Debunking Common Myths About Bitcoin
Bitcoin's price appreciation is bringing the digital currency back into the conversations of mainstream finance, which inevitably brings antiquated, erroneous misnomers about BTC back to the forefront. I would like to try my hand at putting several of these myths about Bitcoin to bed, once and for all.
Myth #1: Bitcoin is akin to other infamous market bubbles such as Tulip Mania.
I think this is one of the easier ones to debunk now, but certainly was more difficult to argue against in 2017, when Bitcoin really only had the support of mostly retail zealots. Paul Tudor Jones, Stanley Druckenmiller, Jack Dorsey with Square, and Michael Saylor with MicroStrategy are not allocating billions of dollars into tulips, and it is foolish to argue otherwise in 2020.
Bitcoin is past the proof-of-concept phase, and is clearly being recognized as a monetary asset in the present - even if only in the speculative sense for some participants.
Myth #2: Governments will just ban Bitcoin if it gets too big.
Ray Dalio was a recent prominent figure in finance to make this claim. The idea is that Bitcoin is something that world governments have allowed to exist up to this point, and could easily snuff out by governmental decree if Bitcoin represented too much of a threat to the global financial order.
This is simply not possible.
Bitcoin is very similar to the internet, in that it is a distributed and decentralized global computer network. For such a network to be shut down, every single participant (anyone running a Bitcoin node) would have to be shut down - an impossible feat.
World governments also cannot simply hoard Bitcoin or attempt to usurp the network by taking over all of the mining power, as they would now have to expend great amounts of money to even attempt to do so, something the citizens of the world would not stand for. Perhaps this could have been done during Bitcoin’s early days, but we are past the point of no return in 2020, Bitcoin’s market cap has reached a critical mass.
Myth #3: Bitcoin is the preferred choice for criminal activity.
It seems like virtually every time you hear Bitcoin being discussed in the mainstream press, you hear something to the effect "Bitcoin benefits hackers, tax evaders, and money launderers," the argument being that Bitcoin is nothing more than a tool for criminals. While it is certainly true that Bitcoin has been used for criminal activity, as have many other currencies, it is not true that Bitcoin should be the preferred choice of criminals.
Every Bitcoin transaction is publicly broadcast to the blockchain, so if you are conducting crime with Bitcoin, you are broadcasting timestamped proof of your crimes to the world, and the record of your crimes will be kept for all eternity - giving the authorities unlimited time to decipher your criminal dealings.
Furthermore, physical cash is by and far still the preferred method of worldwide criminals, notably the U.S. dollar. Should the dollar be banned?
Myth #4: Bitcoin will be destroyed by quantum computing.
I believe the claim that quantum computing could one day destroy the Bitcoin network ignores the simple truth that network participants are well-incentivized to work together to ensure the security and longevity of the network, the incentives being participants' purchasing power on the network. Incentives are powerful, and I have no doubt in my mind that the Bitcoin protocol will be amended, with the full consensus of its users, in the future to protect all participants from all threats; moreover, the fact that this will occur demonstrates the beauty in Satoshi's design, as well as his expert foresight. The protocol will adapt to the times of the day, the incentives for this to occur are far too great.
At the end of the day, quantum computing has many years of development to go before it begins to threaten Bitcoin. When that day arrives, it is not only Bitcoin that will have to undergo changes in its security, it is the entire infrastructure of modern computing networks that will have to change also. It is an erroneous assumption to assume that network security protocols will stay the same while quantum computing moves forward.
I'm sure I have missed several other prominent myths about Bitcoin, there are so many after all. I hope that I at least helped shift the narrative a bit more in Bitcoin's favor with this humble article, however.
You should always consider seeking financial advice from a licensed advisor before making decisions with your money, and you should not consider anything I write as financial advice but merely my opinion. Getting your financial house in order is a prerequisite for Bitcoin saving, in my opinion.
Disclosure: nothing in this article should be considered financial advice and I am not a financial advisor. Do your own research as everything in finance carries risk.