Slowly I’m compiling a list of all the wacky inflatable myths and misbeliefs I hear when people discuss bitcoin and cryptocurrency. If you have additions or feedback, let me know in the comments below or find me on Twitter.
Myth: There will only ever be 21M bitcoin.
Fact: The 21M limit is due to social consensus and can be changed if the major parties (developers, exchanges, miners, large holders) agree. Further, the true amount is closer to 15M. As many as 1/3 of all bitcoins are permanently lost.
Myth: Bitcoin has no intrinsic value.
Fact: Try to send $1M money through the internet without the approval of a bank or government. You can’t. With Bitcoin and its currency bitcoin, you can, and the transfer confirms in under an hour and costs less than 1% of the transaction amount.
Myth: Bitcoin is anonymous.
Fact: Bitcoin is like wearing a mask to a Mardi Gras party. Guests may not see your face or know your name, but they can tell your sex, height, and build. Spend enough time at the party and eventually people will know it’s you.
Myth: Bitcoin is mainly used by drug dealers and criminals.
Fact: Up to 98% of US cash is used for money laundering and tax evasion, while research indicates 75% of bitcoin purchases are as a store of value. Digital gold. And there is a growing class of privacy-first altcoins like Monero and Zcash which are far better for suspicious transactions.
Myth: Bitcoin is illegal and banned in many countries
Fact: The only two countries where Bitcoin is outright illegal are Bangladesh and Kyrgyzstan, where the reality may differ on the ground. The vast majority of countries, including leaders like the US and China, have regulated bitcoin and allowed it to operate. The town of Zug, Switzerland even permits using bitcoin to pay for government services up to $200 USD.
Myth: Bitcoin is controlled by China
Fact: A majority of mining activity and exchange trading are done in China. But China is not monolithic. There is a tremendous diversity of opinions and preferences. Witness the blocksize debate: Chinese exchanges and miners are just one of many voices, and they don’t have the power to unilaterally change Bitcoin.
Myth: You can’t spend bitcoin
Fact: There are 100K plus places around the world where you can spend bitcoin to do everything from gambling online to buying a Tesla sports car to picking furniture on Overstock. This doesn’t include all of the shadow economy where cryptocurrencies are often the only way to transact. And now there’s a growing class of digital assets, such as altcoins and appcoins and digital tokens, where bitcoin is usually the best way to participate.
Myth: Bitcoin’s creator is a crazy underground hacker. Or a mild Japanese guy living in Northern California. Or a secret government agency. Or a rich eccentric Wall Street trader.
Fact: It doesn’t matter. Reality is, the current Bitcoin Core implementation uses less than 2% of Satoshi’s original code. The crypto community has grown, divided, branched, diversified, grown some more, and is now a thriving $20B economy with more than 600 altcoins and hundreds of appcoins. Regardless of whether Satoshi is an individual, a group, a cabal, a criminal, or already dead, his influence wanes every day. If he or she or it came back, a Lazarus-like re-appearance would make for an entertaining chapter in the Bitcoin Hollywood movie, but it won’t change cryptocurrency’s future.
Myth: Bitcoin won’t scale because of its blocksize limit
Fact: The 1mb limit has already been reached, yet transaction numbers continue to grow and the price continues to rise. Bitcoin may solve the blocksize issue as a united community, or it may hard forks and separate like Ethereum. But cryptocurrency as an asset class – and bitcoin’s price – will continue to charge ahead.
Myth: Bitcoin is a ponzi scheme
Fact: While there have been ponzi schemes run using Bitcoin and altcoins, the technology itself is anything but. The definition of a Ponzi scheme is that early investors profit at the expense of later investors. If you bought bitcoin at the beginning of 2016 – seven years after the first investors – you would have already seen a 100% return.
Myth: Quantum computers will break Bitcoin’s cryptography
Fact: Quantum, like tomorrow, never comes. Quantum’s progress is by nature slow and incremental, and Bitcoin can change its cryptography and its protocol to resist quantum hackers using technologies like Schnorr and Lamport. The dominant value of Bitcoin rests in its social consensus. As long as users and merchants and developers and miners continue to believe in Bitcoin, everything will be fine.
That’s it for now folks! What myths and misbeliefs did I miss? That’s a tongue twister 😃
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