"I heard Bitcoin is bad because..."

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In this post, we are going to address some of the most common misconceptions about Bitcoin. While nothing is perfect, most of the time people criticising Bitcoin name myths or incorrect facts or statistics. You might have heard, or perhaps even believe some of them, which is why we thought it would be important to share our perspective on some of those!

• Bitcoin is only used by criminals and for illegal activities

This is a common misconception, but it's simply not true. While Bitcoin has been used in some high-profile criminal cases, especially in its early days, the vast majority of Bitcoin transactions are completely legal and legitimate. In fact, many businesses and individuals use Bitcoin as a way to make fast, secure, and low-cost transactions.

Conducting illegal business using Bitcoin is actually an especially bad idea since any transaction recorded on its public blockchain can be seen at any time and traced back to a specific person or entity once they might interact with platforms or services enforcing KYC or AML requirements, such as a crypto exchange or a custodian. If you are considering running some dirty business (please, don't do it), you would be much better off using cash fiat currencies! This misconception brings us to...

• Bitcoin is completely anonymous and untraceable

While Bitcoin transactions are pseudonymous, meaning that they don't include personal information like your name or address, they are not completely anonymous. Bitcoin transactions are recorded on a public ledger called the blockchain, which means that they can be traced back to the addresses involved in the transaction, and any other transaction before that! This quality has many implications, from an accounting, auditing, or even legal standpoint, just to name a few examples. For instance, can you imagine how much easier would be to check the financial status of a firm if you could audit it, in real time, without any intermediaries, and being able to perform a complete retroactive "sanity check" search?

• Bitcoin is a Ponzi scheme or pyramid scheme

In a Ponzi scheme, a scammer offers investments that promise very high returns with little or no disclosed risk to their victims. The returns are said to originate from a business or a secret idea run by the con artist. In reality, the business does not exist or the idea does not work in the way it is described. Bitcoin is none of those things, as it was never even really advertised in any way outside of its technical whitepaper. Also, there is no business behind Bitcoin, as there is no company, no CEO, no marketing team. You can rather think of Bitcoin as commodity, like oil, or gold.

Bitcoin is a decentralized digital asset that operates on a peer-to-peer network and, like anything else on Earth and beyond, it has value because someone believe it has value. While there have been some high-profile cases of fraud and scams involving Bitcoin, these are not inherent to the currency itself.

• Bitcoin is a bubble that will eventually burst

While Bitcoin's value has been volatile over the years, it's important to remember that the price of any asset can be subject to fluctuations. Some people believe that Bitcoin's value is based on speculation rather than its actual utility, but others see it as a legitimate investment opportunity. We think there are at least two levels on this discussion.

First, most investments consist on speculation. When you purchase a company stock, you are inherently speculating the company that issued that financial product will be successful and consequently, its stock will be worth more in the future. Even if you do actually believe Bitcoin is merely a speculative asset, there is in principle nothing inherently wrong with that.

Second, and foremost, one may argue Bitcoin is much more than a speculative asset. Indeed, Bitcoin has several unique properties, which we succinctly summarized in a previous blog post.

• Bitcoin is too complicated for the average person to understand

Bitcoin can be a complex topic, and it virtually impacts any realm of the known and knowable. Politics, energy, money, computer science, philosophy... and I'm just getting started! Although, a working knowledge of the main mechanisms is something that can be achieved by anybody, without previous experience, in just a dozens of hours of study. In fact, many people find that once they start learning about Bitcoin, it's not as complicated as they thought. When I started looking into it a few years back, this is the first video I've watched. Make sure to watch it, as the author does a beautiful job at simplifying some complex computer science and game theory concepts.

• Bitcoin is only for tech-savvy people

As mentioned above, it is undeniable that Bitcoin involves some heavily technical concepts. But to be perfectly honest, other forms of money, such as Euros and Dollars, are even more complicated! You might be surprised to learn how ponderous is the "plumbing" of traditional currencies and the amount of complexity that goes into a simple ATM withdrawal operation behind the scenes. Just like it's not necessary to be a quantitative financial analyst to withdraw money from your bank, you don't need to be Alan Turing to operate a Bitcoin transaction. There are many user-friendly wallets and exchanges available that make it easy for anyone to buy, sell, and store Bitcoin. Have a look at this recent blog post if you'd like to get started!

• Bitcoin is not backed by anything

It's true, Bitcoin is not backed by a government or central authority. In fact, it is backed by the combined computational power of billions of computers being run by millions of individual miners, which together contribute to the Bitcoin network. Bitcoin is a money with rules, but no rulers. Many businesses and individuals around the world have been using Bitcoin as a legitimate form of payment.

• Bitcoin is only for people who don't trust banks

While Bitcoin was originally created as a way to bypass traditional financial institutions by establishing an exclusively peer-to-peer payment network, it's not just for people who don't trust banks. Many people use Bitcoin as a way to make fast, secure, and low-cost transactions, regardless of their feelings about banks. Before Bitcoin, you needed to trust banks. Bitcoin provides an alternative.

• Bitcoin is not secure and can be easily hacked

While there have been some high-profile incidents of Bitcoin theft, or related to crypto companies going bankrupt or even being discovered promoting scams, the Bitcoin network itself is actually extremely secure, as the blockchain technology that underlies Bitcoin is considered to be the most secure and tamper-proof system in the world. Since its inception in 2009, the Bitcoin network has suffered 0 hacking events.

• Bitcoin is a get-rich-quick scheme

Some people have made a lot of money by investing in Bitcoin, but it's important to remember that investing inherently carries risks, and that's what those investors did: they were rewarded with high returns by accepting the risk that Bitcoin would not be a legitimate asset. By the virtue of its features, Bitcoin represents absolute digital scarcity and has the potential to increase in value over time, but it's not a guaranteed way to get rich quick. In fact, it is engineered to do exactly the opposite: to protect the purchasing power of the user, increasing in value at a proportional rate to the inflation of the surrounding environment.

That's it for today, I hope this helped! Make sure to get in touch with us by using the "Contact us!" button at the top of this page if you have any questions. In our next blog post, we will talk about the future and the expectations of famous investors for Bitcoin. Stay tuned!