Bitcoin Myths

 

Bitcoin Myths

Myth 1: Why bitcoin myths exist in spite of its inception in 2009?

The major news providers write overwhelmingly sensitive news-as they do not really understand bitcoin. The other reason is big entities like centralized exchanges (eg., Coinbase and others) know the technology, writing pieces of incomplete news to make money off you. They are also scared of the decentralization technology underlying bitcoin that one day they will lose customers-every individual can own and trade bitcoin like the banking institutions do these days.

Myth 2: Bitcoin has not intrinsic value!

Unlike the fiat currency or physical commodities like gold or oil, Bitcoin is not guaranteed by any government. Bitcoin do not have any intrinsic value. On the contrary, Bitcoin was designed and built to put an end to ‘double-spending’. That being said, unlike black money associated with fiat currency, Bitcoin is amazingly designed to stop such cases. With bitcoin, you need not wait for the authority of the bank to approve you loan amount. Its decentralized.

Myth 3: Government will shut down Bitcoin

It was an eye-sore for bitcoin owners in the year 2021, when China banned the mining. On the other hand, it was worrisome for the entities who owned the mining farm. But will the government ever be able to shut down the Bitcoin?

Impossible! For a government to shut down the entire Bitcoin network, the government needs to reach out across the entire world, into tens of thousands of private citizen’s houses in over a hundred different countries, they do not control.

Further, the game theory of Bitcoin would also mean that if one “bans” it, other countries will simply embrace the technology and become rich off the business. For example, the ban in China, was happily embraced by USA as China lost billions in investment and taxes.

Myth 4: Bitcoin is too volatile

Please check the market cap of bitcoin in my other post at https://immtalimm.blogspot.com/2023/09/understanding-market-capitalization.html where the market cap of Bitcoin (as of Sept, 2023) was USD 507 billion. As an assets market cap gets bigger, its volatility decreases due to its liquidity increasing. Thus, one should consider the market cap of BTC to determine the validity of Myth 4.

Myth 5: Bitcoin wastes Energy

Bitcoin mining uses Proof of Work (PoW) consensus mechanism and absolutely uses energy. But to claim that it ‘wastes’ energy implies that it has no use that’s valuable to anyone. Bitcoin mining uses energy but is actually one of the cleanest and greenest industries in the world. When people claim Myth 5, they actually mean that the energy is of no use to me, so should be stopped.

As per athena-alpha.com,

“87% of our planet’s population are born into autocracy or untrustworthy currencies. 4.3 billion people live under authoritarianism, and 1.2 billion people live under double or triple-digit inflation”

Thus, with bitcoin, for billions, it gives them their first actual bank account ever. Around 74%, 55%, 50% and 23% of the population do to have bank account in Egypt, Nigeria, Indonesia, and India respectively. Thus, bitcoin’s energy consumption isn’t a waste, it provides a vital service for literally billions of people all around the planet that have never had free money that they can use without the fear of getting stolen by the government.

Myth 6: Bitcoin is used by criminals

Would say Bitcoin does not equal crypto. An investor (who has the experience of several decades of doing businesses) would not blindly jump onto doing mining farm such as the Bitcoin-and one knows the extent of investments involved with Bitcoin farming. The giants/investors do have their financial and business analyst who are being paid for their job-in this case business analysis. On the contrary, there might be other cryptocurrencies which are entirely built to copy Bitcoin, but doing the job of fraud and scamming.

Myth 7: Bitcoin can be cloned

As Bitcoin is an open-source software protocol, it is possible to copy Bitcoin’s code, and thus, so many people contribute to the development of newer versions of Bitcoins core such as “Bitcoin 25.1”. Read more about the nature of bitcoin software at https://immtalimm.blogspot.com/2023/12/the-bitcoin-core.html. But though, you can copy the Bitcoin’s code, do imagine how large is the bitcoin network. Thus, it is too far from equalizing the Bitcoin. In addition, brand awareness, the global liquidity of its market (or market cap), dedicated developers that maintain and propose the code through BIP is too far from competition.

Myth 8: Bitcoin is a bubble

According ‘store of value’ stage of a money, the new money will ‘monetise’ and go through multiple periods where supply and demand do not align properly, causing high volatility. This process can indeed create a bubble. However, with bitcoin, given the size of the network, number of users, and the use cases soaring even faster than the internet, would mean that the bitcoin will create the bubble, but will ‘not die’.

Myth 9: Bitcoin fails as a currency

While most people do not use Bitcoin for their day-to-day purposes, in many countries, people use Bitcoin Debit Cards to pay their bills. Some countries like Hongkong have even installed Bitcoin Teller Machines. While Bitcoin is undergoing the ‘store of value’ stage, over the next 10 years, it’s expected to monetize and delve further into ‘medium of exchange’. 

 

Source: Personal Collection, Sept, 2023

Myth 10: Bitcoin can’t scale

People usually believe that bitcoin supports around 7-10 transactions per second, while Visa or Master Card can manage thousands or tens of thousands of transactions per second. At the Bitcoin’s base layer, transactions take around 10 minutes to 1 hour to fully settle and support a theoretical throughput of around 7-1o transactions per second.

But the underlying advantage is taking 10 minutes to settle literally any value (even billions of dollars) with any parties anywhere in the world at any time (day or night) is what bitcoin does. In addition, bitcoin has ‘lightning network’ as the backup, if you are to use bitcoins for the frequent purchase/transaction.

Myth 11: Bitcoin is not safe/ can get hacked

It is practically impossible to hack the bitcoin network, as the network and the protocol is run by hundreds of thousands of nodes around the world. And it’s possible to hack the network if the hash power of the hacker has 51% of the total hash-and who would have this much money/budget to overpower the bitcoin network.

Myth 12: Bitcoin is too expensive to own

Remember that 100,000,000 (i.e., 100 million Satoshis make 1 bitcoin). Thus, it is not necessary for one to buy 1 bitcoin as it is expensive, tbh. The choice to buy 1 sat, 1000 sats, or 1 bitcoin is yours.

Myth 13: Bitcoin has only 21 million capping, and how can this function as a worldwide currency?

Let’s calculate the total USD that one can derive from 21 million bitcoins, considering the current rate of 1 BTC = 44000 USD (as of Dec 4, 2023).

21,000,000 BTC = 923,832,630,000 USD i.e., 923 billion or with the current rate ~ 1 trillion.

And the world population as of 2021 is just ~ 8 billion.

Which gives us 115.4 billion per person.

Can all persons in this world become a billionaire? Just my thought. 😅😅😅😅😅😅😇😇😇😇😇😇😀😀😀😀😀😀😀😂😂😂😂😂😂😂😂😂