Five popular myths about bitcoin and their debunking

Some see bitcoin as an impressive prospect, while for some, any cryptocurrency is akin to illegal activity or a pyramid scheme. On top of that, there are a number of other misconceptions that have long since been safely debunked.

Some misconceptions about bitcoin have been fought by developers, while others have been dealt with by those who have a large number of coins. Let’s take a look at the most famous myths and their debunking.

Pyramid scheme

There is no clear definition of a pyramid today, but there are those who continue to call cryptocurrency a pyramid. There are several indicators by which this identification occurs:

1. A high level of profitability compared to the market situation.
2. A guarantee of profits/revenues.
3. An active advertising campaign using modern technological goods.

Essentially, according to such criteria, many things can be classified as pyramid schemes today. The wording is too vague. But the main revelation lies in the fact that no one promises high returns. Investors are immediately warned of the risks, especially given the high volatility of the cryptocurrency.

There are also no advertisements for bitcoin. What can be seen online, on TV and through other sources are advertisements for companies that may be associated with the cryptocurrency. Bitcoin has no issuer per se.

Hackability

The virtual currency is based on blockchain technology. It is a database or a ledger of sorts that has blocks chained together. Each new block contains information from the previous blocks. A similar set is stored on all the devices participating in the system.

As the system is decentralised, it cannot be hacked. In order to make changes to the transactions, or rather, to break into the blockchain system, the entire network must be taken care of. This is realistically done if more than 50% of its hash rate is obtained. Essentially, only exchanges and other services can be hacked, not cryptocurrencies.

Bitcoin collateral excluded

To determine the collateral, as well as the process of bitcoin’s price formation, one must clarify its value and functionalities. The owner of a cryptocurrency receives:

1. Privacy. There is no tracking of transactions on the network.
2. Low commission percentage. There is a fixed rate for making transfers. It is formed by determining the load on the network.
3. minimal time costs. Transactions are often carried out instantaneously. Rare delays may occur and may take from 1 minute to 1 hour.
4. no boundaries. Crypto-transfers can be made to any place on the planet. The main requirement is that the recipient must have an appropriate wallet.

Due to the demand for bitcoin and limited issuance, there is a corresponding price formation.

Easy earning

The cryptocurrency is characterized by high volatility. The fluctuations in quotations are sometimes impressive. Bitcoin, for example, holds the record for incredible swings. At the end of 2017, it was valued at $20,000 per coin, and in 2018 the value dropped 80% to stop at $3,500. Crypto traders constantly face the risks of losing everything or getting rich literally in the blink of an eye.

Criminal activity

There is a popular belief that cryptocurrency can be used for criminal purposes due to its anonymity. This is quite possible, but there is no difference between digital and real money.