5 myths about Bitcoin and cryptocurrencies

The myth:

The claim that the price of cryptocurrencies and Bitcoin is a bubble that could burst at any time is often compared to the internet bubble in 2000.

The truth:

Bitcoin and other cryptocurrencies have indeed recorded spectacular price gains in the past, but have also experienced equally spectacular crashes. Nevertheless, there are many factors that speak against simply dismissing cryptocurrencies as a bubble. In addition to their volatile nature, there are numerous real applications that make digital currencies far more than just objects of speculation.

One example of this is their use for international transfers, which can save costs and time. Traditional financial service providers often charge high fees and take several days to process cross-border transactions. Cryptocurrencies, on the other hand, enable fast and inexpensive transactions that can be processed directly between parties without relying on banks or third parties.

In addition, more and more companies and institutions are accepting cryptocurrencies, especially Bitcoin, as a means of payment, which further increases their legitimacy and acceptance. This increasing use in the real world shows that cryptocurrencies can offer real benefits and added value that go beyond pure speculation.

The myth:

As cryptocurrencies, such as Bitcoin, cannot be controlled by any central authority, they are often used for illegal activities. Such as money laundering, fraud, arms or drug trafficking.

The truth:

As with any other means of payment, cryptocurrencies are occasionally used for illicit transactions. Nevertheless, it is important to emphasize that the most commonly used means of payment for illegal activities is still cash - the American dollar (USD), to be precise. Globally, up to 5% of transactions are classified as illicit, compared to just 0.24% for cryptocurrencies. This indicates that cash is much more anonymous compared to cryptocurrencies.

A key reason for this is that all cryptocurrency transactions are recorded on the blockchain, which is publicly accessible. In contrast, cash offers greater anonymity as there are no records of transactions. Nevertheless, most cryptocurrencies are working hard to improve the security and transparency of their transactions in order to curb illegal activities and increase user confidence.

The myth:

As digital payment systems, Bitcoin and other cryptocurrencies are vulnerable to cyber attacks and can be easily hacked.

The truth:

In the past, the media has repeatedly reported on hacks of crypto assets. However, these incidents were mostly due to human error or vulnerabilities in the security infrastructure. In principle, cryptocurrencies are considered more secure than traditional financial instruments as they are based on a decentralized blockchain infrastructure (DLT). This structure makes it more difficult for attackers to manipulate or disrupt the system.

By using secure offline wallets and keeping passwords safe, you can significantly reduce the risk of hacks. It is extremely unlikely that you will fall victim to hacks if you follow these security best practices.

The myth:

Crypto payments are not managed by a central authority and transactions cannot be traced back to the user who made them. They are therefore anonymous.

The truth:

In contrast to bank payments, transactions with Bitcoin and other cryptocurrencies actually offer a certain degree of anonymity. After all, every bank knows its customers and every payment is linked to the name of a person or company. Payments with cryptocurrencies, on the other hand, do not require any personal information about the payer or recipient. However, crypto transfers are not completely anonymous. This is because each transaction has a unique identification number and is recorded on the publicly accessible blockchain. This is referred to as pseudo-anonymity. This means that a user acts under an alias or user name instead of their real name.

The myth:

Bitcoin and cryptocurrencies are often criticized because their operation is associated with high energy consumption, which often comes from fossil fuels. This leads to significant CO₂ emissions and contributes to environmental pollution.

The truth:

Some cryptocurrencies, particularly Bitcoin, have been criticized for their comparatively high energy consumption. Nevertheless, advances in technology and algorithms have helped to significantly reduce the energy requirements of cryptocurrencies. In addition, renewable energies such as wind, solar or hydroelectric power are increasingly being used to make the operation of cryptocurrencies more environmentally friendly. There are even cryptocurrencies such as SolarCoin that are based exclusively on renewable energy sources.

Although the environmental footprint of cryptocurrencies is continuously improving, there is still potential to reduce the carbon footprint. The industry is aware of this challenge and is actively working on solutions to minimize its environmental impact.

It turns out that although many prejudices against cryptocurrencies and Bitcoin contain a spark of truth, they can often be refuted on closer inspection.