Debunking 10 Common Bitcoin Misconceptions

What people most get wrong about Bitcoin

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  • There are many Bitcoin misconceptions out there, generally reinforced by a lot of outspoken Bitcoin naysayers. So we thought we would take the 10 most common ones that we see on a daily basis mythbust them.

     

    1. Bitcoin is anonymous

    Bitcoin is not anonymous. In fact, with Bitcoin the data that is stored on a blockchain is actually visible to everyone. This includes every transaction made right down to the genesis block. What this means is that it is actually a lot harder to launder money through Bitcoin then with cash as every transaction made is visible.

     

    1. You have to buy a whole Bitcoin

    Bitcoin is divisible by 100,000,000 units called Satoshi’s which represent 0.00000001 BTC or in today’s NZD rate $0.00005953. This allows Bitcoin to still be feasible as a payment solution for micro-purchases even if the value of Bitcoin goes up 1000x.

     

    1. Bitcoin doesn’t have any intrinsic value

    Bitcoin has a lot of intrinsic value, it is a technology that allows safer, faster and cheaper transactions through a decentralised network. It is still completely unique in its technology and adoption and millions of people buy Bitcoin at a market cap in the billions because they agree that these features give it value.

     

    1. Bitcoin will fast become a dinosaur

    Bitcoin is open source, anyone can contribute to the code and there are a group of core developers who maintain the code and update it. Bitcoin developers are always building and releasing cutting edge technological features such as the Lightning Network and will continue to do so for as long as Bitcoin is around.

     

    1. Bitcoin can be shut down

    Bitcoin is decentralized, anyone can run the code on their computer which thousands of people are currently doing. This means the only way to shut down Bitcoin would be to turn off the internet which isn’t going to happen anytime soon.

     

    1. Bitcoin is used to buy drugs

    As Bitcoin is more trackable and less anonymous then cash, Bitcoin is actually not a good payment system for illicit activities. Here’s a link to a Bitcoin block explorer which monitors all Bitcoin transactions. Other cryptocurrencies have developed a anonymous niche that these types of people are more willing to use.



    1. Bitcoin is a Pyramid scheme

    Bitcoin is pure supply and demand, just like FIAT currency. You could actually argue that Bitcoin is the opposite of a Pyramid scheme as the more people who join as a miner, increases the difficulty of mining Bitcoin for everyone.

     

    1. Enough computing power could take over the Bitcoin network

    Although this is still somewhat very feasible, the amount this would cost would be in the 10’s of Billions and that money would all go down the drain as soon as any takeover happens because everyone else on the Bitcoin network could simply see it forked, and all shift their value to the new chain essentially making the attackers Bitcoins worthless.

     

    1. Bitcoin can be hacked

    There has never been a successful hack of the Bitcoin network, although people have tried for 10 years. There is simply too much computing power and cryptography behind it.

     

    1. Bitcoin is a bubble

    Like anyone who has been in the Bitcoin game for a few years can attest to. Bitcoin is in a constant state of volatility as it is such a new technology. The percentage price drop from 20k to 4k that we saw in 2018 has happened multiple times throughout Bitcoins history and is likely to happen again as Bitcoin continues rising. It will take a few years before Bitcoin becomes more stable due to a much higher valuation per coin and maturity on the market.

     

    And there we have it, there are many other Bitcoin myths to bust however the above represent the most common that we see on an everyday basis. The moral of the story is to not take things at face value and to always do your own research when it comes to cryptocurrencies. We have written about some great people to follow to improve your understanding of this technology.