The Beginner's Guide To Bitcoin Part 2
The Dangers Of Bitcoin: Should You Be Concerned?
WHY IS THERE NEGATIVE PRESS AROUND BITCOIN?
WHY IS THERE NEGATIVE PRESS AROUND BITCOIN?
You may have heard many mixed things about Bitcoin.
Some people talk about what a great investment it is…
News channels call it a bubble waiting to burst…
Others associate it with drugs and illegal trading…
All the while, those like us believe it’s a major currency of the future, and is a much-needed movement towards giving the power back to the people.
But what’s the Truth in all of this? Is Bitcoin safe?
Is bitcoin a bubble or a Ponzi scheme? Why is it associated with drugs and illegal trading? Is it safe?
We want to make sure you’re aware of the risk involved with Bitcoin and cryptocurrencies, while also dispelling inaccurate myths or misconceptions about what it really is.
After all, we do not recommend investing in it if you don’t feel sure and confident. Only once you understand it fully and know what it is should you put money into it.
This is exactly what we’re going to address in this second installment of the Beginner’s Guide To Bitcoin.
As with every area of life, it’s always important to look at the big picture and understand the context of a situation.
In the case of Bitcoin, we’re dealing with a revolutionary currency that allows people to control their own money, free of any government or institution that wants to control what they do.
Because of this, it makes total sense that some of the initial adopters of Bitcoin were people who were doing things their governments didn’t like (some of which should be allowed, some of which absolutely should NOT be allowed).
But Bitcoin is about freedom, and it allows everyone to be free. Any bad press around it simply highlights human behavior, not the inherent morality of Bitcoin itself.
In addition to this, the institutions that will lose power from this currency becoming popular - governments, banks, and other power structures - have done a good job at attempting to smear its reputation.
COMMON QUESTIONS ABOUT BITCOIN AND CRYPTOCURRENCIES
COMMON QUESTIONS ABOUT BITCOIN AND CRYPTOCURRENCIES
Based on Bitcoin’s past, along with particular media biases, there are some prevailing myths and questions that surround Bitcoin.
Some of these around the question, is Bitcoin safe, are legitimate concerns, while others aren’t based in any real facts.
Here are the most common questions around the dangers of Bitcoin:
Q: Is Bitcoin A Bubble?
A: An economic bubble is when hype around a particular good causes its value to soar far above its actual value, eventually resulting in a collapse of its price back down to its actual value.
Good examples of this are the dotcom bubble and the housing bubble, where the value of domains or of reality far exceeded its actual worth, resulting in many people losing money, while the wealthy pulled out and made money.
Because Bitcoin is increasing so rapidly in price, it might seem like a bubble.
However, there’s an incredibly important distinction here: Bitcoin is not a “good” or “product” - it is a currency. It is money, and money can’t be a bubble.
More to the point, Bitcoin has no inherent value - only the value we as a collective people decide it has, and therefore it’s impossible for it to be overvalued.
Now this doesn’t mean that Bitcoin may not rise and fall rapidly in price, but the fundamentals are different than that of a bubble, because the actual, collectively determined value of Bitcoin will always return to its stable, agreed value based on demand and use of it.
And since Bitcoin is a superior form of currency that will continue to be adopted and used by the mainstream, its value will continue to rise over time.
This is a big part of why we recommend buying some and simply holding it long-term. It may go up in price and drop way down in price, but none of that is important because the long-term growth as it becomes a more popular currency is what really matters.
Bitcoin to date has been through 20-some “bubbles”, where prices drops a bunch, but the overall trend is still massively positive because of this shift towards decentralized money.
However, this will not stop the news from claiming it’s a bubble and attempting to scare you away from it. You can be sure that this discussion will continue to be prominent in the media for some time, but recognize that despite Bitcoin’s current volatility in the market, its price will continue to increase for some time.
Side note: Bubbles are especially prevalent around any form of reality. The reality bubble is obvious, but the dotcom bubble was also about “internet reality” and claiming your domain on the internet. Because of this, we have a prediction that down the road there will be a “virtual reality” bubble around reality in the virtual space, much like what happened with the dotcom bubble. This virtual real estate will initially thrive, the price will go up and far exceed what the virtual space is worth, at which point the bubble will pop and the price will return to its actual value. Given the trajectory of virtual reality, we think this might happen sometime in the late 2020’s or early 2030’s.
Q: Is Bitcoin A Ponzi Scheme / Pyramid Scheme?
A: A Ponzi scheme or Pyramid scheme is an investment business model that relies on taking money from new recruits to feed up the chain, paying the people at the top, while taking from the people at the bottom.
This is the “If you sign up two friends, and they sign up two friends each, you pull the money from each of those people” types of situations.
These are fraudulent forms of business because it relies simply on transferring money from the many people at the bottom to the few people at the top, and does not actually perform a service or sell a good to make money.
Bitcoin is money, just like the US dollar, Euro, or Yen is money. If you understand this, then it’s easy to see how Bitcoin fundamentally CANNOT be a Ponzi scheme or Pyramid scheme. However, money can be used for many different things, none of which are inherent to the money itself.
What this means is that people can create pyramid schemes or ponzi schemes based on Bitcoin, just like they can (and have) done with traditional currencies. BitConnect is one example of a Ponzi scheme based on Bitcoin, but it has nothing to do with Bitcoin or other cryptocurrencies as a form of money.
Bitcoin itself is simply an improved form of currency that will continue to increase in value as it gets adopted by the mainstream.
Q: Is Bitcoin Illegal Or Shady?
A: Bitcoin is absolutely NOT illegal, and if it was, it would be a major invasion and takeover by our governments.
Bitcoin is a peer-to-peer, decentralized, global currency, meaning that no one owns or controls it, and the people have all the power to be free with it. This is obviously not what governments want since it takes away their power, so it’s important to view anything the governments do or say about it with this understanding.
A big part of why Bitcoin has this reputation is because it’s “free market” aspects initially attracted people who were doing things their governments didn’t like.
For example, the original Silk Road was a website where you could buy anything and everything you could ever want, without government regulation.
But in order to do that, you would need a currency that wasn’t controlled by a government (aka a “freedom” currency), and that’s where Bitcoin came in.
People began trading on the Silk road using Bitcoin, and when the US government eventually shut it down and arrested it’s creator, Ross Albright, they made a big public scene over Bitcoin’s involvement in an attempt to smear its reputation and prevent it’s growth.
However, the small dip in Bitcoin price and use from this was quickly recovered from, and proved that Bitcoin is so much more than a currency for illegal trading. People want it because it gives them the freedom to do what they want instead of having an authority dictate what is allowed and what isn’t.
There have been several other instances of similar drug-related things happening with Bitcoin, but it’s important to realize that none of this is indicative of anything about Bitcoin, other than that it is a free currency, and that bad people will do bad things by whatever means they have available to them.
A far bigger volume of illegal drugs have been bought with cash than with Bitcoin, because similar to Bitcoin, cash exists outside of banks and is therefore less regulated.
Q: Is Bitcoin Safe? Can I Get Hacked?
A: While Bitcoin is completely safe, the burden of responsibility falls on you. This is the entire point and it’s a huge part of its appeal.
Instead of trusting third-parties like banks, governments, and other institutions, YOU have the power over your money.
But as the old saying goes, with great power comes great responsibility. If you lose your wallets, give out your private keys, or put your money somewhere risky, you can lose it. That’s why it’s important to not only be educated about how all of this works, but also to be comfortable with the process so that you know what you’re doing.
Some of the misconception around bitcoin being risky comes from certain events in its history, like Mt. GOX, where people lost massive amounts of money, or other events where certain places got hacked or people lost their private keys.
In the case of Mt. GOX, we actually see that what happened supports the main tenet of Bitcoin and cryptocurrencies - don’t trust third-parties!
In this scandal, people left their money on the exchange (Mt. GOX), which then got hacked, resulting in people losing all the money they held there.
The lesson is not that Bitcoin is risky, but that you shouldn’t blindly place your trust in institutions. If you safely secure and take responsibility for your Bitcoin, then you can know that it is safe, because you control it.
As long as you’re careful and smart with your funds, just like you would be careful with a physical wallet that holds your cash, then there’s no need to worry about losing your Bitcoin.
Q: Is Bitcoin Just For Tech People?
A: While Bitcoin often comes across as overly “techy” and niched, using complex terms like SegWit2x, sharding, hodl, DAO, and PoW, it’s not necessary to understand all of these terms to know what Bitcoin is, how it works on a practical level, and why it will change the world.
As long as you understand the basics of the practical side of things (something we teach in our guides and premium courses), you can invest in Bitcoin, support the movement, and profit as it becomes more mainstream and eventually overtakes traditional currency.
Of course, we don’t recommend only buying Bitcoin. It’s a much better idea to diversify your crypto portfolio by getting some of the other popular coins like ethereum, litecoin, and bitcoin cash, along with some altcoins like NEO, DASH, and ADA (amongst many others).
If you want to learn how to buy altcoins, you can check out our free guide here.
If you want a full step-by-step program for going from zero knowledge of cryptocurrencies to having a full-fledged portfolio you’re confident in, then be sure to join the waitlisting for our upcoming program, Perfect Portfolio.
CONCLUSION - Is Bitcoin Safe
CONCLUSION - Is Bitcoin Safe
While the shift away from trusting institutions will inevitably run into a few bumps and snags along the way, it’s a transition that is much needed.
Being a decentralized, peer-to-peer, digital currency that is not owned by anyone, and allows all of the power to be held by the collective people, allows everyone to be free and to have more control over their own lives, while simultaneously preventing corruption by third-party institutions and making the world a more honest place.
It’s no surprise that these institutions that are losing power and those that fear change would speak out against bitcoin and try to slander its name and purpose.
So, is Bitcoin safe? As we’ve seen, the Truth will always prevail, and despite the many setbacks in Bitcoin’s past, it continues to become adopted as a major currency and to become one of the major currencies of the future.
If you want to learn more about Bitcoin’s history and understand even more about how it works, we recommend watching the documentary “Banking on Bitcoin” on Netflix, which does an incredible job at explaining the concepts and dispelling the myths in an exciting and engaging way.
In Part 3 of this series, we’ll walk you through exactly how to buy and store Bitcoin, so you can begin your journey, support the movement, and start personally profiting.
If you want to buy Bitcoin right away, be sure to grab our free guide to buying and storing Bitcoin, by clicking the FB Messenger Button below: