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Myths about bitcoin

13 September 2017 12:30, UTC

There are numerous disputes around bitcoin and the topic of cryptocurrencies in general. Obviously, this point of interest is surrounded by many myths of what is bitcoin all about. We will try and debunk eight of them in this article.

#1. Bitcoin is a kind of electronic money

This statement is written by those people who didn’t even try to get deeper into the true essence of bitcoin and cryptocurrency principles. All electronic money is linked to national means of payment or so-called fiat money. Bitcoin has nothing to do with national currencies.

#2. Bitcoins mining doesn’t require any special efforts

This was only relevant until 2013 – with the passage of time, the complexity of bitcoin mining is constantly increasing as is the growing number of miners around the world. Nowadays mining on a primitive PC will give a result mostly equal to zero.

#3. Bitcoins is an easy way to get rich

This is the myth, based on the past times. Yes, indeed, the cost of bitcoin skyrocketed since it appeared on the web. People who earned bitcoins before, they really had a good profit. However, in terms of energy/profit ratio, bitcoin faucet or bitcoin personal mining is just a way to add some small income to the basic budget. Some people predict that bitcoin market will see some hikes an plummeting of exchange rates in the future. But since the rate is volatile, cryptocurrency is still a risky investment.

#4. Bitcoins are illegal

As it was said before, it’s a myth for those who didn’t even try to overview the topic. Money fakes can be illegal, indeed, but bitcoin is not a fake but a common currency, a cryptocurrency. It is used in many countries as "private means of payment", you just don’t need a permission of a government to operate with it, though some countries are on a way to regulate it. Still, for example, bitcoin is fully legal in the USA.

#5. Bitcoin is a waste because it isn’t backed

Well, that’s not true. Indeed, it has nothing to do with the gold value system, but bitcoin market value is great because people say so. Consider this: an object has value when it serves a purpose. So, bitcoin is a decentralized network system which serves a purpose of payment – as an anonymous digital currency. It has value. It has confidence.

#6. Cryptocurrency is the perfect way to evade taxes

In advanced countries, bitcoin has already become a popular means of transactions and trading. Due to this, the taxation technologies similar to those that operate with fiat currencies have been developed or are underway.

#7. Bitcoins are generated automatically in unlimited quantities

No. Bitcoins are extracted from the network, and their maximum number is 21 million. They are produced in blocks (due to the blockchain tech). Some say that, well, 21 million — that’s too little. Take into account the bitcoin mining system and the fact that 1 BTC consists of 100 million Satoshi. We can easily calculate that the total number of available coins is about 2 quadrillion units.

#8. The owner of a powerful calculating tool can intercept the network

Almost all of the mining is carried out in pools today. The system perceives them as a single getter. One pool may consist of hundreds or even thousands of power systems. If you assemble an installation that will compete with at least one middle pool, you'll have to connect it directly to the nearest power plant.