6 Common Myths About Cryptocurrency

When it comes to financial assets, cryptocurrency is the wild west. It’s still new and largely misunderstood, but its potential is huge. Unfortunately, the misconceptions surrounding cryptocurrency, particularly Bitcoin, leave many who could benefit from diving in. This is one of the many topics covered by Timothy Peterson in GSBLSU Junior class, “Introduction to Digital Assets for Bankers.”

Bitcoin Myths:

  1. Bitcoin is mostly used for illegal activity – Although there have been concerns about bitcoin being used for illegal purposes, less than 1% has been known for illicit activity. Of that 1%, it was not used for money laundering, trafficking, or other criminal purposes.
  2. Bitcoin is anonymous – Bitcoin is completely traceable on a public blockchain. All that is needed is an IP address associated with a wallet
  3. Bitcoin is a bubble -The spikes and dips in Bitcoin are due to price manipulation by bots, not by people.
  4. Bitcoin is a Ponzi scheme – A Ponzi scheme promises quick returns to investors of a non-existent enterprise. Bitcoin investors are ensured no such returns. In fact, its value is notoriously inconsistent.
  5. Bitcoin is an inflation hedge – Bitcoin has no correlation with short and long-term inflation.
  6. Bitcoin will replace Sovereign Currency – Cryptocurrency is unregulated and highly controlled by institutions or billionaires, unlike sovereign currency that the government regulates.