Microsoft strongly encourages users to switch to a different browser than Internet Explorer as it no longer meets modern web and security standards. Therefore we cannot guarantee that our site fully works in Internet Explorer. You can use Chrome or Firefox instead.

4 of the Most Common Bitcoin Myths Debunked

Image from Kanchanara on Unsplash

Like many other new inventions, Bitcoin and cryptocurrency caught many by surprise, opening a continuous series of myths yet to be debunked. Since its discovery, Bitcoin's continued volatility and unstable regulations have earned it both sharp criticism and coveted admiration. Many Bitcoin myths emanate from these admirations and criticisms, and some of them will not go away anytime soon. If you’re starting your investment journey in Bitcoin and are wondering if what you’ve heard about it is true, these four debunked myths below will help you settle that. 

Bitcoin Lacks True Value

Since the most stable traditional financial assets, like the U.S. dollar, lack the backing of a physical asset like gold, it’s mythical to say only Bitcoin lacks true value. When you buy Bitcoin on Kraken, for instance, inflation will never affect it. This is by design, because Bitcoin is hard-coded to be scarce, which helps make it more resistant to inflation. Just like inflation with fiat currencies occurs when large quantities are created, an uncontrolled supply of Bitcoin could see a dilution in its value.

Since there will only ever be 21 million Bitcoins, its supply must be controlled to manage its value in the long run. One way this is achieved is through Bitcoin halving. Halving is an event where, every four years, block rewards awarded to miners in the network are slashed in half. This reduces supply and, by the economic principles of supply and demand, helps keep the price of Bitcoin rising.

Bitcoin Is Anonymous and a Choice Option for Criminals

Critics claiming Bitcoin is anonymous are mostly linking it to its pseudonymous nature. The Bitcoin network allows users to identify themselves with pseudo names and accounts but publicizes all the transaction activities from all the addresses. This means it’s possible to trace criminal transactions completed through a Bitcoin account by linking on-chain activity to real-world accounts. More countries are also implementing new cryptocurrency regulations, and the Financial Action Task Force (FATF), making it more difficult for criminals to get away with their illegal transactions.

Bitcoin Will Eventually Replace the U.S. Dollar

Bitcoin enthusiasts have contributed to the myths lists, and some of them believe Bitcoin will be so reliable that it will one day replace the U.S. dollar. This remains a myth because unless Bitcoin's volatility ceases, there’s no way it’s replacing the very stable U.S. dollar. 

Additionally, those vouching for Bitcoin, don’t know why they’re doing so as they don’t have any substantial argument why the dollar should be replaced. If Bitcoin addressed a major challenge brought by the dollar or traditional currencies, this argument would hold weight. Also, since Bitcoin and other digital currencies are still new and without any proven history as a store of value, few people are willing to trust them.

Bitcoin Isn’t Secure

While the cryptocurrency industry is, unfortunately, marred with attacks and security incidents, it’s wrong to conclude that Bitcoin is inherently insecure. Concluding Bitcoin is insecure can be likened to saying an entire banking system is insecure just because it reports a string of security incidents in a year. 

The fact that Bitcoin has never been compromised or hacked since 2009 means its blockchain is rigid and secure. There are also numerous crypto security precautions users can learn to keep their accounts and transactions safe. 

Investing in Bitcoin can be a great way to expand your financial portfolio, but you must get the wrong information out of the way before investing. Believing that Bitcoin lacks real value or that it will replace the U.S. dollar can misinform your investment decision and lead you astray. These four debunked myths should help you make the right choices when getting started.

Like: 0