When it comes to Bitcoin which is still very much experimental bitcoin is ripe with misunderstanding. For bitcoin to reach its full potential, this knowledge gap needs to be bridged so that the myths and misinformation come to an end.
Myth number one
Bitcoin mining is bad for the environment.
Recently an article that was published in “Bloomberg” magazine claimed that Bitcoin mining consumes so much energy that it’s destructive to the environment. But in fact, if we compare the amount of energy used in other industries, or let’s say in printing and distributing fiat currencies, we would actually see that in comparison Bitcoin mining conserves energy.
Myth number two
There’s a finite supply of bitcoin
Bitcoin has been described, per the title of one book, as “digital gold,” because it’s supposedly impossible to create more than the 21 million units already planned for circulation. Yet there’s no guarantee that the supply of bitcoin won’t change. The currency will hit a deflationary spiral as bitcoin are accidentally lost over time and the supply dwindles.
Computer scientists also fear that the protocol will become unstable. As inflationary rewards for bitcoin “miners” who secure the system using tremendous computing power are phased out in favour of transaction fees.
Myth number three
Anybody can become a miner
Not necessarily. As he or she needs special hardware chips working constantly to solve the cryptographic puzzles that creates new blocks in the bitcoin ledger in exchange for the rights to newly created bitcoin.
Myth number four
There’s no central controller of bitcoin to facilitate such a Ponzi scheme.
The competing self-interests of the bitcoin ecosystem help kept bitcoin from being a pump and dump in the beginning. The miners who had to buy specialised and expensive equipment in order to mine don’t want bitcoin to go away.
The same is true for people who have built businesses around bitcoin and the people who have invested in them. Besides, if you buy a bitcoin you’re actually getting something in return and not a promise. That bitcoin can be used to buy a plane ticket, a laptop or real estate.