Common Misconceptions of Cryptocurrency

  • February 7, 2021

Here we discuss common falsities people believe relating to crypto!

Falsity #1

“It has no intrinsic value.”

Neither does the dollar. Bitcoin has guaranteed scarcity “built in” due to its deflationary nature. Bitcoin is 100% liquid, even moreso than a stock – Bitcoin can be exchanged for cash at any time of the day due to the crypto markets being open 24/7/365!

Falsity #2

“It’s only used by criminals for illicit purposes.”

Criminals are often the first users of new technology. The internet was mostly used for pornography when it was first introduced. Cash and Western Union are used by criminals for illicit purposes.  Today Bitcoin is used by many reputable Wall Street firms and banks, and the internet is relied upon by everyone. It is actually much harder to use Bitcoin than cash for illegal transactions due to the public ledger where all transactions are recorded whereas cash leaves behind no paper trail. The United Nations estimates that at least $2 trillion is used each year in the current financial system to launder money. Compared to Bitcoin, every time $1 is used to launder money, only $0.00125 in Bitcoin is used for illegal activities.

Falsity #3

“It could be hacked.”

As a network, Bitcoin is perhaps the most secure network on earth. Billions of dollars are paid to those who help maintain security of it, and in over 10 years it has retained its value. No one can steal from your Bitcoin wallet without you giving them your private keys or password. If a very unlikely cyber attack were to happen and get past the already secure network, the community could fix the issue and just move the system to another blockchain to undo the theft and unauthorized access. 

Falsity #4

“Major Governments won’t allow Bitcoin to succeed and will begin to ban it.”

Several governments have already tried to ban it, mostly unsuccessfully. Bitcoin is now too large to be threatened by any direct governmental attack, but if a major government were to ban its use it could certainly affect the price in the short term. However, most governments would not want to allow another country to get ahead of them in this emerging area that is being developed by the brightest minds of the world. Bitcoin is rapidly gaining adoption across the world and has even been officially classified as a legal currency in El Salvador – the first country to do so.

Falsity #5

“It’s too hard to use”

Earlier in its lifetime it was extremely difficult. However, now tools such as easy to use exchanges like Coinbase are available. You no longer need a PhD to use Bitcoin. Thanks to rising technologies making the Bitcoin ecosystem more efficient, paying with Bitcoin is as easy as scanning a QR code nowadays. It is important to recognize that people are building resources to make Bitcoin an even easier form of payment than modern payments such as credit cards or cash – these resources will only make Bitcoin better as time goes on.

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