Crypto Talks

Top 5 Myths About Bitcoin and Their Realities

3 Mins read

Being one of the most traded cryptocurrencies, Bitcoin has become pretty popular in the last decade. Almost 80% of global traders deal with this particular crypto in comparison to other currency forms.

Moreover, as it is decentralized, the extent of making profits or fruitful investment is much higher. 

Unfortunately, there are several myths about bitcoin that prevent traders from making profits through trade.

These false conceptions are mainly due to the lack of proper knowledge and understanding of different trading styles.

If you are one of those traders, you should take a step back and learn about the topmost myths about bitcoin trading and the reality behind these falsified perceptions. 

1. No tax related to bitcoin 

Taxation is mainly applied to objects, incomes, and other such aspects that come under the government’s jurisdiction. However, cryptocurrencies are decentralized and therefore, most traders believe that bitcoin does not have any tax rules.

According to this myth, one can trade in as many bitcoins as possible without having to bear the tax charges.  But that’s not the real scenario. Yes, the governments do not have any role in bitcoin trades and their valuation, the banks do consider this as a capital asset.

Therefore, taxation is applicable but only after a certain limit. For example, in the US, you will have to pay taxes if your annual return from crypto trading is more than 40000 USD. 

2. Bitcoin is similar to credit cards

Many people believe that bitcoin behaves similarly to credit cards. And therefore, one can perform all activities with the BTC just like the credit cards like shopping, paying bills in a restaurant, taking credits, and more.

But the reality is something else because a credit card is centralized and it deals with fiat money. This will take time to initiate and complete any transaction-related.

This is why credit cards aren’t similar to bitcoin. Even though the future has many scopes for this cryptocurrency, at the present, you won’t be able to use the currency as your credit card alternative. 

3. Bitcoin will increase cyber threat scams 

Another most common myth concerning bitcoin is that it has the potential to increase cyber threats. Many people believe that if they start trading in it, they will become vulnerable to scams and will end up losing more money than what was originally invested.

Perhaps that’s why people are so skeptical about investing in this particular form of cryptocurrency.

However, it is not the truth because like all other cryptocurrencies, bitcoin is heavily secured. Yes, hacking can be done but to do so, one needs to decode the hash which is not an easy task.

Moreover, your wallet’s private key will make you an anonymous entity. Therefore, chances of recognizing you are almost negligible. 

4. Bitcoin trading is a Ponzi scheme

Often you will hear the term Ponzi being associated with bitcoin trading. It is a kind of investment scam where people are told about the prospective profits they can enjoy from an investment but in an exaggerated manner.

The invested money is actually used to pay the debts of other investors and therefore, this cycle of debt continues to go on. 

But in reality, bitcoin is immune to the Ponzi scheme because here, the authority of making investments and paying off the debts is not in someone’s hands.

Again, you will have the blockchain where every transaction is properly recorded in the ledger, and therefore, scamming traders can be very difficult. 

5. Open positions should be closed against price movements

One of the major bitcoin myths that can lead to huge losses is that an open position needs to be closed the moment the price starts moving against the strategy.

For example, let’s say you have opened a position with a positive price movement forecast. But suddenly the movement is in the opposite direction and to protect your assets, you will either buy or sell coins.

This particular belief is considered a myth because most times, you can keep the trades open for a long time. Once the price starts moving in the expected scenario, you can take proper action and close the trade.

So, believing and practicing FOMO in bitcoin trading is considered a myth that needs to be debunked at the earliest. 

Apart from these myths, several other misconceptions are also there that traders do believe in. so, if you want to make yourself immune to the myths, your responsibility will be to learn more about bitcoin, its trading styles, taxes, price movements, and other such aspects.

Once you have gained enough knowledge, you can start trading the crypto at platforms for understanding bitcoins decentralization.

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About author
Johnmiracle Ejikeme is a 7 Figure digital network marketer, crypto enthusiast, and a trader. A humble fellow that fancy investing and technology.
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