Mention the name Bitcoin, and it is likely to trigger a strong response. Some people are passionate supporters of the world’s largest cryptocurrency, and others believe it has no real value. Most people, however, feel confused whenever Bitcoin is mentioned.
This is because it operates on a blockchain – a complex computer network technology that is difficult for everyone other than computer programmers to understand.
As a result, there are a number of misconceptions circulating about Bitcoin, as people struggle to understand the technology and whether it is worth their attention.
Here are three common misconceptions about Bitcoin:
It is unsafe to store
If you pay attention to the news, chances are you’ve read a crypto horror story in which a Bitcoin owner has somehow lost access to their holdings or has had them stolen.
Given the recent price action of Bitcoin, these losses could add up to serious amounts of money. So, it is important to understand if Bitcoin is unsafe to store or not.
Many critics believe Bitcoin is a risky asset to hold because it forces you to take greater levels of personal responsibility over your financial security than other assets, such as stocks, bonds, and cash.
While those other assets are protected by banks, fund managers, and accountants, your Bitcoin is exclusively yours. This is why it is crucial to store it in a safe hard wallet – such as a Keevo Wallet. In effect, you act as your own private bank.
Therefore, you must keep your hard wallet secure because your Bitcoin cannot be retrieved if you lose the wallet or the digital keys that open it.
It has no intrinsic value
Another subject of a dispute regarding Bitcoin is its intrinsic value. This is because Bitcoin is not immediately quantifiable – it isn’t a gold bar you can hold in your hand or a house you can live in. Instead, if you buy Bitcoin, you essentially own an encrypted line of computer code. Thus, if the global economy decides Bitcoin is no longer valuable, you cannot use it for any other means.
However, this does not mean Bitcoin has no value. In fact, Bitcoin was engineered to have a basic intrinsic value due to its combination of scarcity, durability, and tradability. It is, therefore a useful technology for many people, which popularizes the network.
It is bad for the environment
Although the Bitcoin network undoubtedly uses enormous electrical energy to keep itself online and mine new Bitcoins, it is easy to overlook the fact that many Bitcoin miners rely on renewable energy sources to supply them.
This is because renewable energy sources can be cheaper to use than fossil fuel alternatives, especially as Bitcoin mines can be set up in areas of huge (and cheap) natural resources – such as near water (for hydroelectricity) or in sunny climates (for solar).
As a result, Bitcoin miners have a financial incentive to pursue green energy. Given the enormous current demand for Bitcoin, this could potentially push the case for green energy forwards.