Popular myths about Bitcoin

[deisik]

I have seen a lot of myths and misconceptions that are being repeated again and again on the forum, so I decided to start this topic to debunk and change some of the most entrenched myths and beliefs regarding Bitcoin which have nothing to do with reality

1. Bitcoin is not recognized in the world, its use is illegal in most countries
In fact, Bitcoin is legal and accepted in some form in all countries where it might matter for its future adoption and prosperity. In the US Bitcoin had been classified as a convertible decentralized virtual currency as back as in 2013, and as a commodity for regulating Bitcoin derivative markets. In the EU Bitcoin is officially considered to be a means of payment, i.e. money. In China, bitcoin is fully legal for personal use and possession even though banks and financial institutions are prohibited from using it. The legal status of Bitcoin in Russia is not yet fully defined, but the local authorities now tend to consider Bitcoin as a foreign currency, despite their former threats of criminalizing its use and possession

2. Bitcoin cannot exist without fiat, especially the US dollar
Bitcoin was conceived as a currency, and as such it could facilitate the exchange of goods and consumption of services directly, without any other currency. Money doesn't need other money to function. Saying that Bitcoin couldn't exist without fiat is equal to saying that weight wouldn't exist without scales, which basically comes down to claiming that Bitcoin is not real money (see below). Regarding the US dollar specifically, the total majority of trades involve exchange of Bitcoin and the Chinese Yuan, therefore even if Bitcoin somehow depended on fiat, that most certainly wouldn't be the American dollar

3. Bitcoin is not money altogether since it is not used as a means of exchange
This myth is based on the claim that people don't get paid in bitcoins and don't pay bitcoins to others. The existence of signature campaigns on this very forum outright refutes that. Campaign participants are paid in bitcoins for posting here while campaign owners pay bitcoins for advertising they receive. As simple as it gets. On the other hand, the majority of currencies existing across the world can't be considered as money either if this claim is followed to its logical conclusion. Because any smaller currency can be exchanged directly only for a short list of goods produced domestically while imported goods are paid either in the currency of the country of origin or in dollars, and the national currency thus gets pegged to that currency

4. Bitcoin is hard to regulate and taxing it will be next to impossible
The primary cause for this myth is an implicit assumption that tax agencies and services will be going after every bitcoiner, thereby making it prohibitively expensive to tax Bitcoin. While it is certainly true that it wouldn't be an easy task, it is not how the tax system generally works. It is assumed that every law-abiding citizen should calculate and pay taxes all by himself. If Bitcoin is made taxable, it will be your obligation to pay the tax. Deliberately avoiding such a tax would basically make you into a criminal since tax evasion is considered a criminal offense in many jurisdictions, and you will have to live with that

5. Bitcoin is totally useless in everyday life
This myth might have had some substance a few years ago, but with the massive expansion of Bitcoin payment cards over the last two years (at the very least), it is no longer true. Many web wallets such as Coinbase or Xapo and exchanges like CoinsBank started to issue Bitcoin payment cards which you can use as a typical credit or debit card. Such a card is linked to a user's Bitcoin account, and when he pays with it, the wallet makes all necessary conversions which are totally transparent to the user. These cards allow virtually everything that you would expect from a bank card, for example, paying for goods and services, withdrawing fiat, etc. So owning Bitcoin doesn't any longer mean that you can’t shop conveniently

Will add more myths later, and I don't mind if this topic gets stickied eventually

[1715130129]

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[1715130129]

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[1715130129]

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[Daffadile]

Wouldn't most of the myths be like it would for anything else ? Ignorance and lack of education pretty much lead to the same or similar misconceptions.
Like when it comes to the media so many things are said with little to no proof. Just one or two people going off about things they have no idea about but people that know nothing of the subject at hand might tend to listen since it might be the first they have heard of it.

For example when the whole "bitcoin is used for crime" bs story was around. People who knew nothing believed the first thing the hear just because it is a fact that yes bitcoin is used for crime. But... Everything is used for crime so it actually means nothing. They think if that one part is true then the rest probably is true as well.

It is the same as saying playing video games will make you into a mindless criminal hell bent on violence. 

[Carlton Banks]

3. Bitcoin is not real money, because only banks or governments can run money systems

This myth suggests that money has to be "official" in some way, but history tells us otherwise. Money existed before governments or banks, and has continued to exist when governments or banks dissolve. Barter and trade naturally end up in one commodity or another being used as the most common medium of exchange. Money emerges from marketplace activity over time therefore, and communities will also change the good that they use for money depending on practical or political circumstances.

[newIndia]

3. Bitcoin is not real money, because only banks or governments can run money systems

This myth suggests that money has to be "official" in some way, but history tells us otherwise. Money existed before governments or banks, and has continued to exist when governments or banks dissolve. Barter and trade naturally end up in one commodity or another being used as the most common medium of exchange. Money emerges from marketplace activity over time therefore, and communities will also change the good that they use for money depending on practical or political circumstances.

I beg to disagree with u, though I understand the spirit of your post. By Bitcoin is not real money, it means Bitcoin is not a legal tender. And it is true that Bitcoin is not a legal tender anywhere on earth, though it does not matter much.

[deisik]

Wouldn't most of the myths be like it would for anything else ? Ignorance and lack of education pretty much lead to the same or similar misconceptions.
Like when it comes to the media so many things are said with little to no proof. Just one or two people going off about things they have no idea about but people that know nothing of the subject at hand might tend to listen since it might be the first they have heard of it.

For example when the whole "bitcoin is used for crime" bs story was around. People who knew nothing believed the first thing the hear just because it is a fact that yes bitcoin is used for crime. But... Everything is used for crime so it actually means nothing. They think if that one part is true then the rest probably is true as well.

It is the same as saying playing video games will make you into a mindless criminal hell bent on violence. 

I'm going to include only "real" myths which I encounter myself on a pretty regular basis here. My purpose is certainly not to artificially expand the list beyond what people actually seem to be erroneously stuck with. For example, the story of "Bitcoin is used for crime" is not very popular on the forum, so why make mention of it?

So, in a sense, this thread is meant to be a collection of "live" myths (as of writing this)

3. Bitcoin is not real money, because only banks or governments can run money systems

This myth suggests that money has to be "official" in some way, but history tells us otherwise. Money existed before governments or banks, and has continued to exist when governments or banks dissolve. Barter and trade naturally end up in one commodity or another being used as the most common medium of exchange. Money emerges from marketplace activity over time therefore, and communities will also change the good that they use for money depending on practical or political circumstances.

Such a myth is essentially a logic conclusion of myth #2, namely, that Bitcoin cannot exist without fiat, and therefore it is not real money. I updated the OP a little to reflect your idea

[Velkro]

Ignorance and lack of education pretty much lead to the same or similar misconceptions.

Better to focus on development, promoting than debunking, its waste of time. As above, ignorance is human nature so u won't win with that.

[deisik]

3. Bitcoin is not real money, because only banks or governments can run money systems

This myth suggests that money has to be "official" in some way, but history tells us otherwise. Money existed before governments or banks, and has continued to exist when governments or banks dissolve. Barter and trade naturally end up in one commodity or another being used as the most common medium of exchange. Money emerges from marketplace activity over time therefore, and communities will also change the good that they use for money depending on practical or political circumstances.

I beg to disagree with u, though I understand the spirit of your post. By Bitcoin is not real money, it means Bitcoin is not a legal tender. And it is true that Bitcoin is not a legal tender anywhere on earth, though it does not matter much.

I guess nowhere on Earth foreign currencies are considered as a legal tender domestically, but this doesn't turn them into fake currencies of sorts. I know that Bitcoin is not a legal tender anywhere across the world and most likely won't become one for the next 50 years (though who knows)...

But this alone is apparently not enough to claim that Bitcoin is not real money, even purely on formal basis

[mrcash02]

4. Blockchain.info is the offical wallet of Bitcoins

Many people believe it just because the wallet's name is Blockchain.

About the BTC illegality. Where I live it's not illegal or legal, the law just doesn't know what to say about it. But some banks here block the transaction when you try to convert BTC into local money on exchange and send the money to it, when they distrust about crypto-currencies money.

[isen]

Bitcoin is a Ponzi scheme
Ponzi scheme definition in a few words "A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors"
Bitcoin has nothing to do with this,it will not ask you to 'invest' and it will not promise you any profit it was not created as an earning opportunity (even though many people seem to believe the opposite) but a currency and unlike Ponzis it doesn't require new investors/users to keep going and avoid the collapse.

[arransiv]

About #1 "Bitcoin is not recognized in the world, its use is illegal in most countries"

Actually it's a mess, every country have their own rules and most are just shallow words because it's something new. Let's wait for the future to see what will happen.

[DimensionZ]

2. Bitcoin cannot exist without fiat, especially the US dollar

I don't quite agree with this statement. Crypto currencies need to be pegged to fiat currencies in order to be useful. Do you want to bring back the old days of bartering goods which in itself is very unreliable. Like : 'Hey, I will give you 10 000 Bitcoins for that pizza, is it okay?'
How will you quantify what is worth how much if you don't know what your currency is worth in the first place? Or you will base the price on the amount of electricity used to generate 1 Bitcoin? But you are again basing the price of Bitcoin on fiat because electricity costs fiat money.

[Carlton Banks]

3. Bitcoin is not real money, because only banks or governments can run money systems

This myth suggests that money has to be "official" in some way, but history tells us otherwise. Money existed before governments or banks, and has continued to exist when governments or banks dissolve. Barter and trade naturally end up in one commodity or another being used as the most common medium of exchange. Money emerges from marketplace activity over time therefore, and communities will also change the good that they use for money depending on practical or political circumstances.

I beg to disagree with u, though I understand the spirit of your post. By Bitcoin is not real money, it means Bitcoin is not a legal tender. And it is true that Bitcoin is not a legal tender anywhere on earth, though it does not matter much.

You're not disagreeing with my point, you're disagreeing with it's label. And you're right about something else too: it doesn't matter much.

[rapazev]

2. Bitcoin cannot exist without fiat, especially the US dollar

I don't quite agree with this statement. Crypto currencies need to be pegged to fiat currencies in order to be useful. Do you want to bring back the old days of bartering goods which in itself is very unreliable. Like : 'Hey, I will give you 10 000 Bitcoins for that pizza, is it okay?'
How will you quantify what is worth how much if you don't know what your currency is worth in the first place? Or you will base the price on the amount of electricity used to generate 1 Bitcoin? But you are again basing the price of Bitcoin on fiat because electricity costs fiat money.

this "conversion" will happen but doesnt mean it's needed.
i can accept bitcoin in my local store and say something like "it will be 0.5btc/month". i dont have to peg it with my local currency... if someone wants to pay me in fiat the price will be 0.5btc and the conversion will be made. in my example, if the local FIAT "die" the price will not be affected.

[funkenstein]

Thanks, yes!  More "popular myth"  debunking:

http://frass.woodcoin.org/top-5-errors-in-bitcoin-reportage-volume-2/

http://frass.woodcoin.org/top-5-dumb-things-to-say-about-bitcoin/

[clickerz]

Bitcoin is a Ponzi scheme
Ponzi scheme definition in a few words "A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors"
Bitcoin has nothing to do with this,it will not ask you to 'invest' and it will not promise you any profit it was not created as an earning opportunity (even though many people seem to believe the opposite) but a currency and unlike Ponzis it doesn't require new investors/users to keep going and avoid the collapse.

I do not know how bitcoin became a ponzi scheme. There is no recruiting,a percentage to upline and no one is profiting from it  but the community and users also. It is by the community for the community to used.

[pooya87]

Bitcoin is a Ponzi scheme
~~

This is not a popular myth, it is not even a myth anymore. it was long time ago when bitcoin was bran new and nobody had a clue about what the heck it is.

nowadays apart from some scumbag fudster in their spam attempt to drop bitcoin price, nobody else says it

[Kakmakr]

I guess the thing that are trending now, is : China control Bitcoin. It is not to say that China with it's massive mining farms are in control of Bitcoin. Whatever their hashing power is, and whatever control they might have over Bitcoin, does not matter. The incentive to harm the network, are nullified by the incentive to do it.

If you kill the cow that are giving you milk, you will lose milk production. So why would you want to kill the cow?

The people saying this, do not know how the consensus work and how decentralize Bitcoin is. If China stop all mining and nodes, the network will still exist in many other countries. ^smile^

[deisik]

I guess the thing that are trending now, is : China control Bitcoin. It is not to say that China with it's massive mining farms are in control of Bitcoin. Whatever their hashing power is, and whatever control they might have over Bitcoin, does not matter. The incentive to harm the network, are nullified by the incentive to do it.

If you kill the cow that are giving you milk, you will lose milk production. So why would you want to kill the cow?

I've been massively contributing to such topics myself, but the opinion (I mean the erroneous one) has not yet established itself, so there is no myth to debunk so far. Regarding the question itself, it is multifaceted, to say the least. We can't deny that Bitcoin mining and Bitcoin trading are heavily centralized, there is data proving that. I can't say either that the attempts to exert the power obtained through such centralization will not affect Bitcoin since its price will certainly get affected...

And most likely in a negative way

Actually it's a mess, every country have their own rules and most are just shallow words because it's something new. Let's wait for the future to see what will happen.

Every country (well, most) has different rules and laws irrespective of Bitcoin, so it is a mess on their own

[DimensionZ]

2. Bitcoin cannot exist without fiat, especially the US dollar

I don't quite agree with this statement. Crypto currencies need to be pegged to fiat currencies in order to be useful. Do you want to bring back the old days of bartering goods which in itself is very unreliable. Like : 'Hey, I will give you 10 000 Bitcoins for that pizza, is it okay?'
How will you quantify what is worth how much if you don't know what your currency is worth in the first place? Or you will base the price on the amount of electricity used to generate 1 Bitcoin? But you are again basing the price of Bitcoin on fiat because electricity costs fiat money.

this "conversion" will happen but doesnt mean it's needed.
i can accept bitcoin in my local store and say something like "it will be 0.5btc/month". i dont have to peg it with my local currency... if someone wants to pay me in fiat the price will be 0.5btc and the conversion will be made. in my example, if the local FIAT "die" the price will not be affected.

Okay but Bitcoin is a rare commodity with a limited supply so by design its value is going to be volatile. How will you know how much to charge your customers for the same service or item this week, next week, next month and beyond that? How much would you charge for 1 bottled water today in Bitcoin? It's not so easy as you are describing it. Have you tried paying for your restaurant bill with a piece of gold or a piece of silver? If Bitcoin is not pegged to fiat it's like bartering goods whose value is decided by the seller and buyer which has its drawbacks because something valuable for you might not seem so much valuable for another. 

[Lauda]

About #1 "Bitcoin is not recognized in the world, its use is illegal in most countries"

Actually it's a mess, every country have their own rules and most are just shallow words because it's something new. Let's wait for the future to see what will happen.

No. Bitcoin is legalized in most of the *important* country already. There are obviously missing regulations, but these take quite some time to develop and deploy.

4. Blockchain.info is the offical wallet of Bitcoins

Many people believe it just because the wallet's name is Blockchain.

Those people are not exactly the brightest people around.

Okay but Bitcoin is a rare commodity with a limited supply so by design its value is going to be volatile. How will you know how much to charge your customers for the same service or item this week, next week, next month and beyond that? How much would you charge for 1 bottled water today in Bitcoin?

This question is correct but flawed because of the narrow perspective. How do you know how much you should charge for 1 bottled water today in USD? USD is not pegged to anything either, and the value comes from the implicit agreement that is does have value. The free market would decide whether that bottle of water is going to cost 0.001, 0.01, or 1 BTC (arbitrary numbers).