Bitcoin and Its Misconceptions

In 2017, the price of bitcoin rose to at least 1,221-percent. By December, everyone was chatting about cryptocurrency, specifically bitcoin, and this is not expected to change by 2018, despite the talk moving to more expanded items like litecoin, ripple, and ether.

Even as the general public begins to take more interest in bitcoin, there are still many misconceptions that still linger in the general talk. People talking about these misconceptions on Twitter, among friends, or even reading them in false news articles have no idea that they are being fed false information. We want to put those misconceptions to rest.


One of the biggest misconceptions of bitcoin is that it is unregulated, and this is typically used as the argument that bitcoin is unstable and dangerous. This is simply untrue. Bitcoin is, in fact, regulated in several different ways.

The above-board bitcoin brokerages are licensed in at least some manner. Coinbase is known as a money service business, registered with FinCEN which is the Financial Crimes Enforcement Network. Another option is Gemini, which has been registered as a trust with the New York Department of Financial Services. Both of these license forms comply with AMl, the anit-money laundering, and the KYC, know your customer, requirements.

2015 brought about the BitLicense, which is a set of specific regulations that govern any digital currency companies based out of New York that holds on to customer funds. Several companies applied for this new license, but many shut down operations in the state to avoid this license.

Any and all exchanges that have bitcoin futures trading are required to get approval from the Commodity Future Trading Commission, or the CFTC. There are also several government bodies that have recently issued guidance or rules on various bitcoin or cryptocurrency trading. The IRS first issued their own set of rules and taxes on bitcoin in 2014 since they decided it was property and the income would be training like capital gain.

Bitcoin is always regulated in some ways, and it is safe to say that more regulations should be coming shortly.


Well, bitcoin is not totally anonymous like people think they are. In fact, bitcoin can still be traced, which is why many criminals are moving to monero instead of bitcoin.

When you are a part of selling or buying bitcoin and even sending bitcoin, your transaction, no matter what it is, is put on the public blockchain. Anyone can see it, and you have a public key that identifies you through a series of letters and numbers. Your name is not shown, but the same key is shown for each transaction that is made from the same bitcoin wallet specific address. If someone identifies your wallet address, they could see your transactions.

Bitcoin is pseudonymous, or semi-anonymous, and each block that is mined on the blockchain, the mining pool is identified.


While you might not like the price run-up or that bitcoin will never be widely adopted, you can count on one thing; bitcoin is a legitimate technology that is built to attract those major financial companies through interest.

If you aren’t sure, you should try to send a small amount of bitcoin to someone you know or even yourself at a specific bitcoin wallet address. If you send it from another crypto exchange similar to Coinbase, then that exchange company logs your transaction to show you a screen with all the information you need. For example, they will show the amount you sent, where it was sent from, who it was sent to, and what fees you paid to Coinbase.

In some cases, you may even get a link to the actual blockchain that includes your specific transaction. Bitcoin isn’t a Ponzi scheme either because it doesn’t generate fake returns through the giving of new revenue to the older clients. Still, many people think that bitcoin is illegal. Though it hasn’t been accepted as a legitimate currency by the United States government, it is still not illegal.

Bitcoin was created in the year 2009, and it was meant to be a peer-to-peer cash system through electronic means. The ecosystem and the coin have strayed far away from that original intention, but it’s none of the misconceptions mentioned above.

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