Bitcoin has become the talk of the town and numerous stories are spreading along with its popularity. Along with the success stories, many myths about bitcoin trading are also popular. Most people do not really understand Bitcoins as these currencies are based on a relatively fresh technology called the Blockchain. There are numerous myths on bitcoin creation, its usage, and trading.
Below are the popular 6 myths on Bitcoins that are widespread.
- Bitcoin is worthless and does not have any backing
This is a popular myth and people misunderstand that bitcoin does not have any backing. The fact is that Bitcoins are strongly backed by a completely decentralized ledger that is extremely secure. The Blockchain technology which is used in bitcoins is based on the idea of decentralized ledgers and that is what is backing bitcoins.
- Bitcoin is illegal and completely anonymous
Bitcoin is not at all anonymous, it is just that sometimes the synonyms of bitcoins are used. However, all the transactions of bitcoins undergo an audit trail and will be linked to the parent. Bitcoin is not at all an illegal community. It is a fact that many central banks are uncertain about using bitcoins and the topic is still under discussion. There are also countries like Japan and Germany, where bitcoins are part of legal commodities. Several online websites also accept bitcoins as a mode of payment.
- Bitcoins are mostly used by terrorists for illegal purposes
There are several people who believe that bitcoins are mostly used by terrorists and anti-social people for wrong deeds. But the fact is that Bitcoin has several balances and checks to avoid misuse. Even Europol has made it clear that there has been no evidence that bitcoins are used for such illegal purposes. As blockchain technology comes with many privacy issues, it is hard to use it for anti-social purposes.
- Bitcoin follows a Pyramid scheme
Another popular myth about Bitcoin is that it follows a Ponzi scheme or a Pyramid scheme. This scheme is centered on the Greater Fool theory. In a Pyramid or Ponzi scheme, the creator will collect money from people by giving them impressive returns. When the funds start cascading, the creator uses the funds to give impressive rewards. Until the funds flow, the Pyramid scheme will continue and it will stop when the flowing of the fund ends. Bitcoin does not follow this system as it does not have a central point of power. As it is a decentralized commodity, it does not give promises on the returns. While the Pyramid scheme becomes weaker with the increase in users, Bitcoin gets stronger with the increase in users.
- Bitcoin has become too volatile recently
By looking at the recent charts of bitcoin, people spread the myth that the currency has become too volatile recently. But the fact is that Bitcoin is a volatile currency straight from its launch in 2009 and it is not only the case with bitcoins, every currency has a volatile nature in its period of evolution. Bitcoin will have to go through some period to turn into a stable currency.
- Bitcoins can never be stolen
This too is a myth. Just like any of your assets, bitcoins can also be taken away. Even though Blockchain technology gives more security to bitcoin than the other traditional currencies, your bitcoins can be stolen if you lose your private keys or passwords. Some bitcoin exchanges have already suffered hacking and loss of money.