Common misconceptions about bitcoin

Bitcoin, the world's first and most popular kriptovalyuta, attracts many people around the world. Despite the fact that cryptocurrency has become more widespread and accessible, there are many misconceptions associated with its use and value.

In this article, we will look at some of the most common misconceptions about bitcoin to help our readers better understand this cryptocurrency and its role in the modern world.

Myth #1: Bitcoin is a pyramid scheme

The most common argument about Bitcoin is, of course, what this kriptovalyuta is financial pyramid.

With a high degree of probability, you heard a similar expression about bitcoin from those who found MMM. These people have formed a certain pattern of thinking that free cheese is only in a mousetrap.

We remind you that the definition of a financial pyramid is as follows: it is a system in which the income of members of the structure is provided by constantly attracting funds from new participants, that is, the income of the first participants in the pyramid is paid at the expense of the funds of subsequent ones.

Bitcoin is a decentralized currency and its price depends on supply and demand in the market. Unlike pyramid schemes, which usually promise high returns based on attracting new members, Bitcoin does not depend on new members to function.

As you can understand, this definition does not apply to bitcoin in any way.

Myth #2: Bitcoin is completely anonymous

The Bitcoin blockchain is public, that is, anyone can view the history of its transactions, because. all transactions are recorded on a public ledger that is used to identify users. The identities of wallet owners are not publicly disclosed, however, there are specialized companies that can determine the ownership of a particular wallet with a high degree of reliability. In addition, governments and regulators can track transactions that involve bitcoin and use this information to stop illegal transactions.

Bitcoin is a completely "pseudonymous" system, in which all data is publicly viewable, but hidden by pseudonyms rather than linked to real usernames.

Myth #3: Only criminals use bitcoin

We will not deny that at the beginning of its journey, bitcoin was indeed used for illegal purposes, however, the blockchain network has grown and at the moment only 1% of transactions are associated with illegal activities.

The main users of the world's first cryptocurrency are investors, traders and bots that work automatically. All of them speculate in cryptocurrencies in order to enrich themselves.

Do not forget that bitcoin can also be used to pay for services, purchase goods and transfer money.

Myth #4: Bitcoin is a bubble

During the growth cycles of bitcoin, statements are invariably made that the cryptocurrency is a speculative bubble. Many economists have compared it to tulip mania and the dot-com bubble.

Due to its unique features, Bitcoin is a decentralized digital exchange commodity, the price of which is completely determined by bidders in the open market. The set of factors they take into account determines the dynamics of supply and demand. Since bitcoin is increasingly distributed among investors, while its supply remains limited. Therefore, it is expected that in the long term, demand will prevail over supply.

The cryptocurrency market is relatively small compared to other financial markets. Because of this, cryptocurrency assets have a higher volatility than traditional ones, and in the short term, the imbalance of supply and demand manifests itself more often. In other words, bitcoin can show increased volatility at times, but volatility is a part of financial markets, especially those with rather low trading volumes and liquidity.

Myth #5: Bitcoin is not backed by anything.

This misconception is based on the fact that bitcoin has no physical form and is not backed by a government or a bank. However, Bitcoin is backed by blockchain technology, which ensures the security and transparency of its transactions. In addition, the value of bitcoin is determined by supply and demand in the market, which is the basis for the price of any other currency.

According to analysts, since bitcoin has no physical form and is not backed by a government or a bank, then its real value should supposedly be zero.

By the same logic, we can say that the banknotes that are in your wallet are also worth absolutely nothing. When the US dollar went off the gold standard in 1971, money was no longer backed by gold. In effect, this allowed central banks to create new money out of thin air. After the abolition of the gold standard, dollar inflation only increased.

Conclusion

People confuse other people with various misconceptions about bitkoine due to the fact that partially or completely did not understand the issue. That is why many have a negative image around crypto-currency. It's all so incomprehensible and complicated.

Bitcoin has a number of advantages over traditional currencies. It can also be used for purchases or payment for services, for speculation in the cryptocurrency market with the opportunity to get rich, but at least for illegal purposes.

However, like any other investment, bitcoin is not without risks, so investors in this cryptocurrency should always be on the lookout.

All in all, Bitcoin is a decentralized cryptocurrency that, despite some risks and misconceptions, continues to capture the attention of many people around the world. There's no point in even arguing here.

In this article, we have told you about the most common misconceptions that are associated with bitcoin.

Write in the comments what you think about bitcoin, as well as the aforementioned misconceptions. Perhaps you can provide your own examples.

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