Difference between revisions of "Myths"

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(Bitcoin has no built-in chargeback mechanism, and this is bad)
(Quantum computers would break bitcoin's security)
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Yes but Bitcoin's security can be upgraded.
Yes but Bitcoin's security can be upgraded.
See the implications of quantum computers on public key cryptography here http://en.wikipedia.org/wiki/Quantum_computer#Potential

Revision as of 22:05, 23 March 2011

Lets clear up common Bitcoin misconceptions.


Bitcoins don't solve any problems that fiat and/or gold doesn't solve

  • easy to transfer and store
  • potentially anonymous
  • inflation proof
  • not controlled by a central authority

The bitcoin is backed by CPU cycles

Bitcoin is not backed by anything. It is a commodity in its own right. Is gold backed by anything? No! It's just gold. Same thing with bitcoin.

The Bitcoin currency is protected when adequate computing power exists.

Bitcoins value is based on how much electricity it takes to mine them

Thats the labor theory of value. (insert counterexample scenario here)

Bitcoins have no intrinsic value (unlike some other things)

There is no such thing as intrinsic value. Value is determined by what people are willing to trade for – by supply and demand.

Bitcoins are illegal because it's not legal tender

Chickens aren't legal tender.

Bitcoin is a form of domestic terrorism because it only harms the economic stability of the USA and its currency

http://en.wikipedia.org/wiki/Definitions_of_terrorism#United_States according to this, you need to do violent activities to be considered a terrorist for legal purposes. This has no bearing on politicians and idiotic US attorney's public remarks.

Bitcoin will only enable tax evaders which will lead to the eventual downfall of civilization

It's up to you to follow the applicable state laws in your home country, or face the consequences.

Bitcoins can be printed/minted by anyone and are therefore worthless

It requires substantial computing power to generate new coins, and eventually all the coins will be generated.

Bitcoins are worthless because it's based on unproven cryptography

Same cryptography as everything else.

Early adopters are unfairly rewarded

Early adopters are rewarded for taking the high risk of wasting their time and money. Besides, "fairness" is an arbitrary concept that is improbable to be agreed upon by a large population. Establishing fairness is no goal of Bitcoin, as this would be impossible.

You were unfairly born, too.

21 million coins isn't enough, doesn't scale

It infinitely scales. Infinitely small units are possible.

Bitcoins are stored in wallet files, just copy the wallet file to get more coins!

Bitcoin transactions are stored in the block chain. The wallet has your secret keys necessary to spend your money, that is, to enter new transactions into the block chain. Copying the wallet doesn't copy any coins.

Lost coins can't be replaced and this is bad

Bitcoins are divisible to 0.00000001 at this moment, so this is not a problem. If you lose your coins, all other coins will go up in value a little. Consider it a donation to all other Bitcoin Users.

It's a giant ponzi scheme

Not to be confused with the Bitcoin Randomizer which really is a Ponzi scheme.

Deflationary spiral

As deflationary forces may apply, economic factors such as hoarding are offset by human factors that may lessen the chances that a Deflationary spiral will occur.

Bitcoin community are anarchist/conspiracy theorist/gold standard weenies


Anyone with enough computing power can take over the network


Bitcoin violates some sort of government regulations



Fractional reserve banking is not possible

Yes, it is.

1. Start Bitcoin Bank.

2. Accept deposits from customers

3. Make loans, using part of the funds deposited by customers, keeping a fraction thereof in reserve.

4. ????


Point of sale with bitcoins isn't possible because of the 10 minute wait for confirmation

More computing power incentivised by equitable transaction fees will make waiting time negligible. In layman's terms, speedy thing goes in, speedy thing comes out.

Zero confirmations should be good enough for point of sale purchases, which occur almost instantly.

After 21 million coins are mined, no one will run network nodes

When operating costs can't be covered by mining production, which will happen some time before the total amount of BTC is reached, miners are expected to earn profit from transaction fees.

Actually, all 21 million coins will never be fully mined. Before the 21 million mark is reached, an infinite amount of fractions from the final BTC will be generated for nodes.

Actually, a finite amount of fractions will occur before zero BTC is mined per block.

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

Why some people think its bad: (insert here)

Solutions to the above: (insert here)

Bitcoin is just like all the other virtual currencies, nothing new

All other virtual currencies can be printed at the subjective whims of their creators. Bitcoin is limited.

Quantum computers would break bitcoin's security

Yes but Bitcoin's security can be upgraded.

See the implications of quantum computers on public key cryptography here http://en.wikipedia.org/wiki/Quantum_computer#Potential