I Can’t Believe People Still Believe These Myths About Bitcoin
It’s not a stretch to say I’m on fire for crypto in a way only a truly converted former skeptic could be.
It’s true – I was not always the Baron of Bitcoin (BTC)… the Demigod of Digital Assets… the Lord of the Lightning Network… that you know and love today.
Not all that long ago, I was pretty suspicious of an asset you couldn’t actually put your hands on, but somehow had value. I was more of a gold guy, really.
When it came to Bitcoin, I was skeptical, but I was also pretty curious, too. So, I liquidated just a little of my gold stash and bought some Bitcoin.
Along the way, I wrestled with a lot of (unfortunately) all-too-common myths and misconceptions about Bitcoin and crypto in general. The more I read – and the more I saw my account balance rocket – the more I became convinced I’d made the right call by taking a Bitcoin position. The $1 million-plus balance I ended up with was the ultimate confirmation.
There’s still an incredible amount of Bitcoin mis- and disinformation out there, and that it’s coming at us during a “crypto winter” just makes it all the more destructive.
Today I’m going to explode the myths… the BS… the flat-out wrong myths that are flying around currently. I had to hustle and search high and low to get the real answers – for you, it’s all right here.
And, by all means, share this with someone you think could use it…
Myth No. 1: Bitcoin Has No Intrinsic Value
OK, so this one isn’t a lie so much as a big, fundamental misunderstanding. Yes, money is simply a social contract. Yes, money can be anything – dollars, hacksilver, sea shells, beads – that you can use to extinguish debt. The value lies in the fact that people want it, and that people can use it to wipe debt and meet their needs. This even applies to gold, which gets most of its value from the fact that everybody “knows” that gold is valuable. We don’t question it because people decided it was valuable thousands of years ago. Bitcoin is provably scarce. It’s easy to transport. It’s a monetary instrument that operates outside of increasingly iffy fiat currency systems.
Myth No. 2: Bitcoin Is Like the Dutch “Tulip Mania”
In the early 17th century, from roughly 1634 to 1637, Dutch society managed to go totally bonkers for tulips – admittedly pretty tulips, but tulips. At the peak of the bubble, some bulbs were going for 10 times a normal person’s yearly income. Then, for reasons we don’t really understand, the tulip market crashed. A lot of wealthy people lost a lot of money, but the Dutch economy didn’t take much of a hit. Obviously, the price of tulips has never really recovered.
Bitcoin’s clearly nothing like Tulip Mania. For one thing, tulips make more bulbs. Yes, it’s possible to mine more Bitcoin, but the supply is capped at BTC 21 million – that’s it. Doesn’t matter if the price or demand is high or low, the supply won’t change.
“Sure, Nick, but didn’t we just go through ‘Bitcoin Mania?'” I hear you ask. Well, yes and mostly know. Demand for Bitcoin skyrocketed as FOMO fever kicked in. This latest bull run brought us celebrity Bitcoin endorsements – and celebrity crypto scams. Bitcoin topped $69,000 in late 2021.
Then we got a correction; today Bitcoin’s sitting at just under $17,000, and we’re in a “crypto winter.” But the whole fact that we’ve been through this cycle before. Bitcoin hit an all-time high of $19,837 in December 2017, then it tanked. Less than four years later, it had recovered to more than triple that level. Bitcoin prices have fallen sharply again – they will recover, unlike tulips. Bubbles absolutely positively do not have multi-year recoveries to new all-time highs, and they never will.
Myth No. 3: Bitcoin Is for Criminals
In the early days, criminals used Bitcoin with abandon because they thought it was truly anonymous… but several massive, high-profile law enforcement busts of some utterly despicable bad guys proved it was possible to tie wallets to individuals. In fact, a 2020 by the RAND Corporation think tank showed just 1% of Bitcoin transactions are associated with criminal activity. The “coin of the realm” for bad dudes the world over continues to be… greenbacks.
Myth No. 4: Bitcoin Is Too Volatile
Volatile, yes, but “too volatile?” I think that depends on your risk tolerance – I think that depends entirely on your risk tolerance, in fact. I’m as big a Bitcoin bull as anyone you’ll meet. I’m all-in. But I don’t expect most investors to be that hardcore, and I’ll be the first to tell you, don’t bet the farm on it. Don’t put the kids’ college fund in it, don’t blow out the rest of your portfolio for it. The money you have in Bitcoin will experience significant volatility, and you have to have the intestinal fortitude to watch it happen. My net worth “wobbled” by several million dollars a week not long ago, but I’m okay with it because I believe, wholeheartedly, in the power of Bitcoin and cryptocurrency.
There’s also increasing adoption – “hyperadoption.” As that accelerates, it’s very likely that volatility will decline. At one point, Bitcoin’s 260-day volatility hit a low of just 1.8x the NASDAQ – that’s a sign of a maturing market.
Myth No. 5: Bitcoin Will Be Dethroned Someday
Bitcoin saw off more than 6,500 other coins during the “Crypto Wars” of 2017 and 2018, and it beat thousands more during the 2019 to 2021 bull run.
As recently as May 2022, Bitcoin constituted 44% of the entire crypto market and nearly 3% of the world’s money supply. In other words, Bitcoin’s not going anywhere. At its current rate of adoption, which is growing faster than the Internet did, Bitcoin’s only going to become more important as time goes on.
Amen!
Yes
I’m new to the crypto space and was ignorant when I was 1st introduced to the space 4 years ago. After truly giving it a legit look at this February I will not be making that mistake to not put skin into the game. I haven’t made a penny yet but know that my time is coming and have my positions stacked and am using DCA to ensure I capitalize! Have at it Nick we’re here and listening ?
Happy to be here to help.
Hey don’t feel bad because that happened to me in 2011 ,I told my son to invest $100 and he said that not any other kind of coin it was torn down the dollar. Now I don’t let anyone to involve me in dreams. I have my owns.
That’s why I preach DYOR so you can see the FUD and scams before you’re a part of it.
Terrific article, Nick. Thanks for being so educated on cryptos and passing along that knowledge to us.
Very welcome.
Right on target. Those are the views that I have and you express them well!
Very welcome
Nick, would it possibly be helpful for NEWBIES to expand on this:
“Bitcoin is provably scarce. It’s easy to transport. It’s a monetary instrument that operates outside of increasingly iffy fiat currency systems.”
Like mentioning, that Bitcoin is a DISTRIBUTED (DE-CENTRALIZED) LEDGER, that operates on THOUSANDS of computers, world-wide, that NO GOVERNMENT or other CENTRALIZED authority could ever hope to control?
I’ll look into it.
I don’t understand the business a BIT, so it does not get my coin!
Just keep researching & you will understand more.
I agree
Nice
Bitcoin is here to stay
Indeed