Bitcoin supporters believe the cryptocurrency will soon overtake gold, all government-backed capital, and credit cards, upending the banking system. Despite logical enthusiasm, this is unlikely to happen in the short term. However, there are some skeptics who think Bitcoin is nothing more than a con. Here is a closer look at this case and a response to some of the most common misconceptions that have developed over time.
Let’s take a look at them.
Common Bitcoin Myths Debunked
Here are some common myths that every bitcoin company has to face while doing business:
Bitcoins are worthless because they have no intrinsic value
The controversy over whether bitcoins have intrinsic value beyond their utility as a medium of exchange is raging. Sure, the decentralized currency, which isn’t backed by the government and isn’t tied to any commodity, would be worthless if society collapses.
However, there are counter-arguments to Bitcoin’s importance as a distributed network of exchanges and merchants. At the end of the day, supply and demand dictate worth. If this currency’s popularity increases and it becomes a mainstay, its value would rise as well.
Bitcoin is much too risky to be used as a safe haven
Though Bitcoin is more volatile than government bonds, this isn’t necessarily a bad thing. As gold was officially removed from the monetary system in the 1970s, its price was highly volatile, rising 10-fold in a decade before plummeting 60% and remaining flat for decades. Gold was at the most volatile while its value was rising. The most volatile assets have the highest returns on occasion, but not always.
Bitcoins are prohibited because they are not accepted as legal tender
Another important issue about Bitcoin is whether it is a legal tender. Legal tender in the United States consists of coins and bills minted and issued by the US government. But it’s not to suggest that bitcoins are illegal, since the US government classifies it as a virtual currency … something that the US Financial Crimes Enforcement Network (FinCEN) also acknowledges. Bitcoin may currently fall into some grey areas, but it is not illegal.
It is not a valid payment method
The most common misconception I will bust is the one that claims Bitcoin can’t be used as a payment tool. Many local and national businesses accept it, but because that might not be enough to persuade them otherwise, we chose a few global brands to list.
Tesla is the most recent global brand to declare that Bitcoin will be accepted as a payment method. People can also use Bitcoin to purchase cars. The list goes on and on. Expedia, Shopify, Microsoft, Wikipedia, Starbucks, AT&T, Overstock, and Whole Foods are some of the other global brands that embrace this cryptocurrency.
It’s a giant Ponzi scheme
A Ponzi scheme is a form of fraud in which investors are paid returns with money from later investors rather than income. There is no central authority to lead such a scheme since Bitcoin is a peer-to-peer, open-source currency. Although early adopters have reaped big rewards, they aren’t doing so at the detriment of those who came later.
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