33 myths or lies about Bitcoin

Learn the truth behind some of the best-known myths about Bitcoin and truly understand all that Bitcoin and blockchain technology can offer you.

Lto great popularity that has reached Bitcoin Since its launch in 2009 until today, it has led many to generate lies, myths and information about the operation of this innovative system. Although there are some risks that we should be aware of when using Bitcoin, the truth is that many of the fears we feel about using this system are unfounded. And this is often due to a lack of advanced knowledge about this cryptocurrency.

All the Bitcoin advantages They are huge compared to traditional money, but the lies and myths about Bitcoin do not stop appearing. Why? Hidden interests ?. A little, but mostly due to the basic ignorance that many people still have of Bitcoin.

In this article we will show you what are the 33 most common myths or lies in Bitcoin that can deter and discourage some novice users. And of course, we will briefly explain each one of them, so that you know the truth and clear all your doubts.

Bitcoin is like all other digital currencies and offers nothing new.

This is one of the most common myths or lies about Bitcoin to hear, but completely wrong. First, almost all digital currencies are controlled by a central bank. In addition, most are available to governments to satisfy their own interests.

However, Bitcoin is a completely decentralized system. This means that it is not under the control of or dependent on any government or central bank. On the other hand, coins cannot be created at will either, since the exact amount to exist has been defined in the Bitcoin protocol since its launch, which prevents inflation and devaluation of the value of Bitcoin.

Bitcoins do not solve any problem that fiat currencies and / or gold do not solve.

Another of the myths or lies about Bitcoin is related to its usefulness and ability to solve complex economic problems that the fiat money cannot solve. Certainly fiat currencies and gold are a very popular exchange and safeguard system of value. But with the arrival and implementation of Bitcoin and its underlying technology, la blockchain, a new way of seeing money and safeguarding value was generated. This then Bitcoin offers its users multiple advantages and benefits, so it represents an alternative to the use of fiat money or precious metals.

First of all, unlike gold and fiat currencies, Bitcoins can be transferred to anyone anywhere in the world quickly, safely and reliably. They are also very easy to divide, so we can carry out a transaction with any amount without any problem. Additionally, the operations carried out can be verified publicly thanks to the block explorers.

In relation to electronic systems that operate with fiat money, bitcoins allow pseudo anonymity. In this way our Privacy and personal data are well protected. On the other hand, funds cannot be locked or frozen at the request of third parties. This is because the control of them is in our hands. And finally, bitcoins are faster to transfer and have much cheaper commissions than those offered by banks and other systems.

Miners, developers, or another entity could change Bitcoin's properties to benefit.

This is another of the myths or lies about Bitcoin that is completely wrong. First, the protocol that makes Bitcoin work is open source. This means that any user can review and audit it whenever they want. You can verify that all processes are running correctly, and you will notice if something is wrong. In the same way, the blockchain provides Bitcoin with multiple qualities and functionalities. This prevents for example that a user can change the Bitcoin code to benefit from it.

On the other hand, Bitcoin cannot change illegitimately; as long as most bitcoin uses full client wallets and be nodes. In the net. The transactions made are irreversible as long as no miner or coalition of these have over 50% of total hash power. Likewise, transactions must have an appropriate number of confirmations.

Thus, the Bitcoin system requires certain properties to be applied, in order for this to be a good form of money. For example:

1. No user can create money from nothing. Bitcoin's protocol clearly says how many coins will be put into circulation. It also clarifies that the issue will be at a certain rate. For its part, the function of the miners is to manufacture and extract the coins already established in the protocol through the mining is..
2. Users or third parties may spend bitcoins without possessing the private key. From here starts the expression: "They are not your keys, they are not your bitcoins"
3. Bitcoin cannot be used twice. In other words, the double-spending. For this, bitcoin has a series of protections that prevent this type of attack. 
4. The system has a series of rules that cannot be violated and that they are necessary for it to work properly (network difficulty, proof of work, DoS protection, among other).

These rules are what define Bitcoin. The function of the nodes connected to the network is to verify that they are fulfilled.

Bitcoin is backed by processing power.

One of the most well-known Bitcoin myths or lies is that Bitcoin is “backed by” processing power. But this is not entirely correct. When we use the term “backed” for a currency, we mean that it is tied to something through a central party at a certain exchange rate. But you can't trade bitcoins for the computing power that went into creating them. In this sense, Bitcoin is not backed by anything. It is a currency in itself, even if it is digital and intangible. Bitcoin, like gold, is not backed by anything but has great value.

Bitcoin has no value because it is not backed by anything.

This is another of the myths or lies about Bitcoin and an error regarding what we know as value. As we already mentioned, Bitcoin is a digital and intangible currency that does not exist in the physical world. But its value is linked to its use and adoption as a medium of exchange. Is the supply and demand which actually gives Bitcoin value. As with fiat currencies, which although backed by governments and goods of a country, their value depends on the supply and demand of the citizens of that country.

Thus, as long as users are willing to buy and sell bitcoins, those bitcoins will have a value. Furthermore, due to its properties, qualities, payment facilities and a certain privacy and anonymity, Bitcoin has grown in use and adoption. What gives it a subjective value on the part of the users. Furthermore, being scarce, bitcoin tends to increase its value.

The value of bitcoins is based on the amount of electricity and computing power it takes to mine them.

La labor theory of value states that if a product requires a certain amount of resources to create it, the value of that product will be related to the value of the resources invested. But this theory is false. Since the value of a product will depend on the utility or intrinsic value that the users call it.

However, in Bitcoin, the cost to extract them is related to the value of the cryptocurrency in the market. If bitcoins increase in value, more users will consider mining profitable and join it. This will drive the network hardship which increases the cost of mining. But, the opposite will happen if the bitcoins decrease their value. Thus, these effects are balanced so that mining always has a cost proportional to the value of the bitcoins it generates as a reward. In this way, another myth or lie about Bitcoin is left behind.

Bitcoin has no intrinsic value (unlike other things).

When we talk about intrinsic value we are referring to the real value of an asset taking into account all the factors that surround it. There are many beginning users who consider that Bitcoin has no real value, but this is not true. Let's see why.

Bitcoin meets the characteristics of money: durability, portability, fungibility, recognizability, as well as divisibility and scarcity. So that its value is based on its usefulness as a currency, and in the supply and demand of its users.

In addition, all records of operations performed are on the blockchain. It operates as a permanent, globally distributed ledger and time-stamped. On the other hand, the blockchain only allows you to add data, so once added, they cannot be deleted or modified. In addition, all the information added to it is grouped into blocks which are mathematically related to each other through algorithms, such as merkle tree.

All these characteristics do not exist grouped in other means of payment. Likewise, we can consider the value of Bitcoin according to the global network where it operates. If we compare it with a mobile phone, it depends on a telephone network, without which it would have no use. Likewise, Bitcoin depends on the global network of merchants, exchanges, purses, among others, that are necessary to transmit economic information through the network.

Bitcoin is illegal because it is not legal tender.

Just because Bitcoin is not backed by any specific government does not mean it is illegal. In fact, in March 2013 the United States Financial Crime Control Network issued a series of guidelines on the use of this cryptocurrency. According to the guidelines, any virtual currency user does not constitute a money services company (MSB) under the FinCEN regulations. And, therefore, you are not subject to MSB's record keeping, reporting, and record keeping regulations.

Miners who manufacture and mine bitcoins for personal use are not required to register as an MSB. In a nutshell, users do not require anyone's permission to use Bitcoin. However, national laws may vary from country to country, so the laws and regulations of each should be verified. Although the truth is very few countries that have explicitly and totally prohibited it.

Bitcoin is a form of internal terrorism because it only harms the economic stability of the United States and its currency.

According to the definition of terrorism in the United States, violent activities must be carried out to be considered a terrorist for legal purposes. The outlandish comments of some politicians have no legal or factual basis. Also, Bitcoin is not a national currency in the United States or in any other country. Rather it is a global community, which has nodes connected to the Bitcoin network, distributed throughout the world.

Bitcoin will only allow tax evaders to act with impunity, leading to the eventual downfall of civilization.

It is true that the nature of Bitcoin can facilitate the process of transferring money quickly and almost anonymously. In addition, it allows users to purchase tangible goods and services. But tax evaders are caught because their lifestyle and assets are not consistent with the income they report. So governments do not necessarily require monitoring of funds.

However, The Bitcoin blockchain allows you to keep a constant and permanent record of all transactions made. So it is possible to extract information at any time. But it is important to mention that public addresses do not associate users directly; but if it is possible that if a person claims that a particular address belongs to him, the funds of that address can be verified.

Anyone can print or mint bitcoins, therefore it has no value.

As we have previously explained, bitcoins are not printed or minted. This is another mistake and one of the most ignorant myths or lies about Bitcoin that exist. Among the operating rules of the system there is the proof of work and the difficulty of the network. So miners must solve complex mathematical problems to generate each new block. Then, for the energy expenses and computing efforts made, they are given a specific amount of bitcoins as a reward. Which are then put into circulation.

Bitcoins are worth nothing because they are based on unproven crypto.

Blockchain technology is innovative, and represents an important technological advance to our era. This is what makes the operation of Bitcoin possible; therefore, its development and implementation did not emerge overnight.

By contrast, it is based on several studies and investigations developed by different actors decades ago. So for example, algorithms SHA-256 y ECDSA that are used in Bitcoin are encryption industry standards well known. SHA-256 is endorsed, standardized, and used by the United States government (FIPS180-3 Secure Hash Standard). Much of this technology has emerged as part of the struggles that large groups and developers have had against the so-called Cryptowars.

Furthermore, blockchain technology is not only applicable to cryptocurrencies, , but its nature allows its use and application in various areas of our society. So if you don't trust the algorithms, cryptography, computational operations, and validation processes that underpin Bitcoin, then you shouldn't use it. And you should also not rely on credit card transactions or any type of electronic bank transfer.

The first bitcoin users were unfairly rewarded.

Bitcoin in its beginnings did not have the value it has today. Only a few knew its properties, qualities and potential. Nevertheless, take on an investment this little-known cryptocurrency back then represented a huge risk of time and money.

Those who took risks without knowing for sure what was going to happen in the future, but still invested capital in Bitcoin, were the ones who strengthened the community. And they contributed to the currency reaching later milestones. For this reason, arguing that the first users of Bitcoin do not deserve profit, is like saying that the first investors in a company, or the first buyers of shares in a Initial Public Offering, they are unfairly rewarded.

21 million coins is not enough, it does not scale.

Bitcoin is unique because there will only be approximately 21 million coins. But this does not represent a problem since the same are fully divisible by up to eight decimal places. So there are actually 2.099.999.997.690.000 (just over 2 trillion) maximum possible atomic units in the Bitcoin system. Thus, the value of 1 BTC represents 100.000.000 of these units. In this way, another of the myths or lies about Bitcoin begins to collapse.

As the value of 1 BTC unit grew too large to be useful for daily transactions, people started trading on smaller units, such as deci-bitcoins (dBTC - 0.1 BTC), centi-bitcoins (cBTC - 0.01 BTC), milli-bitcoins (mBTC - 0.001 BTC) or micro-bitcoins (μBTC - 0.000001 BTC) and satoshi (sat - 0.00000001 BTC) . And if in the future it is required, Bitcoin can be divided into much smaller units. All this with a simple modification of your code if the community deems it convenient.

To get more bitcoins, just copy the files from a wallet several times

This is one of the completely wrong myths or lies about Bitcoin and many times seen as a joke. Bitcoin wallets or wallets do not contain or store the cryptocurrencies themselves, but they contain and protect the private keys. With these keys, you have authority and rights over the bitcoins you own. Think of it like having your bank details stored in a file. If you give your bank details to someone else, that doesn't double the amount of money in your account. But you can use your money and spend it.

Lost coins cannot be replaced and this is bad.

We already mentioned that bitcoins are divisible by up to 8 decimal places, that is, 0,00000001. So the fact that you lose your coins does not mean a problem for the network itself. Conversely, the loss of bitcoins makes indirectly all the others acquire much more value. This is because the supply of bitcoins is reduced, and therefore, it becomes scarcer.

Lost coins cannot be recovered because there is no way to discover or find private keys that those bitcoins operate. So they are still on the blockchain but they can never be used again.

It is a giant Ponzi scheme.

Un Ponzi scheme, is a fraudulent pyramid investment action in which investors must be recruited, in order for new members to generate income for older investors.

In Bitcoin this does not happen. This is because there is no central entity to manipulate it. Rather, it is the same users building and contributing to the system and the economy. So it can be beneficial to everyone equally. Another important point to note is that the creator of Bitcoin, Satoshi Nakamoto You have never spent or invested a bitcoin. Rather, he gave away a lot when they were practically worth nothing, and this can be verified on the blockchain using a block explorer.

Bitcoin with its finite coins and lost coins, tends to deflationary spiral.

This false myth is directly related to the way we have seen the economy for years: an inflationary economy. In fact, many find it difficult to imagine a world without inflation because we are already used to the contrary. This is because governments impose currencies that we like or should not adopt, and that soon must be spent or invested in something so that they do not lose their value due to their often excessive printing.

But Bitcoin offers a solution to this. And it is up to everyone whether they adopt it or not, since it is neither imposed nor mandatory. Being a rare commodity, with only 21 million coins to enter circulation at a certain rate, Bitcoin has a deflationary tendency. So it induces its users to save and save value. This way we will only use what is necessary, and we will be able to invest in a long-term future project. We take down another of the false myths or lies about Bitcoin.

Bitcoin cannot work because there is no way to control inflation.

The concept of inflation simply refers to the increase in prices over time, which is generally the result of the devaluation of a currency. This is a function of supply and demand. But since the supply of bitcoins is fixed at a certain amount, unlike fiat money, the only way for inflation to get out of control is for demand to disappear.

For its part, temporary inflation is possible and the most popular scenario will be for inflation to rise and fall as the market stabilizes. And this will happen in the first years of system development.

The Bitcoin community is made up of anarchists, conspiracy theorists, and gold standard weenies.

Members of the Bitcoin community vary in their ideological positions. While it may have been started by ideological enthusiasts, Bitcoin is now talking to a large number of regular pragmatic people, who simply see its potential to reduce the costs and friction of global e-commerce. This debunks the myth that the bitcoin community is made up of people who use or promote the use of tinfoils.

Anyone with enough computing power can take over the network.

Another myth or lie about Bitcoin is related to the famous 51% attack. This is that a user or a coalition of mining users obtain more than 50% of the hash power or hash rate of the network. But this as the network grows, it becomes increasingly difficult to run. In fact, the computing power of the Bitcoin network is far superior to all the power of the world's fastest supercomputers working together.

This guarantees that what an attacker can do once the network is taken is quite limited. Under no circumstances could you create counterfeit coins, counterfeit transactions, or take someone else's money. The attacker's capabilities are limited only to recovering their own money they recently spent, and preventing other people's transactions from receiving confirmations. Such an attack would be very resource-intensive, and for such meager benefits there are few rational economic incentives to carry it out.

Bitcoin violates government regulations.

There is no government regulation that prohibits the use of Bitcoin as such. However, some countries have implemented measures that regulate the use of bitcoins in their territories. In order not to fall on the illegal side of things we recommend that you be aware of these regulations and respect them. In this way another of the very common myths or lies about Bitcoin collapses.

Fractional bank reserve is possible.

Fractional reserve is a banking system that allows commercial banks to make a profit by lending part of their clients' deposits. While only a small fraction of these deposits are stored as real cash and available for withdrawal.

However, Bitcoin operates in a completely different environment. It is a system maintained by a network of distributed nodes. All data is protected by cryptography and they are registered on a blockchain. So there is no need for banks or central authority. Likewise, the issuance of bitcoins is finite and limited, so as it is a different context, there is no fractional reserve.

After mining the 21 million coins, no one will generate new blocks.

This is one of the myths or lies about Bitcoin that has been generated by ignorance of how Bitcoin actually works. First, the creation of new blocks generates a reward that pays off the energy costs and the computational work of the miners. This reward is related to the generation of new currencies and the collection of commissions for each transaction within the network.

But when the roughly 21 million coins are issued, operating costs may be covered by the generation of new blocks whose income will come from the collection of commissions generated by each transaction made. This means that new blocks will continue to be generated and miners will be able to continue earning money with this activity.

Bitcoin does not have a built-in chargeback mechanism and this is bad.

Bitcoin transactions are final and irreversible by design, but consumer protection can still be integrated into Bitcoin in other ways. The most practical way to do this is through multi-level custody. This means that custody systems can be created without the need for third parties that allow protecting both users and businesses in carrying out payment operations.

Quantum computers would break Bitcoin's security.

This is another of the very common myths or lies about Bitcoin and full of a lot of FUD. Although quantum computing can break cryptographic systems like ECDSA, the applicability of these solutions is still far away.

For example, the DWAVE system that is often written on the press is not a quantum computer of the type that could be used to break crypto. Bitcoin's security, when used correctly with a new address on every transaction, depends on more than just the ECDSA algorithm.

However, if in the future quantum computing poses a danger to Bitcoin, we are confident that new post-quantum protocols will be created. This in order to adjust and guarantee the security of the network.

Bitcoin makes self-sufficient artificial intelligence possible.

By definition, the underlying technology that makes Bitcoin's operation possible is the blockchain. A single, detailed and decentralized record of all operations carried out with the cryptocurrency. While artificial intelligence, it refers to an engine that is capable of analyzing and executing functions and actions based on a database.

Each of these technologies encompasses its own complexities and potentialities and could benefit each other. But although artificial intelligence is possible in various ways, it is not closer just for the simple fact that human behavior could be incentivized using payments in Bitcoin.

Bitcoin mining is a waste of energy and harmful to ecology.

While it is true that Bitcoin mining consumes high levels of energy, the truth is that this is nothing more than that used by banks around the world. Nor is it more than the energy used to exploit gold and other minerals. And we only mention these two points to give a small example.

Bitcoin mining is not a waste of energy or time. The fact of contributing to the operation and operation of a payment system as innovative as this is no waste. This if we compare it with the benefits it offers. The difference with Bitcoin is that the amount of energy you consume can be measured transparently. Quite the contrary of other services.

Similarly, Bitcoin mining is designed in such a way that operating costs are proportional to demand. When mining becomes less profitable, some miners choose to disconnect from the network. Furthermore, mining rigs can be disconnected and installed anywhere in the world. So many miners choose to install their equipment in countries where they are more economical and sustainable. Iceland, for example, produces large amounts of energy from renewable sources. So it may become a good place in the future for miners to install their rigs there, and in places similar to this one.

Traders cannot seriously set prices in bitcoins due to volatility.

The bitcoins product of the mining reward They should be sold immediately to cover operating expenses. This is what is supposed, but if the merchant's fund expenses will also be in bitcoins, then the exchange rate would be irrelevant. Greater Bitcoin adoption would make prices rigid and stable. Thus, future volatility is expected to decrease as the size and depth of the market grows.

At the moment, many traders simply regularly check out the latest market rates reflected on the exchanges and automatically update prices on their websites. You may also be able to buy a put option to sell at a fixed rate for a specified period of time. This will protect you from falls in price and simplify your operations for that period of time.

Like Flooz and E-Gold, bitcoins only work for criminals

In general, Bitcoin is money and as such can be used for both legal and illegal acts. It all depends on the people who use it, but not only Bitcoin provides an opportunity for criminals. Other forms of payment such as Visa, MasterCard and Paypal they are also used for criminal acts. But this has not been forbidden. Rather, they continue to function and are improved due to their great value and the benefit they bring to society.

Furthermore, Bitcoin's security plays an important role against criminals. For example, these cryptocurrencies cannot be counterfeited. Furthermore, the payments made are irreversible and cannot be modified. And it is protected against theft thanks to the implementation of innovations such as cryptographic encryption, digital signatures and backups.

Bitcoin will be closed by the government just like Liberty Dollars.

Liberty dollars It started as a trading company to establish an alternative currency in the United States, including notes and physical coins, which were backed by precious metals. This in itself is not illegal. But this project was prosecuted under counterfeiting laws because silver coins bore similar resemblance to American currency.

Bitcoins do not have in any way, nothing similar to the coins and bills of the United States, nor with those of any other country. Therefore, it does not bear any similarity or relationship with the word "dollar" or the symbol "$" of it. On the other hand, Bitcoin, being totally decentralized, does not have a leader or boss, nor servers, nor offices, nor backing of tangible assets. That way, you don't have the same vulnerability.

Bitcoin is not decentralized because developers can dictate on software behavior.

This is simply not true. The Bitcoin software is the work of Satoshi Nakamoto. But currently it has no owners, so no one controls or manipulates it. It is true that developers have some influence on the Bitcoin community. But the truth is that the ability to modify the protocol is limited. This is because the changes must be approved with the consensus of the community. This avoids arbitrary impositions.

If some developers decided to launch a new Bitcoin client, it would surely be rejected. If some miners choose to do so, they will discover that all their transactions are rejected. Therefore, for the Bitcoin protocol to work properly, consensus must be maintained among all users on the network and governed by the same rules.

Bitcoin can be hacked

In Bitcoin's history since its launch in 2009, it has never suffered a network or blockchain attack. The rules of protocol and cryptography have worked flawlessly over the years. There is no record of money theft or vulnerability in the system.

But websites, exchanges and wallets that use cryptocurrencies if they have been raped. The press reports this as if it was the currency that has suffered from hacking or hacking. However, in recent years security has improved. For example with encryption of wallets, encryption of private keys, 2-factor authentication, cold offline wallets, among others.