Debunking common crypto myths

This article was prompted by a bunch of other posts on Medium from people saying that cryptocurrencies have various flaws that will eventually bring it down to zero. That is just groundless speculation.

So now, we are going to refute each of these myths one by one.

Myth: Bitcoin is banned by many countries

I have yet to find a country that has banned bitcoin ownership. True, there are a handful of countries who have banned Bitcoin payments such as China, Turkey and Russia (as well as possibly Nigeria). Some other countries & states have also banned Bitcoin mining. But the truth is, your bitcoins cannot be arbitrarily seized, because there is no legal precedent to do that.

As long as you can still own a bitcoin, Bitcoin is legal in that country.

Myth: Bitcoin is a scam

This is a loaded argument, akin to firing a full shotgun round. But it does not hold any ground either.

Most people who say this probably got scammed by some professional con artist, but this underscores the need for self-education: Look up “keep your bitcoins safe” on Google to find easy to follow steps to protect your funds from theft.

It is financial literacy 101: protect your money from theft, whether it is cash, a credit card, or bank account details. If you need a safe to keep your money secure, then buy one. The equivalent in cryptocurrency is a “hardware wallet” and is highly recommended.

But just like you wouldn’t give the safe keys to strangers, don’t give them your private key or seed phrase (basically, a private key written in the English language) either.

But you didn’t refute the argument.

Exactly which part of the bitcoin ecosystem makes it a scam?

Is it the fact that some person lost access to their wallet and is now yelling at a cloud Homer-style? This was covered above.

Is it because of Bitcoin’s price volatility caused your holdings to decrease in value? Read on.

Is it because an exchange froze your funds? Read on too.

Myth: Bitcoin will never succeed because it is too volatile

This ignores the fact that Bitcoin’s demand has grown at a slower rate of change (acceleration) after each halvening.

In 2009, it was hardly worth anything. Because only a few people were using it.

Then, as more and more people started using it, Bitcoin gained a higher value proportional to the demand of its users. Demand is created when you try to buy something. This is basic economics.

Nowadays people buy bitcoins at an exchange, which is connected to the rest of the financial world. So as more and more people wanted to buy Bitcoin, it’s price went up.

The opposite is also true. If the demand cools down, as in, people no longer want to use Bitcoin, they will sell their coins on an exchange and the price will go down.

None of this is Bitcoin’s fault, that’s just how people are. It’s similar to how if everyone suddenly stops buying Macs, their price tag will tank.

Myth: Exchanges and other corps can freeze money so crypto is unsafe.

The first part of that sentence is true, the second is not. Most crypto will always be safe to use whether corps are failing or not. It just means that you need to keep your coins in a non-custodial wallet.

If you’re here because some exchange froze your funds, I’m assuming you have already completed KYC. (if not, what are you doing here?) Exchanges should only be used for their intended purpose: Buying and selling crypto. They should not be used as a wallet, because it’s not safe to leave your crypto in an exchange. They could get hacked, become insolvent, and more.

Myth: Bitcoin and other cryptos cannot be insured by anyone

Neither can cash or other commodities. Only bank accounts can be insured. Bitcoin is not a bank, it is the exact opposite of one, where you keep control of your coins and consequentially, you can’t lose your money to insolvency.

Myth: Bitcoin is a climate-destroying monster

<insert The Hulk screaming and smashing stuff here>

That’s not true either, because first of all, all that energy is going to a useful utility which is powering a global internet currency (which we can all agree by now is critical infrastructure), and second, more and more of that energy is coming from renewables — as opposed to the AWS servers that are posting this website. I actually made an entire site just for refuting this accusation, and you can see it here.

Thanks for reading, and comments are welcome!