Tackling 7 Common Myths About Bitcoin

Bitcoin Babe’s Michaela Juric addresses seven common myths about Bitcoin.

Did Elon Musk invent Bitcoin?

Honestly, it is possible! The truth is, no one really knows who invented Bitcoin. All we know is that in 2008, a user only identifiable by the screen name “Satoshi Nakamoto” published a paper called “Bitcoin: A Peer-to-Peer Electronic Cash System” (or more commonly known as the Bitcoin white paper) via a cryptography newsletter run by metzdowd.com. The Bitcoin software itself was not fully developed until January 2009.

Since then, there have been many theories about who created Bitcoin, with some hypothesising that Satoshi Nakamoto could be a group of people as opposed to one person. But until this person(s) decides to stand up and admit to it, we have just as much of a chance of finding Santa Claus!

Will Bitcoin crash?

Like any financial ecosystem, there is a possibility it will and a possibility that it won’t. With such high liquidity and price movements that make the stock market look like a walk in the park, Bitcoin can be very reactive to certain news pertaining to countries looking to regulate or even ban Bitcoin, and companies looking to accept and adopt bitcoin as a part of their business structure.

A notable recent example of a “tipping point” for Bitcoin was when the Chinese Government made the decision in September to ban Bitcoin and ICOs. With China holding a substantial portion of the trading volume, as well as operating some of the biggest Bitcoin mines in the world, this could have been a very easy scenario for Bitcoin to plummet to some devastating lows. Instead, we saw the price of Bitcoin recover from, at most, a 15.89% decrease, with a close out of USD$4,367.00 at the end of the September month, compared to a USD$4,904.90 at the start. In November it reached USD$10,000.

Is Bitcoin illegal?

No, the use of Bitcoin and other cryptocurrencies is not illegal. Cryptocurrencies have received a bad rap in previous years, as they have been used on the dark net for illegal purchases. However, if you are using it for investment, remittance or purchasing, you have the same, if not more, freedom to use your Bitcoin.

Is Bitcoin untraceable?

The complete opposite! Every transaction that takes place with bitcoin is broadcast on a public ledger called the Blockchain. With this data being so easily accessible, anyone can view a transaction, and trace a Bitcoin back to when it was originally generated, regardless of whether that Bitcoin was created five minutes ago, or five years ago. It is, however, coded and anonymous.

Is Bitcoin a scam?

I’ve seen many compare Bitcoin to that of a Ponzi, or a multi-level marketing scheme. But really, when we look at our current world economy, it is clear Bitcoin is not structured at all similarly. As many will point out, a Bitcoin isn’t debt- based.

Back in 2014, Michael Goldstein wrote a fantastic piece for the Nakamoto institute called “Everyone’s a scammer”. Despite the hurdles bitcoin has overcome since that time, the value of this article still holds its worth.

Do you have to buy a whole Bitcoin?

Over the past few months many people have spoken to me about wanting to dip their toes in the Crypto pool, but have shied away, admitting defeat to the fact they cannot buy a whole Bitcoin. What many people don’t realise is you can in fact invest in smaller amounts.

The biggest problem with explaining Bitcoin to people who are unfamiliar with it, is that people often compare Bitcoin’s characteristics to that of shares and stocks. And as many people are aware, you can’t buy half a share.

Bitcoin goes back 8 decimal places (0.00000001) which is known as a “Satoshi” and is about the equivalent of $0.00014AUD (at the time of writing). Purchasing $100 worth for example, will give you 0.007BTC. The BTC figure doesn’t change, only the FIAT value of it does!

How can Bitcoin work – there is no way to control inflation?

Inflation is an increase of prices with time, which is the outcome of the devaluing of a currency and can be a function of demand and supply. Given that the source of Bitcoin is fixed in a specific amount, unlike regular money, the only way for inflation to become out of control is for Bitcoin’s demand to disappear. Temporary inflation is possible with a quick adoption of Fractional Reserve Banking, but it would stabilise once the majority of the 21 million Bitcoins were stored as reserves by banks.

Given the fact that Bitcoin is a distributed system of currency, if demand were to decrease to practically nothing, the currency will be doomed anyway. The key here is that Bitcoin as currency cannot be inflated by any person or thing, like a government, as there is no way to increase distribution past a particular amount.

I believe that as Bitcoin becomes more popular and demand increases, the currency will increase in value, or deflate, until demand stabilises.

About Michaela Juric

Michaela Juric is a prominent, up-and-coming cryptocurrency trader and consultant.  She has offered her trading services via her company ‘Bitcoin Babe‘ since 2014.  Michaela has worked with companies domestically and abroad to help them achieve their goals of using Blockchain technology to break down barriers to businesses the world over.

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