Many are wary of Bitcoin because it’s new and foreign. On top of that, the cryptocurrency world seems to be filled with its own lexicon which can be intimidating for newbies. It doesn’t help that Bitcoin gets mostly bad press from mainstream media, contributing to a host of misconceptions about Bitcoin. Here, we’ll address to most common misconceptions to give you a more informed and balanced understanding of what Bitcoin is all about!
Bitcoin is for criminals
The idea that Bitcoin, or any cryptocurrency, is catered to illicit activities is one of the biggest misconceptions. It’s not difficult to see why people think this is the case, especially with scams and criminal activities that revolve around cryptocurrency. However, it’s important to remember that criminal activities occur in all kinds of industries. Bitcoin itself was not created to facilitate illicit activities, just as the internet was not invented to fuel piracy, phishing, and malware. According to a report, a federal agent has stated that the majority of transactions in Bitcoin are made by investors and not criminals.
It’s totally anonymous
And that brings us to the next point. The reason why the federal agent can boldly claim that transactions are dominated by investors is because transactions are trackable. Since Bitcoin uses a public ledger, addresses and transactions can be tied to a particular user. The recorded amount transferred, date, and time of transfers are recorded and immutable. This public ledger allows governmental bodies to trace funds, hence, transactions are not exactly anonymous.
You need to buy a whole bitcoin
The reason why many believe that you need to buy bitcoin in whole units could partly be due to images of “bitcoins” on the internet. Bitcoin is not actually a “coin” and you don’t need to buy a whole unit of bitcoin. Since Bitcoin is digital, unlike the coins we use in day-to-day transactions, it can be bought, sold, and traded small fractions. The units we use for Bitcoin are BTC, bit (0.000001 BTC), and satoshi (0.00000001 BTC). Most Bitcoin exchanges use BTC as a unit of measurement (eg. 0.0000024 BTC).
Your wallets contain crypto coins
Since Bitcoin isn’t actually a “coin”, it can’t be stored anywhere. This means that digital wallets don’t actually store Bitcoins in the literal sense — they store data such as private keys that are used to access Bitcoin addresses. In general, there are four main types of wallets: desktop, web, hardware, and mobile. When it comes to digital wallets, security is the main concern. Hardware wallets are considered the most secure digital wallet since they store important information and data in a piece of physical equipment.
You can read more about digital wallets here.
Bitcoin has a negative impact on the environment
Mining Bitcoin today is not like it was before when you could mine with a regular PC. Since interest in Bitcoin is growing exponentially, mining requires large amounts of computer power. Because of this, many opponents of Bitcoin point out the negative carbon footprints Bitcoin has for the planet.
While there is some concern for the amount of energy mining Bitcoin consumes, mainstream media has overstated the negative impact of Bitcoin on the environment. According to Dr. Katrina M. Kelly-Pitou, Research Associate in the Department of Electrical and Computer Engineering, modern-day banking consumes 100 terawatts of power annually, much more than the energy required to mine Bitcoin. Additionally, Dr. Katrina stated that “[even] if bitcoin technology mature[s]…by more than 100 times its current market size, it would still equal only 2 per cent of all energy consumption.”
Governments are against bitcoin
Governments may be putting in new regulations for this new mode of transaction but that does not mean they are against it. Contrarily, governments are working out policies to adapt to changes that Bitcoin is bringing to the financial world. Although some nations have made bitcoin illegal, major countries like US, Japan, and Hong Kong are hotspots for the development of blockchain industries. As Bitcoin gradually moves into the mainstream, it may even play a role in geopolitics. Governments and countries which do not own Bitcoin, or whichever highly valued global currency, will lose out.
Bitcoin gets lots of bad press and the media often amplifies its failures more than its successes. It’s easy for those new to Bitcoin to relate it to scams and the dark web. While its relationship with criminal activities is not unfounded, it’s ignorant to completely disregard Bitcoin at this point in time. Governments from all over the world are increasingly interested in the Bitcoin’s developments and are finding new ways to adopt and adapt to the new era of technology Bitcoin has ushered in.
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