This report takes a glance at 5 frequent mistakes about why folks despise Bitcoin & cryptocurrencies and attempts to clean these truths.
The accelerated increase of this cryptocurrency business has caused a boosted scrutiny by the public in regards to the tech. The majority are of the opinion that cryptocurrencies and blockchain could be that the tech into their near future and also certainly will interrupt many businesses and systems. Additionally, there are those that oppose the validity of cryptocurrencies and questions the efficacy of blockchain technology.
Of course, there’ll always be people that have a different outlook on matters, also cryptocurrencies aren’t any different. However, it is important to look at the different perspectives on the opposite end to evaluate whether it has any merits and are just plain ‘noise’. This article will be dedicated toward understanding and addressing the opposing viewpoints of those against cryptocurrencies and blockchain technology. We have compiled 5 main misconceptions that the public has toward Bitcoin and cryptocurrencies.
5 Common Misunderstandings
No one knows who the creator of Bitcoin – Satoshi Nakamoto – is. The anonymity of Bitcoin’s creator has often been a point for many to discard any of Bitcoin’s merits. However, the anonymity of Bitcoin is perhaps the main comprehension why it is so revolutionary and victoriously functional. You see, Bitcoin is a trustless system where you do not have to trust anyone in the network to ensure that our payment will be facilitated and secured. There are mechanisms in place (consensus mechanisms) that ensure the alignment of interest of every participant, therefore enabling the self-operating and self-executing to function securely.
In short, the technology speaks for itself. The identity of the creator has no relevance towards the quality and credence of the technology itself. Why? Because Bitcoin’s underlying source code (the lines of computing codes that make Bitcoin work) is open source, meaning the codes are publicly viewable and freely available. Anyone can inspect and download Bitcoin’s software for free! This adjective nature allows anyone to uncover the underlying mechanics of Bitcoin and its potential limitations. The identity of Satoshi is then irrelevant after all the technology itself is open to the world, allowing the public to dissect Bitcoin down to every single detail. This transparency has allowed Bitcoin to stand on its own feet, separate from the identity of its creator. After almost a decade of existence, it is clear that Bitcoin is a disruptive technology with little fundamental issues.
Value is a subjective thing and is ultimately determined by people; if many people deem it valuable then there will be greater demand for it. Perhaps the best way to illustrate the notion of intrinsic value is through gold. Any debate about intrinsic value will be incomplete without mentioning gold. Ironically, if we take a look at gold, only 10% of the total gold supply is used for actual industrial and electronic purposes, while the majority is used for making jewelleries. In short, the ‘inherent worth ‘ that many have associated gold with is rooted more on ostentation and the ‘perception’ that gold is valuable rather than being backed by actual use cases. The notion that ‘inherent worth ‘ can only be attributed to something physical is irrelevant and should be discarded.
Bitcoin – although intangible – has actual uses cases. Using Bitcoin, users can circumvent the traditional banking system full of expensive intermediaries and long waiting times. Value is sent globally in a significantly lower cost and shorter time frame through a secure distributed network. Records are immutably stored in a public ledger, where transactions and ownership statuses is verified by anyone. The value of Bitcoin lies in its utility, network, and adoption. With a fixed supply of only 21 million, it is also inflation-protected.
Let’s break down the above statement into 2 apparent assumptions, where we will address each one:
Assumption 1: Bitcoin is Cryptocurrency and Cryptocurrency is Bitcoin
Yes, Bitcoin is a cryptocurrency but cryptocurrency isn’t only Bitcoin. Bitcoin could be your before all else real world cryptocurrency plus it is most certainly the biggest and most prominent cryptocurrency. In reality, Bitcoin is considered the ‘founding father’ or even cryptocurrencies. But, you’ll find hundreds and hundreds of cryptocurrencies and tokens after Bitcoin. The attractiveness of this cryptocurrency store is that each one of those coins concentrates on special applications and use cases. Some are made up of the intent of interrupting conventional businesses (for instance, Bitcoin’s disturbance of their existing fiscal system), while others are creating new businesses (including the production of blockchain-business solutions). Additionally, there are key differences between diamonds and tokens, which is clarified here.
Assumption two: Bitcoin is Only Used by Bad People Engaging in Illegal Activities
This premise is maybe among the very predominant but destructive viewpoints that prevents a lot of people from researching Bitcoin and cryptocurrencies further. The use of something by an individual – irrespective of how bad or good they truly are – shouldn’t be a yardstick used to evaluate the item itself. An analogy is when someone uses a knife with a bad intent, does the fault lies with the knife or the person? Obviously, the knife is an integral part of our households, but it can also be a weapon of destruction. Similarly, the revolutionary features of Bitcoin and cryptocurrencies shouldn’t be missed only because some terrible men and women are deploying it.
There is usually a misconception which the volatility of cryptocurrencies equates into the whole industry being tagged because of ‘scam’.
Volatility denotes this sharp and abrupt shifts in amounts of the stock. The greater the volatility of the stock is the more straightforward it is to put money into.
It’s authentic that cryptocurrencies would be the most explosive investment you are able to find. In 2017, the whole cryptocurrency store (signaled by market capitalization ) climbed by over 4,000percent in a period of only per year and afterwards dropped by over 75 percent eight weeks after!
However, it’s erroneous to correlate with the volatility of almost any stock or investment into its own authenticity. The amount volatility of the stock doesn’t have everything to do with the merits of the technology, especially when the stock is backed by an infant tech like cryptocurrencies. The cryptocurrency store is somewhat similar to the dot-com boom back in the 1990s, where the amounts of internet shares grew like crazy. The periods of exponential boom and bust was attributed to the infant technology of the internet; new technologies will always be volatile and high-risk at the start. it is clear that the internet is a revolutionary technology that is omnipresent in our daily lives now. What we’re seeing in the cryptocurrency store is similar to the dot-com period back then.
Any stocks traded on a public store is prone to store dynamics of participants (buyers and sellers), and cryptocurrencies are no different. Many have made millions many have lost millions; the store is a zero-sum game.
(See more: ICO Investing Strategy: Making Money off ICOs)
For all of its revolutionary features, this is perhaps a legitimate concern for Bitcoin, as with other cryptocurrencies. Currently, blockchain technology is really slow relative to their centralized competitors. A key metric to evaluate speed is to look at Transactions Per Second (TPS):
As is seen, Bitcoin is capable of processing only 7 TPS, whereas VISA is able to handle tens of thousands of transactions per second. Therefore, Bitcoin isn’t a workable alternative to current charge chips.
However, you will find many innovative solutions that strive to greatly boost the scalability of both blockchains. These solutions are in the works immediately to enlarge the capacities of block-chain technology.
All in All
The way to conventional adoption is a tough and long travel ahead for cryptocurrencies. Considering all of the virtues that block-chain entails, negative senses on the tech will likely continually remain from people oblivious of their possibility that cryptocurrencies have in disrupting our whole world. The authority consequently falls into the cryptocurrency community to constantly describe any negative senses which the overall public has towards cryptocurrencies, to be able to improve understanding and awareness this technology.
Beneficial Resources To Get You Started
If you’re starting your journey into the complex world of cryptocurrencies, here’s a list of useful resources and guides that will obtain you on your way:
- Crypto Guide 101: Choosing The Best Cryptocurrency Exchange
- Guide to Bittrex Exchange: How to Trade on Bittrex
- Guide to Binance Exchange: How to Open Binance Account and What You Should Know
- Guide to Etherdelta Exchange: How to Trade on Etherdelta
- Cryptocurrency Trading: Understanding Cryptocurrency Trading Pairs & How it Works