Where Crypto misinformation and fear go to die.
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FUD #1: Mostly criminals use bitcoin
If you have ever heard (or happen to believe) that is primarily a tool used by criminals, stop and take a quick sample of your friends and family that you suspect may own bitcoin, and then ask yourself how many are known criminals.
The default assumption is generally founded on a view that bitcoin is inferior to the dollar. Your favorite Senator or Treasury Secretary may occasionally make the claim, but thankfully, bitcoin is not for criminals; it is however for everyone.
Bitcoin is superior to any form of money that has previously existed, principally as a function of its fixed supply. And regardless of how many point-of-sale transactions bitcoin may facilitate daily, it is used every day as a censorship-resistant and inflation-resistant form of savings.
Without doubt, bitcoin is definitely used by the likes of drug dealers and nefarious characters on the dark web. However, it would be irrational to believe that is its primary use or to believe bitcoin should be banned because of it.
Using the mail to send a letter to mom is not a crime. But using the mail to send drugs is mail fraud. Similarly, using the to purchase flowers for mom, perfectly fine. But buying narcotics with dollars (or bitcoin), that’s crime. Despite criminal use, no one is calling for the ban of roads, the internet, mail, etc.
Believing bitcoin should be banned because drug dealers use it would be no different than calling for a ban on the dollar for the same reason.
FUD #2: Bitcoin wastes energy
Today, Bitcoin Bitcoin is a decentralized digital currency that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.Learn more consumes as much energy as a small country. This certainly sounds alarming — but the reality is a little more complicated.
But how much energy should a monetary system consume? Right now, organizations around the world are facing pressure to limit the consumption of non-renewable energy sources and the emission of carbon into the atmosphere.
As cryptocurrencies, and Bitcoin in particular, have grown in prominence, energy use has become the latest flashpoint in the larger conversation about what, and who, digital currencies are really good for.
Whether you feel Bitcoin has a valid claim on society’s resources boils down to how much value you think Bitcoin creates for society.
It’s important to understand that many are exaggerated or based on flawed assumptions or misunderstandings of how the Bitcoin protocol works. The actual negative impact we’re talking about is likely a lot less alarming than you might think.
FUD #3: Bitcoin is a Ponzi scheme
One of the concerns aimed at is the claim that it’s a Ponzi scheme. The argument suggests that because the Bitcoin network is continually reliant on new people buying in, that eventually it will collapse in price as new buyers are exhausted.
The short answer is that Bitcoin does not meet the definition of a Ponzi scheme in either narrow or broad sense.
Definition of a Ponzi scheme:
A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk.
With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse.
The Bitcoin White Paper, released in 2008, on the other hand, contained no promises of enrichment or returns. Furthermore, the software was released in 2009 by Satoshi as open-source. Anybody could have taken and used the Bitcoin software. He gave away the key technological breakthrough before he launched the first version of the project.
Bitcoin is open source, and is distributed around the world. The blockchain is public, transparent, verifiable, auditable, and analyzable. An open source full node can be run on a basic home computer, and can audit Bitcoin’s entire money supply and other metrics.
FUD #4: Governments will ban Bitcoin
The idea that somehow bitcoin can be banned by governments is the final stage of grief, right before acceptance. The consequence is an admission that bitcoin “works.” In fact, it posits that bitcoin works so well that it will threaten the incumbent government-run monopolies on mone and thus needs to be regulated out of existence to eliminate the threat.
By design, bitcoin exists beyond governments. It is not just beyond the control of governments, it functions without the coordination of any central third party. It is global and decentralized. The more widespread it becomes, the more difficult it becomes to censor the network.
The architecture of bitcoin is practically purpose-built to resist and immunize any attempts by governments to ban it. This is not to say that governments all over the world will not attempt to regulate, tax or even ban its use. There will certainly be a fight to resist bitcoin adoption. Banning bitcoin is a fool’s errand though. Some will try; all will fail. And the very attempts to ban bitcoin will accelerate its adoption and proliferation.
FUD #5: Bitcoin has no intrinsic value
Let’s begin with a solid definition of money: Money is a good that people value for the mere prospect of later exchanging without having consumed it, or, in other words, for its exchange-value.
Bitcoins, because they can be exchanged, even though they cannot be consumed, are a candidate for being money.
Bitcoins are exceptionally good for exchanging.
- Storage for future use — Bitcoins can be stored for future exchange indefinitely and inexpensively, and in multiple ways and locations simultaneously.
- Protection from thievery and seizure — Bitcoins, when stored in one’s own self-custody with appropriate safety considerations cannot be stolen or seized, either by physical force, through the application of ‘hacking’ skills, or by brute force computing power.
- Divisibility, Purity & Authenticity — Bitcoins’ digital nature makes their divisibility easier than any good that could actually be consumed. When dividing and recombining bitcoins, no dilution or impurity occurs.
- Transportability — Bitcoins’ digital nature means they can be exchanged across any two physical points connected to the digital network, which is currently practically every point on earth.
- Speed of exchange — Bitcoins’ digital nature means they can be exchanged quickly, even instantly through 2nd layers.
- Indisputability of exchange — Bitcoins’ cryptographic ownership makes exchanges of bitcoin indisputable and final.
- Indisputability of provenance (historic record of exchange) — Bitcoin’s decentralized blockchain also means that its whole history of all exchanges of bitcoins is indisputable.
- Scarcity — Bitcoin’s digital nature and enforced supply cap ensures bitcoins’ exchangeability is never diluted.
The best links to articles debunking Bitcoin FUD
endthefud.org is the #1 resource to articles debunking Bitcoin FUD.
A comprehensive and curated list of articles are covered in more detail on their website. Check them out and combat all the CryptoFUD, starting with yourself.