Whether you are a crypto-currency advocate or one of the skeptics, there is no escaping Bitcoin. It’s everywhere: in the news, all over the internet, and now it seems to have found its way into our private conversations. We are seeing high public interest in the topic because of its polarizing nature and its novelty. At the same time, there is plenty of fake facts and misinformation regarding Bitcoin on the internet, and we are here to set the record straight. Here are 5 bitcoin myths busted.
Bitcoin and Blockchain are the same
One of the most common misconceptions regarding Bitcoin is that it is the same as Blockchain – although we can understand where the confusion is coming from. Bitcoin was the first widely known cryptocurrency built on blockchain. Still, cryptocurrency hardly covers all the capabilities of blockchain technology. Blockchain as a distributed ledger technology can be used for many goals beyond financial transactions, although fintech is a big part of blockchain’s current success and popularity. Blockchain has made e-wallets and easy online transactions possible, but this has also created more room for scammers to exploit the users. Ensure that you are using an antivirus and connected to a VPN server before you make any financial transactions online.
Bitcoin is a Bubble
Bubbles or the economic cycles with unsustainable rises in market value have been around for a while. The Bubble pops when investors realize that an asset’s fundamental value has been largely overestimated. In reality, the nature of Bitcoin is not that simple. It has already been through multiple cycles over the last 12 years and has recovered every time. While it’s good to think ahead when it comes to your finances, Bitcoin has proven to be quite robust and can come back even after the toughest blows to its price point. Some financial experts say that the Bitcoin price cycle is typical for young markets, and the cycle will become more stable soon.
Bitcoin does not have any real value
This is an argument often made by Bitcoin skeptics, although they fail to mention that physical assets are neither the US dollar nor other fiat currencies back these days. Although it might be hard to wrap your head around that, this is how the currencies have functioned for quite some time. Bitcoin is, in turn, hard-coded to be scarce, which creates its value and makes it resistant to inflation. Contrary to a popular myth, there isn’t a limitless supply of Bitcoin just waiting to be claimed – Bitcoin supply is capped at 21 million. On top of that, every four years, there is an event called” halving,” where block rewards paid to miners are halved, contributing to Bitcoin’s value in the long run.
Investing in Bitcoin Gambling
While the price of Bitcoin can be volatile, we’ve seen that in the long term, its value keeps rising. In addition to that, we’ve seen less and less volatility over the years – likely the sign of the market maturing and becoming more dependable. Apart from that, though, the rise of institutional participation and increased understanding of Bitcoin in the general public has helped stabilize it and make it into a safer investment, which is hardly comparable to gambling, where you are always going to lose in the end.
Bitcoin is bad for the environment
The myth that has gained traction over the last year or two is the argument that Bitcoin is bad for the environment. While mining Bitcoin is an energy-intensive process, its impact on the environment is hard to pin down. Compared to the energy consumption of more traditional banking methods and other financial transactions, it becomes hard to draw a decisive conclusion. A New York-based fund Ark Investment Management recently concluded that Bitcoin is much more efficient than traditional banking and gold mining regarding energy efficiency. Additionally, a significant portion of Bitcoin mining is powered by renewable energy sources, and its impact on the environment is still marginal.
The media can often exploit the fact that Bitcoin is still somewhat of a mystery to many people; meanwhile, the curiosity around cryptocurrency has only grown over the last few years. While there are certainly risks involved in cryptocurrency, all other financial investments are tied to risks as well. Bitcoin has great potential. The way to use that potential safely is through reliable information.