Bitcoin is not the only cryptocurrency on the market but it’s certainly the highest profile and the first decentralized cryptocurrency. Since its launch in 2009 the digital currency has courted controversy with its detractors in the financial services industry sneeringly decrying it as a bubble just waiting to burst. On the other hand, its proponents respond with accusations that since the financial services industry brought about the collapse of 2007-2008 it stands to reason that they’d be mistrustful of anything that takes wealth and power out of their hands. After booming exponentially, Bitcoin’s value has dipped somewhat in recent months and though it has since stabilized, you can practically hear the detractors rubbing their hands together and preparing their “I told you so’s.” Regardless of where you stand on Bitcoin, it’s important to recognize that a great many myths and fallacies have arisen around the cryptocurrency. So long as you go in with your eyes wide open there’s no reason why Bitcoin can’t be a healthy part of a diverse investment portfolio.
Let’s debunk some of those persistent Bitcoin myths…
Bitcoin is a bubble
Let’s start off by taking the biggest bull by its proverbial horns. Those in the financial services industry that decry Bitcoin as a bubble are curiously oblivious to the fact that the cryptocurrency is far less of a bubble than any fiat currency. There are myriad socioeconomic circumstances that can cause the value of a fiat currency (just like any stock) to tank from war to recession. Although most world currencies are no longer intrinsically tied to the values of precious metals anymore, they are still subject to numerous risks from which Bitcoin is insulated. So long as people trade Bitcoin it will continue to have value. These Bitcoin IRA reviews demonstrate that people are eminently prepared to place their trust in Bitcoin. Thus, it’s unlikely to be going anywhere soon.
Bitcoin is illegal because it’s not legal tender
This one is simply risible. Trading in Bitcoin currency is no more illegal than trading in World of Warcraft gold or Linden dollars. Not being government backed is not the same as being illegal. The US Financial Crimes Enforcement Network even established guidelines for decentralized currency in 2013. While legal definitions vary from country to country (China has been very open about its plans to ban the cryptocurrency), and many are undecided it is perfectly legal to trade in any of these countries.
Bitcoin has no worth because it can be mined by anyone
We have a tendency to think of currency as limited and finite, yet governments and banks create money out of nowhere all the time through quantitative easing. Every time a bank approves a loan, the money is created from out of nowhere. Thus, people should not be so suspicious of mining for Bitcoin. Blocks are computed by miners who are then rewarded by a specific amount of Bitcoin. While its worth is determined by different factors than those that influence the worth of fiat currencies though its value is still determined by those old staples of economics; scarcity, utility, supply and demand.