Bitcoin is all over the news, but there’s an immense amount of confusion surrounding this new concept. Despite its meteoric growth in 2017 and the recent introduction of the CBOE and CME futures contracts, it will still take some time before bitcoin is widely accepted and understood. In order to facilitate its mass adoption, reduce confusion and limit the spread of misinformation, people need to know how to talk about the digital currency and understand its adjacent terms. Here’s your chance to be the bitcoin expert and impress friends, family and acquaintances by answering their hard-hitting questions about the mysterious topic.
“Bitcoin has no Value”
Because bitcoin isn’t a tangible object, like gold, many believe it has no true value. However, it’s important to remember that bitcoin isn’t valued the same as a traditional currency, but rather by its supply and demand. There are only 16.6 million bitcoin currently in the market, with another 4.4 million becoming available in the next 120 years to meet increasing demand. Despite the fact that you can’t hold a bitcoin in your hand, it has real-world applications that give it value.
“It’s Just a Fad”
Another common opinion of bitcoin is that it’s just a passing fad. The answer to this question does not lie with bitcoin itself, but rather the technology it’s built on, called blockchain. Blockchain can be used to make financial transactions more secure and cheaper — impacting credit card transactions, car sales and fast food restaurants. To further cement its permanence, major retailers are beginning to adopt bitcoin as a payment option. In fact, you can even purchase real estate with cryptocurrency in Miami, Dubai, New York City, Lake Tahoe and Bali.
“Bitcoin is a Bubble”
This is one of the most popular statements about bitcoin, and it is simply not true as it doesn’t meet the criteria of a bubble. Bitcoin is a very small part of the investment markets, and it is too young to be a bubble. Although it will have volatile sell-offs in this infancy stage, remember not every market needs to have a bubble. (It’s not like real estate, or the “dot coms” investments owned by a large portion of the country.)
“It’s a Dangerous Investment”
Due to its history of trading through unregulated, third-party exchanges and the rampant fraud during Initial Coin Offerings (ICOs), many fear investing in cryptocurrency is a risky option. Couple that with its high volatility, and investors are naturally skittish. However, now that there are official, regulated exchanges, the risk of fraud is being reduced significantly. As the technology and digital currency is more widely accepted, its volume and liquidity should increase, eventually creating a more stable market.
Will cryptocurrencies someday revolutionize world commerce? It’s still too early to tell. However, the technology behind digital currencies is already changing current systems on a major scale. Bitcoin is still very young, and its technology is advanced to the general population making it more difficult to become widely accepted. It’s worth mentioning that there were many technologies that were resisted before widely accepted. Many of the worlds best ideas and inventions had rough periods as their innovators worked to perfect them.
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