7 Biggest Bitcoin Myths
#1: Bitcoin is used for fraud and speculation
This is not entirely true. Approximately $10 billion worth of transactions are made every day in the world (an average of about 305,000 daily Bitcoin transactions).
Some of these transactions are investment purchases, while others are for speculation, and many others are for regular use.
So, for example, according to the World Economic Forum, 32% of Nigerians own bitcoins for peer-to-peer payments.
#2: Bitcoin is a huge bubble
Despite the fact that many people buy Bitcoin as a speculative investment in search of huge returns, this does not mean at all that Bitcoin is a bubble.
Bubbles are economic cycles characterized by unsustainable growth in market value. They eventually appear when investors realize that prices are much higher than the fundamental value of the asset.
Bitcoin, one way or another, is a catalyst for innovation and may well become a key player in the future of the global financial system. Money is rapidly becoming digital. However, Bitcoin’s success is not guaranteed and it may not be the right investment for everyone. As with any new financial paradigm, there are all sorts of risks and uncertainties.
#3: Bitcoin doesn’t apply in real life
Many critics of Bitcoin argue that it’s completely useless in real life, and if it’s used, it’s mainly for illegal activities. However, these claims are not true — Bitcoin has a long and transparent history as a means of making payments in the banking world. In addition, it is increasingly being used by large institutional investors as an inflation hedge similar to gold.
#4: Bitcoin is too volatile
Bitcoin volatility appears to be on the decline. A recent Bloomberg analysis compared Bitcoin’s recent bull run to the 2017 boom and found that volatility is significantly lower this time around. Why is that? The point is the growth of institutional participants and the general stabilizing effect of the “becoming mainstream” of cryptocurrency.
That’s right — Bitcoin is indeed very volatile, but that’s to be expected from a young and growing market. Since Bitcoin’s initial block in 2010, it has steadily gained long-term value — with a market cap in excess of $1 trillion (as of February 2021; see current market cap). And as Bitcoin has continued to evolve, a robust regulatory framework in countries around the world has helped attract a wave of institutional investment (Tesla, hedge funds).
#5: Governments are going to kill Bitcoin
Not certainly in that way. Yes, there are countries whose governments are negative about Bitcoin. But, for example, in the USA, Canada and most of the West, the situation is quite different. For example, a leading US securities regulator taught a course on cryptocurrencies at the Massachusetts Institute of Technology; The Commodity Futures Trading Commission, which regulates commodity markets, is a global innovator in the regulation of bitcoin derivatives; and the US Office of the Comptroller of the Currency recently allowed banks to provide bitcoin custody services. Central banks really care about financial stability above all else.
#6: Investing in Bitcoin is like a gambling
It’s up to you whether Bitcoin or any other cryptocurrency will have a place in your investment portfolio. It depends on your personal circumstances, risk tolerance and investment time horizon. Everyone knows that while Bitcoin has been steadily rising over the past decade, it has also had significant down cycles. Investors should be careful in volatile markets (and consider working with a financial advisor before making large investments).
#7: Bitcoin doesn’t provide security
Need to know: Bitcoin has never been hacked. Its open-source code has been scrutinized by countless security experts and computer scientists. Bitcoin was also the first digital currency to solve the problem of double-spending, making “unreliable” peer-to-peer currencies a reality. In addition, all Bitcoin transactions are irreversible.
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