Busting 5 Most Common Bitcoin Myths

By Achal Arya
February 2, 2018 Updated February 2, 2018
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5 Most Common Bitcoin Myths
5 Most Common Bitcoin Myths

You probably thought these bitcoin myths were a fact. Let’s see how much you can score?

It all began with a white paper called “Peer-to-Peer Electronic Cash System”. Since bitcoin’s inception in 2009 by someone known as Satoshi Nakamoto(whose real identity is still not known), it even achieved a record price of $20,000 per coin (on December 17, 2017). From investors, governments to entrepreneurs and citizens, this cryptocurrency has taken over the world. However, many are still sceptical about bitcoin and have questions in their mind.

Is bitcoin really safe? Is it the right time to invest? Is it really decentralized? The questions are about endless.

Busting the Bitcoin Myths:

Due to Bitcoin’s complicated technical design and overzealous advocating community, there have been myriad myths surrounding Bitcoin. And, today we are going to bust these bitcoin myths for you!

1. Bitcoin & Blockchain are same-same

Score: 1/0

No, no it’s not. Often you must have come across people who use blockchain and bitcoin as same-same. They can’t be more wrong. Though it is quite easy to understand why these two terms are often confused with each other.

bitcoin myths
Bitcoin & Blockchain are same-same

Bitcoin is a cryptocurrency that is both created and held electronically. Whereas, Blockchain is a platform for cryptocurrencies. So, if there is no Blockchain, there would be no bitcoin.

Being a type of unregulated digital currency, bitcoin transactions are basically stored and transferred by making use of a distributed ledger on a peer-to-peer network.  As no one holds this currency, it offers the promise of anonymity, swiftness and no hassle from any regulatory authority. As for Blockchain, it is the foundation of the technology on which the bitcoin transaction ledger is maintained.

Bitcoin runs on Blockchain technology and used as a mode of payment. Whereas, Blockchain in itself can be used by any industry, institution and individual to record the transactions and benefit from its quick processing times without a middleman.

2. Exchange v/s wallet: What difference does it make?

Score: 2/0

It does.

If you keep your tons of crypto at cryptocurrency exchange wallets and feel safe considering all the buzzwords around blockchain safety, immutability, hacking proof etc.  Maybe it’s time to rethink. These words may be true for a cryptocurrency wallet but not for an exchange wallet.

A wallet is where you keep the cryptocurrency that you have either bought or received but more specifically it is where you own, hold and possess your keys. You can have your wallet on your computer or on your phone. If someone is sending you cryptocurrency, you just require a wallet address and nothing else, neither an exchange nor to be online.

When it comes to exchanges, this is where you buy or sell your cryptocurrency. Exchange in no way can be your wallet, though they more often than not come with a wallet. If you are sending or purchasing a cryptocurrency, you need an interface or exchange. It also means if you are to use your cryptocurrency, you would need permission from your exchange.

Take Coinbase for an instance, it is an exchange and when you create an account with them, it comes with a wallet. No doubt the wallet is controlled by you but it is owned by Coinbase as it will hold the private keys of your wallet. And if god forbid, the website crash and it does happen, then you would have no access to your wallet.

3. Bitcoin will consume all of World’s energy

Score: 3/0

Seriously, well this is something that came up amid the efforts of some reputed media channels efforts to manipulate the Bitcoin prices. We understand you couldn’t make an early start on crypto’s, it’s fine.

bitcoin myths
Bitcoin will consume all of World’s energy

Even Trent Richardson thinks he can solve the energy crisis. Don’t worry.

Surely, bitcoin mining consumes a lot of energy. Thousands of specific hardware use enormous amounts of electricity to create new bitcoins. That being said, first, there is no exact idea of how power hungry bitcoin really is. Bitcoin certainly doesn’t need so much energy to run and moreover, it can be solved by a future upgrade of bitcoin software. Considering that only energy consumption will increase but not the hardware is a bit of bad experiment set up to start with.

The reason for energy consumption is not because the network actually requires it but because of the price rise. In order to solve complex puzzles, servers that are running bitcoin software, compete against each other. The computer that solves the puzzle gets awarded bitcoins. And as the prices go up, more computers are set up that requires more computing power to mine bitcoin. The fact is the number of transaction on Bitcoin network hasn’t increased much in a year.

4. Bitcoin transactions are anonymous

Score: 4/0

Sorry to crash your hopes but you can’t be more disappointed than us. After all cryptocurrencies provided some of us true freedom. You know what I mean.

Bitcoin transactions are anonymous
Bitcoin transactions are anonymous

Anonymity is there but by no means it is perfect. It is basically pseudonymous. Every time you make a transaction, it involves your address that is stored forever in the Blockchain. If someone links your address to your identity, then every transaction will be subsequently linked to you.

Due to the reason that anyone can create a random bitcoin address at any time without submitting any information, having no attachment of a transaction to an identity and the data being transmitted to random nodes, bitcoin network is considered anonymous.

However, if someone connects the multiple nodes, the combined data so collected can reveal the identity of the transaction origin. Most importantly, all the transactions over bitcoin network are traceable and transparent and hence someone can find the real person.

5. Bitcoin is physical money

Score: 5/0

I know you’re dying to debate on this one. But when was the last you bought your girlfriend a drink with your bitcoins. While the good news is in some countries you might but in a majority of countries around the world, you can’t.

Bitcoin is physical money
Bitcoin is physical money

Bitcoin is just a virtual currency. With the way we know coins or hard cash to exist, it doesn’t exist in any kind of physical form. Moreover, unlike your regular money, you can’t buy everything with bitcoin. Surely, there has been recent uses of bitcoin in real estate sector, food, beverages and so much more but it still has a very long way to go and be used in everyday real life.

So what was your score???

Whatever be the case, crypto is fun right and so should be learning it. The articles is meant to do the same. Keep visiting our channels for more news and info.

So, now you know what you were thinking of a fact all along, was just a myth. What are your views on these most common bitcoin myths? Do you want us to debunk some more bitcoin myths? Let us know your thoughts in our comment section below! 

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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Achal is an entrepreneur and a product designer with a bachelors degree in Computer Science. He works in the Web3 domain and manages new developments at Coingape. Follow him on Twitter at @arya_achal or reach him at achal[at]coingape.com.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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