6 most famous Bitcoin myths

By MichDon | MichDon | 2 May 2020

Bitcoin has been around for quite some time now, but myths remain around the king of cryptocurrencies. We list a number of myths surrounding the largest crypto coin and blockchain technology.

1. Bitcoin & Blockchain are the same

No, that is certainly not true. It is quite easy to understand why these two terms are confused. Bitcoin is a cryptocurrency that is both electronically created and stored electronically. Blockchain can be seen as a platform for cryptocurrencies. Simply put: without blockchain, the largest cryptocurrency does not exist.

Digital or virtual currencies are unregulated. Transactions are basically stored and transferred using a distributed ledger on a peer-to-peer network. No one "owns" this currency, it offers a degree of anonymity, speed, and no red tape. Blockchain is the technology on which the transaction registration is maintained. Payment is one of the applications of bitcoin, just like a hoard. Blockchain can be used by every industry, institution and every individual.

2. Bitcoin consumes all the energy in the world

This is something that has been spread through a number of media outlets to manipulate the bitcoin price. Certainly, mining consumes a lot of energy. Thousands of specific hardware use huge amounts of power to create new coins. The reason for the energy consumption is not because the network requires it, but because of the price increase. Nodes that use software compete against each other to solve complex puzzles. Bitcoins are awarded to the computer that solves the puzzle. And as prices rise, more computers are installed that require more processing power to mine.

3. Bitcoin transactions are anonymous

There is anonymity, but it is not 100% private. Every time you make a transaction, the address is stored in the blockchain forever. If someone links your address to your identity, then every transaction can be linked to you. What makes Bitcoin anonymous? Because anyone can create a random bitcoin address at any time without providing information. And without a transaction associated with an identity and the data being sent to arbitrary nodes.

However, if someone connects multiple nodes, the data collected can reveal the identity of the transaction's origin.

4. Bitcoin is a Ponzi scheme

A Ponzi scheme is a form of fraud that pays investors back with money from subsequent investors rather than money from profit. Since it is a peer-to-peer, open-source currency, there is no central entity that can lead such a scheme. Read my article on Ponzi and fraud to learn more on this topic: Be warned: The pump and dump explained!

5. No one will generate new blocks after the last bitcoin has been mined.

When a number of 21 million bitcoins is reached, no new coins are possible anymore. The network still needs to be secured. The incentive for miners may decrease, but generating new blocks is important to provide the network distributed ledger of transactions. Read my separate article for an in depth analysis on this topic: What happens to miners when all Bitcoin (BTC) is in circulation?

6. 40 percent of all bitcoins are managed by 1,000 people

Reportedly, 40 percent of Bitcoins are owned by just 1,000 people. This is pure speculation. What we do know for sure is that there are currently over 24 million Bitcoin wallets. However, a person can have hundreds of wallets. The two wallets containing the most Bitcoins have been identified as the cold wallets of Bitfinex and Bittrex.

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MichDon

Crypto entousiast, father, taekwondo

MichDon

Crypto-enthousiast dad with an aim to try to inform readers of new and interesting projects, upgrades and updates to projects and of course any news of interest on the Crypto spectrum.

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