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20 Misconceptions About Bitcoin And Digital Currencies That You Should Not Take Seriously

As The Digital Currency Market Heats Up, There Are Many Rumors About Cryptocurrencies And Blockchains That Can Be Misleading Without Sufficient Knowledge About Them. 

Misconceptions, The introduction of new ways of investing has raised many questions for investors and analysts. By publishing various tweets and posts daily, celebrities and investors somehow declare their support for cryptocurrencies or vice versa on social networks. Even people who are not active in this field are somewhat familiar with these concepts.

On the other hand, the acceptance of digital currencies in various companies as a payment method is also considered a turning point for this industry, and there does not seem to be a way back from it.

With the dramatic increase in the popularity of digital currencies in recent years, rumors and misconceptions about this space and various cryptocurrencies have been formed.

In the meantime, many people are spreading these rumors for profit, and if someone does not have enough information about this industry, he may believe them.

In this article, while introducing the most common rumors about cryptocurrencies, we will examine the reasons for their inaccuracy:

1. Digital currencies are damaging the environment

Some estimates put the energy of the Bitcoin network security equal to the energy required by Chile.

The term “energy waste” can only be considered correct when there is no value in consuming it. The Bitcoin network is worth $ 1 trillion by providing services to millions of people, including those who do not have access to traditional payment networks. Most miners operate in places with abundant and free electricity.

The electricity consumed in these places is often generated from renewable sources of hydroelectric power (electricity generated from hydroelectric power plants) or geothermal electricity (generated electricity from geothermal energy), which consumes one-eighth the fuel of coal-fired power plants.

In addition, today, at least 39% of the energy required to extract bitcoins from renewable energy is provided, and this share is growing rapidly.

It also consumes a lot of energy to compare, run, and develop programs like TikTok and FedEx, US Department of Defense programs, or the modern financial and banking system requires a lot of electricity to operate daily at any branch, server, or electronic payment network.

Like all other inventions, in addition to the positive effects of bitcoin and digital currencies in general in human life, there are challenges in this area. For example, the carbon footprint of bitcoin mining is a challenge that needs to be addressed; But that does not mean that bitcoin is a bad idea.

On the other hand, many cryptocurrencies are self-sufficient, do not depend on physical commodities for production and valuation, and are environmentally friendly by using a stock-proof mechanism (PoS) in their network.

2. The digital currency transaction is done anonymously and is not traceable

Given that the inventor of Bitcoin, the mother of all digital currencies, is known by the pseudonym Satoshi Nakamoto, distrust in the way transactions are conducted can be one of the most important concerns for anyone after becoming acquainted with the world of cryptocurrencies.

The user’s personal information is not disclosed in the transactions. Still, there are ways to track people’s identities across the Chinese block, and the amount of money sent or received from one address to another is recorded in the general ledger.

In addition, there are tools available to various government and financial institutions to access more information and investigate illegal activities in the Chinese bloc.

In fact, Bitcoin blockchain technology prevents transactions from being anonymous by storing transaction information and recording their time and place.

Aside from bitcoin, other cryptocurrencies such as Monero and Dash are more focused on privacy. Even many exchanges conduct transactions because they receive personal data and work with the government to track fraudsters.

3. China blockchain technology and digital currency are complex

Some people believe that digital currency and blockchain technology are only suitable for people dealing with technology, which is difficult for others to understand.

The code used to create cryptocurrencies is much more complex than the operation of banknote printing machines; But to use both products, you do not need to know the process of their origin.

People are generally afraid to enter this field and consider it for financial activists, and you do not need to write smart codes or contracts to work with digital currencies. It is enough to keep the password safe.

You do not need to be a car engineer to drive a Pride

The same is true of cryptocurrencies. If you have ever made money or made a payment online, you will easily do business in this area. You will suffice for sales and holding a digital currency or investing them, only knowing a few basic concepts and which exchange or V (digital wallet).

Thanks to the improved user interface of digital assets, transactions, and payments through cryptocurrencies are simple and similar to traditional and Fiat currencies.

4. Digital currency will be an alternative to traditional money (Fiat)

In the most optimistic case, digital currencies can use on an enormous scale in the future; But they can never be a substitute for paper or traditional money. After the invention of the airplane, travel did not replace travel by train or the telephone communication after email.

Cryptocurrencies were created to create a faster, more secure, less expensive financial system than traditional money without centralized third-party monitoring.

In fact, digital currency technology seeks to change the payment system and eliminate government or financial institutions in the transaction cycle (if both parties agree).

However, the digital currency market fluctuations are so great that they may change their trend (up or down) many times in response to the news of the day, which is not the concern of traditional money.

5. Governments are seeking a ban on digital currency

Although in some countries, such as China, Nigeria, Russia, or Belarus, cryptocurrencies, especially bitcoins, are not warmly welcomed; But in others, the technology of digital currencies is highly valued, to the point that even officials are offered courses on the technology.

Financial stability is essential for the central banks of any country, and arbitrary and unjustified repressions by governments destabilize the $ 1 trillion bitcoin market.

Decentralization is the main difference between cryptocurrencies and Fiat money. Because of this feature, governments can’t suppress it with the daily advancement of this technology and its forward movemeworldwiderld. Still, perhaps a little more regulation will persuade disgruntled governments as well.

6. Digital currency is used for illegal activities and money laundering

Money laundering concept. Yellow clothes peg hold Bitcoin and one hundred dollar banknotes.

Some people consider the use of cryptocurrencies related to illegal activities, and this thinking is one of the oldest and most common beliefs about digital currencies.

The use of anonymous bitcoin transactions on black markets such as Silk Road (an online drug market) is one of the reasons for this rumor. Still, it should remember that the anonymity of transactions, the absence of fingerprints or signatures, do not make them an undetectable phenomenon.

Many criminals use digital currencies for nefarious purposes, But the same goes for Fiat money.

Finally, the blockchain stores information about the volt used in transactions, which can track to identify the owner of the volt. Transactions will be difficult to track only if the applications and websites of the Volt provider allow the user to choose a nickname.

Criminals also use Fiat money for their illegal activities. Any device with useful uses may also use for illegal purposes; Vehicles can use for bombings and messenger programs to coordinate terrorists.

 According to a study in Australia, 25% of bitcoin users and about 44% of bitcoin transactions were involved in illegal activities. However, the most popular currency for this type of activity is still the dollar.

According to another study conducted to analyze the patterns of money circulation in the Bitcoin network, in the past, most of the activities performed through Bitcoin were related to black markets and gambling. Still, today, such activities account for a small share of the uses of this digital currency.

7. Investing in digital currency is profitable

With the increase in investment of large mutual funds or banks such as Goldman Sex and Morgan Stanley on bitcoin and other digital currencies, many rumors spread about the profitability of digital currencies.

Digital currencies may be profitable, But it depends on several factors.

In blockchains that use the proof-of-work mechanism, after extracting all the cryptocurrencies, the miners’ reward will be paid instead of the cryptocurrencies as the cost of subsequent blockchain transactions.

On the other hand, promoting the profitability of investing in digital currencies encourages miners to participate in networking and mining; But it should be noted that not every cryptography is suitable for every person; News and events around the world can cause a lot of fluctuations in the market in this area.

Just as you are careful with any activity with your Fiat money, for every decision in the field of digital currencies, consider all aspects and do not make transactions without checking or handing over your digital assets to anyone.

8. Token and Quinn are no different

Simply put, a cryptocurrency with a dedicated blockchain, Kevin; A cryptocurrency built on a blockchain for another cryptocurrency, is called a token.

Tokens are used in China’s blockchain technology to mean a cryptocurrency unit exchanged and traded. The need for tokens from a dedicated blockchain is the main difference with Coin.

In fact, Quinn could be a token; But not every token is necessarily a coin. A token that does not have a dedicated blockchain is not worth a coin and is only used for payment or decentralized applications (dApps).

Digital coins such as ethereum have their own native Chinese block, But digital tokens like Shiba have been created on existing china blocks.

9. Digital currency is not taxable

In some countries, such as the Netherlands, South Korea, Denmark, Italy, and Singapore, digital currency technology is not yet widespread, so digital currency exchanges are not taxed.

However, in many countries, the tax on digital activities depends directly on revenue versus the cost. Each country has its own rules: the United States, Britain, and Australia tax capital gains, Japan’s income.

Work in this area is considered “miscellaneous income,” German tax laws also vary depending on the purchase, investment, or sale: the more advanced the country’s regulatory system, the more complex the tax system.

Although governments cannot directly control or legislate digital currencies, they can also tax the revenue generated by cryptocurrencies and manage the activities in this area.

10. Bitcoin is the Chinese block or vice versa

Bitcoin code currency and block China’s manufacturing technology Bitcoin

Bitcoin is a digital asset used to purchase goods or use online services, and transactions related to this digital currency are performed on a digital network called Blockchain.

11. the digital currency has no support

Many people believe that because Bitcoin is not under government control, it has no financial backing and is just a number. This can be true of any currency in general.

Because value depends on nature, the market can value anything. However it wants, and whenever it wants. The nature of the value of money and gold has been created in the same way from the beginning.

What gives traditional money (banknotes) credit is the compulsion to use it by the government and the agreement to use it by the people.

The high speed and low cost of transactions and the lack of centralized oversight for a currency like Bitcoin give it credibility, like any currency in circulation.

What determines the value of Bitcoin and all digital currencies, in general, is the supply and demand in this system, and anything used for payment can be considered as money.

12. After extracting 21 million bitcoins, no transaction will take place

Many people do not know enough about the fate of Bitcoin after mining a total of 21 million and think that after that, the miners will no longer have any incentive to continue, and the network will destroy.

When all the bitcoins are mined, and there are no more bitcoins to be mined. It is the turn of more than 21 million of them in the network. The volume of transactions increases; Therefore, the miners’ income will be after extracting the entire bitcoins from the confirmation of the transactions and their fees.

13. Cheap coins and six coins are growing as big as bitcoins

The fact is that no digital currency has the same amount of bitcoin in circulation. Many people argue that bitcoin is worth only a fraction of a penny a day, and based on this, they make exciting predictions of low-cost pennies.

The growth of the value of altcoins or six coins varies depending on their characteristics, But it is unlikely that they will equal Bitcoin one day.

14. Bitcoin and digital currencies are a temporary bubble

It can say that bitcoin has just entered the mainstream.

Any device that is scarce and practical cannot be considered bubble and non-existent.

With the acceptance of bitcoin and digital currencies in different societies as a payment method, this technology is increasingly recognized. The demand for bitcoin is increasing sharply due to the limited resources.

It is safe to say that the debate over bitcoin and digital currencies, in general, will be short-lived for many years to come. Still, it can say with certainty that once it comes to having privacy in transactions and their decentralization in the world, it will be impossible to reverse it, and this process can no longer stop.

15. Quantum computers endanger the security of digital currencies

With the rise of quantum computing, many users are worried about decrypting blockchains and stealing their digital currencies (especially bitcoin). Still, this forecast will only happen if the Bitcoin network does not experience any improvement in the coming years.

Even so, owning one is still beyond the reach of the average person. As a result, today’s users do not have to worry about bitcoin being decrypted by quantum computers.

Assuming that quantum computers can take control of the Chinese blockchain and the entire cryptographic mechanism is broken, in addition to digital currencies, all financial institutions, including banks, will be at risk; At that time, we will have much more important concerns about digital currencies and blockchains, and this will no longer be limited to the field of digital currencies.

16. You Only  can purchase one full bitcoin

Today, the value of a complete bitcoin is so high that newcomers to the network are shocked; But because bitcoin is a digital network, it can split into more than 100 million pieces; Therefore, there is no need to buy a complete bitcoin and a small part of it can be bought, sold or sent and received. As the value of bitcoin increases, so will the value of each share you own.

17. Bitcoin is a Ponzi scheme, like pyramid schemes

The Panzi scheme operates like a pyramid scheme in which the profits of the initial investors are offset by the money of the subsequent investors in the network. If new participants do not enter the network in sufficient numbers, they will collapse at a loss.

This is not the case with Bitcoin, as Bitcoin is a free software project without a central authority. Bitcoin is open-source, and its performance can be seen at every step.

This digital currency is currently a registered asset, and its profitability is taxable. So Bitcoin can not be considered a Ponzi scheme because it does not have the features and characteristics associated with this scheme.

18. Bitcoin loses its value due to multiple forks



Fork means branching out and branching out. In blockchains, disagreements within the network about the future status of the blockchain lead to the creation of forks and altcoins, and as a result, the main chain of blocks is divided into two or more branches, all of which are valid. For example, a bitcoin cache is the result of one of the bitcoin forks.

With each fork on the Bitcoin network, many people raise concerns about bitcoin inflation; But in fact, these forks only create separate networks and have no effect on the bitcoin network.

In addition, coins with different uses can make people more involved in digital currencies, which is beneficial for bitcoins.

19. Bitcoin network will not upgrade

Since the advent of the Bitcoin network, there have been many changes to optimize it, increase privacy, and increase the capacity of smart contracts.

However, the Bitcoin network still has a long way to reach out to large credit card networks. In general, Bitcoin intends to remove the restrictions on its network with various updates.

20. Missing bitcoins are recoverable

Bitcoin is not paper money that falls out of our pockets or gets lost, But it is still possible to lose them by forgetting the private key or losing the information about the digital wallet.

Once the bitcoins are lost, there is no way to access them, and they remain in the Chinese block just like the rest of the bitcoins.

This can increase the price of bitcoins because as the number of bitcoins available for exchanges decreases, the demand for the remaining bitcoins increases. To compensate for this demand, its value increases.