Popular myths about Bitcoin

[kiklo]

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^

Hmm,

Maybe you should study decentralization ,

Fact : China Mining Pools Combined are more than 51%

Fact : China like all Governments can exert control over any Entity inside their borders by Regulations or by Force.

Fact : 51 % attack is a valid concern and sticking your heads in the ground about it , is foolish.
Reference: In his Bitcoin paper, Satoshi identified several issues, with the 51% attack being the greatest.
http://www.btcpedia.com/bitcoin-51-attack/

So what is the 51% attack? To understand that you have to understand how Bitcoin works. Essentially Bitcoin is a collection of nodes performing “virtual work”, the more work you do the higher your rating on the network. So what happens when malicious users get together and manage to do more “virtual work” than the “good people” ? Well that is the 51% attack, and it basically means you can wake up tomorrow with zero Bitcoins in your wallet. It means any business that accepts Bitcoins can get robbed and have all their goods taken with fake Bitcoins. It also means if they wanted, governments, large corporations or hackers can “shut down the network” by refusing to accept any new transactions. Complete network shutdown. Can’t do anything with your Bitcoins, neither can anyone else.

Myth: China stop all mining and nodes, the network will still exist in many other countries.
Why on earth would they go thru all of the trouble to Completely Dominate it, merely to give it up.
They have an intent and purpose planned for their BTC Dominance , and it will be carried out on their timetable.
They could increase fees on all Foreign Countries while discounting in their country, they could hold your BTC for ransom or for Political Compliance of one of their Agendas.
You would comply to receive your BTC. Look at how they control their Yuan, their business, and their People , expect similar control of BTC when ever they deem fit.
Giving up Control of BTC would be Stupid, and the Chinese are many things, Stupid is not one of them.

Fact: China mining pools already blocked BTC XT from going to the 20MB blocks because their internet infrastructure would not yet support it. 
https://cointelegraph.com/news/chinese-mining-pools-call-for-consensus-refuse-switch-to-bitcoin-xt

Fact: BTC is still having Transactions delay problems because the 20MB were refused.
http://www.ibtimes.com/bitcoins-big-problem-transaction-delays-renew-blockchain-debate-2330143

Observation: When Ghash.io passed the 51% everyone in the BTC Community was terrified.
https://www.extremetech.com/extreme/184427-one-bitcoin-group-now-controls-51-of-total-mining-power-threatening-entire-currencys-safety
But now that the Country of China has done it for over a year, no one is concerned.

Fact: Satoshi himself listed the 51% attack as the Greatest Danger to BTC, and now the Majority of the BTC community ignores his most important warning. 
The Chinese Officials are smarter than all of you BTC Advocates, with your heads in the sand over this 51% attack security threat.

Warning: When you make another entity your Master, be prepared to be Punished at their discretion.
Good Luck , you are going to need it.

 

[darklus123]

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.

Nope, Actually you are wrong because if that certain person realizes that what he may be thinking about the certain thing is wrong then he would probably be going correct his/her misconception. Which may also lead to what are talking about, developing something that misleads a myth.

[franky1]

bitcoin is money myth
bitcoin is not money. because bitcoin is not a standard medium of exchange.. people cannot easily know that 0.0000x btc will get the X amount of loaves of bread without having to convert it to another value first to derive how much bitcoin is actually valued at.
yes you can exchange it. barter it swap it. but having it as a stable value that people can directly correlate labour vs goods is not a feature of bitcoin right now. people seem to emphasise the word 'exchange' and hide the word 'medium of' to not fully grasp what money is or is not.

bitcoin needs to stabilise in price, well actually bitcoin needs to stop being valued against money and instead get valued directly against goods and services for it to then have its own direct value medium of exchange. then people can know without stress or a calculator how many loaves of bread they can buy with X bitcoin.

money is about taking the majority of guess work out of the whole: 'how many hours of sweat labour equals how many loaves of bread'. which bitcoin has not reached that point yet.

china 51% attack
comparing a country of 1 billion+ citizens individual mindsets and lives vs a single company like ghash is silly.
most of the pools in china have multiple servers. so if one server goes offline in one country there are other servers to hop to, so treating a country as a 'pool' instead of realising the server/company running a couple servers is a pool, is where things fall flat for this myth.

the mindset should be:
china 2014-2016  vs   america  2011-2013
or    Ghash  vs  antpool
not
china vs ghash     or     antpool vs america

treating a country as a pool is silly beyond belief and mainly sounding like subtle racism rather then technical understanding of centralization.
especially when bitmain has servers in multiple countries, thus are not worried about what one countries government may or may not do to them

[deisik]

bitcoin is money myth
bitcoin is not money. because bitcoin is not a standard medium of exchange.. people cannot easily know that 0.0000x btc will get the X amount of loaves of bread without having to convert it to another value first to derive how much bitcoin is actually valued at.
yes you can exchange it. barter it swap it. but having it as a stable value that people can directly correlate labour vs goods is not a feature of bitcoin right now. people seem to emphasise the word 'exchange' and hide the word 'medium of' to not fully grasp what money is or is not.

bitcoin needs to stabilise in price, well actually bitcoin needs to stop being valued against money and instead get valued directly against goods and services for it to then have its own direct value medium of exchange. then people can know without stress or a calculator how many loaves of bread they can buy with X bitcoin.

money is about taking the majority of guess work out of the whole: 'how many hours of sweat labour equals how many loaves of bread'. which bitcoin has not reached that point yet

Substitute Bitcoin in this text with foreign currency and will get semantically identical text. There are major currencies like dollar, euro, yuan, Swiss franc, but there are a lot more currencies that most people here don't even know the names of. For example, can you tell me the name of the national currency of Peru without looking into Wikipedia? But I could just as well claim that the Peruvian currency is not money anywhere beyond Peru since it is not considered a "standard medium of exchange" anywhere outside of this country. And so what?

And who is actually not fully grasping what money is?

[darklus123]

bitcoin is money myth
bitcoin is not money. because bitcoin is not a standard medium of exchange.. people cannot easily know that 0.0000x btc will get the X amount of loaves of bread without having to convert it to another value first to derive how much bitcoin is actually valued at.
yes you can exchange it. barter it swap it. but having it as a stable value that people can directly correlate labour vs goods is not a feature of bitcoin right now. people seem to emphasise the word 'exchange' and hide the word 'medium of' to not fully grasp what money is or is not.

bitcoin needs to stabilise in price, well actually bitcoin needs to stop being valued against money and instead get valued directly against goods and services for it to then have its own direct value medium of exchange. then people can know without stress or a calculator how many loaves of bread they can buy with X bitcoin.

money is about taking the majority of guess work out of the whole: 'how many hours of sweat labour equals how many loaves of bread'. which bitcoin has not reached that point yet

Substitute Bitcoin in this text with foreign currency and will get semantically identical text. There are major currencies like dollar, euro, yuan, Swiss franc, but there are a lot more currencies that most people here don't even know the names of. For example, can you tell me the name of the national currency of Peru without looking into Wikipedia? But I could just as well claim that the Peruvian currency is not money anywhere beyond Peru since it is not considered a "standard medium of exchange" anywhere outside of this country. And so what?

And who is actually not fully grasping what money is?

I would totally agree with you. As far as i have understood money is being used as a medium or a way of payment and obviously bitcoin is on the track. I think we should never argue to this one because it is just so obvious

[kiklo]

china 51% attack
comparing a country of 1 billion+ citizens individual mindsets and lives vs a single company like ghash is silly.
most of the pools in china have multiple servers. so if one server goes offline in one country there are other servers to hop to, so treating a country as a 'pool' instead of realising the server/company running a couple servers is a pool, is where things fall flat for this myth.

the mindset should be:
china 2014-2016  vs   america  2011-2013
or    Ghash  vs  antpool
not
china vs ghash     or     antpool vs america

treating a country as a pool is silly beyond belief and mainly sounding like subtle racism rather then technical understanding of centralization.
especially when bitmain has servers in multiple countries, thus are not worried about what one countries government may or may not do to them

OMG, you guys are so Stupid, it is beyond belief.

You deserve what is going to happen to you.

Enjoy the Beach.




 

[franky1]

Substitute Bitcoin in this text with foreign currency and will get semantically identical text. There are major currencies like dollar, euro, yuan, Swiss franc, but there are a lot more currencies that most people here don't even know the names of. For example, can you tell me the name of the national currency of Peru without looking into Wikipedia? But I could just as well claim that the Peruvian currency is not money anywhere beyond Peru since it is not considered a "standard medium of exchange" anywhere outside of this country. And so what?

And who is actually not fully grasping what money is?

facebook credits are facebooks currency.. but facebook credits are not money

the thing with money is that it has to be the main/major used medium of exchange by the populous that give it value, fully and direct knowing its value of labour vs goods without reliance on another currency to give it value.

bitcoin is not measured directly between labour and goods.
bitcoin is not mainstream
emphasis:
bitcoin is bartered rather than actually used as a stable value to measure the difference between labour and goods

until bitcoin can actually be utilised the way it should have been to have a direct connection to cost of living, its not a medium of exchange between labour and goods without having to rely on a more mainstream currency to then attribute value.

bitcoin has become too reliant on fiat to give it value. rather than forming its own 'cost of living measure'

once we stop caring about bitcoins fiat value and start thinking 0.01btc is an hours labour and 0.002 is a loaf of bread and not caring about national fiat currencies as the measure.. THEN bitcoin is money..
but until that point its not money..

put it this way, in peru people can know X peruvian sol's is an hours labour. X peruvian sol's is a loaf of bread.
however if peru had to value a sol in dollars to then work out labour and value a sol in dollars to work out a loaf of bread. then the sol loses its status.

yes bitcoin is a currency
yes bitcoin is an asset with a value (derrived by the dollar)
but until bitcoin is mainstream, until bitcoin has its own cost of living understanding by those that use it.. its not money

the strange thing is. not being money can actually have its advantage in some ways.
but also not attaining mainstream/direct labour/goods valuation disadvantage too.

[franky1]

OMG, you guys are so Stupid, it is beyond belief.

lol you need to do more research and expand your mind beyond the confines of your racist rhetoric.
you are trying a little too hard to push "china are bad guys" and not think of the technicals.

if governments stop chinese pools.. the pools simply move IP addresses in under 3 seconds. yep thats right these individual pools also have individual servers in different countries.
thus they dont care about politics in regards to bitcoin security
trying to presume that 1billion people are colluding together is a failure of understanding the technology and political risks.

all you are doing is trying to provide false distractions to hide where the real vulnerabilities of bitcoin are.

[kiklo]

OMG, you guys are so Stupid, it is beyond belief.

lol you need to do more research and expand your mind beyond the confines of your racist rhetoric.
you are trying a little too hard to push "china are bad guys" and not think of the technicals.

if governments stop chinese pools.. the pools simply move IP addresses in under 3 seconds. yep thats right these individual pools also have individual servers in different countries.
thus they dont care about politics in regards to bitcoin security
trying to presume that 1billion people are colluding together is a failure of understanding the technology and political risks.

all you are doing is trying to provide false distractions to hide where the real vulnerabilities of bitcoin are.

Man, you are dim.

Ceo of the Mining pool gets a phone call from a Chinese official, telling him what to do.
CEO refuses, Official lets him know they have his wife and child.
Do I really need to explain anything else ,
it is amazing you can even type.

 

FYI:
In Satoshi original warning he mentioned Governments, guess he was just being silly according to you. 
Fact : 51 % attack is a valid concern and sticking your heads in the ground about it , is foolish.
Reference: In his Bitcoin paper, Satoshi identified several issues, with the 51% attack being the greatest.
http://www.btcpedia.com/bitcoin-51-attack/

So what is the 51% attack? To understand that you have to understand how Bitcoin works. Essentially Bitcoin is a collection of nodes performing “virtual work”, the more work you do the higher your rating on the network. So what happens when malicious users get together and manage to do more “virtual work” than the “good people” ? Well that is the 51% attack, and it basically means you can wake up tomorrow with zero Bitcoins in your wallet. It means any business that accepts Bitcoins can get robbed and have all their goods taken with fake Bitcoins. It also means if they wanted, governments, large corporations or hackers can “shut down the network” by refusing to accept any new transactions. Complete network shutdown. Can’t do anything with your Bitcoins, neither can anyone else.

[deisik]

Substitute Bitcoin in this text with foreign currency and will get semantically identical text. There are major currencies like dollar, euro, yuan, Swiss franc, but there are a lot more currencies that most people here don't even know the names of. For example, can you tell me the name of the national currency of Peru without looking into Wikipedia? But I could just as well claim that the Peruvian currency is not money anywhere beyond Peru since it is not considered a "standard medium of exchange" anywhere outside of this country. And so what?

And who is actually not fully grasping what money is?

facebook credits are facebooks currency.. but facebook credits are not money

the thing with money is that it has to be the main/major used medium of exchange by the populous that give it value, fuly and direct knowing its value of labour vs goods without reliance on another currency to give it value.

bitcoin is not measured directly between labour and goods.
bitcoin is not mainstream
emphasis:
bitcoin is bartered rather than actually used as a stable value to measure the difference between labour and goods

until bitcoin can actually be utilised the way it should have been to have a direct connection to cost of living, its not a medium of exchange between labour and goods without having to rely on a more mainstream currency to then attribute value.

once we stop caring about bitcoins fiat value and start thinking 0.01btc is an hours labour and 0.002 is a loaf of bread and not caring about national fiat currencies as the measure.. THEN bitcoin is money..
but until that point its not money..

put it this way, in peru people can know X peruvian sol's is an hours labour. X peruvian sol's is a loaf of bread.
however if peru had to value a sol in dollars to then work out labour and value a sol in dollars to work out a loaf of bread. then the sol loses its status.

The labor theory of value (the tenets of which you basically seem to be pushing here) has long been abandoned as inconsistent. In any case, I don't quite understand what you are trying to say here. At first you say that Facebook credits are Facebook's currency and then you claim that they are not money. Alternately stated, currency is not money. But what is currency then? It pretty much looks like as if you don't really feel quite confident and clear about your own arguments. Could you express what you mean in a more coherent way? Just in case, since I'm paid for posting here, I think exactly the way you mention, i.e. one hour of my labor costs, say, 0.001 BTC, and I can spend the bitcoins which I earn here directly, though not on many things. But this is only a quantitative difference, anyway. In this way, I guess I'm not much different from a lot of Peruvians who consider their national currency as money without any reservations. Even despite the fact that, strictly speaking, they can't buy over 90% of goods with their money directly. I mean imports which are paid either in the currency of the country of origin or dollars...

It seems I should address this issue specifically in the OP

[franky1]

currency and money are 2 different things.

think of currency as the umbrella term. anything valued or exchanged is a currency

but money is a subcategory within the umbrella term that has its own definition/utility

bitcoin is a currency
bitcoin is not mainstream/ direct independent valuation of labour/goods to be defined as money

[davis196]

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, basically making it into a financial asset. 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 or 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. 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, it most certainly wouldn't be the American dollar

3. 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 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

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

I think that number 1 myth about bitcoin is that btc is decentralized.

This myth is going to be busted soon,but i still support bitcoin.

Number 2 myth is that bitcoin has no future and sooner or later governments will destroy it.

[bitbunnny]

These are mayb some limitations that Bitcoin has at the moment, I wouldn't call them myths.
The thing is that regulatios or lack of regulation in some countries determine the Bitcoin status and how people will use it. With time some of these obstacles will disappear, maybe some new will appear, but there is stil a long strugle for Bitcoin to be fuly recognized and appreciated in financial world.

[deisik]

currency and money are 2 different things

This is no more than semantic quibbling. I tend to consider these two terms completely interchangeable for the purposes of this thread

bitcoin is a currency
bitcoin is not mainstream/ direct independent valuation of labour/goods to be defined as money

The total majority of currencies existing in the world should not then be considered as currencies/monies since they are, first, not mainstream, and they have, second, only a limited "direct independent" valuation of labor/goods, valid and applicable only to a short list of domestically produced goods and services as opposed to what the countries which issue these currencies import. On the other hand, I can just as easily claim that, for example, posting for bitcoins on the forum is perfectly in line with what you basically refuse Bitcoin in, i.e. in your so-called direct independent valuation. People on signature campaigns get bitcoins for their labor while owners get services for which they pay bitcoins...

I updated the opening post to reflect this misconception

[DimensionZ]

Still no one has answered my question: how would you find out the value of 1 Bitcoin if there were no Bitcoin exchanges?

Bitcoin is more like a commodity right now than actual, useful money. Bitcoin is like crude oil. People waste energy and resources to gain crude oil for example, that crude oil has a price attached to it depending on the market. The market speculators regulate the price. 1 barrel of crude oil costs $44.65 at present.
Now, I can go to Amazon and shop around bringing my shopping cart to $44.65 with the shipping included. Can I send them 1 barrel of crude oil because it is the same value just because the market says so and it's 'money'? I guess no.

Now we have Bitcoin. What are people doing to get Bitcoin? They sit at home digitally extracting that commodity racking up electricity bills and breaking down expensive electronics in the process trying to extract Bitcoin from the Blockchain. 1 Bitcoin is valued at $708.8. This is what the market thinks 1 Bitcoin is valued at - or the speculators.

Now, I challenge you to delete all bookmarks to any online Bitcoin exchanges, BTC debit cards, Circle, Coinbase all the other fancy-schmancy websites and tell me what 1 BTC is valued at this Christmas based on your calculations.

Because I know that 1 bottle of water or 1 Subway sandwich will be x amount of fiat at the end of the day but there is no way you would know how much that would cost in BTC if BTC weren't pegged to fiat. Or I could pay for my sandwich with x amount of gold, Facebook credits, CS Go skins, World of Tanks points or any other token but this doesn't make it money just because it has a value. Anything can have a value so what? Just because Satoshi said that Bitcoin will be free digital currency for the people worldwide that doesn't mean that everyone will become rich out of the blue. You still have to buy equipment and 'mine' for it in the virtual world like you would mine for ores or extract petrol in the real world. And no, Bitcoin at the moment is not money.

[Carlton Banks]

Still no one has answered my question: how would you find out the value of 1 Bitcoin if there were no Bitcoin exchanges?

Barter. That's exactly how Bitcoin got it's first valuation: 2 pizzas (+ delivery) were traded for 10,000 BTC in 2010.

[jtipt]

Real good and informative topic, many people still thing that these myths are true this topic would surely help some of the new bitcoiners. Right now you only have included the most common myths but i hope you would add some more soon.

[deisik]

Still no one has answered my question: how would you find out the value of 1 Bitcoin if there were no Bitcoin exchanges?

Just like the value of any other fiat currency is determined when it is bootstrapped. Bitcoin is also a sort of "fiat" currency, in the sense that it doesn't have intrinsic value beyond that of pure money (namely, a transactional utility). In short, you know in advance how many coins (or bills) are to be mined or issued over time, and this amount of money should service the exchange of goods and services. The amount of goods to be sold and the volume of services to be offered is pretty much known in absolute terms (for example, quantity of goods and hours of work) as well as their relative values (for example, oranges are typically valued twice as high as apples), so you can assess how much everything will cost. In other words, you know the specific scarcity of your money which is what defines the value of a unit of currency per piece of goods or hour of service. If you are a government you start paying salaries to government employees and making payments on public contracts based on your estimates as well as accept taxes and other obligatory payments in the new currency. Government employees and public contractors then pay for goods and services of the private sector. And this is how the new money enters the economy...

In the case of Bitcoin, the process is essentially the same (it is assumed that people trust the new money). How much you can buy with a single bitcoin will be determined empirically, by trial and error, but the final outcome (value of Bitcoin) will still be based on the same premises and conditions as with fiat currency (i.e. scarcity of bitcoins vs the amount of goods and volume of services). Hope this helps

[DimensionZ]

Okay that's true, but Bitcoin will have 21 million units in circulation by 2150. 21 million coins will need to service the financial needs of the whole world by that time. How can we attribute the global net worth of everything on Earth to 21 million units? Because Bitcoin will be a truly global currency if this ever happens - to effectively supersede fiat. I think we will need a lot more subunits past the 8 one to even accommodate such big numbers. And 1 satoshi by 2150 would cost astronomical sums compared to now. And what if some very wealthy individuals just buy out massive amounts of units and put them out of the market - let's say they burn them. The 21 million units will be even less. That will lead to massive inflation and deflation every time a portion is added or removed form the global pool of 21 million units. This will lead to a cluster fuck of problems because unlike traditional fiat we can't print out additional coins to accommodate the market.

[Carlton Banks]

Okay that's true, but Bitcoin will have 21 million units in circulation by 2150. 21 million coins will need to service the financial needs of the whole world by that time. How can we attribute the global net worth of everything on Earth to 21 million units?

When you say 21 million, you really mean 2.1 quadrillion. That's because 1 BTC has 100 million pennies, not 1 hundred pennies.