If we look at the early days of blockchain and bitcoin, most people associated these two with illegal activities like drug transactions. Not just this, both these terms were often mentioned in the same breath. Fortunately, with the rising popularity of bitcoin and widespread acceptance of blockchain, this stereotype has now changed drastically.
Today, bitcoin is the world’s most popular cryptocurrency and blockchain is widely accepted as a legitimate technology for enterprises. Although most people are aware of both these terms, unfortunately, misconceptions about bitcoin and blockchain are still prevalent. So, in this post, we’re going to clarify some of those myths and misconceptions that propel false impressions about bitcoin.
To dispel some of the common myths about bitcoin, let’s begin with understanding it first.
The blockchain is a distributed ledger system which allows users to store data in an immutable form. This decentralized and shared ledger provides a mechanism whereby data is stored in data blocks, and these data blocks are linked cryptographically. Since it is nearly impossible to change data in a particular block, blockchain is an ideal way to conduct important transactions. The most common and popular use of this revolutionary technology is the existence of Bitcoin and other cryptocurrencies.
Bitcoin is a cryptocurrency, a type of money that exists online only. This digital currency is built upon the underlying infrastructure of blockchain technology. This means bitcoin is a decentralized virtual currency which doesn’t require a central bank and can be sent from user to user on the peer-to-peer Bitcoin network without the need for intermediaries.
Now, let’s quickly move to the biggest misconception about bitcoin.
Myth #1: Governments can shut down Bitcoin
The news of some governments regulating the bitcoin has generated a myth among people that Bitcoin can be completely shut down by the authorities. Well, this is not feasible because shutting down digital currencies would require a worldwide internet outage. As such, the only possibility for governments is to put limitations on exchanges where Bitcoin is traded for fiat currencies with strict KYC (Know Your Customer) regulations.
Myth #2: Bitcoin is used for illegal activities
This is a lame myth about bitcoin. We are in 2019 and still, some misinformed people believe that bitcoin is a form of payment solely used by people who are involved in illegal activity online, such as drug dealers and terrorists. To clear this misconception, we need to understand that even cash is used by criminals. In fact, cash is the most preferred option for illegal activities. It is due to the transparency of bitcoin’s underlying technology that many big and legitimate organizations have embraced blockchain and cryptocurrency. Moreover, some governments and financial institutions are also actively exploring its applications.
Myth #3: Bitcoin is a bubble
Another most common misconception about Bitcoins is that it’s a bubble which will soon burst. In fact, some crypto cynics have already pronounced it dead. But the truth is that both bitcoin and blockchain is not going away, as long as crypto enthusiasts are here to keep the network alive. Over the years, the technology will mature and evolve to become fully mainstreamed in 5 to 10 years.
Myth #4: Bitcoin transactions are anonymous
It’s commonly believed that if you use bitcoin, the transactions can’t be traced. Again this is not the case. In fact, cash payments are more anonymous as compared to paying in bitcoin. This is because bitcoins are stored in a digital wallet which is a software program. This wallet is accessed with a password or key which is traceable.