Anytime a particular thing gets popular, a lot of myths start circulating about it. Bitcoin is the first cryptocurrency that got immense popularity by investors across the world. While some people know the potential of bitcoin, others stay away from it based on some misconceptions that are prevalent. So before believing anything that you hear about bitcoin, it would be a good approach to educate yourself about the myths and reality related to it. Here are some of the most common false facts about Bitcoin that most people think are true:
1. Bitcoin is No Applications in the Real World
Because bitcoin is a cryptocurrency, many people think that it will have no use in the real world. But it is as far from the truth as anyone can go because it is constantly being used in the real world by real people to make payments and perform transactions. Because Bitcoin is not reliant on any of the regulations of any particular nation or a governing body, it is virtually free from inflation.
Bitcoin is rightly called digital gold because investors and multi-millionaires have used it to manage their wealth. Since it is a cryptocurrency, the way it is transacted and managed is different from the traditional currencies. As it is related to finances, some of it can also be misused. Tracking illicit and fraudulent activities with real-world implications is easier with bitcoin.
2. Bitcoin will be Replaced
Bitcoin was the first cryptocurrency that took the world by storm and gave investors a different outlet. While the concern of Bitcoin getting replaced by other alternative cryptocurrencies is valid, one has to take the statistics and evidence into consideration before taking it as a fact. New cryptocurrencies have surely been introduced in the market, but that does not mean that Bitcoin is going anywhere.
Bitcoin currently makes up for more than half the market share of cryptocurrencies in the market. It is a decentralized currency with open-source software which makes it free from any regulations by a governing body. It is of a limited quantity, so the value is more likely to increase as the time comes. Even if new cryptocurrencies can emerge and possibly overtake Bitcoin, it is less likely that this cryptocurrency will be erased altogether.
3. Your Money Will be Stolen
A serious concern with investing in cryptocurrency has been the fear of getting hacked and losing all your investment. Bitcoin has not been hacked in its entire history, which makes it a relatively secure place for investing your money. Anyone worried about losing money due to the failure of transactions can also rest assured because all the transactions are not to be reversed.
4. Bubble Bitcoin
From an economic perspective, bubbles are supposed to be investments that are higher in price as compared to their actual value. Some people think that Bitcoin is a bubble and has extremely high prices with no significant fundamental value. That is not true even if the price of bitcoin is increasing exponentially. Another characteristic of bubbles is that they pop and reveal that the rise in the value was nothing but a mirage.
The reasoning behind Bitcoin not being a bubble is that the price cycles have constantly been fluctuating over the years. If bitcoin had been a bubble, its price cycle would have fallen to never recover again. But the 12 year-long life of bitcoin has shown that it has today become an important pillar in the cryptocurrency market globally. While experts anticipate stability in the coming time, there is also a chance of seeing more fluctuation in the prices of bitcoin.
5. Bitcoin has No True Value
Just because bitcoin is a cryptocurrency does not mean that it does not have real value. Anyone who is under the impression that Bitcoin has no real-world value needs to realize that neither does any other currency. And while a typical fiat currency is liable to inflation owing to large quantities in circulation, Bitcoin is inherently resistant to it. Bitcoin was created to be in a limited quantity which makes it a scarce currency whose value will only rise as time passes.
The scarcity of Bitcoin is deliberate to make its value rise over time with subsequent mining. Due to the process of halving, the value of newly mined bitcoin is reduced as well. The miners are paid in half of the previous value every four years, which drives the value of already circulated Bitcoin to a higher rate. Since the supply is limited and constantly reducing with the increase in mining efforts, bitcoin’s value is increasing with time and in the real world scenario, as explained by bitcoineranew.com/de.
6. Bitcoin is Not a Safe Bet
Many people compare Bitcoin to gambling and consider it a very insecure source of putting your finances. Unlike gambling which is entirely related to chance, Bitcoin has seen price volatility based on certain trends as any currency does when it is introduced in the market. Bitcoin has seen significant institutional investment over recent years, which has led to the constant decline of its volatility.
While it is natural that there are certain risks to any investor who decides to invest in cryptocurrency, it is no way higher than regular risk-taking in the financial market. The investment of any individual in Bitcoin will have to depend on their risk tolerance and attitude towards investments and returns. So while one can say that Bitcoin is not a sure-shot bet on increasing your investment, it is not a gamble either. If you are vigilant about the trends in volatility and have been careful with your investment, then you can get significant returns out of it.
If you notice the trends of misconceptions related to Bitcoin, you will see that almost all the facts rising about this cryptocurrency are related to the fear of losing money. If one takes into account the price volatility, making an investment will not be as scary as it is made out to be.