Myth #1: Bitcoin has no fundamental.
A lot of people question the value of Bitcoin. The masses simply do not think that Bitcoin has any fundamental.
The truth is Bitcoin does have fundamental. Bitcoins are created as a reward for a process known as mining. Setting up a bitmain S9 antminer with a setup cost of $2,500 will induce electricity cost of about $2,073.60.
One will gain 0.6291 BTC and incur an expense of $4,573.60 while revenue from Bitcoin can only amount to around $4,027.14 (at the point of writing).
This ascertains that it requires fundamental fiat to create Bitcoin. Bitcoin is not just some digital numbers.
Myth #2: Bitcoin will be just like another E-gold. Will it be another collapse?
E-gold was a digital gold currency operated by Gold & Silver Reserve Inc. (G&SR) under e-gold Ltd. that allowed users to open an account on their website denominated in grams of gold (or other precious metals) and the ability to make instant transfers of value (“spends”) to other e-gold accounts.
The fall of E-gold is due to its centralize entity risk.
Bitcoin is the digital currency/cryptocurrency or what people label as the new arise digital gold but its infrastructure is different when compared with the traditional centralizes digital currency. The whole Bitcoin is based on Blockchain technology, a decentralized platform whereby these transactions are verified by network nodes and recorded in a public distributed ledger.
Instead of being owned by an entity/company or central authority, Bitcoin creator Satoshi Nakamoto designed Bitcoin in a way that it does not require a central authority. As long there is internet and miners community to support the network nodes, Bitcoin and its Blockchain will be there.
Myth #3: Bitcoin supply is limited and will not be sufficient for the world population.
I have always heard this comment, “Bitcoin has only 21 million of supply and it won’t be enough for whole world population to use”.
This is true if you look at its integer unit but the true picture is, Bitcoin can be measured as Satoshi unit which has up to 8 decimal.
A lot of people do not realize that we can buy a fraction of Bitcoin instead of 1 unit Bitcoin. If we take the Satoshi unit to reflect the true amount of Bitcoin, there is 2,100,000,000,000,000 (2.1 quadrillions) Satoshi’s which I believe is more than enough for 7.6 billion world population to use.
Myth #4: Is the valuation of Bitcoin purely a speculation?
I agree that the market price of Bitcoin is not just determined by supply and demand but speculation likewise plays a part in it. However, the speculation of Bitcoin price is based on some reference.
Most investors see its value in replacing gold. The current gold market cap is valued at 7 Trillion while the Bitcoin market cap currently hovers at 100 billion which is at 1-2% of the gold market cap. This is the primary reason most Bitcoin investors are bullish on Bitcoin.
Myth #5: Bitcoin a bubble?
Before we go into this topic let’s take a look at the Dow Jones Index. The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange (NYSE) and the NASDAQ.
We can make a comparison of these two asset classes to find out their respective percentage increase.
Over a time horizon, DJIA has increased up to 2,500%+ while the increase of Bitcoin is around 1,700%+. I believe bubble exists not just in Bitcoin but across multiple assets as well.
Disclaimer: The content of this article is for information and educational purposes only and should not be considered investment advice nor portfolio management.