Bitcoin isn’t something new to the market; it has existed since 2009 when a genius named ‘Satoshi Nakamoto’ first introduced it to the world.
However, it remains a mystery with such myths in the minds of people:
- Bitcoins used for illegal activities
- It is all a giant Ponzi Scheme.
- Why invest in it when anyone can create it?’
Even an online study conducted by Harris Poll reveals that less than 50% of people are somewhat familiar with Bitcoins, although more than 80% are aware of its existence.
But still, limited knowledge and fewer facts have led to many misconceptions and myths regarding Bitcoins.
Courtesy: Blockchain Capital Research
7 Bitcoin Myths Debunked
However, all the aforementioned myths are not true. That’s why in this article, I have attempted to clear your head off the significant misconceptions revolving around Bitcoins.
#1 Bitcoins Are Illegal
It is true that in April 2018, RBI imposed a ban on entities under its regulation to stop facilitating individuals/entities who deal in crypto. It clarified that cryptocurrency is not legal tender in India.
Practically, this means banks will have to stop deposits and withdrawals to and from the Indian rupee on cryptocurrency exchanges. This ban, however, did not state that trading or investing in bitcoins was illegal.
More yet, that is the news of the past.
In March 2020, the Supreme court ruled against the banking ban on cryptocurrency trading. This means that now banks and financial institutions are permitted to resume offering services to individuals and entities dealing in cryptocurrency.
Now not only Bitcoins but also other virtual currencies are legal in India.
#2 Bitcoin Only Funds Illegal Things
Crime and illegal activities are a growing problem in India. Plenty of money is circulated for the conduction of such activities.
Back in the 1970s, there was a compelling and highly organized Colombian drug cartel named Medellín Cartel. It made about $60 million daily in the cocaine trade alone.
Does that make the US dollar illegal? No!!
The fact that specific currency is used for illegal transactions does not make it illegal. Cryptocurrencies are indeed being used for unlawful activities; however, that does not mean that it is solely used for such transactions.
#3 Bitcoin Is a Ponzi Scheme
A Ponzi scheme is an investment scam where earlier investors’ returns are paid off from the funds of new investors and not from the business’s profits.
Bitcoin is a decentralized currency – there is no one particular entity or power that can lead such a scheme. It is a peer-peer, open-source currency.
However, investors need to beware of companies that conduct Ponzi schemes in the name of Bitcoins, just like there are investment Ponzi schemes in the name of gold or stocks. Check the everyday BTC to INR rate.
#4 Bitcoin Is Expensive
As the article is being written, the value of Bitcoin is around ₹800,000
Does that mean that you cannot afford to buy Bitcoin? No !!
You can buy a portion of a Bitcoin that you can afford, just like owning a company’s shares.
There are sub-units of Bitcoin, namely Millibitcoins, Microbitcoins, and Satoshis. With Satoshi being the lowest unit, you can buy bitcoins fractions for how much ever money you are looking to invest in it.
The minimum investment value may vary at different exchanges – Coinswitch Kuber App allows you to invest in any cryptocurrency, including bitcoins, for as low as ₹100.
#5 Bitcoin Wastes Energy
The internet and the news are full of information about how bitcoin mining is a waste of energy.
But this isn’t true !!
Yes, mining Bitcoins does consume a lot of energy. If there is no cost attached to mining, then how will bitcoins be priced?
Also, has anyone ever questioned – how much energy is consumed for the conduction of financial institutions, banks, and other finance-related industries put together? Come to think of that; there is considerably more waste in these sectors than in Bitcoin mining.
Bitcoin can change too – If research on low energy consumption pans out. In fact, the Bitcoin network’s demand will push the research for efficient energy benefitting everyone in the long run.
#6 Bitcoins Are Hacked
The Bitcoin blockchain is regularly reviewed by the entire network, making attacks on the Bitcoin itself highly unlikely.
Thousands of copies of Bitcoin’s ledger are stored in computer nodes scattered across the planet containing all the transactions that have taken place so far.
If hackers decide to alter the distributed Bitcoin ledger, they need to first hack more than 50% of the computer nodes used for mining, which you also know is how much possible !!
That’s why the fact is; Bitcoin itself has not been hacked since inception.
Having said that, Bitcoins cannot be hacked but can be stolen just like any other currency. This is most likely to happen if you store it in places that are not secure.
#7 Bitcoins Are Not Accepted Anywhere
Bitcoins are merely seen as just an investment vehicle by a majority of the people. But like the Indian Rupee, you can spend Bitcoins on purchasing things or paying bills.
- Pay for mobile recharge in India using Bitrefill etc.
- Purchase from online shopping sites such as Sapnaonine and Overstock.
- Purchase games and applications in Windows and Xbox stores.
- Purchase Amazon, Myntra, or Flipkart gift cards on platforms such as Purse.
- Pay at physical stores in countries such as the US, Germany, Japan, etc.
Many more online and offline businesses accept bitcoins and other cryptocurrencies for various services and goods they provide.
To sum up, cryptocurrencies are yet an unexplored avenue that has high potential in the Indian market. Now that you have some truth put to light, I leave it at your hands to decide the worthiness of investing in Bitcoin.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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