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Bitcoin Myths Debunked

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Bitcoin enthusiasts assert that digital currency will soon substitute gold, government-backed income, and credit cards and fundamentally alter the financial system. Apart from rational exuberance, it is very improbable, at least in the near term. On the other hand, media opponents often misrepresent Bitcoin as a gambling tool, an environmental catastrophe, a bubble, or worse. The risk renders an investor’s honest, sober assessment of the facts almost tricky, which is a pity. As a new asset class, consumers must do due diligence on Bitcoin and weigh the risks cautiously before investing. Rather than depending on daring explorers, bitcoin relies on a worldwide network of contending computers. As with safecrackers at a safe-cracking competition, these bitcoin processing machines attempt to guess the sequence to a digital lock, a lengthy string of numbers, with the right combination earning a few new bitcoins. Every 10 minutes, the arrangement changes, and the battle resumes.

Bitcoin Is Not a Secure Cryptocurrency

Many individuals have legitimate concerns about the integrity and protection of crypto exchanges, which is understandable given the absence of organizations or authorities to contact in the event of fraud. However, the reality is that bitcoin transactions are more secure than records of conventional money. An attacker who compromises the core network can tamper with each transaction. Meanwhile, in the instance of cryptocurrencies such as bitcoin, the data are kept in the form of blocks in a distributed ledger known as a blockchain. Cracking a blockchain is almost tricky due to the immutability of the blocks, which means that no one can change a block once it is created. Additionally, the records are freely accessible to anybody interested in joining the network. However, news of different crypto attacks may contradict this assertion. However, you should be aware that such events were caused by vulnerabilities discovered in cryptocurrency trading platforms, not by the cryptocurrency itself. 

Instability Makes Bitcoin Unsuitable As A Reserve

While Bitcoin is more unpredictable than, for example, government bonds, this is not always a negative thing. When gold was officially removed from the economic model in the 1970s, its price was highly erratic, rising tenfold in a decade, then plummeting 60% and remaining flat for decades. Gold was at its most volatile during the period when its value was rising. Occasionally, the most volatile commodities provide the most significant returns, and occasionally, they do not. Bitcoin is now in a “price discovery” period akin to gold in the 1970s, with frequent large swings up and down. Nonetheless, Bitcoin may not be appropriate for many investors because of its volatility. 

Bitcoin Eliminates the Necessity for Gold Mining 

Here is the difference between bitcoin mining and gold mining. Gold mining is one of the most damaging businesses on the planet. Bitcoin was first envisioned as a digital substitute for gold that functioned as a deflationary medium of exchange, capable of displacing inefficient banks and regulators. However, many fund managers are purchasing gold to protect themselves against bitcoin’s volatility. Tesla invested US$1.5 billion in bitcoin but also stated a desire to acquire gold. While bitcoin is presently enjoying all-time highs in price, gold will do the same in 2020. Neither has bitcoin supplanted established financial institutions. Central banks are striving to become very wealthy as a result of it. 

Cryptocurrencies Are Used for Illegal Activity

One of the most prevalent and, regrettably, oldest misconceptions about virtual currencies is that they are most often (or maybe most successfully) utilized for criminal activities. While it is true that crypto assets have been utilized by people with evil intentions and criminal organizations, the same could be said of fiat currency. As the first significant digital money, Bitcoin gained popularity in underground marketplaces such as the Silk Road. While it is true that some features of bitcoin, such as its anonymity, may have been attractive to criminals doing illicit business in that and other comparable marketplaces, it is crucial noting that the payments themselves were unlawful, not the cryptocurrency. Criminals may, and often do, conduct their crimes using fiat money as well. While the investigation into the patterns of money movement on the Bitcoin blockchain had shown that there was a point when most Bitcoin activities were focused on underground marketplaces and gambling sites, illicit activity now accounts for a negligible portion of overall flows.