There are folks who still keep repeating the same mainstream news narrative that keeps throwing a lot of negativity on cryptocurrencies. Lot of these myths are based on substandard research, I wanted to extinguish some of these myths out there related to Bitcoin and share some helpful links below this article for your own research.
Lets start with the most common myths about cryptocurrencies –
Bitcoin is For Criminals
Many people think that Bitcoin is being used for criminal activity whereas in reality the bulk of most of the activity (99.5%) is for completely legitimate purposes.
Bitcoin is Private
Bitcoin is one of the most traceable type of money on earth. Everything that is done on the blockchain can instantly be see by anyone who has a blockchain explorer. If you want true privacy, the gold standard is always Monero and Piratechain. To learn about Privacy coins, you should check out the episode on the FINfluential on why Privacy Matters.
Governments Can Shut Down
There is a conception that government can restrict open source and peer to peer technology. More recently you have had countries from India to Nigeria, Turkey to Russia. The only problem in their plan is that it physically cannot be done. The nodes are all around the world and as long as there is an active node somewhere the network is likely to live on.
Bitcoin is Centralized
What people need to understand is the difference between the Bitcoin network and the miners on the network. The network itself is a collection of nodes that store the Bitcoin blockchain Just because most of the miners are located in one country does not make the network centralized.
In fact, if we were to take a look at the geographical distribution of Bitcoin nodes across the world, it is incredibly decentralized.
Bitcoin & Environment
There is a mainstream narrative that Bitcoin is bad for the environment. This has been pushed by Elon Musk and is being used as a reason to regulate it. This is untrue as Bitcoin uses cleaner energy sources than most other energy users. It uses 75% from renewables whereas the bulk of energy use is at about 27%.
Retail Can Impact Markets
In reality, the bulk of crypto trading volume (especially for the more liquid cryptocurrencies) is controlled by large investors, institutions According to a Chainalysis report, 4% of the active Bitcoin traders control 85% of the volume in the markets.
Leveraged Trading Will Make You Rich
There is a narrative out there that seems to say leverage trading is a quick way to multiply your gains. However, the sad reality is that most retail traders end up getting absolutely REKT.
Day Trading Will Make You Rich
This is the notion that the best way to generate quick gains is through crypto day trading. The problem with this is that daily crypto moves are incredibly hard to read. They are idiosyncratic and often don’t follow predictable trends
Bitcoin Will Make You Rich
Too many people think that cryptocurrencies are their ticket to becoming a millionaire. This leads them to have false misconceptions about the crypto market and make terrible decisions. You are more likely to hear about the one guy who made a million than the 100 who lost their investments. This is down to the common logical fallacy of survivor-ship bias.
Bitcoin Maximalism – Tribalism
According to the die hard Bitcoin Core maximalists, there is only one true cryptocurrency that will last and that is Bitcoin. This is untrue as we know that there are many use cases that Bitcoin just cannot meet. Everything from privacy preserving to smart contracts and scalability.
► Chainalysis Report on Whales: https://blog.chainalysis.com/reports/bitcoin-market-data-exchanges-trading
► Coinshares Report: https://coinshares.com/research/bitcoin-mining-network-june-2019
► BitMEX Report Telegram Post: https://t.me/cbinsider/823
► Square Renewable Energy: https://squareup.com/ca/en/press/bcei-white-paper
► Chainalysis Criminal Report: https://blog.chainalysis.com/reports/2021-crypto-crime-report-intro-ransomware-scams-darknet-markets