7 BitCoin CryptoCurrency BlockChain mistakes people make

Bitcoing logo example for CryptoCurrency Bitcoin PriceEverything related to BlockChain, CrytpoCurrency and BitCoin is a very hot topic right now. This however creates a lot of information regarding this topic. Some of this information is correct, some of this information may be wrong however. As it is very difficult to see the difference between the right and wrong information below I am going to list 7 BitCoin CryptoCurrency BlockChain mistakes people make.

 

What are the Most common mistakes and misunderstandings regarding this topic?

 

1. When you buy BitCoin through exchange or bitcoin broker you will own the bitcoin

This is the first of 7 BitCoin CryptoCurrency BlockChain mistakes people make. When you buy BitCoin through Exchanges and Brokers lets say Coinbase, Kraken etc, you will not own the actual BitCoin (the transaction is not recorded to the BlockChain). Technically the BitCoin Broker promises you that when you want to use the BitCoin you bought, they will give you the appropriate amount. This kind of an approach makes selling and buying bitcoin easier, however each transaction has a transaction fee (this is how the platform earns).

 

2. The increasing mining power increases the amount of transactions that can take place in a second

This is the second of 7 BitCoin CryptoCurrency BlockChain mistakes people make. Currently the maximum amount of transactions that can be inserted into BlockChain is roughly around 3-7. Increasing the BitCoin mining power will not increase this number considerably. The main reason why more and more electricity and computing power is put into mining CryptoCurrencies is due to the high price of BitCoin. Everyone wants to make a profit and therefor mine their own BitCoins.

 

  3. You can pay everywhere with BitCoin

This is the third of 7 BitCoin CryptoCurrency BlockChain mistakes people make. Very few places accept BitCoin as the payment currency. Usually they use the help of a service provider. The service provider buys your BitCoins, exchanges it to the accepted Currency (USD, EUR, etc) and then pays to the seller in your name.

 

4. As BlockChain is good, BitCoin also has to be good

Example of How to use blockchain technology - What is BlockChain Technology

People often say that as BlockChain is one really awesome new technology the price of BitCoin rises just because BitCoin is based on BlockChain. This is the fourth of 7 BitCoin CryptoCurrency BlockChain mistakes people make. BitCoin is not BlockChain, it is just based on it. There are many CryptoCurrencies. BitCoin is an open source project, so you can take the it’s code and create your own CryptoCurrency AwesomeCoin or anything like that. Creating new Coins, does not rise the BitCoin price. BitCoin price rises when large amounts of BitCoin are being bought and falls when large amounts of BitCoin are being sold.

 

 

5. BitCoin has no inflation

This is the fifth of 7 BitCoin CryptoCurrency BlockChain mistakes people make. People say that as there is limited amount of BitCoins, inflation will not affect it. This is not quite right. Inflation is the rise of the prices. If sellers would set their prices directly in BitCoins and would accept pure BitCoin payments, this could be so. However as most prices are set in Old World Currencies (USD, EUR, etc) the amount you pay for a product in BitCoin depends the actual price in say euros. So you will face inflation when:

  • Product price in EUR or USD rises (you pay more BitCoins)
  • BitCoin price in EUR, USD etc drops (again you pay more BitCoins)

 

6. BitCoin is anonymous

 

Example of How to Use BlockChain Technology - Distributed BlockChain Network

This is the sixth of 7 BitCoin CryptoCurrency BlockChain mistakes people make. BitCoin is pseudonymous. You can create different addresses to do transactions with BitCoin, that are not related to you personally. However all the transactions are stored in a public BlockChain and currently there are already several ways to connect your anonymous address to your name and address.

Some Examples

The most typical way your name is connected to to your BitCoin address is when you exchange your CryptoCurrency into some other Currencies using different Exchanges Brokers. You provide your name, email address and often also your bank account details to the Broker in order to move money to and from your Broker account.

 

7. BitCoin Cannot be confiscated – The Final of 7 BitCoin CryptoCurrency BlockChain mistakes people make

This is somewhat true if you are the only person that knows your Accounts Private Key and any access to your wallet is encrypted. In such case the confiscating it difficult, though not fully impossible (Silk Road). This however makes the usage of your BitCoins rather uncomfortable and difficult. If you hold your BitCoins in some Exchange or Broker, the confiscating is just a matter of getting the approval from the court. Also many examples show the hackers stealing large amounts of CryptoCurrencies, therefor everything is possible.

 

So now you should have much better understanding regarding these 7 most made mistakes regarding BitCoin CryptoCurrency BlockChain. If you liked this post, and found it helpful, do Share IT with your friends and family and others.

 

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29.01.2018 – EqEST

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