Myth vs Facts and My Assumptions about Bitcoin

[yazher]

This kind of myth's is not totally avoidable or new since people think negative on new things discover especially if we talk about finance and investment. But what good thing here is we have venue like bitcointalk to discuss such many topics where people can get enlightenment on how this one really works and correct what they think wrong about bitcoin like they think its a ponzi or other forms of frauds.

It will become like that until no other myth will be brought to the table since their negative speculations will be cleared in the future. Then all they will do is cause panic or some negative assumptions about it. Those people who don't believe anything about cryptocurrencies have been doing this kind of nonsense from the past until now and they don't want to stop no matter what happened.

[_BlackStar]

Not sure if that's a typo or you've misunderstood, but RBF is only possible on unconfirmed transactions, not transactions with one confirmations. Also note that although your replacement transaction might end up paying the same addresses the same amount, just with a higher fee, the new transaction is very much a brand new transaction with its own transaction hash, and is not "the same transaction".

I'm just bad at explaining to you, actually I want to say that even though RBF allows double spending or allow us to pay higher fees when the mempool is congested then only one transaction will be confirmed ^{[a transaction with a higher fee than the first transaction].}

Good job BlackStar, I don't know how long it took you to summarize all this from few references into a topic that is quite interesting to discuss. I really appreciate your effort.

Never much, just that it took me 2 days to do it because I needed to understand how the codes work. Also thank you for your appreciation.

My assumption is that the world population will favor a faster technology, cheap and safe. The history of a bitcoin will continue, no business in the history of the world has been able to increase 40-45 thousand times in 10 years.

Bitcoin transactions are no faster than fiat digital transactions that you often do via ATM or mobile banking so not everyone will do it with bitcoin. But bitcoin allows you to send money between countries cheaper than digital fiat transactions. These two financial systems have different innovations and with them we can choose what options we need.

Well done, I wish I knew half of what's written here. I bet  it took quite some time to summarize all the information into one, summarised post. I'll keep this thread bookmarked and use it as an insight for real life Bitcoin discussions, to answer your questions that I do not know how to explain correctly.

Good riddance on the merit requirement too, you'll soon become Sr Member.

It will become like that until no other myth will be brought to the table since their negative speculations will be cleared in the future. Then all they will do is cause panic or some negative assumptions about it. Those people who don't believe anything about cryptocurrencies have been doing this kind of nonsense from the past until now and they don't want to stop no matter what happened.

We can't really dispel this myth among people who basically don't really know what bitcoin is. They can still understand it in a wrong way but because we have some facts, we can explain it in a right way.

Thanks for all the appreciation you gave me but what really matters is how we understand what is right about bitcoin and explain it to those who understand it the wrong way.

[Vestigial Appendage]

"A Ponzi scheme is a zero sum game. In a Ponzi scheme, early adopters can only profit at the expense of late adopters, and the late adopters always lose. Bitcoin can have a win-win outcome. Earlier adopters profit from the rise in value as Bitcoin becomes better understood and in turn demanded by the public at large. All adopters benefit from the usefulness of a reliable and widely-accepted decentralized peer-to-peer currency..."

While I 100% agree BTC is not a Ponzi scheme - unlike many in the community - I find it fascinating that Bitcoin has some things in common w/ a Ponzi scheme. For example, early adopters profiting huge as BTC goes mainstream, etc.

[_BlackStar]

While I 100% agree BTC is not a Ponzi scheme - unlike many in the community - I find it fascinating that Bitcoin has some things in common w/ a Ponzi scheme. For example, early adopters profiting huge as BTC goes mainstream, etc.

I've tried to make assumptions about this where I think the myth of early adopters being unfairly rewarded is something that is misunderstood. Not all early adopters will get a decent return on investment as it really depends on how they use bitcoin. Great profits would be made if they were willing to hold rather than spend it. They acept it a higher risk to invest in bitcoin early, so it is not true that bitcoin deserves to be called a ponzi scheme or pyramid investment scheme.

[Charles-Tim]

I'm just bad at explaining to you, actually I want to say that even though RBF allows double spending or allow us to pay higher fees when the mempool is congested then only one transaction will be confirmed ^{[a transaction with a higher fee than the first transaction].}

It is not when mempool is congested, it is when transaction has not been confirmed that you can double-spend the coin, but there is higher chance for low fee transactions to be confirmed fast when mempool is not congested.

But bitcoin allows you to send money between countries cheaper than digital fiat transactions.

Also bitcoin transaction should be confirmed faster than cross border fiat transactions if appropriate fee is used in accordance to mempool estimation that could get transaction confirm earlier. No third party needed, all can be done at your comfort in your home or wherever you are.

While I 100% agree BTC is not a Ponzi scheme - unlike many in the community - I find it fascinating that Bitcoin has some things in common w/ a Ponzi scheme. For example, early adopters profiting huge as BTC goes mainstream, etc.

Ponzis are business that sells nothing or what what are told customers but not true, no profit from anywhere but just a means Paul is paid Peter's money and so on. No money generated from anywhere than using investors money to pay investors money and profit and when no more investors investing, the the Ponzi will collapse as usual. Many investors will lose as usual.

Bitcoin has never collapsed
Bitcoin is not a fraud, Ponzi is a fraud
Bitcoin does not promise high yield return, it is transparent and everyone knows the risk involved, but patient people and long term investors are highly likely to make profit. Ponzi schemes promise high yield return.
Bitcoin is not shady, Ponzi scheme is absolutely shady

How is Bitcoin the same as Ponzi? You are absolutely wrong.

[o_e_l_e_o]

Bitcoin transactions are no faster than fiat digital transactions that you often do via ATM or mobile banking so not everyone will do it with bitcoin.

They are, though. When you transfer fiat electronically, the vast majority of the time all that changes immediately are the numbers you see on the screen, as your entry in the central database is updated, and no money actually moves hands for several business days. And even once the money has moved hands, it can be reversed or clawed back for months after. Bitcoin transaction can be completely finalized in 10 minutes.

For example, early adopters profiting huge as BTC goes mainstream, etc.

Which is the case for almost any asset. If you happened to mine a ton of gold before it became popular, you make a huge profit. If you buy a bunch of land or property in a neighborhood that later becomes the next big development, you make a huge profit. If you bought Amazon or Google shares when they were still operating out of a garage, you make a huge profit. Almost any well performing asset shares this characteristic.

[_BlackStar]

It is not when mempool is congested, it is when transaction has not been confirmed that you can double-spend the coin, but there is higher chance for low fee transactions to be confirmed fast when mempool is not congested.

Right, I know about that. When the mempool have a spike in transactions that can cause congested for low-fee transactions, then the fees required to get confirmation faster will also increase. RBF allows for bump fees ^{[pay higher fees while the transaction is still in 0conf state].}

Also bitcoin transaction should be confirmed faster than cross border fiat transactions if appropriate fee is used in accordance to mempool estimation that could get transaction confirm earlier. No third party needed, all can be done at your comfort in your home or wherever you are.

That is one of the advantages of bitcoin over other financial systems. Choose your own fees, security, transparency, increase financial privacy and more.

They are, though. When you transfer fiat electronically, the vast majority of the time all that changes immediately are the numbers you see on the screen, as your entry in the central database is updated, and no money actually moves hands for several business days. And even once the money has moved hands, it can be reversed or clawed back for months after. Bitcoin transaction can be completely finalized in 10 minutes.

Maybe you are right but only if the recipient keeps it in the bank account without spending it or withdrawing it. I once received some money in a bank account without knowing who the sender was, only a few minutes the bank withdrew the money and my balance returned to normal. They really can do it, but with bitcoin once a transaction is confirmed, it can no longer be undone unless the recipient is willing to send it back.

[o_e_l_e_o]

Maybe you are right but only if the recipient keeps it in the bank account without spending it or withdrawing it. I once received some money in a bank account without knowing who the sender was, only a few minutes the bank withdrew the money and my balance returned to normal.

Sure, because the bank is a centralized institution and the money in your account is under their control, not yours. If a bank mistakenly deposits money in to your account, then again, no money has actually moved anywhere; all that has happened is that the bank have mistakenly updated your entry on their database to show more money than you have. If you had withdrawn that money before the bank realized their mistake, then they simply would have deducted the respective amount from your remaining balance. If you had no balance remaining, then they would have come after you for outstanding debt.

With bank transfers, credit card payments, PayPal payments, etc., you can reverse the payment for up to 180 days after it has been made. It doesn't matter if the recipient has withdrawn that money and spent it already - the bank will simply take the money from the recipient's other balances or accounts. They are in control, not you.

[Stalker22]

This kind of myth's is not totally avoidable or new since people think negative on new things discover especially if we talk about finance and investment. But what good thing here is we have venue like bitcointalk to discuss such many topics where people can get enlightenment on how this one really works and correct what they think wrong about bitcoin like they think its a ponzi or other forms of frauds.

It will become like that until no other myth will be brought to the table since their negative speculations will be cleared in the future. Then all they will do is cause panic or some negative assumptions about it. Those people who don't believe anything about cryptocurrencies have been doing this kind of nonsense from the past until now and they don't want to stop no matter what happened.

Well, I think Bitcoin is not for everyone. At least not yet. It's okay for some people to never believe in it, just as many did not believe in the internet, email, smartphones, social media, or digital photography during the 1990s. Today, they don't believe in artificial intelligence, smart homes, self-driving cars, or Bitcoin and crypto.

Maybe in 20 years, people will look back at the bitcoin hype and shake their heads at the modern world of social media hype and instant financial transactions that are only accessible by holding a public key on a decentralized network. Or maybe they will look back and say, "Look at this crazy crap we were getting excited about back in the day!" 

[Falconer]

If you wish to accept 0 confirmation transactions, then you need to ensure RBF is disabled. If you receive an RBF enabled transaction, you should wait for a minimum of 1 confirmation.

Of course it is mandatory in every transaction if we do it without escrow.
But I've also heard that 1 confirmation is not completely safe but it will be safer if the transaction has reached 4-5 confirmations. I forgot how confirmation was declared unsafe, maybe you still remember about that? I remember about the 51% attack, can they cancel a transaction that already has 1 confirmation?

[Groundbit]

Quite interesting information, After reading the entire contents of this topic suddenly a question arose in my heart. What if satoshi appears again and what will happen.

Satoshi is unlikely to be able to take a back control of Bitcoin ongoing development.

At the beginning of the emergence of Bitcoin in 2008-2009, there was a stir because it was a mystery who was actually the person behind the creation of Bitcoin.?
To this day it is not clear who the creator of Bitcoin is, The public only knows that the pseudonym used is Satoshi Nakamoto.
If Satoshi wanted to reveal himself, I'm not sure if the idea will be wise and useful for Satoshi or Bitcoin. But I agree that if Satoshi is going to reveal himself publicly, Satoshi is unlikely to be able to take a back control of Bitcoin ongoing development.

My assumption: Bitcoin is decentralized enough to turn down Satoshi if he comes back. Bitcoin is enough, and it doesn't need a lot of derivative projects anymore. The support of countries that accept bitcoin such as El Salvador, the European Union, Australia, Canada, the United States and investors from foreign countries makes the development of bitcoin increasingly increasing.
Obviously Bitcoin does not need Satoshi presence, because without Satoshi Bitcoin can still grow, peaking on November 10, 2021 when other industries were sluggish, Bitcoin managed to hit a high (all-time high).

[skarais]

My assumption: Bitcoin is decentralized enough to turn down Satoshi if he comes back. Bitcoin is enough, and it doesn't need a lot of derivative projects anymore. The support of countries that accept bitcoin such as El Salvador, the European Union, Australia, Canada, the United States and investors from foreign countries makes the development of bitcoin increasingly increasing.
Obviously Bitcoin does not need Satoshi presence, because without Satoshi Bitcoin can still grow, peaking on November 10, 2021 when other industries were sluggish, Bitcoin managed to hit a high (all-time high).

Can you explain a bit about what the correlation between your assumptions and this thread is? I found no correlation between what you're talking about and what's being discussed in the thread so it's entirely possible that your post is off-topic which might deserve deletion. Anyway bitcoin still needs development regardless of whether satoshi is involved or not we don't really know if he is there or not.

_BlackStar, good job. You are really getting a lot of attention in this thread and you will be promoted to Sr in the near future. About Bitcoin Myths and Facts, we really can't completely get people to believe in what we can explain. The fact is that they stick to their point of view and maybe they won't change their minds and assumptions about bitcoin. Pros and Cons are always there but this thread is good for answering some doubts of people new to bitcoin not for those who hate and fight against bitcoin.

[pooya87]

While I 100% agree BTC is not a Ponzi scheme - unlike many in the community - I find it fascinating that Bitcoin has some things in common w/ a Ponzi scheme. For example, early adopters profiting huge as BTC goes mainstream, etc.

Well then you are saying that literary everything else in this world that has a value is also a Ponzi scheme because that thing has gained value. For example potatoes are also Ponzi schemes since over the last year the have produced less crops and the price has gone up. Anyone who stockpiled potato (as an early adopter) is now in a huge profit!

[witcher_sense]

Of course it is mandatory in every transaction if we do it without escrow.
But I've also heard that 1 confirmation is not completely safe but it will be safer if the transaction has reached 4-5 confirmations. I forgot how confirmation was declared unsafe, maybe you still remember about that? I remember about the 51% attack, can they cancel a transaction that already has 1 confirmation?

It is not mandatory for every single transaction, it all depends on the amount of money in question. If you are selling a cup of coffee, you can safely accept a transaction with zero confirmations since the cost to attack the network to replace this transaction is significantly higher than the cost of one cup of coffee. The more valuable good you are selling, the more confirmation you should wait for to prevent being attacked this way. It also depends on the type of good you are selling, because it is pointless, for example, to wait for 100+ confirmations to transfer rights on your 5 million dollar house since the buyer of a house can't run away with it after the fake purchase occurred, which means you can always sue him in case he tries to deceive you.

[o_e_l_e_o]

But I've also heard that 1 confirmation is not completely safe but it will be safer if the transaction has reached 4-5 confirmations. I forgot how confirmation was declared unsafe, maybe you still remember about that? I remember about the 51% attack, can they cancel a transaction that already has 1 confirmation?

If a single entity controls 51% of the hashrate (which is very unlikely), and can sustain that hashrate indefinitely (which is even more unlikely), then they can theoretically reverse a transaction with any number of confirmations. They would simply mine their own chain in secret which double spends the transaction they want to reverse, and then when their own chain is longer than the main chain they release it to the wider network. All the other nodes would now switch to this chain since it has more work, and consensus rules state the chain with the most work is the main chain. The cost of such an attack is astronomical though, and becomes larger and larger with every additional confirmation the attacker needs to overturn. No one is going to use such an attack to reverse a transaction of $1000, $10,000, or even $100,000, because it would be more profitable for them to simply mine honestly and collect the block rewards. Even if an entity has lower than 51% of the hashrate, though, they can still attempt this attack, and be successful if they get lucky. If they don't get lucky, though, then again they lose a huge amount of money by funding such an unsuccessful attack.

There's also a very unlikely scenario which could happen by chance, when two honest miners find a block at the same time, and there are competing blocks at the same height. The split will be resolved when one of the two blocks has another block found on top it, becoming the longest chain, which would eject the competing block from the mempool. If your transaction was in this competing block but not in either of the two blocks on the main chain, your transaction would go from 1 to 0 confirmations, but would almost certainly just be picked up again in the next handful of blocks to be mined.

There are also a couple of other theoretical attacks which have never been seen in the wild which could result in a transaction with 1 confirmation being ejected from the main chain, but again, these are very costly.

Think of confirmations as a continuum. It's not "x is unsafe, y is safe", but rather "1 is fine, 3 is safe, 6 is super safe", and so on. What the individual numbers are depends on your individual risk model and the size of the transaction in question.

[Kakmakr]

The biggest "Myth" is that Bitcoin (Crypto currencies) are a "Get-Rich-Quick" scheme and this is very wrong. People see examples of other people buying tokens when the price was very low and they sell those coins for a massive profit. You are extremely lucky, if you can buy a token when the price is low and then after a few months or years.. those same tokens are worth say 800% more when you sell them. 

People are buying 1000's of worthless shitcoins for every 1 or 2 Alt coins that succeed and most of those shitcoin purchases will eat into their profits that they made with the 1 or 2 that succeeded. 

Bitcoin must not be seen as an Investment option (Commodity) ... it is simply an alternative currency, with a added trading bonus potential .. if you want to sell it later. 

[BlackHatCoiner]

I remember about the 51% attack, can they cancel a transaction that already has 1 confirmation?

Someone who owns 51% of the hashrate can reverse any transaction regardless of its confirmations, it'd just be a matter of time. They decide what's the correct chain. If they own less than that, then the more the confirmations the more difficult it becomes to catch up.

This probability can be calculated using the C code displayed in the whitepaper:

Code:

#include <math.h>
double AttackerSuccessProbability(double q, int z)
{
	double p = 1.0 - q;
	double lambda = z * (q / p);
	double sum = 1.0;
	int i, k;
	for (k = 0; k <= z; k++)
	{
	double poisson = exp(-lambda);
	for (i = 1; i <= k; i++)
	poisson *= lambda / i;
	sum -= poisson * (1 - pow(q / p, z - k));
	}
	return sum;
}

Where z is the blocks you expect to be found, q the probability for an attacker to solve those blocks and p the probability for the honest nodes to solve those blocks. Set the proportion of the hash rate and the confirmations accordingly to what you want, here: https://web.archive.org/web/20181231045818/https://people.xiph.org/~greg/attack_success.html

Here's some noteworthy results:

• With 30% of the hash rate, you have a ~62% chance to reverse a transaction with 1 confirmation.
• With 40% of the hash rate, you have a ~55% chance to reverse a transaction with 5 confirmation.
• With 20% of the hash rate, you have a ~10% chance to reverse a transaction with 3 confirmation.

Everything drops off exponentially as confirmations (z) increase. The 6 confirmations have the best security:speed ratio. It takes 1 hour, but even for someone who owns one third of the hash rate, it's improbable for their attack to succeed. (~21% chance)

[coolcoinz]

Bitcoin is backed by processing powerIt is not correct to say that Bitcoin is "backed by" processing power. A currency being "backed" means that it is pegged to something else via a central party at a certain exchange rate yet you cannot exchange bitcoins for the computing power that was used to create them. Bitcoin is in this sense not backed by anything. It is a currency in its own right. Just as gold is not backed by anything, the same applies to Bitcoin.

Bitcoin mining and gold mining aren't the same. When you mine gold, once the job is done, its done. You have gold and can sell your equipment because it no longer serves a purpose. Bitcoin miners continue to process transactions, so they support the existing network and allow you to validate transactions not only for new bitcoins, but also those who are 10 years old.
If we would compare this to gold mining, the machines used to mine gold would also be the ones used to clean, cut, melt, polish, weigh and count your gold.
If miners were to stop confirming transactions we'd have a drop in bitcoin's value. If the same thing were to happen with gold I'd expect the opposite effect.

[Falconer]

It is not mandatory for every single transaction, it all depends on the amount of money in question. If you are selling a cup of coffee, you can safely accept a transaction with zero confirmations since the cost to attack the network to replace this transaction is significantly higher than the cost of one cup of coffee.

Haha, you're right. But wait I'm only talking about online transaction without involving escrow and also not knowing each other, so it shouldn't be for the equivalent amount for a cup of coffee. But thanks for trying to explain.

If a single entity controls 51% of the hashrate (which is very unlikely), and can sustain that hashrate indefinitely (which is even more unlikely), then they can theoretically reverse a transaction with any number of confirmations. They would simply mine their own chain in secret which double spends the transaction they want to reverse, and then when their own chain is longer than the main chain they release it to the wider network.
<.....>

Think of confirmations as a continuum. It's not "x is unsafe, y is safe", but rather "1 is fine, 3 is safe, 6 is super safe", and so on. What the individual numbers are depends on your individual risk model and the size of the transaction in question.

o_e_l_e_o, I understand. 51% attacks can be done but with the risk of failure and the cost is quite expensive so that at the same time it will be something that will be difficult to do. I'm not so sure an entity can do it in the future for no apparent reason, but you're right, attacks like this don't need us to think too much about it.

Someone who owns 51% of the hashrate can reverse any transaction regardless of its confirmations, it's just be a matter of time. They decide what's the correct chain. If they own less than that, then the more the confirmations the more difficult it becomes to catch up.

This probability can be calculated using the C code displayed in the whitepaper:

Code:

#include <math.h>
double AttackerSuccessProbability(double q, int z)
{
	double p = 1.0 - q;
	double lambda = z * (q / p);
	double sum = 1.0;
	int i, k;
	for (k = 0; k <= z; k++)
	{
	double poisson = exp(-lambda);
	for (i = 1; i <= k; i++)
	poisson *= lambda / i;
	sum -= poisson * (1 - pow(q / p, z - k));
	}
	return sum;
}

Where z is the blocks you expect to be found, q the probability for an attacker to solve those blocks and p the probability for the honest nodes to solve those blocks. Set the proportion of the hash rate and the confirmations accordingly to what you want, here: https://web.archive.org/web/20181231045818/https://people.xiph.org/~greg/attack_success.html

Here's some noteworthy results:

• With 30% of the hash rate, you have a ~62% chance to reverse a transaction with 1 confirmation.
• With 40% of the hash rate, you have a ~55% chance to reverse a transaction with 5 confirmation.
• With 20% of the hash rate, you have a ~10% chance to reverse a transaction with 3 confirmation.

Everything drops off exponentially as confirmations (z) increase. The 6 confirmations have the best security:speed ratio. It takes 1 hour, but even for someone who owns one third of the hash rate, it's improbable for their attack to succeed. (~21% chance)

I'm trying to understand something you're trying to explain about the probability of a 51% attack, which I can understand based on your description of how likely they are to reverse a confirmed transaction. Now I know that you've explained it, but considering the cost and probability of carrying out this attack is very small (a matter of time), I wouldn't think too much into it. Also, thanks for the technical explanation.

[Uang_kartal]

 

~Snip~
new user who knows bitcoin since 2020. I don't have much knowledge about bitcoin,

I also accidentally, when I started 2017 knowing bitcoin, at that time Hyip was so hotly discussed by influencers and YouTube made clickbait until I darkened my eyes and deposited with their tutorial because I was tempted and greedy. scam, that's sad
but that didn't stop my interest to read a lot about it. So I dedicate this thread to testing me all this time about bitcoin based on a myth that I often hear in my knowledge. and make clicks that make greedy and dark eyes, long story short I know this forum and started learning in bitcointalk about 3-4 months ago. I don't regret it

.
~Snip~
Almost all other digital currencies are freely controlled. This means that They can be printed as per the subjective wishes of the controller. They can defeat by attacking the control center point

this is probably a fact because I personally also read that supply is limited and
some say it's limited, some say it will continue to grow
(at the moment) and halving every few years. every event/burning/reward block (with a deduction from each miner) maybe this is an attempt to confront bitcoin which can still be sought as natural resources.

~Snip~

Unlike gold, bitcoin is

Easy to move

Easy Easy to do


Faster to transfer

Cheaper to transfer

This may be a myth and there are facts
, I haven't experienced any of the categories above/ I'm just not used to storing blocks more than in bank statements. I admit it, as discussed above, by another friend who compared institutions.
(Service per bank either transaction or convenience) with a comparison of systems in block/decentralized (bitcoin/crypto). It is difficult to accept criticism for good service (improvement) such as institutions. While bitcoin.

Of course there is a measurement value even though it is the same for transactions and stores, but the exchange rate is also very different between fiat and bitcoin.

Between myths or facts it depends on each other's experience in their perspective. Because the assessment is not the same as what each individual feels in owning, keeping, buying bitcoin. Good thread bro