Bitcoin has proven to be polarizing, and most diehards assert that the coins will substitute gold sooner. They also believe that it will replace money backed by Central Banks, credit cards, and the whole banking system. All factors considered, it is very unlikely this will happen, unless it is for the short-term. The situation gets even murkier when the media critics parade the coin as a hypothetical tool, with very adverse effects on the environment and a bubble that will soon burst.
This therefore impossible to come across a straightforward analysis by an investor. Being a new type of asset, it is crucial to have a deep look into Bitcoin and consider the hazards before investing in it. In the same line, we will look into the common misconceptions about Bitcoin that are not true.
1. It Is Just a Bubble
Even though a few individuals invest in Bitcoin to offer big returns, it does not imply that Bitcoin is a bubble. In simple terms, bubbles are economic cycles based on an unsustainable increase in market value. Eventually, they burst when investors find out that they paid a higher price for an asset with a lower fundamental value. Bitcoin has gone through cycles for more than 12 years and has recovered all times by hitting new highs.
2. Bitcoin Cannot Be Used in the Real World
Critics have claimed that Bitcoin does not have any use in the real world and is only good for illegal activities. These statements are not true. Bitcoin has for a long time been used to make payments all over the world, without the need of a bank or a third party to process the payment. Currently, it is widely used as an inflation-proof currency, especially by institutional investors.
Many industries have adopted the use of Bitcoin for processing payments and the one of them is the online casino industry. There are many casinos that now accept Bitcoin as a way of depositing and withdrawing funds. Casino.co.za lists some of the best Bitcoin casinos in South Africa meticulously reviewed by a team of experts.
Bitcoin Has No Real Value
Despite not being backed by any physical asset, Bitcoin is designed to be scarce and stand against inflation. All modern currencies, even the dollar, do not have a physical backing but suffer so much inflation. This happens in cases where too much is created, which weakened the current supply. Bitcoin has been coded only to have 21 million coins in circulation over time, which will instill its scarcity.
3. Bitcoin Will Be Replaced
Bitcoin was the first digital coin to gain massive success and despite new currencies promising to outdo Bitcoin by adding newer features, this has not happened yet. Over the past decade, thousands of cryptocurrencies have been developed, but Bitcoin still gains more value over time. With the ongoing innovation within the crypto space, there is a likelihood of a strong rival emerging.
4. Bitcoin Investments Are Like Gambling
Bitcoin has gone through price volatility for some time which is very common in a growing market. Tracing back to its genesis in 2010, the growth of Bitcoins value has been steady, and now it has a market cap surpassing $1 trillion. As Bitcoin gets even stronger, several institutions have championed the use of the coin, which has attracted many users worldwide.
5. Bitcoin Has No Security
Blockchain is built on a strong framework, and it is very hard to hack. Since Bitcoin runs on Blockchain, there have been no cases of the system being hacked. Bitcoin made peer-to-peer currency a reality, and all transactions cannot be reversed. If you look keenly, you realize that most misconceptions concerning Bitcoin’s security revolve around attacks on businesses that use Bitcoin but not the actual network. Attacks on wallet providers have raised so many questions about the safety of using Bitcoin.
6. Bitcoin Is an Environmental Hazard
The process of mining Bitcoin takes up a lot of energy, and this has raised so many questions from environmentalists. In essence, almost all aspects of the digital space are energy-intensive, even the global banking system and machinery required to process payments and power buildings. Compared to the traditional banking system and gold mining process, Bitcoin is much efficient and reliable. Most Bitcoin mining activities use renewable energy such as solar, wind, and hydro energy, contrasting with all the lies people have been fed.
7. Bitcoin Cannot Be Taxed
Many users think that since Bitcoin is mostly transacted online, they can easily avoid taxes. Indeed, Bitcoin is not regulated by any banking system or government, but it is untaxable is far-fetched. Bitcoin is mostly controlled through computers, and most governments regard it as a capital asset rather than an actual currency. Bitcoin, therefore, gets taxed as a capital asset in any state or country. There are transaction costs to be paid when transferring funds or when converting them to fiat currency. It might take a while before it fully goes untaxable.
Now that we have gone through the biggest misconceptions about Bitcoin, you might find it easy to invest in Bitcoin or not. This guide was not intended to convince you to buy Bitcoins— it might not work for everyone. But if used well, you can analyze all aspects that might conflict your interests and know the way forward.