Bitcoin is a form of digital currency that is decentralized, meaning that it is not managed by any central bank or authority. It can be sent from one user to another on the peer-to-peer network and there is no need for intermediaries in between. Bitcoin has been under controversy since its launch.
Many people feel hesitant to invest in Bitcoin due to its unpredictable nature and the volatility of the market. Due to this, many myths have emerged in the market regarding Bitcoin that need to be debunked in order to make the users aware of the reality and help them in making the right choices.
Myth 1: Usage of bitcoin only for illegal activities
The first and one of the most popular myths about bitcoin is that is it used for illegal criminal activities and cybercrimes. People tend to believe this because bitcoin is not controlled by any central authority or bank.
Since it
runs without any government support, it has attracted people all over the
globe, including cybercriminals.
Cryptocurrency laundering cases can occur because online websites and wallets allow the user to add a fake username. This option of hiding your identity can be misused by criminals, but the possibility of this happening is rare.
Myth 2: Issue of safety while buying
and selling bitcoin
It is important to understand that choosing a bitcoin marketplace that is safe and stable is extremely crucial if one wants to avoid their account from being hacked. Selecting a safe bitcoin marketplace ensures that your money is safe.
To make your trading experience secure, bitcoin exchanges use 2-factor authentication, an escrow system and require mandatory account verification.
Myth 3: It is easy to hack
Any hacking incidents in the past have only happened due to poor supervision but the blockchain has remained stable and efficient. Bitcoin makes use of blockchain technology which makes it very difficult for hackers to penetrate the system.
It is a complex and inefficient technology that makes it impossible
to reverse or hack any transactions, thus securing your money.
Myth 4: Bitcoin transactions are
anonymous and untraceable
Blockchain technology is actually more transparent and allows users to trace their transactions on the network. The users have the access to view each wallet in the transaction changed. The bitcoins received can be monitored by people. Large charitable organisations all over the world use it to monitor donations.
Myth 5: Bitcoin doesn’t have
real-world uses
Many critics have claimed that bitcoin has no use in the real world and even if does, it is only being used for unlawful activities. These claims are incorrect. Bitcoin can be used to make payments to anyone all over the world and it doesn’t require a bank or intermediary in between.
A lot of
institutional investors are also increasingly using bitcoin as a gold-like
hedge against inflation.
Myth 6: Bitcoin is bad for the
environment
The process of bitcoin mining is energy-intensive but determining the impact of this process on the environment is difficult. The global banking system consumes a huge amount of energy to process transactions, run ATMs, different branches, etc.
Bitcoin is much more efficient in terms of energy consumption, as compared to traditional banking and gold mining.
Moreover, a major portion of the process
of bitcoin mining is carried out with the help of renewable energy resources
such as hydropower, wind power, solar power, etc. it only has a marginal impact
on the environment.
Myth 7: Investing in bitcoin is like
gambling
As a young and growing market, bitcoin is also bound to have some price volatility. What is important to note here is that its long-term value is readily increasing with time. A new wave of institutional investments is taking place due to the growth of a robust regulatory structure being set up in many countries.
Cryptocurrency is going mainstream and therefore there has been an increase in institutional participants, which has led to a steady decline in the market volatility.
Many investors make use of the dollar-cost averaging strategy to reduce the impact of volatility. This requires investing a fixed amount every week or month in bitcoin and it will result in positive returns despite the volatility in the market.
Written By - Himanshi Nebhnani
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