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The introduction of Bitcoin in 2009 took the world by surprise. It was a concept unheard of. Fiat currency was the only commodity that had been in use since time immemorial for all types of economic activities all across the world. The economic world was governed by regulations and followed a certain structure.
Each country has its legal tender established by the government and is used for all financial transactions within its geographical limits. The transactions and investments in stocks and bonds operate according to the guidelines laid down by the financial institutions.
Then came a concept that created quite a stir in the global financial world. Being the first-ever cryptocurrency that was launched, Bitcoin became a topic of debate for economy experts. Common people stayed away from it as it was too complex to comprehend. As happens with a novel concept, everyone viewed it with scepticism and did not expect it to survive in our world of structured economy.
Bitcoin started slowly in its initial years but has gained popularity and acceptance across the globe in the last few years. But along with its acceptance have come certain myths or notions associated with it. Here, we shall try to see if these myths hold any truth whatsoever.
Cryptocurrency myths
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Cryptocurrency is a bubble waiting to pop
When the price of an asset rises much higher than its fundamental value and is not deemed fit to be invested in anymore, it is known as a bubble. The market price of Bitcoin has experienced sharp surges and plunges on many occasions, but the cryptocurrency has survived each time and currently is going strong.
It is believed that since cryptocurrency is in its nascent stage, it is experiencing such volatility, and gradually the upward and downward swings will be smaller until they settle down, with the cryptocurrency becoming relatively stable at some point of time in the future. It can be safely said that Bitcoin is not a bubble.
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Cryptocurrencies are complex and not easy to use
The Blockchain technology on which cryptocurrency is based is complicated for a layman. The traders and the investors may have a working knowledge of how the system works, but it does not entail them to understand the intricacies of the technology.
But only the miners work with this technology directly in their efforts to solve complex mathematical puzzles and create a new Bitcoin. With internet banking a familiar term now, for the users, it is as simple as a bank transaction on your mobile. Mobile trading app visit website.
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Cryptocurrencies have no real value
When a currency is created in large quantities and circulated, it results in inflation. The limit of Bitcoin has been capped at 21 million, and this limit itself gives it a value. Due to the scarcity in supply, its demand has ensured the price staying mostly strong over the last few years.
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Cryptocurrencies have not much use in the real world
Bitcoins have been used to make faster and cheaper transactions across the world without requiring a bank to facilitate the process. Large investment firms are making Bitcoins a part of their financial portfolio for better management of their funds.
Due to its inflation-resistant value, but white gold is difficult to store and move. Transfer and storage of the cryptocurrency are very simple.
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Mainly used for illicit activities
In its initial days, Bitcoin was used for nefarious activities because of the anonymity factor that one enjoys in this kind of trading. But of late, not much of it is seen as being gradually incorporated into the global economic mainstream.
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Environmental damage by cryptocurrency
Mining of Bitcoin involves a network of computers that use up many energy resources and is a source of increasing carbon footprints. An important part of mining has shifted towards employing renewable resources for its operation, thus making it nothing extra like any other energy-intensive activity.
Conclusion
Like any new concept introduced and challenges the established system, Bitcoin too was met with apprehensions about its worth and rate of survival that gave rise to many myths. But Bitcoin has survived many tumultuous phases and continues to exist. This will hopefully lay to rest many myths associated with it.
