The Six Biggest Misconceptions About Bitcoin
Confused about Bitcoin? You're not alone. After all, it's pretty new - it made its debut in 2008 in the form of a white paper by the mysterious Satoshi Nakamoto, and it was launched as a currency as recently as 2009. There is a lot of sound and fury in the press, much of it misleading. Investopedia comes to the rescue with this list of the top misconceptions about Bitcoin, with the help of our crack team of external consultants.
1. "A Bitcoin Looks Like This"
These golden tokens are basically symbolic and pretty worthless. Think of them as souvenirs or memorabilia - that's why they take on so many forms, including plastic. On this particular coinage, note that the inscription has the block number and difficulty level. The difficulty level refers to the degree of work and technological savoir-faire required of the miner to reach that level. But don't let anyone try to buy something from you using this token.
2. "You Have To Buy A Whole Bitcoin"
Bitcoins are divisible to eight decimal places, or 1/100 millionth of a bitcoin. The limiting factor is the indivisibility of cents (or the smallest denomination of any fiat currency). Since the value of Bitcoin has historically reached a high of about $1000, buying an entire Bitcoin would be so prohibitive that it would not be practical for use as a currency. (Contributor: Kyle Powers, Co-Founder of Liberty Teller)
3. "Bitcoins don't have any intrinsic value."
Bitcoins have value because millions of people believe that Bitcoin offers a safer, faster, cheaper transaction network. Because the bitcoin money supply is finite, and because people must own units if the currency in order to use the valuable transaction network, it has value. (Contributor: Ryan Selkis, author of "The Most Definitive Bitcoin IRS Tax Guide You Will See Anywhere.")
4: "We've seen most of what Bitcoin has to offer"
Bitcoin today is like the internet in the early 90s; there is a massive wave of new companies and use cases that are coming. (Contributor: Kyle Powers, co-Founder of Liberty Teller)
5: "Bitcoin can be shut down"
Companies can be shut down, but Bitcoin can only be shut down by shutting down the internet, which is not going to happen. (Contributor: Kyle Powers, co-Founder of Liberty Teller)
6. "Bitcoin is used for illicit activities more than cash is"
Bitcoin is more trackable and less anonymous than cash, so criminals prefer cash and investigators prefer Bitcoin. (Contributor: Kyle Powers, co-Founder of Liberty Teller)
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