Five myths about bitcoin

It all began on October 31, 2008 with the publication of a white paper called “Bitcoin: A Peer-to-Peer Electronic Cash System.” This white paper, authored by an individual known by the pseudonym Satoshi Nakamoto, marked the start of what has become Bitcoin.

The fact that as of today, no one knows who Satoshi Nakamoto is or if he’s just one person or instead a group of people writing under a pen name lends an air of mystery to Bitcoin. Whoever or whatever he may be, Satoshi Nakamoto disappeared in 2011 allegedly telling a few of the core developers that he had “moved on to other things.”

This aura of mystery surrounding the origin of Bitcoin and the sheer novelty of having a new form of “electronic cash” which is not controlled by any government, has given rise to many misconceptions about it.

Myth No. 1

Bitcoin is the same thing as Blockchain

One of the key innovations of Bitcoin was the use of a new type of ledger technology called a Blockchain. By using Blockchain, Bitcoin enables two parties to transfer value by sending bitcoin to one another over the Internet, without needing the services of a third party such as a bank. This ability to transfer value securely over the Internet between parties is one of the primary innovations that Bitcoin gave birth to. However, Blockchain is only one of the components of Bitcoin, and there is much more to Bitcoin than merely Blockchain.

Myth No. 2

Bitcoin is a Pyramid scheme

Given the incredible rise in the price of Bitcoin, some people believe that it’s simply impossible that a digital asset which is not backed by any government or any physical asset could be worth so much. As a result, there is the mistaken belief that Bitcoin is actually just a carefully constructed pyramid scheme, and that there are entities which have designed the whole thing as a way to enrich themselves. This idea that Bitcoin is a pyramid scheme is simply impossible as there is no central authority to control Bitcoin.

Myth No. 3

Bitcoin is Anonymous

One of the most common misconceptions about Bitcoin is that it is anonymous. While there is some truth to this concept, given that you do not need to provide your name or any identifying information to send and receive bitcoin – there is a permanent record of every bitcoin transaction that takes place permanently recorded on the Bitcoin Blockchain.

Every single transaction on Bitcoin leaves a permanent record which can be viewed by anyone on the Internet by using what is called a Block Explorer. Each transaction record includes the Bitcoin addresses of the sender and the recipient of Bitcoin. As a result, it is possible to keep track of the transfers of bitcoin between parties by simply looking for the movement of bitcoin between addresses. So, while you do not need to provide your name in order to get a Bitcoin address to send and receive bitcoin, it is fairly easy to see which address is sending bitcoin to another address. Because of this, it is often said that Bitcoin is “Pseudonymous” rather than “Anonymous.” Similar to how an actor can be known by a “Stage name / pseudonym” – if the actor’s real name were one day discovered, their identity would be permanently known by everyone since you can match the pseudonym to their real name.

Myth No. 4

You Need to Buy One Full Bitcoin

One of the biggest misunderstandings about Bitcoin is that people believe that in order to get into Bitcoin, you need to buy a full bitcoin. Given that the price of one bitcoin has risen well above one thousand dollars (at the time of this article), it becomes very costly to get into Bitcoin. However, this is not accurate, and you can buy, acquire, give or sell any amount of bitcoin -far less than one full bitcoin. All you need is a digital wallet to get started and there are many places you can securely buy bitcoin from.

Myth No. 5

You Can Simply Turn Bitcoin Off

Given the mysterious origins of Bitcoin and the public lack of knowledge about how Bitcoin works, some people believe that it is possible to “turn off Bitcoin.” In other words, that there is some way that some entity can disconnect Bitcoin and suddenly the entire thing would disappear, taking away all the billions of dollars in value which are stored as bitcoins on the network. This is simply incorrect as Bitcoin “lives” simultaneously across a decentralized network of thousands of computers worldwide. Each of these computers keeps a copy of the entire Bitcoin Blockchain, which keeps a permanent record of every single bitcoin transaction ever made. Each of these “nodes”, runs on its own and can operate independently to keep the Bitcoin network running. Because of this, should there be any attempt at interrupting Bitcoin by blocking access to any group of nodes, the rest of the network would continue operating and Bitcoin would still remain operational. And because there is no single centralized authority controlling Bitcoin, there is no single entity which may have a “power switch” to turn off Bitcoin.

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George Levy

George Levy is Chief Learning Officer for Blockchain Institute of Technology (BIT) and a co-founder of Bitsonline. Blockchain Institute of Technology (BIT) is one of the world’s leading Blockchain technology training providers. BIT partners with companies and individuals to address their unique needs, providing training and certification that helps professionals reach their goals. George is an award-winning digital entrepreneur, Certified Senior Blockchain Professional (CSBCP) and Certified Bitcoin Professional (CBP) expert on Blockchain technology, and was a co-founder of Yupi.com a leading Internet portal acquired by Microsoft. Follow George on Twitter @georgelevy and @blockchaininfos

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