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Science Behind Crypto Misconceptions: Confirmation Bias

binance.com 17 h

Main Takeaways

Confirmation bias causes us to seek out information that reinforces our pre-existing beliefs, often ignoring evidence that contradicts them.

This bias significantly reinforces both everyday and crypto-related false beliefs ranging from “moon landing was faked" and “cryptocurrency is solely used for illegal activities.”

Other biases work together with confirmation bias, creating a cycle that distorts our perception of facts.

Ever wonder why it's so hard to change someone’s mind, even when the facts are blatantly laid out in front of them? The culprit is often confirmation bias, a cognitive mechanism that makes us seek out and believe information that fits our pre-existing views. Whether it's historical myths or cryptocurrency misconceptions, confirmation bias plays a powerful role in shaping how we select and process information.

In the finale of this series, we’ll unpack the science behind confirmation bias and explore how it fuels some of the most persistent crypto myths out there.

Confirmation Bias

Why do we cling to false beliefs, even when faced with evidence that shatters them? Confirmation bias is often to blame. Defined by Britannica as the tendency to “process information by looking for, or interpreting, information that is consistent with existing beliefs,” confirmation bias misleads us by filtering reality through a lens of comfort.

This means we give more weight to what we already believe and sideline anything that challenges those beliefs. This mental habit becomes especially potent when we’re emotionally invested in an issue — making it hard to see the full picture, even when it's right in front of us. We humans generally enjoy the comfort of having a consistent, unambiguous picture of the world. In the contradictory, fragmented online information environment we navigate today, this deep-seated bias gets activated to preserve this worldview consistency in the face of constant changes.

Myths That Just Won’t Die: How Confirmation Bias Keeps Fallacies Alive

No achievement, not even landing on the moon, is immune to the distortions of confirmation bias.

Despite extensive photographic and video evidence, as well as testimonies from astronauts and scientists, the moon landing conspiracy persists. Believers latch onto selective "evidence" that confirms their suspicions while dismissing overwhelming proof to the contrary. They filter out anything that doesn’t align with their pre-established narrative. This phenomenon shows how even well-documented historical events can be dismissed as untruths when people allow their preconceptions to guide their interpretation of the facts.

Another widespread misconception shaped by confirmation bias is the belief that people can multitask effectively.

Despite extensive scientific research showing that the human brain struggles to focus on multiple tasks simultaneously, many people still believe they can handle various tasks at once with no decline in performance. Studies show that multitasking leads to more errors and reduces productivity, but individuals often focus on rare instances where they believe they’ve successfully multitasked. Confirmation bias reinforces this belief, leading people to ignore evidence that concentration and efficiency suffer when they attempt to juggle too many tasks at once.

A Criminal’s Playground and Just Another Bubble?

Now let’s turn our attention to the world of crypto. If you’ve ever heard someone say that cryptocurrency is only used for illegal activities, you’ve encountered a myth deeply rooted in confirmation bias. This idea gained traction early in crypto’s history, with high-profile cases of drug trafficking and money laundering dominating the headlines. And while these stories are real, they represent a tiny fraction of the actual transactions happening on blockchain networks.

The problem? People are far more likely to remember negative news that fits their beliefs. Once they’ve formed a mental association between crypto and crime, confirmation bias ensures they’ll continue filtering out positive developments — like the fact that less than 1% of crypto transactions are linked to illegal activities.

The idea that cryptocurrencies are a bubble is another myth amplified by confirmation bias. We see it every time the market experiences volatility — skeptics seize the opportunity to claim that crypto is doomed to fail. But just as in traditional markets, price swings are part of the game, and they don’t necessarily indicate that the entire asset class is on the verge of collapse.

What confirmation bias does here is it amplifies our focus on short-term volatility while ignoring the broader, long-term innovations happening within the crypto space — like the constantly evolving technologies or the growing adoption of blockchain technology across industries. This selective focus can lead to skewed perceptions and persistent misconceptions.

The Whole Circle, a Whole Circus

Furthermore, confirmation bias doesn’t operate in isolation; it teams up with several other cognitive biases to reinforce misconceptions. Here’s how this interplay might unfold step by step:

First, theanchoring effectmay set the stage by introducing an initial piece of information — let’s say, the idea that crypto is only used for illegal activities. This first impression sticks, becoming the foundation for how a person processes everything related to crypto.

Next, confirmation bias may kick in. Once the anchor is established, it encourages one to seek out information that aligns with their initial belief — focusing on news stories or articles that confirm the negative aspects of crypto, while overlooking or downplaying any information that contradicts these views.

Next, the bandwagon effect can reinforce your belief. As more people around one — whether through social media, news, or conversations — echo similar negative sentiments regarding crypto, they might be more inclined to adopt these views too, believing that if "everyone else" shares a certain belief, it must be right.

As the narrative grows, the illusory truth effectpossibly takes hold. The more one hears the same ideas about crypto, the more they begin to feel it’s true regardless of the accuracy of the information. Repetition makes the myth seem even more believable.

Thereafter, availability bias may lock them in. When negative stories about crypto dominate the news, they’re easier to recall, and they overshadow any balanced or positive stories one might come across. These vivid, fear-inducing examples stay on top of one’s mind, reinforcing your existing beliefs.

Moving forward, status quo bias can play a crucial role in fostering distrust. People generally feel more secure in the familiar, and traditional financial systems — like banks and fiat currencies — have long been seen as stable and trustworthy. Crypto, being a relatively new and volatile asset class, feels unfamiliar and untested to many. This preference for the status quo means that even when presented with facts about crypto’s potential, individuals may reject it simply because it doesn’t align with their comfort zone or what they know.

Finally, the endowment effect may strengthen this distrust. When people have long been invested in traditional financial systems, whether through time, energy, or wealth, they tend to overvalue those systems simply because they are their own. For example, someone who has spent years building wealth using fiat currencies or investing in stocks might have a hard time seeing the value of crypto, even when presented with compelling evidence. This emotional attachment to the familiar makes it difficult to embrace new financial innovations, even if they could be beneficial.

Together, these biases — anchoring, confirmation, bandwagon, illusory truth, availability, status quo, and endowment — form a powerful feedback loop that polarizes human perception, shaping subconscious behaviour. Across the board, they encourage us to err on the side of caution — often resulting in a preference for more conservative, socially accepted, and mainstream-popular beliefs. On the whole, this makes it inherently challenging for any innovative idea, technology, or approach to gain widespread acceptance, as these biases reinforce the comfort of the familiar and the safety of the collective consensus.

In the context of crypto, this feedback loop perpetuates distrust, making it increasingly difficult to break free from widespread misconceptions. Each bias further reinforces the others, strengthening initial beliefs over time in a cyclic manner, creating a barrier for more balanced or informed perspectives to take root.

Breaking Free: How to Overcome Confirmation Bias

Breaking free from confirmation bias isn’t just a small step — it’s perhaps the key to unraveling a web of faulty thinking. By challenging your own beliefs, you open the door to new perspectives and weaken the grip of the anchoring effect. This makes you less likely to fall in with the crowd, reducing the bandwagon effect, and helps you spot repeated myths for what they are, countering the illusory truth effect. With availability bias losing its sway, you’ll view situations more clearly and make better, more informed decisions. Moreover, by actively questioning the familiar and stepping outside the comfort zone of established beliefs, you can overcome the status quo bias, opening your mind to new possibilities. Similarly, by recognizing the endowment effect, you can detach emotional value from outdated ideas and begin to embrace more practical, evidence-based viewpoints. Breaking free from confirmation bias is thus the first domino that can topple the entire chain of biases.

So, how can we counteract confirmation bias? Actively seek out information that challenges our assumptions! By broadening our media intake, stepping outside echo chambers, and paying attention to contradictory evidence, can one start to form a more complete picture.

Final Thoughts

Confirmation bias clouds our judgment, leading us to cling to false beliefs and misconceptions, whether in history or finance. When it comes to cryptocurrency, this bias plays a crucial role in perpetuating myths. However, once you recognize the power of confirmation bias, you can begin to question the assumptions that hold us back. By embracing a mindset that actively seeks out diverse perspectives and challenges our preconceptions, we can break free from this mental shortcut — and make more informed decisions about the world of crypto and beyond.

So next time you hear a story that perfectly aligns with your beliefs, ask yourself: Am I really seeing the whole picture? The answer may surprise you.This is where Binance Academy shines. Our open-access hub offers valuable insights to help you recognize and overcome biases like confirmation bias. As we wrap up the Science Behind Crypto Misconceptions series, revisit earlier entries to better understand how other biases shape common crypto myths. Stay informed, challenge your assumptions, and dive deeper into blockchain education with Binance Academy!