The Top 11 Bitcoin Myths Debunked

In 2024, Bitcoin shattered records, reaching an all-time high of $73,000, fueled by the entrance of major financial institutions into the crypto space amid the advent of Bitcoin ETFs. 

However, with increased attention from the media, a resurgence of age-old arguments against Bitcoin has emerged. 

Despite tireless efforts from Bitcoin advocates to dispel these misconceptions, they persist. In this comprehensive article, we aim to debunk these persistent myths surrounding cryptocurrencies, with a particular focus on Bitcoin. 

By examining each myth in detail, we aim to provide a more nuanced understanding of cryptocurrencies and their potential impact on the financial landscape.

Myth: Bitcoin has no intrinsic value

 

This is by far the most common myth about Bitcoin, and by far the most flawed. Critics of Bitcoin’s lack of intrinsic value often fail to realize that fiat currencies are no longer backed by an underlying asset. The US dollar for instance hasn’t been backed by gold since 1971.

Intrinsic value is defined as a measure of what an asset is worth. In finance, it denotes the evaluation of an asset to estimate underlying value. Therein lies the problem. Whilst models attempt to be comprehensive they are never complete and can only be relied upon to produce estimates. 

More generally, value is defined as subjective worth to the appraiser. Consequently, value itself, intrinsic or otherwise, is subjective. 

To ask whether something possesses intrinsic value is a bad question. That Bitcoin has a price means it is valuable to some people and therefore it has value. Whether an individual agrees with that value or not has no impact on Bitcoin’s value to others.

Myth: Governments will stop Bitcoin 

 

While crypto has been banned in China and 8 other countries, Bitcoin is fully decentralized and is maintained by thousands of computers worldwide. For governments to stop Bitcoin, a single government would have to convince all governments to act together to confiscate all computers and prevent access to the internet. 

This is practically impossible on a global scale. The internet is simply a network of computers. Moreover, the internet itself is becoming more and more decentralized. All of this is before considering the unlikeliness of governments around the world working in 100% unity to ban something that can drive such vast growth.

Myth: Bitcoin is too volatile

 

Volatility is a function of a number of factors, including maturity, participation, and several externalities. All assets and commodities can be subject to volatility when there are large changes in supply or demand.

The key question is whether Bitcoin’s volatility hinders its progress and purpose. To the extent that Bitcoin is intended as a currency, volatile currencies do not tend to work. However, Bitcoin is increasingly seen as an asset, and many investors actually seek volatility within reason in order to gain from actively trading. However, despite all of that, Bitcoin’s volatility is actually decreasing as more people participate in its trading. While bitcoin’s volatility is high relative to other growth assets, investors are increasingly recognizing that the benefits of bitcoin’s growth over recent years have outweighed the risks posed by its volatility.

Myth: Bitcoin wastes energy

 

Bitcoin is created through a system that requires intensive computer output, which in turn requires energy. To the extent that this energy secures the network, it is highly useful and therefore cannot be described as waste.

Many argue that the source of energy used is the problem; that computers are often attached to a national grid that in turn sources its energy from unsustainable sources. However, market forces drive Bitcoin mining towards the cheapest sources of energy. 

In reality, the cheapest source of energy is typically green energy that is produced in parts of the world where it’s difficult to export it from. This means that bitcoin mining naturally gravitates towards green energy sources that wouldn’t otherwise be fully utilized. 

Many argue, that creating incentives to produce green energy in such places is a key driving force behind the development of ever-greener and more efficient energy technology.

When looking at Bitcoin’s energy consumption it makes sense to compare it to an asset such as gold. At a base level, gold consumes around 85% more energy per year than Bitcoin mining, and gold mining’s consumption of non-renewable energy is 3x that of Bitcoin mining. This is before factoring in the harmful environmental consequences of digging for gold.

Looking beyond Bitcoin, cryptocurrencies such as Ethereum have moved towards ever-greener means of securing their networks, such as the Proof of Stake consensus mechanism.

Myth: Bitcoin is used by criminals

 

This is true in the same way that it is true for cash, gold, and the list goes on. Even some of the world’s biggest banks have been found to have allowed criminals to launder trillions of dollars. 

In the early days of Bitcoin, it is true that there were places like Silk Road and Agora Market that were 100% denominated in Bitcoin, and being used for illicit activities by criminals. This could have been a large portion of Bitcoin activity before Bitcoin became popular. 

However, these types of activities have now moved away from cryptocurrencies like Bitcoin that operate on publicly traceable ledgers. 

Extensive studies have shown that less than 1% of all Bitcoin transactions are now associated with crime. Moreover, former CIA Acting Director, Micheal Morell, produced a comprehensive report that showed the level of illegality involving Bitcoin was significantly overstated. 

In the criminal world, cash is still king. 

Myth: Bitcoin can be cloned

 

The beauty of bitcoin is that a bitcoin can’t be copied and every bitcoin can only exist in one place at one time. But what about the bitcoin network?

Those that argue that bitcoin can be cloned are missing the point. Bitcoins on the Bitcoin network cannot be cloned. The chain can be copied, yes, and continued. But these will not be supported by miners on the Bitcoin blockchain and so will have little – if any – value in comparison.

Moreover, the “cloning” this argument refers to is actually a positive thing. Bitcoin’s code is publicly available and as such, individuals can easily use it as a base for innovation which drives forward the entire space. 

In fact, when bitcoin is “cloned”, bitcoin holders directly benefit. When Bitcoin was cloned or “forked” to create bitcoin cash for example, every single bitcoin holder received an equal amount of bitcoin cash as their bitcoin holdings. It turns out that there is such a thing as free money after all, when it comes to bitcoin holders when bitcoin is “cloned”.

Myth: Bitcoin is a bubble

 

A bubble is defined as a pattern that is characterized by the rapid escalation of market value, particularly in the price of assets, followed by a rapid deflation in asset price, often referred to as a “crash”. 

The data does show that Bitcoin has experienced the above several times across its lifespan, on occasion rising nearly 1000%, before losing 90% of its value. However, historically, over time Bitcoin has always trended upwards over the long-term, making it one of the best investments of the last decade when you zoom out. Bubbles normally last only a few months or years, if Bitcoin is a bubble it has to be by far the longest bubble of all time.

Consider, for example, the “.com bubble” that saw website-based businesses surge in stock price before rapidly crashing. This occurred between 1995 and 2000. Tech equities entered a bear market after the bubble burst in 2001. Companies that experienced that period included the likes of Apple, Google, Amazon and Yahoo, relatively small companies then but now some of the largest companies in the world today. 

Had you invested in tech equities in the 90’s and sold when the “.com” bubble burst you would have missed out on the far greater boom that followed. It is very likely however, many smaller copycat cryptocurrencies will end up going the way of Pets.com and it will be the Googles and Amazons of the crypto world that emerge victorious!

Myth: Bitcoin fails as a currency

 

This is an interesting argument and probably the argument with the most merit. Bitcoin was intended as a currency, but its volatility as a result of speculation stemming from its limited supply, transformed it more into an asset. Indeed, it may never revert fully to its intended purpose but that is not an argument for it to become irrelevant. Gold was once used as a currency but would no longer be considered as such, yet it is now far more valuable as a trusted store of value.

Moreover, the innovation that Bitcoin spurred led to the advent of stablecoins. Stablecoins’ purpose is to allow crypto to be transferred without volatility upsetting transactions. Stablecoins are the bridge that allows crypto to be used more easily as a currency in the real world.

Myth: Bitcoin can’t scale

 

Looking at its processing speed and capacity in isolation, one might reach this conclusion. 

Bitcoin’s native blockchain can only support 7-10 transactions per second and process 1MB of data per block. Compared to payments giant VISA, which has the capacity to process 4000 transactions per second, this is minuscule. 

However, again, this is looking at the wrong thing. Bitcoin’s processing volume is over $5 billion per day, which averages to $5,000 per transaction, much higher than Visa’s $80 per transaction average. Moreover, layer two solutions such as the Lightning Network are now helping Bitcoin to surpass VISA’s maximum output with ease.

Myth: Bitcoin gets hacked

 

 

This is simply not true. Bitcoin has never been “hacked”. Thanks to Bitcoin’s consensus mechanism, Proof-of-Work (PoW), Bitcoin’s blockchain can only be tampered with, with the consent of the majority of miners. 

Headlines about Bitcoin being “hacked” tend to refer to poorly run cryptocurrency exchanges losing customers’ money. But this is not happening at the chain level. This is simply down to businesses not maintaining proper protocols and customers failing to choose exchanges like Xcoins, that don’t keep hold of customer crypto. 

 

Some fear the advent of quantum computing could threaten bitcoin in future, but quantum computers would need to become a million times more powerful than they are today for this to happen and by this time Bitcoin’s security will be far stronger.

Myth: China controls bitcoin

 

This is clearly false. China has in fact tried to stop Bitcoin several times. But for the reason explained above, no government has the ability to shut down Bitcoin due to its decentralized nature. This includes China. 

In the past, a large portion of mining activity on the Bitcoin blockchain emanated from China. However, after a recent mining ban in China, China’s mining activity has largely moved overseas, decentralizing bitcoin even further and making Bitcoin’s network even stronger.

 

From Myths to Mainstream

Bitcoin, like any new world-changing force, faces its share of conspiracy theories, myths and misconceptions. These myths often stem from a lack of understanding of its underlying principles and the broader economic context. Despite the numerous arguments against Bitcoin, its resilience and growing adoption by mainstream financial institutions underscore its legitimacy and potential.

The narrative around Bitcoin is evolving. As it matures, it continues to debunk long-standing myths while demonstrating its utility and robustness. From its decentralized nature, which makes it nearly impossible for any single government to control, to its capacity for innovation and adaptation, Bitcoin is proving to be more than just a passing trend. As more people and institutions embrace it, the myths will likely diminish, giving way to a more informed and nuanced understanding of what Bitcoin truly represents in the modern financial landscape.

As you navigate the complex world of cryptocurrencies, it’s crucial to rely on accurate information and stay informed about the latest developments. Bitcoin’s journey is far from over, and its impact on the global economy is only just beginning to unfold.

As always, this article does not constitute financial advice and you should be sure to do your own research and consult a professional financial advisor before making a major investment decision.

As always, this article does not constitute financial advice. You should be sure to do your own research and consult a professional financial advisor before making a major investment decision.

To stay up to date on all things crypto, like Xcoins on Facebook, and follow us on Twitter, Instagram, TikTok, and LinkedIn.