during existence bitcoin And other cryptocurrencies, a large number of misconceptions have emerged about them, which are still spreading among people until now. This leads to cryptocurrencies being treated negatively, as the vast majority of myths about digital currencies aim to discredit them.
In this article, we will look at the most popular of them and reject them once and for all.
Bitcoin can be hacked
Cryptocurrencies are created based on blockchain technology, which organizes a database consisting of a series of blocks. Each successive block contains information about the previous blocks. This database is stored simultaneously on all computers of the system participants.
This technology is based on the principle of decentralization, that is, the database is not in one place, and all computers participating in the system form a network. To influence the network in any way, it is necessary to get 51% of its hash rate. Only then will it be possible to make changes to transactions and force a minority to accept them.
Bitcoin’s computing power is distributed all over the world, and in an attempt to control the network, a large amount of hardware must be integrated. However, mining companies will not destroy their source of income. And even if someone decides to attack the system, at most it will lead to bugs, which will be eliminated with emergency updates.
However, cryptocurrency exchanges and other digital money services are vulnerable to hacking.
Bitcoin is not backed by anything
As early as 1971, the US authorities abandoned the Bretton Woods system (den gold default), and the US dollar has lost its peg to gold . Since then, the US currency has not specifically fallen, but directly depends on the country’s financial stability.
to understand what bitcoin It is secured and how its price is formed, it is necessary to take into account the value and functionality that the cryptocurrency offers to its owner:
Anonymity. Nobody is watching bitcoin transfer and has no right to influence (interrupt or cancel) the transaction in any way;
Low commissions. In the main cryptocurrency network, there is a fixed commission for transfers, which is determined based on the load on the network. This means that the commission will be the same if you transfer 100 dollars and 100 thousand dollars, as well as other amounts;
Speed. bitcoin Transactions are usually instant. Allowable delays range from a few minutes to an hour, depending on network load;
Infinite. You can transfer Bitcoins Anywhere in the world. The main thing is that the recipient has a cryptocurrency wallet.
So, bitcoin It allows anonymous payments and money transfers to be made in any amount, regardless of the location of the sender and recipient of the cryptocurrency. This factor, together with Bitcoin’s limited emissions (21 million coins), determines the demand that shapes the price of the cryptocurrency next.
Bitcoin is only used by criminals
The anonymity that cryptocurrencies provide allows digital currencies to be used in illegal systems. But in this case, it is not different from cash, which is also used for illegal activities.
last year, bitcoin They are actively bought by large corporations to protect themselves from And other risks in the traditional financial market. For example, the $1.5 billion major cryptocurrency was bought by Tesla . According to the CEO Elon Musk And Tesla Sell 10% off Bitcoins at the end of March and recorded a profit.
The oldest American banks such as Morgan Stanley Goldman Sachs and JP Morgan are also showing interest in the cryptocurrency. The latter is already preparing to launch its first active management bitcoin finance. Goldman Sachs will also offer cryptocurrency investments to clients.
Bitcoin is a bubble
Back in 2010, it was the price of bitcoin It used to be less than a dollar, but now it’s worth more than $23,000. Other cryptocurrencies have also seen their prices rise hundreds or thousands of times. This gave reason to compare the cryptocurrency market with a bubble that will certainly burst, and investors will be left with nothing.
First of all, let’s understand what a bubble is. It recovered after the collapse. There was also the famous internet bubble at the turn of the century. Then the value of Internet companies skyrocketed and collapsed dramatically in a short period of time.Trading in an asset characterized by an unsustainable growth in its market value. One of the first examples of such a bubble was the high price of tulips in Holland in the 17th century. At that time its value rose tenfold, and it never was
bitcoin And other cryptocurrencies have been around for more than a decade. During that time, they have gone through several cycles where their value has gone up and down. But after all, the previous cases, bitcoin Renewed their price records. Besides, the entire cryptocurrency market has grown.
As the analysts explain, volatility in cryptocurrencies is a typical pattern for emerging markets. They expect the asset to go up and down with less volatility over time, and the time between these cycles will increase. That is, the cryptocurrency market will become more stable and predictable.
Buying cryptocurrency is hard
Many potential investors are discouraged from buying crypto assets due to their lack of experience. Since it is a new and technological tool, it may seem complicated. In fact, it is possible to invest through private exchanges, mobile applications or other trading platforms. The registration procedure on it is usually not more complicated than, for example, creating an account on a social network or in an online store.
As a general rule, major exchanges require confirmation of identity. To do this, it is necessary to upload a photo of the documents. This is a requirement of the world’s regulatory authorities, which helps make exchanges more secure. But those who value anonymity can also find exchanges where there are no such requirements.
The process of buying cryptocurrency itself is also simple. To do this, you can top up your account balance and use it to make purchases or pay with your card directly for each cryptocurrency purchase. In terms of complexity, this procedure can be compared with charging a mobile phone or purchasing goods.
You need a lot of money to buy cryptocurrency
Most people learned about the existence of cryptocurrency at a price bitcoin It reached tens of thousands of dollars, which seemed to immediately cut off investors with a budget of a few hundred.
In fact, all services allow you to buy a share of bitcoin or other cryptocurrencies. The minimum amount you can buy cryptocurrency for can vary from site to site, but it’s usually only a few hundred dollars.
If you buy one bitcoin Or other cryptocurrencies, you will benefit from its growth, as well as those who work with tens of thousands of dollars. If an asset doubles in value, for example, then the investments of everyone who owns it will double as well. The same thing will happen if crypto assets get cheaper.
Only professionals can make money with cryptocurrency
There is a widespread perception that buying cryptocurrencies is similar to trading in the foreign exchange market. They say you have to buy it when its price goes down, sell it when its price goes up and so on in a circle. To do this one needs to understand the trends, news and the reasons for the daily price changes.
Of course, this is how traders make money. However, most cryptocurrency investors are not actively trading. They just buy bitcoin Or other symbols and wait for their price to rise. This strategy is used by those who see the potential of cryptocurrencies in the long term. The advantage of this strategy is the ease. You don’t need to check the exchange rate every day and monitor the news.
The cryptocurrency guarantees anonymity
This myth arose because cryptocurrency allows transactions outside the banking system. There are also anonymous wallets, to create which it is not necessary to enter any personal data.
At the same time, it should be borne in mind that all transactions are recorded in the blockchain and saved forever. This means that if bitcoin It was in a wallet associated with criminal activity, no matter how much it is sent to other wallets, it cannot be “laundered”. Law enforcement agencies can access the blockchain data and track down the person who made the transactions. However, since this procedure is complex, it is only used in special cases.
Anyone who buys cryptocurrency gets rich
There are many stories of people who have bought bitcoin When he was worth a few hundred and woke up rich a few years later. Similar cases occur with other coins, the price of which has increased tens or hundreds of times. However, this does not mean that everyone who buys cryptocurrency will definitely get rich.
Keep in mind that these are risky assets that can go up and down in value. Moreover, to themhigher than those of stocks, real estate, or fiat currencies. Therefore, experts recommend keeping 5% to 10% of your savings in crypto assets.
Cryptocurrency is a fad, and it will soon be gone
A few decades ago, computers and email only interested a very limited number of technology enthusiasts. When Steve Jobs said that soon there will be computers in every home, he was surprised when asked “Why are these devices there?”.
The same thing is happening now with cryptocurrencies. To date, they have been used by a relatively limited number of people. But cryptocurrencies today create ecosystems that, according to analysts, will continue to develop, and there will be more and more practical applications for them.
There is a growing interest in decentralized financial software, which is more secure, reliable and cheaper than existing systems. Tech giants are exploring ways to merge the real and digital worlds, using blockchain technology as a building block for this. Countries are considering creating their own cryptocurrency. So, of course, virtual assets will evolve and change, but they will remain with the technology on which they are based.
New tokens appear all the time and some may increase in value hundreds of times. At the same time, some of them will disappear or disappear altogether. Therefore, professionals recommend diversifying your cryptocurrency portfolio: keep most of your money in popular cryptocurrencies, such as bitcoin or Ethereum And only part of the money should be spent on new projects that seem promising. This allows you to maintain a balance between risk and reward.