Cryptocurrency appeared by the time people were already experiencing financial hardships after the 2008 worldwide crisis. Bitcoin was the first to enter the market in 2009, and the uncertainties about its value, stability and reliance haven’t changed much. However, some investors passionate about this technological advancement started using it when its price was close to nothing, eventually leading to more people trying it out of curiosity.
Now, we’re getting close to its 15th anniversary, and the Bitcoin price has reached unthinkable values. Miners need expensive computational power to maintain the blockchain, and the coin is getting adopted as legal tender in countries like El Salvador. So, as you can see, many things have changed, but what remains is people’s lack of trust in what Bitcoin can contribute to society.
Hence, we’ll get through some common misconceptions about Bitcoin and debunk them to reveal the truth about the revolutionary cryptocurrency.
Bitcoin has no real value in the real world, so why risk investing in it?
Bitcoin is a digital coin and lives on its blockchain, which is also an online network. Since it doesn’t have a physical form, people are reluctant to know whether Bitcoin is real money. At the same time, Bitcoin is considered with no utility because vendors and shops do not accept it.
Explaining why Bitcoin is valuable is not that complex. First, compared to fiat money, Bitcoin is scarce since only 21 million coins are provided. Therefore, at some point, no more Bitcoins will be deployed into circulation, which is why it’s so expensive now because it’s slowly reaching its maximum cap.
Plus, Bitcoin has been the start of the technological era. As society evolves, we use digital money more often than fiat money, at least in some parts of the world. It’s expected that at some point, the financial system will be digitalized entirely, which is why understanding Bitcoin’s value now when there’s little demand, is what can help people prepare their finances for the future.
Finally, more and more shops have started to accept Bitcoin payments due to an increasingly specific target audience. Most crypto enthusiasts want to use their Bitcoins and save them, which is why companies like Microsoft. PayPal, Starbucks and more allow crypto payments.
Bitcoin is not backed by a government, so it’s not adequately controlled
Indeed, Bitcoin is not backed by any official financial institutions, but this was its primary purpose. Bitcoin was created to be a decentralized economic approach to fiat money because this way, people could access it due to a lack of banking systems and no third parties needed to be involved in transactional processes.
Controlling Bitcoin is not done by a single authority point but is maintained by nodes and validators globally that filter, accept and complete all blocks with predetermined computational systems. This procedure helped Bitcoin stay censorship-resistant, so it’s not affected by corruption and other aspects from regular governments.
The truth is that many countries still don’t provide their citizens with reliable and safe banking systems, whether it’s about dishonesty, like in some African countries, or a poor economic state, such as Venezuela. With no access to the internet, savings accounts or technology, citizens are left without many choices other than to live their lives without having the opportunity for improvement.
Bitcoin is not safe because anyone can steal it
Bitcoin has been created to be one of the safest and best financial systems on the market since it’s based on cryptography, blockchain and consensus technologies. However, this advancement is still young compared to others, so breaches happened at some point, convincing people that anyone can steal their money immediately.
Indeed, in the era of technology, you’re never too prepared to face hackers and cybersecurity challenges. However, Bitcoin is the safest solution compared to current financial systems. Worldwide, users of debit cards found they were the victims of scams and frauds. That happens because most individuals don’t prioritize the security of their bank accounts, so it’s pretty easy for hackers to steal their identities and resources.
But with Bitcoin, things are more complex. While it can be possible for wallet users to be influenced to give away their coins, hacking the entire blockchain is almost impossible. Most crypto users consider Bitcoin hack-proof since nodes constantly maintain the blockchain. Hence, it would take a lot of time to crack a private key used for the decryption and encryption of software.
Bitcoin is too complex to understand, so why bother with it?
Bitcoin is not easy to understand by all age categories. Indeed, explaining it to our grandparents, who lived with only physical money and through several financial hardships, would be close to impossible because they’re not used to the basics of technology.
But even youngsters have trouble grasping it because even if it’s a new technology on the market, its white paper discusses a multitude of new terms and practices. So, to adequately use Bitcoin and reap benefits, it’s always best to thoroughly read the white paper and consult websites and people who critically analyze the market and cryptocurrencies. Depending on what you’re using Bitcoin for, such as transactions, mining or trading, you need to build a certain knowledge base to avoid risks.
Indeed, Bitcoin is exposed to volatility spikes, meaning prices can change in a matter of days. At the same time, fiat money is affected by inflation, recession and poor worldwide economic situations, so we know how it feels for money to devalue shortly and lose its value. Bitcoin’s prices can be predicted with proper knowledge and preparation, so investors can actually balance volatility if they invest in the long term.
Since its beginning, Bitcoin has been surrounded by speculations on its lack of value and security. However, understanding how the cryptocurrency works is the only way to see how important Bitcoin is for the economy. It is not only decentralized, so it’s not subject to corruption, but it is also incredibly safe due to encryption and constant maintenance from global nodes and validators.