The Top Five Misconceptions About Bitcoin

1. It is used by criminals for illegal activity.

One of the most common concerns for newcomers to Bitcoin and cryptocurrency is the idea that it is used by criminals for illegal activity. The truth is that less than 5 percent of all BTC transactions are used for criminal activity. Contrary to the earlier narrative that with BTC you can send anonymous payments, the fact is actually the reverse. All transactions within the blockchain are completely transparent, and anyone has access to that information. We can actually see where each coin has been, all the way since when that coin was minted. If you wanted to look at a currency that is used for illegal activities, look at the US dollar. US dollar bills are untraceable and are used for criminal activities all the time, being the currency of choice for criminals in the black market. With regular currencies, AKA Fiat currencies, we do not know where and for what each bill was used for. Never mind the fact of fake dollar bills being circulated, with BTC, you cannot “create” fake BTC.

2. It has no inherent value.

Contrary to mainstream opinion, BTC actually has inherent properties not found in any asset in the world. It is the first asset that is censorship resistant, meaning ownership, or the transfer of assets, cannot be stopped by any third party, whether that be a corrupt government, or a corporation. If you have your BTC within your own wallet, it is completely up to you in how you want to send your money. Nobody can stop you. All you need to access BTC is a connection to the internet and a device. No other asset has ever existed with these properties, making BTC have a property that is unique to it alone. Also, because Bticoin was the first cryptocurrency, and is the most decentralized, it will have these properties imbued in it much stronger than any other cryptocurrency that is created. No other crypto can be as censorship resistant as Bitcoin.

3. It is waste of resources

This leads back to the previous misnomer, which is that Bitcoin wastes a ridiculous amount of energy through mining and the servers that run the Bitcoin network. It can be argued that because BTC is the first asset that is non confiscatable by corrupt third parties in human history, it actually is one of the best uses of electricity that we currently have. It is true that Bitcoin mining consumes more electricity than some countries, but this is inherently needed. The Bitcoin network needs to have a monetary cost in order to prevent actors from spamming and clogging the network. If BTC transactions were free, or cost very little, than malicious actors could send useless or bad transactions, similar to how DDoS attacks work, to make the Bitcoin network congested.
There are measures to reduce the amount of carbon emitting energy that is used to mine Bitcoin. In China, where 80% of all BTC mining takes place, miners move their machines depending on the season, to different parts of the country where energy uses renewable energy. This is just one example of how BTC mining tries to be environmentally friendly.

4. Bitcoin is vulnerable to hackers

The Bitcoin network has never been hacked, and likely never will be. As more data, or blocks, are created and transactions are processed, more computer processing power is needed to change the Bitcoin ledger. 
When you hear about news headlines saying that Bitcoin has been hacked, it is a little bit of a misnomer. What happens often is actually individual peoples having their personal wallets hacked, which definitely can happen if you do not practice safe security measures. Or what happens every so often is cryptocurrency exchanges having their wallets hacked, which contains the funds of all the users on their website. The most famous hack has the MTGox hack in 2014, which was at the time the biggest cryptocurrency exchange by far, and had millions of users' funds stolen. This is why it is imperative that you keep your tokens in your own wallet, which is much less vulnerable to hackers.

5. It will replace banking.

I am not of the opinion that cryptocurrency will replace the traditional banking system, but instead the two systems will work in tandem with separate functions. The traditional banking system is worth trillions of dollars, and is arguably the most powerful industry in the world next to IT. It has existed for hundreds of years and is entwined in all parts of our lives. It is supported by governments, and supports them in turn. While I do believe decentralized currencies will replace fiat currency in the future, I would not be surprised if the underlying technology of blockchain will be effectively utilized by the legacy finance system.

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Blockchain and Cryptocurrency Enthusiast since 2017. Also enjoy discussing politics, photogpraphy and travelling. Currently in Tokyo, Japan.

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Roland Matheson

Roland Matheson

Blockchain and Cryptocurrency Enthusiast since 2017. Also enjoy discussing politics, photogpraphy and travelling. Currently in Tokyo, Japan.

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