Myths and Real Facts about Bitcoin in 2023

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Despite the fact that Bitcoin appeared 13 years ago, developed an ecosystem, and became the most recognized cryptocurrency, its principles, and features remain unclear to newcomers. 

This lack of understanding leads to myths and untrue facts related to the first cryptocurrency. 

In this article, let’s break down 10 popular myths about Bitcoin, and destroy them if they are false.

History of Bitcoin’s Creation

Myth:

The history of Bitcoin’s creation and the identity of its creator is not just a myth, but a whole set of myths. There is a lot of speculation about who created Bitcoin, why, and how. 

Somewhere, for example, you can read the story of Jürgen Etienne Guido Debo, a Belgian citizen who claims to be Nakamoto and even tells how he came up with the alias.

In fact:

Who is behind the alias Satoshi Nakamoto is unknown. In 2010, Satoshi disappeared from the online space without revealing his identity, thereby sparking dozens of stories and myths. 

Thus, Craig Wright (the initiator of the BSV fork) claims the title of Bitcoin’s creator and has been trying to prove his involvement in BTC in court for several years. Some lovers of loud theories believe that under the pseudonym of Nakamoto, there is Elon Musk, CIA, Charles Bry, or aliens.

Not a single person has yet provided convincing evidence of involvement in the Bitcoin launch, so Nakamoto’s identity as well as the real motives for launching BTC remain unknown.

Bitcoin Is a Hoax

Myth:

Bitcoin is just a pyramid/fraud/financial bubble or another kind of scam. It is worthless and has no real value, and its ever-increasing price is simply the result of deceiving gullible investors. 

Added to this myth are conspiracy theories that Bitcoin is the idea of bankers/masons/governments to make it easier to take money from honest investors and manipulate the markets. 

In fact:

Bitcoin is a peer-to-peer payment network that implements cryptographic encryption and data storage technology in a distributed network – a blockchain. Verifying the authenticity of the Bitcoin network yourself is easy: just register a wallet and make a few transactions.

As for the legitimacy of Bitcoin as a financial asset, it is determined by users and regulators themselves. In most countries, BTC is recognized as a digital asset or cryptocurrency, and only in some jurisdictions, such as China, is it considered a dangerous and speculative tool. 

How Much Does Bitcoin Cost

Myth:

Bitcoin is expensive. Only rich investors and large investment funds buy Bitcoin. The price tag of several tens of thousands of dollars makes BTC one of the most expensive digital assets in the world, which is simply inaccessible to ordinary people.

In fact:

Bitcoin is divided into smaller fractions, satoshi.

Satoshi is one hundred thousandths of a Bitcoin and is the smallest unit a user can own. This means that you can buy not the whole BTC, but a small fraction of it: 10,000 Satoshi is only worth $2.2 right now. 

You can check the exact value of Bitcoin on the ticker at the top of Incrypted’s website or on Coinmarketcap, a data aggregator. 

What Bitcoin Is Secured By

Myth:

Bitcoin has no real value and its market value is nothing more than speculation and a bubble. Dishonest entrepreneurs and scam funds might as well convince everyone that wrappers or dried leaves have value. 

In fact:

Part of it is true, Bitcoin is not backed by anything of what is commonly considered “collateral” in traditional economics. The dollar has the army and the GDP of the United States, gold has the advantages of the noble metal and the reputation of the oldest form of money, BTC has none of that. 

That said, Bitcoin is backed by real money from investors, and its value is based on technical and economic advantages:

• BTC is decentralized, no government can take the asset away from its owner without access to its wallet.
• BTC is relatively poorly regulated. Many jurisdictions don’t consider it a currency or a security, which simplifies the access to BTC and doesn’t allow the regulators to apply additional restrictions. 
• BTC has a limited supply, just like gold, which makes it a deflationary asset. 

Not to mention advantages such as cheap and cross-border transfers, pseudonymity, and the security of the network. 

Bitcoin’s Connection to Criminality

Myth:

Because Bitcoin is anonymous and not controlled by governments, it is conveniently used for illegal activities: buying illegal items/substances, underground betting and gambling, or even financing terrorism. 

In fact:

According to a report by the National Bureau of Economic Research (NBER), in 2020, only 3% of BTC transactions involved illegal activity. And that’s far less than the amount of funding for the same activity in fiat currency. BTC is not popular in the criminal world for several reasons:

• If you’ve read our article on Bitcoin, you know that it’s not anonymous, but a pseudonymous currency. That is, it does not guarantee user privacy.
• Chainalysys has developed software that allows you to tag wallets and transactions, and track connections between different addresses. This greatly simplifies on-chain investigations and wallet identification. 
• The Bitcoin ecosystem is tied to centralized exchanges. These services usually require KYC, which allows one to reach a real person.
• Much more often so-called “anonymous” cryptocurrencies are used for illegal purposes – Zcash, Dash, Monero, and others. The anonymization mechanisms built into their algorithms break the links between addresses and do not allow transactions to be tracked.

It Is Easy to Hack Bitcoin

Myth:

Like any other payment system, Bitcoin can be hacked. Moreover, hackers often steal thousands of BTC from cryptocurrency exchanges or individual owners. Because of this, Bitcoin is not safe for transfers and investing.

In fact:

Bitcoin is built on blockchain technology. In our article on the blockchain, we discussed in detail why this technology cannot be hacked and what mechanisms are used to protect it. 

Hackers can indeed steal BTC, but they succeed in doing so not by hacking the network, but by gaining access to individual users’ wallets. Bitcoins will be fully protected if a few rules are followed:

• Use a full node or “cold” wallet for storage.
• Sign transactions on a device disconnected from the internet.
• Do not give your private key and seed phrase to anyone.

There are indeed potential threats to the Bitcoin network: a 51% attack or a Sybil attack, but no one has managed to implement them yet. Bitcoin’s blockchain is secure due to the number and dispersion of nodes.

Bitcoin and the Internet

Myth:

Bitcoin is Internet money; it has no physical form and is only stored as data and can only be used on the Internet. Bitcoin is not suitable for paying for real goods because it cannot be exchanged for physical units (banknotes, coins, etc.).

In fact:

Yes, Bitcoin is Internet money, but that’s the name BTC got because the Internet has become one of the fundamental technologies of blockchain. Without the internet connection, it would be impossible to exchange data between nodes in the network, synchronize nodes, and other technical functions of Bitcoin and cryptocurrencies in general. 

But this does not mean that Bitcoin has no connection to the real world. BTC can’t be stored as bills or coins, but it can be used to pay for real goods and services just like a bank card. 

Bitcoin technology allows adapting it for “real world” payments, the only question is, how convenient it will be for users and how many merchants will be willing to accept BTC payments. 

How Environmentally Friendly Is Bitcoin

Myth:

The Bitcoin payment network uses the PoW algorithm, so it requires powerful and energy-intensive equipment to process transactions. Miners and mining farms consume huge amounts of energy, which requires the additional generation and stimulates CO2 emissions into the atmosphere. 

In fact:

The first part of the statement is true. According to the Bitcoin Energy Consumption Index, the BTC network currently consumes about 125 Tw/h (terawatt hours) – that’s almost 50% of the energy consumption of the entire Pacific region in 2021. 

But if we compare these figures with the world’s electricity consumption data, we see that it is only 0.5% of the total electricity consumed by the world in 2021 (almost 25 thousand terawatt hours). 

In addition, the statement about the unsustainability of BTC does not take into account the origin of the electricity used by the miners. There are simply no such statistics. At the same time, part of the energy consumed is produced by burning gas, hydroelectric power plants, or SES, which are considered environmentally acceptable methods of generation. 

However, the same Bitcoin Energy Consumption Index reports that the carbon footprint of the Bitcoin network is 70.5 megatons, which is comparable to the carbon footprint of Greece.

How Easy Is It to Make Money from Bitcoin

Myth: 

Bitcoin is a “dough button.” Every few years it updates its historical highs, adding a few “X’s” to its value, and due to volatility and derivatives, you can make money very quickly and with relatively small capital. 

In fact:

Bitcoin is a speculative and high-risk asset with high volatility. And while BTC price fluctuations have signs of being systematic, they are still unpredictable and therefore require experience and an effective risk management strategy to generate income. 

Without an investment/trading strategy, BTC becomes a regular lottery.

Bitcoin and Taxes

Myth:

Since Bitcoin is unregulated, is not considered a security or currency, and does not belong to other asset types, it is not taxed. Investing in BTC is an effective way to avoid taxation. 

In fact:

The above described is relevant for BTC at an early stage of development, but, the first thing governments have done is to introduce taxation for Bitcoin and cryptocurrency transactions. 

Even in countries without regulation of the cryptocurrency market or digital assets, income from BTC transactions is taxed on personal income or business income, depending on the status of the subject of transactions. 

You don’t have to pay taxes only in those countries where the use of Bitcoin is completely banned and considered illegal. 

The good news is that the tax is only levied on the actual profit, which is the difference between the purchase price and the sale price of Bitcoin. This means that until you “go out” into fiat and record income, you don’t have to declare the profit and pay tax.

Conclusions – Bitcoin & Crypto Casinos

Since its introduction in 2009, Bitcoin has significantly influenced the growth and development of virtual casinos. Crypto casinos are online gaming sites that conduct transactions using cryptocurrencies like Bitcoin. Many angles can be used to examine Bitcoin’s impact on crypto casinos:

• Anonymity and privacy: The privacy that cryptocurrencies like Bitcoin and others offer is one of their key draws. Since most cryptocurrency transactions are pseudonymous, gamers can continue to be anonymous while partaking in gambling. Due to this, crypto casinos have drawn a sizable number of users who respect anonymity.
• Speedy transactions: Compared to typical banking systems, which might take several days to process, Bitcoin transactions are comparatively quick. Because speedier transactions result in a smoother gaming experience, it has become a desirable alternative for both gamers and casino owners.
• Lower transaction costs: Cryptocurrencies like Bitcoin and others often have lower transaction costs than traditional payment methods like credit cards or bank transfers. Cryptocurrencies are now a popular option for gamers and casino operators because of the cheaper transaction costs.
• Global accessibility: Bitcoin is a borderless currency that is not subject to exchange rates or country-specific regulations. This has made it easier for players from different parts of the world to access and gamble on crypto casinos, increasing their user base and popularity.
• Provably fair gaming: Blockchain technology, which underpins cryptocurrencies like Bitcoin, allows for transparent and tamper-proof recording of transactions. This has led to the development of provably fair gaming systems, where players can verify the fairness of each game outcome. This feature has attracted more users to crypto casinos, as it fosters trust in the gaming platform.

Ultimately, Bitcoin has had a significant impact on crypto casinos, changing the online gambling market by offering privacy, speed, low transaction fees, and provably fair gaming systems. The market is still developing, therefore it’s unclear how Bitcoin casinos will continue to adjust to regulating issues and new advancements in the cryptocurrency arena.