Myths and Misconceptions About Buying Bitcoin

Adam Robertson

@Adamjr

BitcoinBitcoin BuyingBitcoin GuideBitcoin MythsBTC Myths and Misconceptions

Despite being in existence for over a decade, Bitcoin (BTC) is going mainstream now. Unfortunately, its relative newness has bred the perfect ground for myths and misconceptions about it to thrive. For the most part, the mainstream media hasn’t helped its cause either. Ignorance about their function has seen them misrepresent and downright discredit it. Opinion and news pieces portraying them as a scandal and a bubble waiting to pop abound, even in respected outlets.

So for a budding investor, the negative press may be confusing, even discouraging. But it doesn’t have to be that way. This article examines 9 Bitcoin myths and misconceptions you may have heard. We will also show you why you should still invest in BTC anyway. So without further ado, we should dive in.

9 Often Peddled BTC Myths and Misconceptions

Opinion on Bitcoin comes in all shades and colors. The negative thoughts range from the ridiculous to the tragic. Here we present 9 of the often peddled BTC myths and misconceptions.

Bitcoin is a Dirty Currency

The anti-Bitcoin crusade has constantly peddled the narrative that it is dirty crypto. They use the fact that BTC mining is an energy-intensive activity making it have a considerable carbon footprint. It’s true that Proof of Work mining, which BTC subscribes to, consumes a lot of energy. As such, BTC does have an impact on our environment. But is it that significant to warrant the condemnation that it receives?

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Christmas Lights Consume More

Hardly! Available data shows that BTC’s carbon footprint pales compared to other widely accepted and enjoyed activities. For instance, powering Christmas lights in US households consumes more KWh than BTC does annually. 

Again you cannot compare its energy requirements against traditional financial systems. Completing bank transfers and card payments consumes far greater power than the collective BTC transactions.

BTC is Going Green

All these realities get swept under the rug by sensationalist media out of tune with current realities. Additionally, they conveniently ignore that the BTC ecosystem has readily embraced green energy.

A study by Cambridge University suggests that up to 40% of PoW Mining uses renewable energy, chiefly hydropower. Moreover, this figure is bound to grow as more nations encourage clean energy practices across different sectors.

So, no, BTC isn’t and won’t boil the oceans.

You Need a Lot of Money to Trade BTC

At the time of writing, one BTC costs $ 31,449.70. Of course, the figure will rise and fall depending on the market sentiment. To many, this is a considerable sum to cough at a go. 

BTC’s Divisibility

So investing in BTC seems a tall order for the regular guy. But do you have to buy a whole BTC from the onset? Not really. See, one of the coin’s positive features is its divisibility.

You can divide a coin into eight decimal places. The smallest BTC unit, the Satoshi, is many times smaller than the US cent or any other fiat you’re using. So you can buy and pay with fractions of the coin you can afford.

You Needn’t  Break the Bank

Of course, each crypto exchange you get your BTC from will place minimums on the amount of cash you can spend. But all in all, the coin remains affordable to many. Sure, to accumulate large volumes of the asset at once, you’ll need deep pockets. 

That said, the average guy can still acquire and trade in the asset without breaking the bank.

BTC is anonymous and, Therefore, a Tool for Illicit Trade

There’s a misconception that transactions over the BTC network are anonymous. Consequently, they enable illegal activity to thrive.

While it’s true that cryptos, including BTC, have been used illegally, it’s not a feature that’s exclusive to them. Again the transfer of proceeds from crime via BTC isn’t as endemic through legacy financial means.

Addresses Remain Public

Though the network masks your identity, your wallet addresses remain public. Also, your transactions on the Blockchain are immutable. So anyone can trace those transactions back to you if they want to since you can’t erase them. It would be foolhardy for criminals to use a system that would easily expose them.

Furthermore, even when criminals have used BTC and Cryptos for their activities, it’s been in low volumes. On the flip side, the traditional banking system is the usual conduit for moving funds acquired through or intended for ill means.

We’ve Crypto Forensics Now

A good thing might fall into the hands of people who misuse it. For example, the banking sector has many sound moving finances, but fraudsters exploit it to transfer funds from corrupt deals. It would be absurd to call for the disbandment of the financial sector because of the wrongdoing happening there, wouldn’t it? 

Today, it’s important to note that Blockchain forensics firms act as watchdogs in the sector.  They detect fraudulent activity helping financial service providers and authorities stem them.

You have to be a Computer Geek to Trade BTC

No, you don’t have to speak code to transact in BTC. You didn’t have to learn the technology behind your internet connection or phone to use these to communicate. That didn’t stop you from doing so effectively, too.

The same goes for BTC and its network. You don’t need to learn the intricacies of their work to trade in the currency. All you need is a willingness to learn and an effort to practice the lessons in its trade.

BTC is Unsafe/Prone to Hacking

You shouldn’t invest in BTC because they’re an easy target for hàcking. Right? Wrong! None of the exploits in the cryptosphere has successfully compromised BTC or its network.

BTC is Impregnable

Bitcoin’s architecture makes it impregnable. Its consensus mechanism and global distribution of nodes make it impossible to breach it from any single point. That should give you confidence that it has a sound technical structure.

Often what’s presented as a BTC hack is a breach of either the exchange or wallet(s) storing it. Thus, it’s disingenuous to blame the security flaws in exchanges and wallets on BTC.

BTC is a Ponzi Scheme

Another school of thought holds that BTC is a Ponzi scheme. But, unfortunately, several crypto projects have indeed ended up being scams that ripped off the unsuspecting.

However, BTC doesn’t fall into that category. It remains the longest-serving crypto project today. Its utility originates from the value it holds as a means of exchange.

Not a Get Rich Quick Scheme

Ponzi schemes entice investors by promising them outlandish returns. They use new members’ initial investments to pay early investors. However, their models could be more sustainable, leading to late investors losing their funds.

Granted, BTC experiences vast upsides and downsides too. But that’s true for high-risk assets. You may make significant profits or losses with it depending on the market. That said, it isn’t a get-rich-quick vehicle that an individual or group uses to defraud you of your money. 

BTC is Not a Sound Store of Value/ Doesn’t have Intrinsic Value

Bitcoin’s detractors suggest that it only has a few usages except for a few retailers that accept it. However, everything about BTC disputes this assertion. Even though it lacks the physical backing of an asset, BTC finds its utility and significance in its function as a monetary system. Similarly, the USD draws its relevance from the confidence its value attracts globally. 

Hard-Coded For Scarcity

Just like any precious metal, BTC is scarce. It has a lifetime supply of 21 Million coins. Again it undergoes periodic halving that helps increase its scarcity. It’s this scarcity that makes it valuable.

The coin’s hard coding for scarcity makes it a good hedge against inflation. That’s why institutional players are investing billions of dollars in it. Would they do so if they didn’t see value in it? Of course not.

Bitcoin is a Bubble

Another favorite misconception is that BTC is a bubble. Respected entrepreneurs and business writers have said as much. They’ve repeatedly warned the public about its impending death, urging them to steer clear of it.

Not losing Steam

But that isn’t true at all. Thirteen years after its inception, BTC has retained steam. If anything, it keeps on gaining momentum and acceptance. If it’s a bubble, it’s sure taken a long time to burst; neither has it showing signs of doing so soon.

Many have erroneously compared BTC to the tulip craze of the 17th century. Tulips, then a status symbol, were appreciated, creating a momentary bubble. As a result, production increased, but many lost their small fortunes when the market corrected itself.

Not Your Modern-Day Tulip

Although some hold BTC speculatively, it’s no modern-day tulip. Unlike the tulip, it stores and moves value better. It is also scarce and finite, like gold. So despite its volatility, it will turn useful soon.

Bitcoin has experienced booms and bursts, which is expected of any nascent market. The pattern will continue until it stabilizes in the future.

Investing or Trading in BTC is Gambling

You may have heard them compare BTC and crypto trading to gambling. What they need to tell you is that the two are fundamentally different.

Gambling is purely speculative. It thrives on whims and hunches. Crypto trading, on the other hand, is a science. Investors seek profits by using technical and fundamental analysis to read markets.

Not a Gamble

Investing creates value. Gambling doesn’t. The latter involves taking money from the loser and handing it to the winner. There’s no science to it.

Bitcoin’s mainstreaming is shifting how we think about it. Today many consider it an asset, just like stocks and bonds. Yes, as is with any investment, you will be aware of speculators. Nevertheless, many use time-tested trading principles and techniques to grow their currency holdings. As such, it differs from any gamble.

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Final Thoughts

Thirteen years on, Bitcoin is finally getting the recognition it deserves.  But since it’s still “new” to many, there’s plenty of ignorance surrounding its workings. That ignorance provides a fertile environment for spawning BTC myths and misconceptions. Any new investor may feel discouraged by the negative rap that the coin is receiving. However, they shouldn’t be amid the noise and dust raised against it lies the actual value of BTC. 

Btc

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The misrepresentations notwithstanding, BTC is a solid investment and will only grow better.  It’s a pity that you can’t avoid them. But you know what will be pitiable? It’s passing over a firm investment that BTC affords you because of misinformation.