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Top 5 Bitcoin Myths

Bitcoin Myths Top 5

Bitcoins are illegal, they are useless, it’s a giant ponzi scheme and only drug dealers use them. These are just some of the few misconceptions surrounding Bitcoin.

Those who hear of Bitcoin usually aren’t familiar with cryptography and blockchain technology in general. As a result misconceptions about Bitcoin’s inner workings may arise as one’s intuitions takes over reality.....


This is by far the most popular myth which suggests that Bitcoin is in fact simple a Ponzi Scheme and buying into it would only mean disappointment later. By definition a Ponzi Scheme is a fraudulent operation in which the operator solicits investors by making promises of unrealistic returns. 

....In the case of Bitcoin there are no unrealistic returns being advertised for users or investors. In fact, the only return that Bitcoin promises is a return of full control over your finances....


This is yet another misconception surround Bitcoin and cryptocurrencies in general. When people first learn about Bitcoin they believe that as a currency it is backed by the miners who are mining Bitcoins....

.....In the case of Bitcoin one cannot exchange it for the hash power that was used to create it. Sure you can buy more hashes with the Bitcoins you own, but that hash power will reward you with a different amount of Bitcoin than you started with because the exchange isn’t set to a specific rate.....


...To better explain where Bitcoin’s intrinsic value comes from it’s best to compare it to gold. Gold has value because it’s scarce, you cannot counterfeit it, and there is a high demand for jewelry and other products made with the material. Similarly Bitcoin is scarce because of the hard coded 21 million cap on the currency, one cannot counterfeit Bitcoins as the network backing it effectively has a $7 billion bounty on any person who can take over the network,...


According to some experts, Bitcoin mining is centralized because when looking at the hash rate distribution one can see that a handful of mining pools control the hash power. However, what is ignored is the fact that those mining pools are comprised of individual miners.....


Another common misconception surrounding new users is that Bitcoin transactions are anonymous. The truth of the matter is that Bitcoin is pseudonymous and one’s anonymity lies in the connection between one’s identity and their Bitcoin address. Once an identity is linked to one’s address his transactions and funds can be traced on the network by anybody....

...As a brand new technology Bitcoin is full of misunderstandings, as the knowledge gap closes with the increasing adoption and educational resources available for new users the public will realize Bitcoin is much more than magic internet money....

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