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5 major misconceptions about bitcoin

here are 5 major misconceptions about Bitcoin in the cryptocurrency market which beginners might hear or even be unaware of

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Image: Blockchain Global

For people who have just begun their investor journey, they should know that the crypto market is still a developing market, and contrary to what you might have heard from others about how it is too late to enter this market now, it is still not too late to be joining the market.

Although this article is specific and concerns Bitcoin in particular, it should be known that BTC is not the only crypto, and that there are several others in the market, and also performing well, for example, ethereum, litecoin, Binance coin, and XRP etcetera. You should be aware and well-researched before entering the market or deciding which digital currency to invest in.

A lot of beginners and newbies have claimed that there is generally a lot of rumors, misguidance and misconceptions created in the market by some people which can mislead those investors who are just starting their investment journeys.

We have identified a few of the most common misconceptions or myths that circulate in this market and the beginners might face while entering the digital currency market for the first time. Visit https://bitcoincompass.io/to learn more about bitcoin and investing or trading in the crypto market.

Background on Bitcoin

The cryptocurrency market has been dominated by bitcoin ever since crypto began. Several hundreds of other digital currencies have come, stayed, and left in the meanwhile, yet none surpassed BTC. However, despite this market leadership, the journey of bitcoin has not been all smooth.

We can demonstrate this by the example of how Bitcoin prices skyrocketed up to $20,000 during the end of 2017, before falling down by more than $15000, to $3,234 in 2018. It is, however, noteworthy that the BTC has been seen more on the upside ever since then.

This can be seen from the very recent price hike of up to $40,000 for BTC during the start of this year, accounting for a market capitalization of beyond $1 trillion. This shows that BTC comprised greater than 69% of the digital currency market.

Now that we know what bitcoin is, and have a slight idea of its general and recent performance, here are 5 major misconceptions about Bitcoin in the cryptocurrency market which beginners might hear or even be unaware of:

1. Digital Currencies are not used to buy illegal stuff

Although BTC was at one point in time known to be used to purchase MDMA at some point in the last decade, one should understand that this is not the only purpose it’s used for. In the recent past, upon increased acceptance of bitcoins and another crypto in different global markets, you can also make transactions in order to purchase a certain product or service through crypto payments, e.g. on AT&T or Microsoft. PayPal has also introduced a feature where it allows its users to convert its credits into bitcoin and make payments via it.

2. Digital Currencies Aren’t the Fastest Payment Method

The speed of all the digital currency payments varies from one another, depending upon several underlying factors. This can be demonstrated from the examples of Ether and Bitcoin, given the former has a faster transaction and payment processing speed than the latter.

Every cryptocurrency has a different transaction speed. Having said that, these digital currency payments are not processed instantaneously. Even for Bitcoins, the processing time can range anywhere from within minutes to a few days, depending upon underlying factors such as payment processing charges paid – the greater, the faster payments.

3. Digital Currencies Are Also Taxed

it is true that Bitcoin system is the decentralized, which mean that it is free from any third party intervention, it should still be known that they are sometimes taxed. Given that you are earning any profits or making any gains after investing in crypto through exchanges, you will be required to provide your tax information and pay income tax or Capital Gains Tax on your earnings via the exchange. You should research on the internet about these things and taxation rates in your areas in order to efficiently manage your crypto.

4. Digital Currency Payments Are Not Free

Another major thing to understand before you enter the market, or if you already have is that there is a cost of investment associated with purchasing and paying through digital currencies. This is in the form of payment processing charges. This fee is basically the compensation for the crypto miners for their services, which validate your crypto payments and enable you to make seamless payments. The variation in this fee, however, is due to the urgency of payments. In simple words, you pay a higher fee if you want your payment to be processed faster.

5. Digital Currency Might Not Make You as Wealthy as You Think

Everybody hears stories about how people have made fortunes with crypto investments such as through bitcoins. Although these examples are true, they are true for some of them, and not every investor. These are the people who have invested relatively greater amounts and also invested in the beginning of the crypto era, when the risks were the highest. Also, the infamous volatility in the crypto market is another factor which has not only made returns lesser for investors but caused some to go even in losses, therefore it is essential to do a thorough research and be well-informed before entering the crypto market and converting your hard earned cash into the digital currencies like bitcoin.

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