Bitcoin & Co: What’s the Real Reason Behind Crypto’s Biggest Myths

Bitcoin and co

What is really behind the biggest myth about cryptocurrency

Today, May 4, 2023 | 15:55

Blockchain technology with its applications such as cryptocurrency is highly discussed. Developments in this field are fast-moving and not directly understood by many. This provides fertile ground for myths and makes people question digital assets. In this article, two of the most important myths and how to debunk them are presented.

Myth 1: Digital assets have no intrinsic value

The common argument is that digital assets – with the exception of stablecoins – are not backed by anything tangible or any form of “hard” fiat currency. According to this logic, “unsupported” is equivalent to “has no value”. However, it is important to remember that most fiat currencies are not backed by real assets. Instead, they are issued by governments, and the belief that government alone accounts for a significant portion of the value.

Just as people see the value of fiat money because of their trust in governments, users value digital currencies more because of their trust in the technology behind them. The value here comes from open source code that anyone can see and verify for themselves. This eliminates the need to trust a third party who may be selfish or corrupt.

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The other component of a coin’s value is its level of acceptance, and this is increasing for digital currencies every year. Additionally, digital assets can act as a store of value, similar to gold.

An example of this is Bitcoin. This is a rare asset as only 21 million bitcoins will be in circulation. As such, Bitcoin is inherently an anti-inflationary agent, unlike fiat currencies, which can be diluted in value through monetary policy. In addition, other applications can be created with the help of so-called smart contracts – including decentralized management, digital art, or new types of financial products.

Dismediation, i.e. the elimination of intermediaries and the possibility of making payments, the store-of-value function and the technological innovations themselves offer additional intrinsic value.

Myth 2: Cryptocurrencies are not “real money”

When speaking of “real money,” the first bond is usually a medium of exchange or a unit of account that can be used freely for trading activities. Crypto skeptics often assume that digital assets cannot be used for everyday purchases. However, cryptocurrencies are already being used as a method of payment all over the world.

Since the first popular exchange of bitcoin for a physical good — two pizzas — in 2010, people all over the world have been using cryptocurrencies to buy products and services. Among other things, these products are often necessary in situations or places where paper money is not readily available.

In recent years, with the increasing integration of cryptocurrencies into traditional payment systems and methods, many services that allow cryptocurrency spending have emerged in merchants as well. With the right cards, consumers can use them to purchase goods and services wherever traditional payment systems already operate. So there are more and more ways to pay with cryptocurrency.

Bottom line: Cryptocurrencies have value – and they really are a means of payment

The common belief is that digital assets have no intrinsic value or that they are not “real money”. This is not true, as the evolution of cryptocurrencies shows. Digital currencies like Bitcoin have intrinsic value that comes from trust in the underlying technology and increased adoption.

It can also serve as a store of value and for new applications such as decentralized management or digital art. And as far as “real money” is concerned, cryptocurrencies are used all over the world as a means of payment and can even be spent at merchants with the appropriate cards.