#5 Myths About the World's New Favourite Bitcoin Busted
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If there’s one thing in the financial technology space currently that has governments, investors, entrepreneurs and the citizens attention it is Bitcoin. Zooming past the 10,000-dollar-mark as its value, the cryptocurrency form has taken over the world. Amidst talks about the Bitcoin bubble set to burst soon, it has been creating ripples in the financial space exciting everyone who had made the move to Bitcoin earlier.
However, when it comes to Bitcoin, many are still sceptical about the cryptocurrency with many questions on their mind. Is this the right time to invest? Is it safe? Can this be a long term investment? etc. With the Indian government’s refusal to recognise it as a currency, even though one of the big four – PwC – has already made its first Bitcoin transaction, there are still many myths doing the rounds about the cryptocurrency.
Entrepreneur India spoke to experts as they listed the top – myths about Bitcoin and the truth behind them.
Now that Bitcoin is worth USD 10,000, I cannot buy it
The most common myth about the cryptocurrency is that it can only be bought as a whole. With the soaring prices of Bitcoin, many people refrain from buying it because not all can afford it. Saurabh Agrawal, co-founder, Zebpay disagrees. “Bitcoin is divisible to about 8 decimals. As it is also available in units, one can even buy a Bitcoin worth 10 dollars,” he said.
Agarwal also goes back in time to explain that Bitcoin’s value rose from one cent. Three years ago, there were very few people who invested in it and the number is growing at a rapid rate now. “The demand will increase and as the supply is limited, there will never be a good or bad price for Bitcoin. You cannot time the market,” he said.
Bitcoin Promises a Fixed Return Scheme
People believe that Bitcoin is a long term investment, where they can lock in for a fixed period and then by the end of the said time, also gain a fixed return. However, Agarwal clarifies that with Bitcoin comes an open protocol. With buyers and sellers deciding the price, there are no fixed returns and no guarantee. “There are many people out there who tell buyers that with an investment in Bitcoin, they are guaranteed a certain amount of return. But these are wrong promises,” he said.
Bitcoin Can Shutdown; It’s a Bubble
Most investors and people getting to know about Bitcoin now have the misconception that bitcoin is a bubble that might burst anytime. Hesham Rehman, CEO and Co-founder, Bitxoxo, said that everytime the price of bitcoin surges, this rumour starts doing the rounds. “According to me, it’s not because Bitcoin is a decentralized currency (it is not controlled by any authority hence it cannot be manipulated). Another reason would be the supply of bitcoin is limited (21 million). Every year the increment of 400 to 1000 percent has been recorded in the growth of bitcoin if it would be a bubble the growth would have stopped a long time ago,” said Rehman.
According to Rehman, saying that Bitcoin might shutdown soon is another myth that needs to be busted. He said that it is next to impossible as for shutting down the cryptocurrency you need to close the two lakh servers covering Bitcoin as its backup and the internet which is not possible.
Unlimited or Limited; What’s the Deal?
Some of the questions that people have Bitcoin is about its validity. Being circulated in the market now, what will hapeen when it’s over? Agarwal states a few facts that will clear the air. Of the 21 million Bitcoins that were mined, 17 million have already been circulated. Every 10 minutes, 12.5 new Bitcoins are added. But because of its limited number and reduction in production, the value is only going to increase. However, all is not lost for those who haven’t yet invested. “Because it’s a number and you can invest in fractions, this means that there are 21 Mn multiplied by .008 Bitcoins available, so there’s enough left to be circulated around the world,” he said.
Bitcoin Will Lead to the Increase in Illegal Acts than Fiat Currency
With fiat currency, there is no tracking system that ensures the sending and receiving funds only from trusted sources. With Bitcoin being digital, people believe it can also lead to its participation in many illegal acts. Rehman refuted the statement and said, “With Bitcoin, you can always be sure about where your currency is moving. Bitcoin is traceable, and its transactions are transparent with the help of blockchain technology.”