Bitcoin has gained a lot of interest and attention after it skyrocketed to approximately $17,500 (USD) in late 2017. Since then, Bitcoin and other alt-coins (LiteCoin, Ethereum etc.) have been the subject of wide-ranging interest across the media. So here are the most common Bitcoin myths, debunked.
Bitcoin and other crypto-currencies are mostly used for illegal transactions.
The anonymity of Bitcoin makes it appear to be an attractive alternative for illegal transactions. However, this anonymity is really an illusion. Bitcoin is one of the most transparent currency systems to have ever existed, every Bitcoin transaction is recorded on a public ledger called the ‘Blockchain’. The Blockchain is essentially a data record which is decentralised meaning the data cannot be amended or tampered with. A report by the UK Treasury in late 2017 found a lack of evidence supporting illegal transactions used with Bitcoin. In fact, over a four-year study, only 0.61% of money entering conversion services were from verifiably illicit sources. Whilst other alt-coins such as Monero could be used in illicit transactions, front-runners like Bitcoin and Ethereum are virtually transparent making it harder to use them in unlawful transactions. Therefore the assumption that criminals predominately use Crypto is a myth.
Bitcoin is a ‘bubble’ waiting to burst.
A financial bubble is an asset that’s price deviates from its intrinsic value. Bitcoin has been commonly compared to ‘tulip mania’ boom in 17th century Europe. You can read more about it here and here.
In a nutshell, the ‘tulip bubble’ burst because tulips were a terrible store of value due to its lifespan and fungibility. Bitcoins, however, are immutable and they can be sent anywhere in the world within minutes without the need of an intermediary. Furthermore, there are finite number of Bitcoins that will ever exist, making them high in demand. It is hardly fair to compare the ‘tulip mania’ bubble to the Bitcoin bubble as its only in the early stages and it could very well last another 20 years.
Bitcoin as a crypto-currency, association with the word crypto.
Crypto is a word that is commonly associated with negative terms such as ‘crypto-attack’. This can make people hesitant to get involved with Bitcoin as it is a crypto-currency. However, the word ‘crypto’ just means concealed and ‘crypto-currency’ just means encryption techniques used to regulate the currency and verify transactions.
The market is too volatile and Bitcoin is a dangerous investment.
Ever heard the saying ‘good things come to those who wait’?. Well, the same applies to crypto-investments. Whilst the value of Bitcoin was quite volatile, graphs of its value show that the price of Bitcoin fluctuates far less than it did in 2016 and early 2017. Similarly, many people think they cannot buy into bitcoin as $10,000 USD (1 BTC). However, you can buy Bitcoin from as little as 8 decimal places (known as 1 Satoshi).
This blog on debunking Bitcoin myths is a part of our Crypto blog series, you can read more here: