As interest in Bitcoin grows, more people are being introduced to cryptocurrencies each day. This is exciting, but there are still common misconceptions and myths surrounding this new financial system: here we shed light on few.
1. Bitcoin is used for illegal activities (like drug dealing) because it’s anonymous
Contrary to popular belief, Bitcoin is not anonymous
It’s pseudo-anonymous. This means that all transactions are recorded on the public blockchain, along with the addresses of the wallets involved. Although no identifying personal details are included on the blockchain ledger, if you figure out who owns a particular wallet, you then know they were responsible for all transactions from that address.
People have always found a way to carry out illegal activities, long before Bitcoin existed. Maybe they always will. In any case, it’s far easier to trace than cash. Bitcoin now has numerous legitimate uses and its use by criminals has shrunk dramatically.
2. Bitcoin has no intrinsic value, so it’s not a currency
The same statement can be applied to any currency.
If we all stopped believing in the pound (or the dollar or euro or any other currency), it would cease to have any value.
Value is in our minds.
3. Bitcoin has been (or will be) hacked — it’s not safe
Bitcoin itself has never been hacked and probably never will be.
Some exchanges, wallet providers and other cryptocurrency related companies have had their security compromised. Most, if not all, of these hacks, have been the result of preventable security lapses.
It’s also your responsibility to take extra precautions
For example, you should turn on 2-factor authentication and use strong passwords. The same precautions apply to any other store of value, and there are always going to be risks. Bitcoin has some security advantages, provided you make use of them.
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