2019-10-10 2017-11-15 Busting bitcoin myths Jana Kane 2019-10-102017-11-15

“Cryptocurrency”, are you familiar with this word? And what do you know about bitcoins? A lot of people have heard about them, some people know and only very few do not doubt in their knowledge. Let’s sort it out.

People like to speak about cryptocurrencies and about the possibility to take profit from them. Especially often they try to speculate on the vivid interest in this topic And this is perhaps normal. It is a characteristic human feature to invent and assume something lacking the information. For you to make your own opinion about the benefits and the drawbacks of cryptocurrencies and the prospects of their use we will cover in the article the most common legends about virtual currencies and Bitcoin in particular.

So, I present to your attention Bitcoin myths and their busting.

№1. Bitcoin is no different from digital money.

This is a myth. Digital money unlike Bitcoins depend on national currencies. They can be blocked or frozen. Bitcoins can’t be arrested. They are absolutely decentralized, they can’t be faked (their total amount is known, it is 21 000 000) or eliminated. Bitcoins appear according to the algorithm built in advance.

№2. Bitcoins cost is provided by computation and energy costs.

It is a myth. The matter is that Bitcoins are valuable themselves while they are valuable for people. For example, gold doesn’t cause any doubts for investors, because its quality is indisputable, it is material. But in case of national currencies everything is much more complicated. Of course, in theory, money must be conditioned by gold and exchange stock, but defaults are not so rare. Who but investor should know how the currency value changes with the falling demand, that is the trust.

№3. Bitcoins legality is questionable.

This is a myth. “All that is not forbidden is allowed”. At the moment cryptocurrencies are not marked by the legislature as quasi-money, so they are legal. In some countries Bitcoins are considered to be “private money”. They are convenient for paying, for Bitcoins as any currency are equivalent to the cost of goods and services.

№4. Bitcoins damage national currencies and the economic stability.

This is a myth. As an alternative to a national currency (with all its drawbacks) Bitcoin enables to make money transactions in safer conditions. Providing the essence understanding, the use of Bitcoins can promote business development and in its turn the development of the economic situation in the country.

№5. Everybody can create Bitcoins so they are useless.

This is a myth. First, the process of getting Bitcoins is called mining and it requires serious effort. There is special equipment for this and every year it becomes more and more difficult to mine the cryptocurrency. An ordinary computer is not enough now. Unlike ordinary currency, Bitcoins can't be printed at will. The cryptocurrency is useless when nobody uses it, and the same can’t be said about bitcoins. Today only 2/3 of 21 million of coins are mined. Their value is growing and correspondingly their use is growing too.

№6. 21 000 000 of Bitcoins are too little for a real currency.

This is a myth. Just as ruble has kopecks so BTC can have micro bitcoins. Moreover, 1 BTC is a hundred of millions indivisible units. And when all the Bitcoins are mined and there is such a need, the increased in price cryptocurrency can be divided into as many units as required.

№7.Bitcoins are easy to be taken over and appropriated.

This is a myth. Nobody can use other people’s BTC. They are stored on the global distribution net, not even on the wallet. Only knowing the keys one can get an access to Bitcoins on the wallet. If a person loses the keys to Bitcoins nobody every will use them. This is the system. “Lost coins make all the others a little bit more expensive. Think of them as a present to all the others”, Satoshi Nakamoto, BTC creator.

№8. Bitcoin is a scam as any other pyramid invested scheme.

This is a myth. First of all, Bitcoin should be understood as a convenient and safe means of making financial transactions. This is a payment technology which enables to avoid cheating and fraud. Every pyramid has a peak which is a center (a person or a group of people) where eventually come all the invested money. In BTC system there is no such a peak, no interested individual.

№9.To earn BTC it is enough to install a special programme to your PC.

This is a myth. An installed client is not enough. To mine Bitcoins great computer capacity is necessary which requires a large amount of electricity. When BTC just appeared it was possible to mine on a home PC or a laptop. Now professional equipment is necessary.

№10. Bitcoins mining damages the planet’s environment.

This is a myth. Today the whole Bitcoin net consumes as much energy as a small town with the population of about a hundred of thousand needs. The effects of mining on the environment are far less in comparison to resource extraction or even to the operation of large banks’ services

Is it worth investing in Bitcoins?

The question of whether the investing in Bitcoins is profitable is rather complex and requires a detailed response. Undoubtedly, cryptocurrency price is growing and this attracts investors. Especially after its rapid growth in 2013, Bitcoin attracted attention and was taken into account. Low base effect worked, when Bitcoin cost was extremely low against the world economy. There is a little hope for a sharp increase in Bitcoin price in the nearest future. Bitcoin can be recommended to an investor only as an investment “just in case” and providing the most favourable exchange rate. The matter is that Bitcoin has a chance to astonish people but it is better not to invest your last money, because these prospects are rather far and there always is a risk as in any investment. However, it is definitely worth buying bitcoins from time to time and keep them without harm to your budget.

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