What is Bitcoin?
Bitcoin is a Digital Currency that was created in January 2009. It follows the ideas exposed in a white paper by the mysterious and pseudonym Satoshi Nakamoto.
The identity of the person who created technology has always been a mystery.
Bitcoin offers the promise of reducing transaction fees below traditional online payment mechanisms, and, contrary to the currencies issued by the government, it is exploited by a decentralized authority.
Bitcoin is a type of cryptocurrency. There are no physical bitters, only sales kept on a large public book that everyone has transparent access to. A massive amount of computing power checks all Bitcoin transactions.
Bitcoins are neither issued nor supported by banks nor governments, nor valuable individual bitcoins as a commodity. Despite its legal call for tenders, Bitcoin is very popular and triggered the launch of hundreds of other cryptocurrencies, which is a joint commission. Bitcoin is commonly abbreviated as “BTC.”
Various Misconceptions about Bitcoin:
After understanding the concept of Bitcoin above, now let’s come to our main topic, which is: Misconceptions of Bitcoin.
So, the following are the misconceptions of Bitcoin:
Bitcoin is for Illegal Dealings
This old argument probably comes from the association between crypto and various shaded operations, such as the current Silk Road or the present-day Web services.
To a certain extent, cryptocurrencies can indeed be used for illicit activities. An Australian study asserts that 25% of Bitcoin users and about 44% of Bitcoin transactions are engaged in illegal use.
On the other hand, if we talk about the most popular currency for black market operations, it is the US dollar. Like cryptocurrency can be used for transactions or illegal operations, can the Fiat perhaps money.
And most of the things that can be used for good can also be used for harmful purposes, with Microsoft Suite applications used to write anarchist treaties or keep track of cargo banking payments used in bombings and applications. Messaging used by terrorists.
- Bitcoin is a Non Taxable Income
There are a lot of countries where there is indeed any tax on cryptocurrency (South Korea,Netherlands, Denmark, Singapore and Italy etc.), but this is likely because the question has not been appropriately taken into consideration at this stage.
However, this idea is just not right for many countries and represents a confusion between what you can escape and what you are supposed to do.
Cryptocurrencies are taxed differently depending on what it is considered. The United States, U.K., and Australia tax as capital gains; Japan sees it as “miscellaneous income.” Germany taxes differently depending on whether you buy, invest or sell. The more advanced the regulatory system is, the more complex is the taxation system.
- Bitcoin is Unregulated
The crypto regulation is a bustling area for the moment. Countries have varying degrees and types of rules. The United States, Australia, Japan, South Korea, most of the South American countries – in fact, most countries worldwide – are held together to allow cryptocurrencies but demanding different types and levels of compliance.
Also, various countries like China, Pakistan, Bangladesh, Nepal, and India have prohibited cryptocurrency. Do not be surprised if you also see the crypto activity of these countries. VPNs are quite efficient; you can not regulate the use of mathematics and code on your computer.
For the most part, however, the bottom line is that more regulation will probably be introduced soon.
- Bitcoin Wastes Energy
The Bitcoin Network, as of now, takes as much energy as a small country. This naturally raises environmental concerns significantly since it increases.
Similarly, gold exploitation uses a lot of energy. For each gold coin, a considerable amount of money, energy, and time has been explored for deposits, developing a mine, then treating innumerable tons of rocks with heavy equipment to get some grams of Gold per tonne. Then, it must be purified and struck in bars and coins and transported.
It takes several tons of transformed rocks to get each 1-ounce gold coin and thousands of tons of rock transformed for each right golden delivery bar. The amount of energy that goes in a small gold unit is immense.
Similarly, Bitcoin takes a lot of energy. It is still because it has so much computer power, always ensuring its protocol compared to countless other easy-to-attack or insufficiently decentralized cryptocurrencies.
The question then becomes whether this energy associated with Bitcoin is used. Does Bitcoin justify its energy use? Does it add enough value?
So far, the market says that it does. A decentralized digital currency system, distinct from any sovereign entity, with a monetary policy based on inherent rules and scarcity, gives people a choice that some of them use to store the value and use to transmit this value to others.
- Bitcoin has no Intrinsic Value.
When we talk about intrinsic value, we refer to an asset’s real value taking into account all the factors that surround it. Many beginner users consider that Bitcoin has no total value, but that’s not true.
Bitcoin meets the characteristics of money- sustainability, portability, fungibility, recognition, divisibility, and shortage. So its value rests on its utility as a currency and in the supply and demand of its users.
Also, all records of the operations performed are on the Blockchain. It works like a great permanent and distributed book at the global and stamped time. On the other hand, the Blockchain only allows you to add data, so once added, they can not be deleted or modified. Also, all the information added to it is grouped into mathematically linked blocks to the other via algorithms, such as Merkle Tree.
All these characteristics do not exist grouped into other means of payment. Similarly, we can consider the value of Bitcoin according to the global network where it works. If we compare it to a mobile phone, it depends on a telephone network, without which it would have no use. Similarly, Bitcoin relies on merchants’ global network, exchanges, and handbags, which are needed to transmit financial information via the web.
In this article, we have tried explaining to you the meaning of Bitcoin, what are the misconceptions regarding Bitcoin. We hope you will enjoy reading this article.