The King of Cryptocurrencies, is known as Bitcoin. Bitcoins have been known to many for over a decade now. Yet, there are many speculations and myths regarding Bitcoins among the new users as well as the Veterans.
5 myths related to Bitcoin-
The topic, Crypto or Bitcoin, can indeed be quite confusing to many; due to its various angles or aspects of understanding. They involve math, computer science, economics, cryptography, psychology as well as philosophical angle.
Thus, as humans, it’s an obvious confusion caused in the brain due to a mixture of knowledge.
Hence, here are few of the main myths which are being busted by clarifying the knowledge about these decentralised and censorship-resistant based Bitcoins.
Myths #1/5 – Scam and Ponzi involved in Bitcoin
[Ponzi scheme, named after Charles Ponzi; basically means a fraudulent investment that involves the payment of purported returns to existing investors from funds contributed by new investors. It is an investment system where the investment profits are paid with the money from other investors; and those who experience profit believe the profits come from non-investors; such as business activities, or the earnings and growth of a company.
Operators of Ponzi schemes can be either individuals or corporations. Ponzi schemes rely on a constant flow of new investments to continue to provide returns to older investors. When this flow runs out, the scheme falls apart.]
The first about Bitcoin has to be the one that involves Scam or the Ponzi scheme. Many consider this true and the reasons behind this are probably the following –
- Bitcoin founder – Satoshi Nakamoto owns 1 million Bitcoins.
- Satoshi ran away.
- Many people lost money.
- BTC is not backed by anything at all.
- Volatility in BTC markets are wild.
All the above reasons are probably misunderstood by the people since they lack the knowledge on decentralisation, economics related to free-market, intrinsic value, etc.
More Insight –
Firstly, yes, Satoshi Nakamoto owned 1 million Bitcoins. But compared to the fiat paper money printed by the Central Banks which have no certain accountable amount; owning those 1 million Bitcoins is in fact better.
Satoshi didn’t run away! He stepped down in order to give way for total decentralisation. He did so, to not show any human involvement or dependency. This also avoided single point of failures.
People would have indeed lost their money if they had given into trading or gambling. So to blame Bitcoin is in fact unfair.
How can one be sure that BTC is not backed by anything? We are not even aware of what backs our national currencies which are inflated annually. Or even the 13000% inflation like Venezuela.
One could only know the various angles in which a currency is backed by. Hence, BTC is in fact backed by math, economics, decentralisation, censorship-resistance, etc.
Considering BTC markets’ volatility to be wild is also an assumption. They are, as mentioned earlier, free-markets which do not have a particular asset class. It’s considered as a multiple asset class which is un-correlated. Hence, gambling and trading leads to it being ‘Wild’.
Myths #2/5 – Bitcoin is expensive and to obtain a whole BTC is unaffordable
No Bitcoins are not expensive. Of course there are cheap currencies but to get the most out of cryptocurrencies, one must indeed invest in Bitcoins.
This myth is one of the common ones. Even a person who doesn’t have any knowledge related to Bticoins would consider it as an expensive asset. But that is surely not the case.
Cryptocurrency without Bitcoins has absolutely no meaning. Obviously you could buy other coins like Cardano, Ripple, etc. but the Rate of Return (ROR) is comparatively higher among Bitcoins and that is one of the main aspects of investing in cryptocurrency.
Another myth is to buy a whole BTC. That’s not true and here is why-
Bitcoins are divisible to 10^-8. This is a lot of Bitcoin fractions which a normal person’s money could afford.
The smallest out of the fraction unit is known as Satoshi, named after the founder. A person could buy many Satoshis in just $100 to $200.
If you are worried about the long term effect, well then you could keep a certain part of your money like 50 or 60%, in BTC itself. This keeps your money safe in the hardware wallets like Ledger Nano S.
Hence, do remove this myth from your head, if you want to gain the best out of crypto. Besides, many of the cheaper coins would fail to see the sunlight very soon.
Myths #3/5 – Bitcoin Mining involves a lot of Wastage in Energy
Imagine a scenario wherein you spend a certain amount of time and energy in building something. Even if it did take years to complete, the final result obtained with all your time and money would be paid off right?
It’s a similar case in Bitcoin Mining as well. Bitcoin not only gives you immutability, it also provides resilience as well as money that is self-sovereign. So much in return for comparatively lesser energy.
Hence, if the protocol is consuming so much energy, then there is no reason to not go forward; because as mentioned earlier, Bitcoin’s main aspect is Rate of Return.
But yes, there are pioneers like Standard American Mining, who have started implementing a better or sustainable solution like converting the waster energy to improve crypto mining. After all, a sustainable and efficient way to quench the needs of Bitcoin protocol is better than completely erasing the entire mining that involves a lot of energy.
Hence compared to the energy wasted due to the Christmas lights, the energy invested in Bitcoin Mining would definitely be fruitful.
So to conclude on this myth, No, Bitcoin mining isn’t a waste of energy.