This list was hard to come up with, but we think we nailed it. Trust us; there were a lot of myths and stupid ideas to comb through. But most myths were just innocent misunderstandings, and maybe a few facts not lining up as they should. So, here’s the worst three myths about bitcoin debunked.
1. Bitcoin is not backed by anything and has no value
Bitcoin has perceived value.
To see how perceived value works, peer into your wallet and consider those US dollar bills.
You keep those dollar bills because of your belief in the US economy, and the belief that other people want them.
Bitcoin is the same, but with a difference.
The difference is that US dollars are from the US economy, while bitcoins are from a distributed ledger technology named the blockchain, mined gods-knows-where out in the boondocks of China. Which would you prefer?
Gold and silver aren’t backed by anything either, yet these metals are some of the most valuable on Earth. Are they worthless too?
To say that bitcoin has no value is an opinion.
A fact is that people want to buy bitcoin, meaning that the cryptocurrency has value because people believe that it does. Just like you believe that your bank will not collapse or disappear with your money. Same thing.
2. 21 million Bitcoins is too small for a currency; doesn’t scale.
There will only be 21 million bitcoins, but remember that one bitcoin is divisible to eight decimal places. These decimals add up to an unfathomably large number.
There are 2,099,99,997,690,000 (2 quadrillion) atomic units in the Bitcoin network.
And each coin is divisible to 100,000,000 atomic units each.
We do not trade one bitcoin at a time. Instead, we trade with much smaller units like mili-bitcoins (mBTC) or micro-bitcoins (μBTC).
Although the supply of bitcoin has a cap of 21 million, this is not a good argument against Bitcoin’s future. We can always divide a coin into much smaller fractions.
These fractions can solve bitcoin’s supply and scaling issues if there ever was one.
3. Bitcoin is a Ponzi scheme
This myth comes from a misunderstanding of what a Ponzi scheme is, and what Bitcoin isn’t.
In a Ponzi scheme, the founders trick investors into joining with guaranteed profits. Bitcoin does not make such promises (maybe critics have confused the name with BitConnect!). There is no group of elite individuals pulling strings. The collective profits from the success of bitcoin, which is everyone.
The difference between bitcoin and a Ponzi scheme is who the winners and losers are. A Ponzi is always unsustainable. New money pays old money, and only people who get in first in a Ponzi scheme make a profit. There are clear winners and losers.
Unlike a Ponzi scheme, bitcoin is not a zero-sum game, nor is it win-lose, but win-win.
Everyone who holds bitcoin wins from an increase in demand and adoption by society. Even non-bitcoin holders win, as they can enjoy a new, decentralized, peer-to-peer currency with innovations in the future.
To say that bitcoin is a Ponzi scheme is not true. Bitcoin and Ponzi schemes are not at all comparable in their intentions or how they work.
So what do you think are the biggest myths and misconceptions about bitcoin? Write those myths in the comments!