Debunking the 7 biggest myths about bitcoin

I feel like if you inhabit the crypto world, you spend 50% of the time learning and studying, and 50% of the time worrying about buying the dip. There’s still so much I don’t know, and I wanna learn more, but for people who literally know zero about BTC – because they’re just getting started – there are a few myths that must be debunked. And the sooner you learn about it, the better. I thought it’d be interesting to put together a list of myths that I want to debunk. As ever, feel free to correct me and/or add your take in the comments.

1. “Bitcoin is anonymous”

Bitcoin is not actually anonymous, it’s pseudonymous. If Person A sends XY BTC to Person B, you won’t be able to extract their identity from the transaction HASH or the BTC addresses involved, but the transactions are recorded on the blockchain and they will stay there forever, and you can trace transactions in perpetuity. And that means that you can, in theory, follow the public address that’s been used, say, 10 years ago, follow that address and use it the trace the IP address or the exchange account to which the transaction was sent.

2. “Bitcoin is often used for illegal activities”

This is actually, factually incorrect. Every single BTC transaction ever is recorded on the blockchain, which is a public ledger anyone can observe. So if Mr Baddie gets paid in BTC for an illegal activity you know of, you can trace that payment back to Mr Baddie and you know, beyond doubt, which transactions were used for illegal purposes. At the time of writing, only 3% of what goes on in the Bitcoin blockchain can be traced back to illegal activities, and that number has been steadily declining.

In 2020, only 0.34% of crypto transactions (so not just BTC) was associated with illegal activities. 

3. “They’re just gonna ban it”

We keep hearing about countries ‘banning’ bitcoin but the first question I’d ask is “what does ‘banning’ actually mean’?”. The truth is, holding and transacting bitcoin is not a black-or-white affair, in the sense that there are several layers with several degrees of centralisation. If, for example, you hold your coins in an exchange, you’re having a relatively ‘centralised’ experience because the exchange is regulated and governments can regulate exchanges out of existence, in theory. However, on the opposite extreme, if you hold your coins in cold wallets (=not connected to the internet), no one can touch it.

Transactions can’t be affected either. Let’s say you wanna buy my watch and you’ll give me 0.1 BTC for the watch. Governments can’t stop that transaction, they can make it very difficult for you to top up your crypto account with your debit card, and they can make it very difficult for me to sell that BTC for cash if I wanted to, but they can’t stop the transaction per se.

4. “Bitcoin is bad for the environment”

When somebody says “BTC is bad for the environment” because it uses too much energy, I always tell them, “what about the fields of terabytes and servers that your bank needs to keep its systems running? Where does that energy come from?”

Most global companies and institutions are transitioning towards sustainable energy and the same principles and tools could be used for bitcoin mining. And indeed they are. According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin consumes around 110 Terawatt Hours per year — 0.55% of global electricity production, and according to their latest data, 39% of BTC mining comes from carbon neutral sources, but that number is going up, mostly using hydro and wind energy. So even if we accept the argument – and I’m not saying we should – it’ll be a short-lived argument.

5. “Bitcoin is just a bubble”

I guess this may sound more like an opinion than a fact but Bitcoin is too big and it’s gotten too far to be “just a bubble”. The adoption rate has been growing steadily and quickly, it is an asset that created a multi-trillion market from zero in just 13 years. It has already survived two major crashes, including one (after the 2017 ATH) that could have destroyed it because that did, indeed, look a bubble that was about to burst.

It could go to zero, it’s a possibility, but it is not a probability. If I were a betting man, I’d give it a 0.01% probability of it going to zero.

6. “Countries are just going to make their own cryptocurrencies.”

Sometimes people use the Digital YUAN, issued by the Chinese government, as an example but that’s a terrible example. Government-issued, government-backed and government-controlled digital cryptocurrencies are the exact opposite of what Bitcoin is and is trying to be. And they’re contributing to the problem that BTC is trying to solve.

No one can take your BTC or dilute your BTC by issuing more, whereas governments can easily do it with government-issued money. The only thing that the Digital YUAN or any equivalent government-issued ‘cryptocurrency’ has in common with Bitcoin is that they both only work online. That’s it.

7. “Bitcoin is worse than the USD for transactions.”

Bitcoin is deflationary and as such, it means its scarcity is absolute and can’t be diluted, so I’m not sure you actually want to use it for transactions. Only 21 million BTC will ever be available, you’re free to do what you want with your BTC but I’d personally keep mine. And while it is true that there other better, faster, cheaper coins you can use for transactions, it is still – should you choose to transact with BTC – faster than a wire transfer, and it has no borders.

I’ve crossposted this article on readcash, LeoFinance and Publish0x, a social media platform that pays you small amounts to create and/or read content. You need to sign up but it’s 100% free.

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