The recent rise in Bitcoin popularity has seen a number of media outlets reporting misinformation about cryptocurrency. If you’ve been in the market long enough, you’ve probably learned to ignore this kind of bias reporting. But those new to cryptocurrency can be put off by constant claims that Bitcoin is dangerous, volatile & unsafe.
So in that spirit, we’re fact-checking a few common Bitcoin misconceptions below:
BITCOIN IS USED PRIMARILY FOR ILLICIT ACTIVITY
This was certainly the case in the early days of Bitcoin. Like with many new technologies, criminals were early adopters of cryptocurrencies. But just last year in 2020, the illicit share of all cryptocurrency activity was less than 1% or $10.0 billion in transaction volume.
According to the UN, it is estimated that between 2% and 5% of global GDP ($1.6 to $4 trillion) annually is connected with money laundering and illicit activity. This means that criminal activity using cryptocurrency transactions is actually much smaller than fiat currency and its use for such activities is going down year by year.
Bitcoin is now legal tender in some countries around the world, and it now has a higher market cap than Tesla, Facebook, Walmart & JP Morgan. Gone are the days where Bitcoin is considered a niche technology only used by criminals for illegal activities!
IT’S TOO LATE TO BUY BITCOIN, IT’S TOO EXPENSIVE
Of course, when comparing Bitcoin’s current prices to that of 10 years ago, it can certainly make people feel as though they have already missed the boat. In March 2011, the price of one Bitcoin sat at $1 USD. 10 years has since passed and that same Bitcoin is now worth over $60,000 USD. If we can take one thing from that it’s that the price of Bitcoin only appears to be going up.
The CIO and co-founder of the BlockTower Capital investment company, Ari Paul, suggests that the current bull market may last until the end of 2022, with Bitcoin reaching prices between $100K and $400K. Bitcoin continues to be the best performing asset each year and is now the best performing asset of the decade. Simply put, it doesn’t matter when you buy it, it matters that you buy it!
BITCOIN IS TOO VOLATILE
While it’s true that Bitcoin has historically had very high trading volatility (not surprising for an asset whose market cap has grown to billions of dollars in just over a decade!), Bitcoin’s volatility is actually decreasing as it matures. This is evident when you take a look outside the monthly price action; Bitcoin’s history of year-over-year value steadily increases.
Another thing to mention is that Bitcoin’s price is consistently gaining more stability as more investors place their trust (and money!) in it. As the market size increases, the reliance of Bitcoin’s price on large-scale investors is reducing, and the impact of anyone selling their Bitcoins is absorbed by the rest of the market.