myths about bitcoin

Part 5: Myths About Bitcoin

Bitcoin is still just a baby when compared to the financial market as a whole. However, there are already a lot of myths and misconceptions about the world's largest cryptocurrency, which we intend to address in this course. 

For example, you may have heard that Bitcoin has no underlying value or that it is far too volatile. Then you have come to the right place!

First myth: Bitcoin is just a bubble

You can trade Bitcoin with contracts speculatively as an investment, but that doesn't mean it's a bubble. Many have compared it to the "tulip mania" of the 17th century where speculators caused the price to rise by 26 times. Unfortunately, it burst after 6 months where the market crashed and never recovered.

Second myth: Bitcoin has no use

Many critics have claimed that Bitcoin is worthless and is only for criminal activities. This is a claim that is clearly not true as Bitcoin has long been used as a means of transaction for people around the world - without a centralised authority.

In addition, the cryptocurrency is nowadays used as a hedge against inflation by large institutional investors.

Third myth: Bitcoin has no value at all

Unlike the US dollar, for example, which is backed by gold, Bitcoin does not have an underlying value. However, Bitcoin itself is coded in such a way that it is limited in number, which makes it resistant to inflation. Therefore, it is valuable to own Bitcoin now, because one day it will have reached its maximum limit. 

However, fiat currencies do not because the majority of them are printed in large quantities and inflation increases accordingly.

Fourth myth: Bitcoin will be replaced by a better cryptocurrency

At the time of writing, it was over 13 years since Bitcoin came into the world and it is still the largest cryptocurrency, despite thousands of other cryptocurrencies. There are many cryptocurrencies that have been promised to take over the top spot, but so far none have even come close.

Fifth myth: Investing in Bitcoin is a gamble

About it has invested in Bitcoin over the past decade. we know that price movements have been very volatile. However, it is natural and somewhat is to be expected since Bitcoin is still relatively new and a growing market with a lot of hype. 

Countries around the world have also started to regulate the cryptocurrency which in the long run contributes to a more stable market. The price is still very volatile but as more institutional investors integrate Bitcoin the more stable it will become.

Sixth myth: Bitcoin is an uncertain option

The one must understand is that Bitcoins network has never been hacked. Moreover, the code it is programmed with is open source and regularly audits the network. In fact, Bitcoin has solved more problems than it has caused problems and is therefore very secure.