We’ve written before about some of the common myths that have been attached to Bitcoin over the years, such as that it’s a ponzi scheme or that it’s somehow otherwise illegal. In these cases, people’s ideas about Bitcoin are simply false, but unfortunately there are a few tall tales that have become valid in the eyes of many without actual experience with Bitcoin.
In this piece I don’t want to look at flat-out myths, but instead three more misconceptions specifically about how Bitcoin is used or stored. These aren’t pure fictions so much as misunderstandings that make a certain amount of sense but can easily be corrected.
BITCOIN IS EITHER CURRENCY OR COMMODITY
Since Bitcoin became an actual financial resource, and not just a cool technological idea, there’s been debate about whether it’s more of a currency or a commodity. It was really intended as a currency, meaning it’s meant to be collected, stored, and then spent and exchanged in much the same way we do with ordinary money. However, as you can see here, there are major institutions that have officially classified Bitcoin as a commodity instead. This implies that while it does represent wealth, it’s more of a material to be traded or invested in, rather than to purchase goods with. If you’ve seen arguments toward one or the other, you may have been left with the impression that some obscure financial authorities are still trying to determine what to do with Bitcoin. But the truth is their “official” classifications don’t much matter to the average consumer. You can invest in Bitcoin as a commodity or s
pend it as a currency wherever it’s accepted.
A BITCOIN WALLET IS A SINGULAR ENTITY
If you’ve explored Bitcoin a little bit, you’ve likely found yourself wondering how exactly one stores digital currency. You’ve probably then come across the term “Bitcoin Wallet,” and you wouldn’t be alone in assuming that this is some kind of definitive resource for storing Bitcoins. Rather, it’s a concept that takes many different forms. This overview of Bitcoin Wallet options should give you an idea of both how the whole storage system works and what your options are. It’s more of a bank account than a hands-on personal storage system, and it’s the program you choose to stash your Bitcoins in. It’s also your means of accessing and using them. Sometimes wallets are software programs; sometimes they’re USB devices containing address keys and codes to access your Bitcoin; and sometimes they’re even specially printed pieces of paper with the same keys and codes on
them. There are dozens of mainstream options, however, so each consumer can choose his or her own favorite type of wallet.
GOVERNMENTS ARE ANTI-BITCOIN
This may actually be true in some cases. A lot of governments are at least uneasy about the disruptive potential of Bitcoin, and this list shows that at least 10 countries in the world have officially banned its use. Nevertheless, most governments in the Western world aren’t actually against Bitcoin, so much as they’re refusing to directly involve themselves with it. There’s a significant difference there. In most instances, governments are doing little to prohibit the spread of Bitcoin as an alternative currency among citizens. They’re just not typically allowing government-related transactions to be made with Bitcoin, and central banks are doing nothing to back the digital currency. Again, there are exceptions, but for the most part governments don’t seem to mind if people start using Bitcoin.
There will probably always be misconceptions about Bitcoin, simply because many consider it to be such a radical idea. But these, at least, are easily explained away. Once you get past ideas like these, Bitcoin begins to look a little simpler and much less mysterious.