4 Bitcoin Myths Busted

Bitcoin is the 1st decentralized digital currencyUPDATED March 2, 2014: Notes added to last paragraph.
If I were to make a list of topics capable of eliciting the fork-in-eye response (i.e. I’d rather stick a fork in my eye than read about that) currency and how it’s backed by its issuing country would be right at the top. You can put your fork away. I promise to painlessly help you understand the basics of Bitcoin. This article won’t make you an expert; you’ll end up with just enough info to be able to contribute to the conversation when Bitcoin comes up during happy hour.

What Is Bitcoin and Who’s Using It?

Bitcoin is a digital currency, not issued by any single country, that can be used to pay for goods and services. The first Bitcoin ATM ever installed was in downtown Vancouver in 2013. Australia is poised to roll out 100 Bitcoin ATMs in 2014. Here are just a few examples of businesses accepting Bitcoin payments. You can find many more at SpendBitCoins:

Restaurants
CoffeeTime in Schenectady, NY; Eethuis de Zon in The Hague.

Business Services
FreshGigs.ca in Vancouver, BC; A2Z School of English, Manchester, England; 5 Star Home Inspection, Maryland.

Retail
Nest Bedding in San Francisco; Mayberry Salon and Barber in Reno, Nevada.

Let’s Debunk A Few Myths

Myth #1: Today’s currency is backed by physical assets; Bitcoin is not.

Not true. There was a time when money was backed by gold, but during the Great Depression, every major currency abandoned the gold standard. Backed currency received it’s final death blow more than forty years ago.

One of the long-standing myths about modern currency is that it is backed by the U.S. gold supply in Fort Knox. That is, you can trade your greenback dollars to the U.S. government for the equivalent amount of gold bullion at any time. At one point, this was true of most paper currencies in the world. However, the U.S. took away the government backing of the dollar with an actual gold supply (known as leaving the gold standard) in 1971, and every major international currency has followed suit. Source: How Stuff Works

Myth #2: Bitcoins are illegal.

Depends on where you live. Bitcoin is legal in Canada, the U.S., Australia, France, Great Britain, and quite a few others. Russian authorities, on the other hand, recently stated that the rouble is the sole official currency in that country. China is putting Bitcoin under scrutiny. In countries where it’s legal, governments are seeking tighter controls so that it’s not used for nefarious purposes or used to hide the proceeds of crime (ill-gotten booty).

Myth #3: Bitcoin is a pyramid scheme.

Pyramid schemes are real but Bitcoin isn’t one of them. I get email invitations to pyramid schemes almost every day as many are aimed at bloggers. A pyramid scheme requires you to pay a fee in order to start earning money and they encourage you to bring in new recruits to build your income levels. Some even require you to pay a fee in order to receive commission on goods you legitimately sell. Bitcoin offers no advantages from introducing new users. It’s simply another form of currency.

Myth #4: Bitcoin is for money launderers.

Umm, well kinda. Actually every currency in the world can be used for money laundering. The myth is that Bitcoin makes it easier or is a favourite method. It’s very difficult to purchase or sell Bitcoin currency anonymously and there are moves afoot to make it even more difficult.

So How Can I Get Some Bitcoin Currency For Myself?

First, let me say that I don’t use it. I’m not for it or against it — so anything I’ve written here is for informational purposes only. If you decide to jump on the crypto-currency bandwagon, here are some ways you can get started.

How to choose your Bitcoin wallet

Find out where to buy Bitcoins in your country: How to buy Bitcoins

Add your business to the global directory

See a map of registered Bitcoin businesses

UPDATE: March 2, 2014
No doubt you’ve heard about the recent collapse of MtGox, one of the largest Bitcoin exchanges. I recommend reading this article: MtGox Meltdown: causes and conspiracies from raincoaster media. It will give you a good overview of the situation without drowning you in technical jargon. The article also contains links to other sources if you want to do a deep dive on the topic.

I hope you found this article interesting and informative. If you did, please consider tweeting about it. Click the icon for a handy dandy pre-formatted tweet. Tweetable Twitter link


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14 Comments

  1. Actually I think this is among the most vital information for me. And i am glad reading your article. But want to remark on some general things, the web site style is ideal, the articles is really excellent. Thank you for sharing with us. I think it would be effective for all. Good job, cheers!Bitcoin ATM

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  2. I wonder if the time is coming when the next generations will look at our paper/coin money and say? Can you believe they used that to pay? Just as they now say, How could they live without cellular phones? Thanks for sharing the basics of this new technology. I am glad you did, so I can feel comfortable when the subject comes up. :-)

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    1. Hi Caroline, great question!

      Paypal is not a currency, it’s a method of payment. Bitcoin is an actual currency that you purchase (or invest in) and then spend as you wish — either in person at a participating business or by making online purchases. Merchants are moving toward Bitcoin because transaction fees are lower than Paypal or credit cards.

      Thanks for stopping by and for taking the time to ask a question.

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    1. Hi Jacqueline,

      Excellent! Glad I’m not the only one who was feeling left out. I hope your son is shocked when you tell him you know what he’s talking about.

      Thanks for taking the time to leave a comment.

      Like

      Reply

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