5 Mistakes About Bitcoin in Modern Financial Systems

Along with the crypto market, Bitcoin has shown that the financial system still has some way to go. But like a new thing, most individuals will have a mistake about Bitcoin, be it system, usability, etc. This error generally occurs in ordinary people who are new to Bitcoin.

Often Bitcoin errors are caused by two things; the error that appears, in general, is divided into two things: the perception of skepticism or distrust, and the second is due to lack of education.

Here are the Bitcoin blunders you need to know.

Speculative Bitcoin

Many ordinary individuals think that Bitcoin is a financial asset that is used for speculative activities. Although not entirely wrong, Bitcoin itself was created as a transaction tool that provides freedom or decentralization.

Bitcoin was created with a classical economic orientation where everything moves on an invisible hand based on the law of supply and demand.
But unfortunately, the interpretation of the Qibla has not been able to produce results like its initial function, namely as a transaction tool.

This is because, to become a transaction tool, several stages must be passed. Currently, Bitcoin is unfortunately still seen by most individuals as a means of speculation and a protector of wealth.

Bitcoin Reflection Bubble Economy

The first most common mistake is that Bitcoin is seen as a bubble in the economy that will drastically depreciate after a high rise. The perception that Bitcoin will end up experiencing a bubble is inaccurate.

This perception is that Bitcoin is a financial asset like any other financial asset that will appreciate. If most individuals were aware of this, they would not refer to Bitcoin as an asset that will experience a bubble.

If individuals see Bitcoin will experience a bubble due to appreciation, then all financial assets will experience a bubble. But from this, it can be realized that there are two possibilities the asset will end in a bubble or will continue to rise and be adopted as a medium of exchange, just like Bitcoin’s original intention.

Volatility Too High

Another fallacy with Bitcoin is its overstated volatility. Although not entirely wrong, this perception arose due to the early days of Bitcoin, where like stocks that had just made a public offering, their movements were very volatile or often called “fried” stocks.

This perception seems to be still strongly attached to Bitcoin due to the habit of most individuals viewing Bitcoin and the effect that Bitcoin is still relatively new. However, over time, its adoption and liquidity have continued to increase and will continue to increase.

As a result, with the increasing liquidity and adoption of Bitcoin, its capitalization will increase even more. The higher the capitalization, like other financial assets, the less volatility.

So this perception is very wrong due to the perception of high volatility that can only be validated with a less broad perspective. If this perception is maintained, it can be said that all financial assets have too high volatility.

Transaction Fees Too High

One of the biggest criticisms leveled at Bitcoin is that some individuals overvalue its transaction fees. This creates the perception that Bitcoin is not suitable as a medium of exchange or means of payment.

While it is true that transaction fees will increase as a result of Bitcoin mining, over time, these fees will continue to fall in the long run. This will happen as Bitcoin adapts as a medium of exchange and not just as a hedge of wealth or a speculative asset.

This is because individuals will use a more efficient network over time, with increasing adaptation to the use of Bitcoin. Following developments and the theory of supply and demand, the more exchanges take place, the lower the costs.

Currently, the cost is high due to the need for mining processes and transactions that are not yet common. But as time goes on and capitalization increases, just like gold during the gold standard, over time, the transaction costs will decrease and even turn into a piece of paper.

Forking and Competition

The last mistake that is most often stated is the potential for forking and the existence of competition that can make Bitcoin fall even to value. This perception is still wrong because no matter how deep the replica is made, so far, no one has been able to beat the Bitcoin system.

One of the parties trying the forking or duplicating process of the Bitcoin network is Bitcoin Cash. When Bitcoin Cash was created, many people began to believe that Bitcoin would fall as a result of being replaced by this competition.

But the reality is that currently, Bitcoin Cash is still falling below Bitcoin, especially in market capitalization due to differences in the system despite the intention to imitate. This misperception generally comes from overblown altcoins proponents hoping that Bitcoin will crash.

So even though some of these errors still occur, these errors also need to be known in depth. These mistakes can also be a stepping stone so that Bitcoin can continue to advance and achieve its original goal or hyperbitcoinization.