services with BTC.
Third Myth: Bitcoin has no true value.
Although Bitcoin isn’t backed by a physical asset like gold, neither is the US dollar or practically any other form of modern fiat money. Due to its hard-coded rarity, Bitcoin is impervious to inflation. Fiat currency inflation can happen when a lot of new money is printed, diminishing the supply already in existence.
Fourth Myth: A rival will just replace Bitcoin.
The first truly successful digital currency was Bitcoin. Even though numerous new cryptocurrencies have long promised to surpass Bitcoin thanks to innovative features or other benefits, none have come close to this first crypto. So, it is expected that BTC will occupy the first place in the future of this crypto industry.
Myth five: Buying bitcoins is gambling.
While it’s true that Bitcoin’s price has fluctuated a lot over the past ten years, this is to be expected in a market that is still developing. Since its genesis block in 2010, Bitcoin’s value has steadily risen, now valued at over $1 trillion on the market. Additionally, as Bitcoin has developed, a strong regulatory framework in many nations has contributed to luring a surge of institutional investment. You need to pay taxes on your profit earned from bitcoin investment and the government cannot apply any taxes on illegal assets.
Myth Six: Bitcoin security is poor
The Bitcoin network has never been the target of a hack. Its open-source code has been scrutinized by numerous computer scientists and security specialists.
Additionally, Bitcoin introduced the concept of “trustless” peer-to-peer currencies by becoming the first digital currency to address the double-spend problem. It is 100% secured. But crypto exchanges are vulnerable and you should not leave your coins in your exchange account. Keep it safe in a digital wallet.
Myth seven: Bitcoin harms the environment
Mining bitcoins takes a lot of energy. But it’s challenging to assess the environmental damage. One thing about the digital economy is that it all needs electricity. Take into account the entire global banking system, the energy used to handle financial transactions, and everything else, such as the powering of office buildings, ATMs, neighborhood branches, and more.
Over the course of more than 12 years, there have been several price cycles for Bitcoin, and each time it has rebounded to new highs. With any new technology, boom and bust cycles are expected. For instance, Amazon stock plummeted from about $100 to just $5 after the dot.com boom in the 1990s before rising to become one of the most valuable firms in the world.
Some of the biggest Bitcoin investors think that the oscillations Bitcoin experiences follow a pattern typical of emerging markets. According to them, Bitcoin will have ups and downs with smaller swings and longer intervals between them until it eventually stabilizes.