Myths - Revision history

Jesse.am: /* Bitcoin has no built-in chargeback mechanism and this is bad */

2022-08-30T20:21:32Z

Bitcoin has no built-in chargeback mechanism and this is bad

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	== Bitcoin has no built-in chargeback mechanism and this is bad ==		== Bitcoin has no built-in chargeback mechanism and this is bad ==

	Bitcoin base-layer transactions are [[Irreversible Transactions\|final and irreversible by design]], but consumer protection can still built into bitcoin in other layers on top. The most practical way of doing this is [[Multisignature\|multisig]] escrow. For example when trading over-the-counter, [[Secure_Trading#Use_an_Escrow_Service\|using an escrow]] is essential protection.		Bitcoin base-layer transactions are [[Irreversible Transactions\|final and irreversible by design]], but consumer protection can still be built into bitcoin in other layers on top. The most practical way of doing this is [[Multisignature\|multisig]] escrow. For example when trading over-the-counter, [[Secure_Trading#Use_an_Escrow_Service\|using an escrow]] is essential protection.

	It's worth noting that virtually all successful consumer-facing bitcoin businesses do indeed already implement some kind of consumer protection; Routine escrow was used by Localbitcoins, Silk Road and the bitcoin ebay-site Bitmit. Others such as online bitcoin casinos rely on their long-standing reputation, while others such as Coinbase.com rely on the legal and regulatory system.		It's worth noting that virtually all successful consumer-facing bitcoin businesses do indeed already implement some kind of consumer protection; Routine escrow was used by Localbitcoins, Silk Road and the bitcoin ebay-site Bitmit. Others such as online bitcoin casinos rely on their long-standing reputation, while others such as Coinbase.com rely on the legal and regulatory system.

Fturco: use HTTPS for links to garzikrants.blogspot.com

2018-08-24T17:55:38Z

use HTTPS for links to garzikrants.blogspot.com

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	== Bitcoin makes self-sufficient artificial intelligence possible ==		== Bitcoin makes self-sufficient artificial intelligence possible ==
	[[StorJ]]<ref>[~~http~~://garzikrants.blogspot.com/2013/01/storj-and-bitcoin-autonomous-agents.html StorJ And Bitcoin Autonomous Agents]</ref>, a theorized autonomous agent which utilizes humans to build itself and issues autonomous payments for improvement work done, is not a conscious entity. Whatever AI is possible, is not going to be magically more possible simply because it could incentivize human behaviour with pseudonymous Bitcoin payments.		[[StorJ]]<ref>[https://garzikrants.blogspot.com/2013/01/storj-and-bitcoin-autonomous-agents.html StorJ And Bitcoin Autonomous Agents]</ref>, a theorized autonomous agent which utilizes humans to build itself and issues autonomous payments for improvement work done, is not a conscious entity. Whatever AI is possible, is not going to be magically more possible simply because it could incentivize human behaviour with pseudonymous Bitcoin payments.

	== [[Mining\|Bitcoin mining]] is a waste of energy and harmful for ecology ==		== [[Mining\|Bitcoin mining]] is a waste of energy and harmful for ecology ==

Fturco: fix broken external link

2018-08-24T17:53:52Z

fix broken external link

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	== Bitcoin is illegal because it's not legal tender ==		== Bitcoin is illegal because it's not legal tender ==
	In March 2013, the U.S. [https://en.wikipedia.org/wiki/Financial_Crimes_Enforcement_Network Financial Crimes Enforcement Network] issues a new set of guidelines on "de-centralized virtual currency", clearly targeting Bitcoin. Under the new guidelines, "a user of virtual currency is not a Money Services Businesses (MSB) under FinCEN's regulations and therefore is not subject to MSB registration, reporting, and record keeping regulations." <ref>[https://arstechnica.com/tech-policy/2013/03/us-regulator-bitcoin-exchanges-must-comply-with-money-laundering-laws/ US regulator: Bitcoin exchanges must comply with money-laundering laws \| Ars Technica]</ref> [[Mining\|Miners]], when mining bitcoins for their own personal use, aren't required to register as a MSB or Money Transmitter. <ref>[~~http~~://fincen.gov/~~news_room~~/rp/rulings/~~html/FIN~~-~~2014~~-~~R001.html~~ Application of FinCEN’s Regulations to Virtual Currency Mining Operations \| Fincen]</ref>		In March 2013, the U.S. [https://en.wikipedia.org/wiki/Financial_Crimes_Enforcement_Network Financial Crimes Enforcement Network] issues a new set of guidelines on "de-centralized virtual currency", clearly targeting Bitcoin. Under the new guidelines, "a user of virtual currency is not a Money Services Businesses (MSB) under FinCEN's regulations and therefore is not subject to MSB registration, reporting, and record keeping regulations." <ref>[https://arstechnica.com/tech-policy/2013/03/us-regulator-bitcoin-exchanges-must-comply-with-money-laundering-laws/ US regulator: Bitcoin exchanges must comply with money-laundering laws \| Ars Technica]</ref> [[Mining\|Miners]], when mining bitcoins for their own personal use, aren't required to register as a MSB or Money Transmitter. <ref>[https://www.fincen.gov/resources/statutes-regulations/administrative-rulings/application-fincens-regulations-virtual-0 Application of FinCEN’s Regulations to Virtual Currency Mining Operations \| Fincen]</ref>

	In general, there are a [https://en.wikipedia.org/wiki/Local_currency number of currencies] in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, [https://en.wikipedia.org/wiki/BerkShares BerkShares], game currencies like WoW gold, or Linden dollars, is not illegal.		In general, there are a [https://en.wikipedia.org/wiki/Local_currency number of currencies] in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, [https://en.wikipedia.org/wiki/BerkShares BerkShares], game currencies like WoW gold, or Linden dollars, is not illegal.

Fturco: use HTTPS for links to arstechnica.com

2018-08-24T17:47:51Z

use HTTPS for links to arstechnica.com

← Older revision		Revision as of 17:47, 24 August 2018
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	== Bitcoin is illegal because it's not legal tender ==		== Bitcoin is illegal because it's not legal tender ==
	In March 2013, the U.S. [https://en.wikipedia.org/wiki/Financial_Crimes_Enforcement_Network Financial Crimes Enforcement Network] issues a new set of guidelines on "de-centralized virtual currency", clearly targeting Bitcoin. Under the new guidelines, "a user of virtual currency is not a Money Services Businesses (MSB) under FinCEN's regulations and therefore is not subject to MSB registration, reporting, and record keeping regulations." <ref>[~~http~~://arstechnica.com/tech-policy/2013/03/us-regulator-bitcoin-exchanges-must-comply-with-money-laundering-laws/ US regulator: Bitcoin exchanges must comply with money-laundering laws \| Ars Technica]</ref> [[Mining\|Miners]], when mining bitcoins for their own personal use, aren't required to register as a MSB or Money Transmitter. <ref>[http://fincen.gov/news_room/rp/rulings/html/FIN-2014-R001.html Application of FinCEN’s Regulations to Virtual Currency Mining Operations \| Fincen]</ref>		In March 2013, the U.S. [https://en.wikipedia.org/wiki/Financial_Crimes_Enforcement_Network Financial Crimes Enforcement Network] issues a new set of guidelines on "de-centralized virtual currency", clearly targeting Bitcoin. Under the new guidelines, "a user of virtual currency is not a Money Services Businesses (MSB) under FinCEN's regulations and therefore is not subject to MSB registration, reporting, and record keeping regulations." <ref>[https://arstechnica.com/tech-policy/2013/03/us-regulator-bitcoin-exchanges-must-comply-with-money-laundering-laws/ US regulator: Bitcoin exchanges must comply with money-laundering laws \| Ars Technica]</ref> [[Mining\|Miners]], when mining bitcoins for their own personal use, aren't required to register as a MSB or Money Transmitter. <ref>[http://fincen.gov/news_room/rp/rulings/html/FIN-2014-R001.html Application of FinCEN’s Regulations to Virtual Currency Mining Operations \| Fincen]</ref>

	In general, there are a [https://en.wikipedia.org/wiki/Local_currency number of currencies] in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, [https://en.wikipedia.org/wiki/BerkShares BerkShares], game currencies like WoW gold, or Linden dollars, is not illegal.		In general, there are a [https://en.wikipedia.org/wiki/Local_currency number of currencies] in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, [https://en.wikipedia.org/wiki/BerkShares BerkShares], game currencies like WoW gold, or Linden dollars, is not illegal.

Fturco: fix internal link (avoid redirect)

2018-08-24T17:47:04Z

fix internal link (avoid redirect)

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	It is safe to say that the currency itself has never been 'hacked'. However, several major ''websites'' using the currency have been hacked, often resulting in high profile Bitcoin heists. These heists are misreported in some media as hacks on Bitcoin itself. An analogy: just because someone stole US dollars from a supermarket till, doesn’t mean that the US dollar as a currency has been 'hacked'.		It is safe to say that the currency itself has never been 'hacked'. However, several major ''websites'' using the currency have been hacked, often resulting in high profile Bitcoin heists. These heists are misreported in some media as hacks on Bitcoin itself. An analogy: just because someone stole US dollars from a supermarket till, doesn’t mean that the US dollar as a currency has been 'hacked'.

	Most bitcoin thefts are the result of inadequate [[~~Securing your wallet~~\|wallet security]]. In response to the wave of thefts in 2011 and 2012, the community has developed risk-mitigating measures such as [[Wallet_encryption\|wallet encryption]], support for [[BIP_0011\|multiple signatures]], [[How_to_set_up_a_secure_offline_savings_wallet\|offline wallets]], [[Paper_wallet\|paper wallets]], and [[Hardware_wallet\|hardware wallets]]. As these measures gain adoption by merchants and users, the number of thefts drop.		Most bitcoin thefts are the result of inadequate [[Storing bitcoins\|wallet security]]. In response to the wave of thefts in 2011 and 2012, the community has developed risk-mitigating measures such as [[Wallet_encryption\|wallet encryption]], support for [[BIP_0011\|multiple signatures]], [[How_to_set_up_a_secure_offline_savings_wallet\|offline wallets]], [[Paper_wallet\|paper wallets]], and [[Hardware_wallet\|hardware wallets]]. As these measures gain adoption by merchants and users, the number of thefts drop.

	==References==		==References==

Fturco: fix capitalization

2018-08-24T17:44:52Z

fix capitalization

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	In the history of Bitcoin, there has never been an attack on the [[block chain]] that resulted in stolen money from a confirmed output. Neither has there ever been a reported theft resulting directly from a vulnerability in the [[Original Bitcoin client\|original Bitcoin client]], or a vulnerability in the protocol. Bitcoin is secured by standard cryptographic functions. These functions have been peer reviewed by cryptography experts and are considered unlikely to be breakable in the foreseeable future.		In the history of Bitcoin, there has never been an attack on the [[block chain]] that resulted in stolen money from a confirmed output. Neither has there ever been a reported theft resulting directly from a vulnerability in the [[Original Bitcoin client\|original Bitcoin client]], or a vulnerability in the protocol. Bitcoin is secured by standard cryptographic functions. These functions have been peer reviewed by cryptography experts and are considered unlikely to be breakable in the foreseeable future.

	It is safe to say that the currency itself has never been 'hacked'. However, several major ''websites'' using the currency have been hacked, often resulting in high profile Bitcoin heists. These heists are misreported in some media as hacks on Bitcoin itself. An analogy: ~~Just~~ because someone stole US dollars from a supermarket till, doesn’t mean that the US dollar as a currency has been 'hacked'.		It is safe to say that the currency itself has never been 'hacked'. However, several major ''websites'' using the currency have been hacked, often resulting in high profile Bitcoin heists. These heists are misreported in some media as hacks on Bitcoin itself. An analogy: just because someone stole US dollars from a supermarket till, doesn’t mean that the US dollar as a currency has been 'hacked'.

	Most bitcoin thefts are the result of inadequate [[Securing your wallet\|wallet security]]. In response to the wave of thefts in 2011 and 2012, the community has developed risk-mitigating measures such as [[Wallet_encryption\|wallet encryption]], support for [[BIP_0011\|multiple signatures]], [[How_to_set_up_a_secure_offline_savings_wallet\|offline wallets]], [[Paper_wallet\|paper wallets]], and [[Hardware_wallet\|hardware wallets]]. As these measures gain adoption by merchants and users, the number of thefts drop.		Most bitcoin thefts are the result of inadequate [[Securing your wallet\|wallet security]]. In response to the wave of thefts in 2011 and 2012, the community has developed risk-mitigating measures such as [[Wallet_encryption\|wallet encryption]], support for [[BIP_0011\|multiple signatures]], [[How_to_set_up_a_secure_offline_savings_wallet\|offline wallets]], [[Paper_wallet\|paper wallets]], and [[Hardware_wallet\|hardware wallets]]. As these measures gain adoption by merchants and users, the number of thefts drop.

Fturco: update external link (avoid redirect)

2018-08-24T17:40:55Z

update external link (avoid redirect)

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	== Shopkeepers can't seriously set prices in bitcoins because of the volatile exchange rate ==		== Shopkeepers can't seriously set prices in bitcoins because of the volatile exchange rate ==

	The assumption is that bitcoins must be sold immediately to cover operating expenses. If the shopkeeper's back-end expenses were transacted in bitcoins as well, then the exchange rate would be irrelevant. Larger adoption of Bitcoin would make prices [https://en.wikipedia.org/wiki/~~Sticky_%28economics%29~~ sticky]. Future volatility is expected to decrease, as the size and depth of the market grows.		The assumption is that bitcoins must be sold immediately to cover operating expenses. If the shopkeeper's back-end expenses were transacted in bitcoins as well, then the exchange rate would be irrelevant. Larger adoption of Bitcoin would make prices [https://en.wikipedia.org/wiki/Nominal_rigidity sticky]. Future volatility is expected to decrease, as the size and depth of the market grows.

	In the meantime, many merchants simply regularly pull the latest market rates from the exchanges and automatically update the prices on their websites. Also you might be able to buy a put option in order to sell at a fixed rate for a given amount of time. This would protect you from drops in price and simplify your operations for that time period.		In the meantime, many merchants simply regularly pull the latest market rates from the exchanges and automatically update the prices on their websites. Also you might be able to buy a put option in order to sell at a fixed rate for a given amount of time. This would protect you from drops in price and simplify your operations for that time period.

Fturco: fix external link (avoid redirect)

2018-08-24T17:35:37Z

fix external link (avoid redirect)

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	'''Economic Argument 1'''		'''Economic Argument 1'''

	[[Mining\|Bitcoin mining]] is a highly competitive, dynamic, almost [https://en.wikipedia.org/wiki/~~Perfect_market~~ perfect]~~, market~~. Mining rigs can be set up and dismantled almost anywhere in the world with relative ease. Thus, market forces are constantly pushing mining activity to ''places'' and ''times'' where the marginal price of electricity is low or zero. These electricity products are cheap for a reason. Often, it’s because the electricity is difficult (and wasteful) to transport, difficult to store, or because there is low demand and high supply. Using electricity in this way is a lot less wasteful than simply plugging a mining rig into the mains indiscriminately.		[[Mining\|Bitcoin mining]] is a highly competitive, dynamic, almost [https://en.wikipedia.org/wiki/Perfect_competition perfect market]. Mining rigs can be set up and dismantled almost anywhere in the world with relative ease. Thus, market forces are constantly pushing mining activity to ''places'' and ''times'' where the marginal price of electricity is low or zero. These electricity products are cheap for a reason. Often, it’s because the electricity is difficult (and wasteful) to transport, difficult to store, or because there is low demand and high supply. Using electricity in this way is a lot less wasteful than simply plugging a mining rig into the mains indiscriminately.

	For example, Iceland produces an excess of cheap electricity from renewable sources, but it has no way of exporting electricity because of its remote location. It is conceivable that at some point in future Bitcoin mining will only be profitable in places like Iceland, and unprofitable in places like central Europe, where electricity comes mostly from nuclear and fossil sources.		For example, Iceland produces an excess of cheap electricity from renewable sources, but it has no way of exporting electricity because of its remote location. It is conceivable that at some point in future Bitcoin mining will only be profitable in places like Iceland, and unprofitable in places like central Europe, where electricity comes mostly from nuclear and fossil sources.

Fturco: fix external link (avoid redirect)

2018-08-24T17:32:47Z

fix external link (avoid redirect)

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	Bitcoin's security was designed to be upgraded in a forward compatible way and could be [https://en.wikipedia.org/wiki/Post-quantum_cryptography upgraded] if this were considered an imminent threat (cf. Aggarwal et al. 2017, "[https://arxiv.org/abs/1710.10377 Quantum attacks on Bitcoin, and how to protect against them]").		Bitcoin's security was designed to be upgraded in a forward compatible way and could be [https://en.wikipedia.org/wiki/Post-quantum_cryptography upgraded] if this were considered an imminent threat (cf. Aggarwal et al. 2017, "[https://arxiv.org/abs/1710.10377 Quantum attacks on Bitcoin, and how to protect against them]").

	See the [https://en.wikipedia.org/wiki/~~Quantum_computer~~#Potential implications of quantum computers on public key cryptography].		See the [https://en.wikipedia.org/wiki/Quantum_computing#Potential implications of quantum computers on public key cryptography].

	The ''risk'' of quantum computers is also there for financial institutions, like banks, because they heavily rely on cryptography when doing transactions.		The ''risk'' of quantum computers is also there for financial institutions, like banks, because they heavily rely on cryptography when doing transactions.

Fturco: fix typo

2018-08-24T17:30:32Z

fix typo

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	It's worth noting that virtually all successful consumer-facing bitcoin businesses do indeed already implement some kind of consumer protection; Routine escrow was used by Localbitcoins, Silk Road and the bitcoin ebay-site Bitmit. Others such as online bitcoin casinos rely on their long-standing reputation, while others such as Coinbase.com rely on the legal and regulatory system.		It's worth noting that virtually all successful consumer-facing bitcoin businesses do indeed already implement some kind of consumer protection; Routine escrow was used by Localbitcoins, Silk Road and the bitcoin ebay-site Bitmit. Others such as online bitcoin casinos rely on their long-standing reputation, while others such as Coinbase.com rely on the legal and regulatory system.

	The bitcoin method of routinely using escrow has benefits over competitors like credit cards. The security of credit cards is not very good which results in higher costs overall and the possibility of payments being reversed for months afterwards. By contrast when bitcoins have been released to the seller from escrow, they cannot be reversed as the coins are ~~truely~~ in the seller's possession. The requirement to use real-life names for credit cards and PayPal also excludes unbanked people and those from countries with less developed financial infrastructure. There are also downsides like bitcoin is not yet as widely accepted as credit cards and is not a front for providing lines of credit.		The bitcoin method of routinely using escrow has benefits over competitors like credit cards. The security of credit cards is not very good which results in higher costs overall and the possibility of payments being reversed for months afterwards. By contrast when bitcoins have been released to the seller from escrow, they cannot be reversed as the coins are truly in the seller's possession. The requirement to use real-life names for credit cards and PayPal also excludes unbanked people and those from countries with less developed financial infrastructure. There are also downsides like bitcoin is not yet as widely accepted as credit cards and is not a front for providing lines of credit.

	== Quantum computers would break Bitcoin's security ==		== Quantum computers would break Bitcoin's security ==