In recent times, where everyone has been looking for new avenues of investment, the question of whether to invest in Bitcoin or not should have passed your mind multiple times by now. In order to find the answer to this question, one needs to have a contextual understanding of the functioning of cryptocurrencies with respect to traditional investments.
A cryptocurrency is a digital asset which can be used for payments and also as a mode of investment. Bitcoin was the first crypto currency to be ever designed successfully. At the time, the value of Bitcoin was insignificant compared to today’s value and not many people were aware of it. As the technology behind Bitcoin proved itself to be of value, the price of Bitcoin started appreciating immensely in the last 10 years.
There is a lot of information about Bitcoin and cryptocurrencies out there. For a person who is starting out, it will become confusing or misleading. So we advise the reader to continue with this article to understand the myths surrounding Bitcoin.
Myths of Investing in Bitcoin:
- Anonymity amongst Bitcoin users:
Most people who are starting out in the crypto world have come to a conclusion that transactions using bitcoin are anonymous. Well, we agree there is a certain degree of anonymity but every time somebody contributes to the blockchain network, there is a pattern, or trace that is left behind. Apart from that, when you avail Bitcoin services in a country with appropriate regulations, know-your-customer (KYC) is mandatory to protect the customers.
- Bitcoin cannot be used as payments in the future:
When we talk about Bitcoin, few tout it as the currency of the future. Suppose if we go shopping at a Hypermarket, it is possible to make the payment for our purchase using Bitcoin. If you are thinking about whether Bitcoin technology will replace the traditional financial system that has been working for us so far, well no one knows for sure. Firstly, the base network of Bitcoin is not scalable to billions of people and cannot be processed as fast as the existing visa networks. In short, Bitcoin doesn’t have the technological feasibility to adapt it for our daily uses. Having said that, innovations could always happen that solves scalability problems.
- Bitcoin is associated as a Ponzi Scheme:
This is a blatant accusation which many come up with when they hear about Bitcoin for the first time. So, to be clear, nobody in the world has autonomy and control over the monetary system design of Bitcoin. It works with a decentralized platform called Blockchain and everyone who has bitcoin has the right to sell and buy it at any point of time through exchanges.
- Bitcoin Volatility:
There has been a rise and fall in the prices of Bitcoin just like any other asset in the past decade. Bitcoin was continuously increasing at a steady pace till 2017 where it saw a sudden increase in its value. It continues to exhibit volatility because it is an emerging asset class compared to other assets like gold etc. On a broader level, Bitcoin has been in an uptrend.
- Bitcoin is used for Illegal Activities:
Lot of people have acquired this understanding about Bitcoin that it is used for selling drugs and guns on the black market majorly. Part of this myth was generated due to the element of anonymity of bitcoin transactions. This can be applied to fiat currencies as well. It is not the nature of the currency that determines its power to support illegal activities. It is dependent on the laws and regulations that allow abusers to take advantage of a loophole. Since it functions on a decentralized platform, people have misunderstood that there is no law governing the use of bitcoin.
- Bitcoin is Expensive:
Think of gold. Not everyone goes to the shop to buy 1 kg of gold. Some buy 1 gm too depending on their goals. Right now, owning a whole bitcoin may seem expensive but Bitcoin always allows you to buy portions of it as well. Well, if you are persistent enough, one might be able to accumulate 1 Bitcoin over the years.
- Bitcoin assets are prone to theft:
If you are wondering if investing in Bitcoin is safe and there are chances you might end up losing your assets, then you can relax as the chances are very low. When you buy on an exchange, you are provided with a digital wallet where you can store your bitcoin. Both the exchange and yourself will have access to it. If you want to go further and take full custody, you can move it to an offline wallet in which you can store your Bitcoin. In that case, only you know the pin to your digital wallet and it is actually more secure than storing in an exchange.
These are the most common myths associated with the usage of Bitocin and if you are just starting out, we recommend you to read more about how bitcoin works, blockchain technology. This will help your journey of investing in Bitcoin easy. If you want to learn trading, then check out Giottus – Cryptocurrency buying app and enjoy safe & secure trading experience. You can download Giottus trading app here from Playstore/Appstore – https://giottus.onelink.me/YWFR/giottusblog