Six myths about Bitcoin that should be ignored

by Moris Beracha – With the entire distortion field surrounding Bitcoin, it is hard to see all the arguments in favor of the crypto currency.

However, we should consider that the world of this kind of currency is relatively new and for that reason, it is hard for many people to trust in them.

For that reason it is necessary to take some distance from some debates and analyses some myths.

“The price of Bitcoin is very high”

Despite having declined by more than 60% since its all-time high in December, the price of the currency, around $ 9,400 at the time of writing this note, still discourages many people from entering the market.

However, the currency can be bought in small fractions.

A single currency can be broken down into 100 million shares or 100 million satoshis, the smallest unit of bitcoin.

“The price of Bitcoin is very volatile”

The price of Bitcoin itself is volatile. However, it must be taken into account that for the first time in the history of mankind, there is a cryptographically safe and decentralized currency not backed by any central bank or any physical asset. Actually, it would be even more amazing if Bitcoin was already stable. The problem of volatility is likely to disappear over time when the stock market capitalization of Bitcoin becomes comparable to that of the assets with which it competes.

Cryptocurrencies are the most volatile and speculative asset class in the world, so if you invest in Bitcoin or other cryptocurrencies, you should know what you are looking for and you should only invest what you can afford to lose. If you have time, you will never be forced to sell when the price is low and can weather market cycles, including severe crises.

“Bitcoin is bad for the environment”

The Bitcoin algorithm is such that it automatically adjusts the difficulty of the cryptographic puzzle that the miners have to solve to validate a block and receive the reward so that it always takes 10 minutes to extract a block on average. The more resources are added to the Bitcoin network, the greater the difficulty. This difficulty is what makes the Bitcoin network the most powerful and, therefore, the safest on Earth.

While Bitcoin is valuable, companies will invest in mining equipment to obtain the reward that comes with the successful extraction of a block. These miners consume large amounts of electricity to carry out their operations, and this is what has been strongly criticized. But since the cost of electricity is the main operating cost for miners, they are always looking for cheap electricity around the world.

“40% of Bitcoins are controlled by 1,000 people”

A person can have hundreds of wallets, while one can have Bitcoins held by thousands or millions of people, which makes any analysis of the concentration of wealth among Bitcoin holders impossible.

Most wallets create a new address every time there is an incoming transaction. This means that someone with a hardware wallet would have received 5 times 0.2. Bitcoin will own 1 Bitcoin distributed in 5 different addresses. There is no way to know that these 5 directions actually belong to the same person. The great concentration of wealth in the Bitcoin world may or may not be a reality, but there is still no convincing evidence to close the debate on this point.

“Bitcoin is used to buy drugs and money laundering”

With Bitcoin, each transaction is public, which is not exactly ideal if you want to carry out illegal activities. Recently two reports have been published stating that only 1 percent of all Bitcoin transactions were used for money laundering or 44 percent for illegal activities. There is still no consensus on this issue.

If you are running a large illegal operation and suddenly decide to collect Bitcoins instead of cash, how will you pay your expenses? Most likely, you need to exchange to obtain a good fiduciary currency in exchange for your cryptocurrencies, and you cannot do it anonymously since many stock exchanges follow the procedures of Know Your Customer (KYC) and Anti Money Laundering (ALD) when registering users.

“Transactions in Bitcoin are slow and expensive”

Since the soft fork SegWit was implemented about 6 months ago, the theoretical maximum number of transactions per second increased from 5 to 7 per second to close to 20 per second, or 1.7 million per day. This figure is far from what it should be to compete with legacy payment systems. But it has never been the goal of Bitcoin Blockchain to record every single transaction. Many of the smaller transactions could be registered outside the chain, and this is precisely what the next Lightning Network will make possible.

The entire Bitcoin network has been designed around incentives. The rates are necessary to avoid spam attacks on the network. The rates ensure that the most important transactions, those for which high rates have been paid, are processed first.

About the Author
Published by Crypto Bill - Bill is a writer, geek, crypto-curious polyheurist, a dog's best friend and coffee addict. Information security expert, encryption software with interests in P2P networking, decentralized applications (dApps), smart contracts and crypto based payment solutions. Learn More About Us