Luno Shines Light on the Most Common Bitcoin Myths
Luno, the leading Securities Commission-approved digital asset exchange in Malaysia, has shared the five most common Bitcoin myths among investors during a live virtual media session. The myths are based on Bitcoin’s value as an investment asset, its impact on the environment, and its general adoption by consumers. The media session was part of Luno’s efforts to help Malaysians learn about cryptocurrency as the company achieved a major milestone of eight million customers globally. This follows an earlier announcement in April 2021 after it reached seven million customers in seven weeks.
Speaking during the virtual media session, Aaron Tang, Luno Malaysia Country Manager said, “As with any new area of investment, cryptocurrency has prompted many questions from potential investors. In the past year, cryptocurrencies such as Bitcoin have experienced significant boosts in popularity. This is encouraging to see but there are persistent misconceptions about Bitcoin which makes it difficult for new investors to understand this asset class. A lot of familiarity and not enough information can breed a lot of misconceptions.
As a leading digital asset exchange with eight million global customers, Luno is committed to educating the public about cryptocurrency so they are well equipped with the necessary knowledge to explore the world of cryptocurrency. Our platform is not just a place to safely buy and sell cryptocurrencies, it is also a great resource to learn about cryptocurrency for anyone, from beginners to seasoned investors. Ultimately, we want to make cryptocurrency accessible to everyone as we believe it has the potential to revolutionise the way the world views and uses money.”
Myth 1: It is too late to buy bitcoin
Cryptocurrency is a technology that inspires people to change their way of using money. In Bitcoin’s case, its technology is open and transparent and has the potential to improve the global financial system. Bitcoin’s real value can be seen in global adoption over time and in emerging use cases whether as a payment method, a store of value, or a hedge against inflation. Not forgetting the fact that Bitcoin is still a young technology having been around for just over 12 years with much potential for the future.
Myth 2: With wild volatility, you cannot take Bitcoin seriously
Bitcoin’s price is driven by demand especially in the short term. This demand is driven by people who understand how bitcoin could benefit the world and believe it will be more widely adopted in the future. However, the scale of belief is liable to change in the short term due to certain events having temporary impacts on the price. A negative article in the mainstream media may put people off and Bitcoin’s price could experience a dip. On the other hand, news of a major company investing in Bitcoin or adopting it as a form of payment could help it go on a rally. In the longer term, the price of bitcoin has historically increased due to its continued adoption and belief in its value.
Myth 3: Bitcoin has no intrinsic value
The entire concept of money boils down to perceived value and people’s faith in using them. Unlike fiat currency, where value and legal status are enforced by each country’s government, Bitcoin’s value comes from its code, infrastructure, scarcity, and adoption. Due to the economic impact caused by COVID-19, individuals, institutions and even some governments have looked to Bitcoin as a hedge against pervasive currency devaluation.
Bitcoin’s fixed supply of 21 million coins also attributes value in the sense that scarce assets tend to appreciate over time as demand goes up. In the past year, we have seen the price skyrocket and its market cap cross a major milestone, surpassing USD1 trillion (RM4 trillion) in February 2021. With over 100 million wallets with active balances globally, it is clear that a lot of individuals and corporations are viewing bitcoin as a credible innovation.
Myth 4: Bitcoin has a detrimental impact on the environment
Bitcoin actually consumes only a tiny portion of the energy consumed by the current financial sector. On top of that, currently 39% of bitcoin mining is performed with renewable energy and 76% of miners use renewables as part of their energy mix, far more than in other industries. This is because renewable energy is currently cheaper than non-renewable energy. Bitcoin miners will go wherever they can use the cheapest power and because they are so mobile, they move to regions where power is cheap and clean.
Bitcoin has the potential to replace and combine many existing financial systems in a way that could help to reduce global carbon emissions. As it gets more energy efficient over time, Bitcoin has a valuable role to play in the future of renewable energy usage.
Myth 5: Bitcoin is only used by criminals
There is a public misconception that Bitcoin is mostly used by criminals. This is mainly because many people think Bitcoin is anonymous, when in fact it is the opposite – all Bitcoin transactions are transparent for anyone to view. Bitcoin is actually pseudonymous and all transactions recorded on the blockchain are immutable. Each user’s transaction history is available for anyone to view and trace, making Bitcoin a particularly bad tool for illicit activities.
In 2020, the criminal share of all cryptocurrency activity was just 0.34% – much less than fiat currency. The UN estimates that 2-5% of global GDP every year is connected with money laundering and illicit activity. In simple terms, illicit transaction volume is 400 times higher in fiat currency than in crypto.