Most Common Bitcoin Myths Debunked

It seems like a good moment to examine some of the biggest myths and misconceptions people have about the world's first cryptocurrency, determine whether they are true, and set the record straight, especially with Bitcoin reaching new all-time highs and significant news breaking virtually every day. Let's distinguish reality from myth while taking the necessary risks to learn the real story behind the most widely used cryptocurrency in the world.

Myth #1: 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 itself is in a bubble. Economic cycles known as bubbles are characterised by unjustified increases in market value. Investors finally discover prices are far greater than an asset's intrinsic value, causing them to burst.

Debunked:

Over the span of more than 12 years, there have been several price cycles for Bitcoin, and each time it has rebounded to new highs. It is normal to predict boom and bust cycles with any new technology. Some of the biggest Bitcoin investors think that the oscillations Bitcoin experiences follow a pattern characteristic of emerging economies. According to them, Bitcoin will have ups and downs with smaller swings and longer intervals between them until it eventually stabilises. 

Myth #2: Bitcoin Has No Real-World Uses

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 behaviour. Bitcoin, on the other hand, has a long history of being used to send payments to anybody in the world without a bank or payment processor getting in the way. 

Debunked:

Bitcoin has earned the moniker "digital gold" because it is becoming well-liked as an inflation-resistant store of value similar to gold. Bitcoin is limited, much like gold (there will never be more than 21 million Bitcoin). Bitcoin can be delivered digitally as easy as sending an email, but gold is obviously heavy, large, and difficult to carry and keep.

When Bitcoin first emerged as a method of payment on the dark web, it drew criticism. However, when the first significant dark-web market was shut down, Bitcoin values immediately increased and kept doing so.

Some of it will be misused, just like any type of money. However, the illegal usage of Bitcoin pales in comparison to the use of US currency. Only 2.1% of the total amount of Bitcoin transactions in 2019 was reportedly connected to illegal activity, according to new research.

Additionally, since every Bitcoin transaction takes place on an accessible blockchain, it is frequently simpler for law enforcement to identify illegal activities than it would be in a conventional banking system. 

Myth #3: Bitcoin Doesn’t Have Real Value

Bitcoin may not be backed by a real item like gold, but neither is the US dollar or almost any other form of contemporary fiat money. Bitcoin is immune to inflation because it is hard-coded to be rare. Fiat currency inflation can happen when a lot of new money is printed, diminishing the amount already in existence. 

Debunked:

Not only is the supply limited, but there is also a predicted downward trend in the rate of new Bitcoin mining over time. Block rewards awarded to network miners are halved every four years in an event known as a "halving."

Due to the basic economic concept of scarcity, this helps to ensure that the supply is always decreasing, which has kept the price of Bitcoin generally moving higher over the long-term — from less than a cent at the beginning to more than $50,000 as of mid-February 2021. 

Myth #4: Bitcoin Will Just Be Replaced by a Competitor

The first truly successful digital currency was Bitcoin. Despite the fact that several new cryptocurrencies have long promised to surpass Bitcoin thanks to innovative features or other benefits, none have come close. 

Debunked:

With almost 60% of the market, Bitcoin is the most widely used cryptocurrency. Bitcoin's "first-mover" advantage and the purity of its goal as decentralised and open money are some of the explanations.

The software is open-source, though, so developers who are unable to win over the community can even split the Bitcoin blockchain and produce a whole new cryptocurrency. For instance, Bitcoin Cash was developed in this manner, although none of the Bitcoin clones has yet been able to fully eclipse the original.

Myth #5: Investing in Bitcoin is Gambling

While it's true that Bitcoin's price has fluctuated a lot over the past ten years, this is to be anticipated in a market that is still developing. With a market valuation above $1 trillion, Bitcoin has consistently increased in value since its genesis block in 2010. 

Debunked:

The volatility of bitcoin looks to be decreasing. According to a recent Bloomberg report, which compared the current Bitcoin bull run to the bubble of 2017, volatility is far lower this time around as a result of the emergence of institutional investors and the general stabilising impact of cryptocurrencies "becoming mainstream."

Myth #6: Bitcoin Isn’t Secure

There has never been a hack on the Bitcoin network. Numerous computer scientists and security experts have examined its open-source code. In addition, Bitcoin was the first digital money to address the double-spend issue, ushering in the era of "trustless" peer-to-peer currencies. Additionally, all Bitcoin transactions are final.

Debunked:

Some users have begun to doubt Bitcoin's security in the wake of high-profile thefts of early Bitcoin businesses with lax security measures and sporadic data leaks. However, from its inception in 2009, the Bitcoin core protocol has operated reliably and securely with 99.9% uptime.

Hence, as with any innovation, there is still a lot of apprehension and subsequent misconceptions about cryptocurrency. But as we just saw, most of these fears are not fact-based. So, even though personal finances should always be an individual’s well-thought-out choice, it is safe to say that Bitcoin is here to stay.

Written By: Devika Mishra
Edited By: Nidhi Jha