Bitcoin has been called a bubble, a playground for the wealthy and even a passing fad, but how much of that is actually true? Despite its volatility, bitcoin has repeatedly bounced back from major downturns, gained mainstream adoption and proven its staying power over the past 15 years.
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Yet, misconceptions about its security, accessibility and legitimacy persist. Before you dismiss Bitcoin based on common myths, experts separated fact from fiction about the most well-known cryptocurrency.
Bitcoin Is a Bubble
People who refer to bitcoin as being in a “bubble” are ignoring how it has performed across multiple boom-and-bust cycles, according to Thomas Franklin, CEO and founder of Swapped, a company that builds crypto-exposure products.
“Bubbles pop and disappear. Bitcoin has recovered from drops of 50% or more multiple times and hit new all-time highs afterward.”
Its market cycles may resemble financial bubbles, “but its long-term trajectory suggests it is more than just a speculative asset,” according to Daniel Logvin, CEO at LedgerByte.
Unlike traditional bubbles that collapse permanently, bitcoin has repeatedly recovered, reaching new all-time highs after each major downturn, Logvin assured. “Major financial institutions, hedge funds and even governments are now integrating bitcoin, reinforcing its legitimacy beyond speculative trading,” Logvin pointed out.
While he acknowledged that short-term speculation can drive volatility, bitcoin’s decentralized nature, fixed supply and increasing adoption suggest it behaves more like “digital gold” than a classic financial bubble.
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Only the Wealthy Can Invest
While bitcoin’s price may seem high, it is actually one of the most accessible assets in the world because it can be bought in fractions, Logvin said. The smallest fraction is called a “satoshi” (0.00000001 BTC) after Bitcoin’s developer Satoshi Nakamoto.
The idea that bitcoin is reserved for the rich likely stems from “its significant price appreciation over the years,” Logvin said.
However, unlike stocks, which often require buying whole shares, bitcoin is accessible at any amount, Franklin pointed out. “Large institutions hold massive amounts but smaller investors make up a huge part of the market.”
You Have To Know Tech To Invest
If you think you need tech savvy to invest, think again, Logvin said. Many investors participate without deep technical knowledge. What is needed is an understanding of basic security best practices to keep your investment safe.
“Unlike traditional banking, where financial institutions protect your funds, bitcoin operates on a decentralized network, giving users full responsibility for securing their assets,” Logvin explained.
Buying and storing bitcoin is as simple as using a banking app, Franklin said. “With regulated exchanges, secure wallets and user-friendly platforms, the process is no more complicated than setting up an online savings account.”
Bitcoin Is Not Secure
Stories of people losing their funds should not be mistaken for flaws in the core technology or its security, Logvin said.
“Every case of lost bitcoin has resulted from human error, such as poor security practices, falling victim to phishing attacks or storing funds on centralized exchanges that get hacked.”
Despite being one of the most targeted assets in the world, bitcoin’s blockchain has never been hacked, thanks to its robust encryption and decentralized consensus mechanism, Logvin added.
Franklin explained that the sheer cost of acquiring enough mining power — which requires trillions of dollars in equipment and electricity — outweighs any potential benefit.
“Bitcoin’s security model is built on game theory — the most profitable strategy for miners is to act honestly rather than attack the system.”
The only sense in which bitcoin can be considered “not secure” is from a financial protection standpoint, Franklin said. “Unlike traditional banks that offer fraud protection and chargebacks, bitcoin operates on a decentralized, irreversible ledger. This means users must take full responsibility for securing their funds.”
Crypto Is a Fad
Calling bitcoin a fad ignores that it has been around for 15 years, which is longer than many tech companies that people trust daily, Franklin said.
“Large financial institutions now hold bitcoin and major governments are discussing its regulation. A fad fades when interest dies out. Adoption keeps increasing and bitcoin continues to integrate into mainstream finance.”
While the misconception that cryptocurrency is a “money-printing machine” has led to reckless speculation and poor investment decisions, legitimate blockchain technology and cryptocurrencies like bitcoin are now recognized as digital gold, Logvin concluded.
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This article originally appeared on GOBankingRates.com: 5 Myths About Bitcoin Debunked
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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