Is Bitcoin really used by criminals all over the world? Today we discuss the top 6 Bitcoin myths regarding the cryptocurrency community. Do you believe in any of these?
4 September, AtoZ Markets – Just like with any other topics, cryptocurrency and, especially, the Bitcoin topic is surrounded by a bunch of myths. Myths come as a misinformation of some kind that seeks to represent various issues related to specific topics.
Top 6 Bitcoin Myths Debunked
In the case of cryptocurrency, most of the myths are negative, however. Let’s look over some of the most popular top Bitcoin myths and try to actually find the truth behind the presented facts.
Bitcoin price is too volatile to invest in it
The first part of the myths is not actually a myth – it is a complete truth. The price of Bitcoin is very volatile, but for good reasons. Just think about it – there is a decentralized currency that is not backed by any central authority and it is at the same time cryptographically secure.
It would not be possible for Bitcoin to be stable at this point in time, as it is still too young. The volatile nature of Bitcoin might very well stabilize when the leading cryptocurrency’s market cap will hit that of fiat currencies or gold, for example.
Bitcoin is a speculative asset, so if you decided to invest in it, you should only invest the sum of money you are ready to lose.
Bitcoin is used by criminals mostly
A lot of governments have been opposing Bitcoin and other altcoins basing their judgments on this myth. It could be true. Some criminals might have use Bitcoin and other cryptocurrencies in their illegal activities.
However, these criminals still prefer cash over any Bitcoin. The key use case for Bitcoin and crypto globally still stays the investment for the purpose of making a profit.
Is Bitcoin a Ponzi scheme?
First of all, what is a Ponzi scheme? A Ponzi scheme can be defined as a form of fraud that pays investors returns with the money from the investors that got lured into the scam later or with money from profits.
Since Bitcoin is a peer-to-peer open-source currency, there is no central entity that can control it. Thus, there is no possibility of carrying out any such fraud schemes. While, in fact, early Bitcoin adopters enjoyed huge profits, they are not benefitting from the later investors.
There is nothing backing Bitcoin
It happens that many traditional investors do not fully understand the concept behind a decentralized digital payment network, which leads them to the conclusion that Bitcoin is worthless.
Some people believe that Bitcoin’s limited supply is the key point that provides it with the value attribute, while others state that Bitcoin is useful due to the fact that it is the most prominent and secure decentralized ledger in the world.
Jim Rickards, Currency Wars author and gold bull has recently argued that there is nothing backing Bitcoin. However, he stated that in fact, confidence or consensus principle are backing the Bitcoin network and BTC as a commoodity.
Bitcoin Mining is wasteful
One of the recent reports suggests that Bitcoin’s network hash rate will consume as much power as Denmark by 2020. Some other reports state that Bitcoin uses the same electricity as the consumption of 674.5 average US homes yearly.
But is Bitcoin mining wasteful after all?
It depends on how you look at it. The truth is that the use of computing power acts as a purpose in Bitcoin, which is securing all of the transactions on the network. In case you believe that Bitcoin is not valuable, maybe this is a waste for you. So, if you don’t think that fiat currencies are valuable, maybe providing all the energy to the Federal Reserve is a waste.
People will not generate new blocks after 21 million bitcoins
Can we finish Bitcoin mining completely? After all the supply of Bitcoin has a hard cap of 21 million bitcoins. However, the network will still need miners to keep its secure transactions. One thing is sure the closer we get to 21 million BTCs, the lowe mining incentive will be. However, we will need the miners to keep the network up. Miners will make their income from the transaction fees.
Therefore, miners will still be able to receive a profit from transaction fees.
Think we missed something in this article about Top 6 Bitcoin myths? Let us know in the comments section below.