5 Bitcoin Myths

Written By Brian Hicks

Posted April 4, 2013

bitcoinwdAlthough the bitcoin movement is still relatively new, there are a number of myths now floating around the Internet regarding this digital currency. I found some fascinating ones on a bitcoin wiki page. Here are some of the more interesting entries:

1.) Bitcoins are worthless because they aren’t backed by anything.

Well, is gold backed by anything? Bitcoins are subjectively valued by individuals, with this valuation being demonstrated every time individuals freely exchange for or with bitcoins.

2.) Bitcoins are illegal because they’re not legal tender.

Currency, in its purest form, is nothing more than a unit of account. And because a user of virtual currency is not a Money Services Businesses under the 2013 Financial Crimes Enforcement Network, that user is not subject to any form of money services registration, reporting or record keeping regulations.

3.) The bitcoin platform is a giant ponzi scheme.

Founders of ponzi schemes convince investors that they’ll make a profit. The bitcoin platform does not make that kind of guarantee, nor is such a thing possible as there is not central controller, but rather a group of individuals constantly building and growing.

4.) Bitcoin violates government regulations.

No government regulations in existence today outlaw the use of bitcoins. Such an attempt would also be extremely difficult and costly to enforce.

5.) Bitcoins will only create more opportunities for criminals.

It is true that criminals will certainly take advantage of bitcoin users. Just like criminals also take advantage of credit card users and other online payment systems. But it’s definitely a lot easier for someone to steal your credit card information than it is to steal your bitcoins.

Of course, while bitcoins continue to look quite appealing, we remain focused on gold. Because without a doubt, gold is the ultimate safe haven. You can read more about that here.

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