This article is a collection of myths and questions about Bitcoin from many people that they were asking me these things during all these years. In order to not waste more time debating these questions, I will put them together here so all nocoiners, pre-coiners and all those that still have these questions in their mind, to read them and understand once and for all: BITCOIN IS HERE TO FREE THE WORLD.
Read this important initial article: 21 Reasons Why Bitcoin Will Save The World
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Almost all other digital currencies are centrally controlled. This means that:
-They can be printed according to the subjective whims of the drivers.
-They can be destroyed by attacking the central control point.
-Controllers can impose arbitrary rules on their users
+Being decentralized, Bitcoin solves all these problems.
-Read more - Bitcoin commandments.
-#2 - Bitcoin does not solve any problems that fiat currency and / or gold do not solve -Unlike gold, bitcoins are: Easy to transfer, Easy to secure, Easy to verify, Easy to granulate.
-Unlike fiat currencies, bitcoins are: Predictable and limited in supply, Not controlled by a central authority (such as the United States Federal Reserve), Not based on debt.
-Unlike electronic fiat currency systems, bitcoins are: Potentially anonymous, Freeze proof, Faster to transfer, Cheaper to transfer.
-#3 - Miners, developers or some other entity could change the properties of Bitcoin to benefit themselves. -Bitcoin's properties cannot be illegitimately traded as long as the majority of the Bitcoin economy uses full node wallets. Transactions are irreversible and uncensorable as long as no coalition of miners has more than 50% hashing power and the transactions have an appropriate number of confirmations.
+Read more - Bitcoin commandments.
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Bitcoin's properties cannot be illegitimately traded as long as the majority of the Bitcoin economy uses full node wallets. Transactions are irreversible and uncensorable as long as no coalition of miners has more than 50% hashing power and the transactions have an appropriate number of confirmations.
Bitcoin requires certain properties to be applied to make it a good form of money, for example:
-No one created money out of thin air (except miners, and only according to a well-defined schedule).
-Nobody spent coins without knowing their private key.
-No one spent the same coin twice
-No one violated any of the other complicated rules that are needed for the system to work (difficulty, proof of work, DoS protection, ...).
-These rules define bitcoin. A full node is software that checks bitcoin rules. Any transaction that breaks these rules is not a valid bitcoin transaction and would be rejected in the same way that a careful goldsmith rejects fool's gold.
+These rules define bitcoin. A full node is software that checks bitcoin rules. Any transaction that breaks these rules is not a valid bitcoin transaction and would be rejected in the same way that a careful goldsmith rejects fool's gold.
Full node wallets should be used by any intermediate or higher bitcoin user, and especially bitcoin companies. Therefore, anyone who tries to create bitcoins with invalid properties will be rejected by any trading partner. Note that lightweight wallets and web wallets do not have the low-trust benefits of full node wallets. Light wallet (SPV) will blindly trust miners, which means that if 51% of miners printed infinite coins or spent the same coin twice, light wallet users would happily accept these fake bitcoins as payment. Web wallets blindly trust the web server, which could display anything.
Miners must choose from several valid transaction histories. A coalition of more than 50% of the mining power can (at great cost to themselves) rewrite transaction history, so mining decentralization is necessary to keep transactions irreversible. Miners burn a lot of electrical energy in the mining process, so they must constantly exchange their bitcoin income to pay the bills. This makes miners completely dependent on the overall bitcoin economy and therefore gives them a strong incentive to mine valid bitcoin blocks that full nodes will accept as payment.
Influential figures in the community (such as developers, politicians, or investors) may attempt to use their influence to convince people to download and run modified full node software that illegitimately changes the properties of bitcoin. This is unlikely to be successful as long as counterarguments can be freely disseminated through the media, Internet forums, and chat rooms. Many bitcoin users don't follow bitcoin forums on a regular basis or don't even speak English. All appeals to run alternative software must be critically considered to see if the individual agrees with the proposed changes. Full node software should always be open source so that any programmer can examine the changes for himself. Due to the coordination problem, there is usually a strong incentive to maintain the status quo.
-#4 - Bitcoin is backed by processing power. -It is not correct to say that Bitcoin is "backed by" processing power. A "backed" currency means that it is pegged to something else through a central entity at a certain exchange rate, but bitcoins cannot be exchanged for the computing power that was used to create them. Bitcoin, in this sense, is not backed by anything. It is a currency in its own right. Just as gold is not backed by anything, the same applies to Bitcoin.
+ +It is not correct to say that Bitcoin is "backed by" processing power. A "backed" currency means that it is pegged to something else through a central entity at a certain exchange rate, but bitcoins cannot be exchanged for the computing power that was used to create them. Bitcoin, in this sense, is not backed by anything. It is a currency in its own right. Just as gold is not backed by anything, the same applies to Bitcoin.
Bitcoin currency is created through processing power, and the integrity of the blockchain is protected by the existence of a network of powerful computing nodes against certain attacks.
-#5 - Bitcoins are worth nothing because they are not backed by anything -It could be argued that gold is also not backed by anything. Bitcoins have properties resulting from the design of the system that allow them to be subjectively valued by individuals. This valuation is demonstrated when people freely exchange for or with bitcoins. Check out the subjective theory of value. Also here is a very good article, written by Jeffrey Tucker about what gives value to Bitcoin.
-Read more - What Gave Bitcoin Its Value?
-#6 - The value of bitcoins is based on the amount of electricity and computing power it takes to mine them. -This statement is an attempt to apply the labor theory of value, which is generally accepted as false, to Bitcoin. Just because something requires X resources to create does not mean that the resulting product will be worth X. It may be worth more, or less, depending on how useful it is to your users.
-In fact, causality is the opposite (this applies to the labor theory of value in general). The cost of mining bitcoins is based on their value. If bitcoins increase in value, more people will mine (because mining is profitable), therefore the difficulty will increase and the cost of mining will increase. The opposite happens if bitcoins go down in value. These effects are balanced to make mining always cost an amount proportional to the value of bitcoins it produces.
+ +It could be argued that gold is also not backed by anything. Bitcoins have properties resulting from the design of the system that allow them to be subjectively valued by individuals. This valuation is demonstrated when people freely exchange for or with bitcoins. Check out the subjective theory of value. Also here is a very good article, written by Jeffrey Tucker about what gives value to Bitcoin.
+Read more - What Gave Bitcoin Its Value?
+ +This statement is an attempt to apply the labor theory of value, which is generally accepted as false, to Bitcoin. Just because something requires X resources to create does not mean that the resulting product will be worth X. It may be worth more, or less, depending on how useful it is to your users.
+In fact, causality is the opposite (this applies to the labor theory of value in general). The cost of mining bitcoins is based on their value. If bitcoins increase in value, more people will mine (because mining is profitable), therefore the difficulty will increase and the cost of mining will increase. The opposite happens if bitcoins go down in value. These effects are balanced to make mining always cost an amount proportional to the value of bitcoins it produces.
Here is an explanatory audio (EN) on the energy consumption to mine Bitcoin.
-#7 - Bitcoin has no intrinsic value (unlike other things) -This is simply not true. Each bitcoin gives the holder the ability to embed a large number of short messages during the transaction in a time-stamped, globally distributed permanent data store, namely the bitcoin blockchain. There is no other similar data warehouse that is so widely distributed. There is a trade-off between the exact number of messages and how quickly they can be embedded. But from December 2013, it is fair to say that a bitcoin allows you to embed about 1,000 such messages, each within 10 minutes after shipment, since a rate of 0.001 BTC is sufficient to confirm transactions quickly . This message embedding certainly has intrinsic value because it can be used to prove ownership of a document at a given time, to the include a one-way hash of the document in a transaction. Considering that electronic notarization services charge something like $ 10 per document, this would give an intrinsic value of around $ 10,000 per bitcoin.
+ + + +This is simply not true. Each bitcoin gives the holder the ability to embed a large number of short messages during the transaction in a time-stamped, globally distributed permanent data store, namely the bitcoin blockchain. There is no other similar data warehouse that is so widely distributed. There is a trade-off between the exact number of messages and how quickly they can be embedded. But from December 2013, it is fair to say that a bitcoin allows you to embed about 1,000 such messages, each within 10 minutes after shipment, since a rate of 0.001 BTC is sufficient to confirm transactions quickly . This message embedding certainly has intrinsic value because it can be used to prove ownership of a document at a given time, to the include a one-way hash of the document in a transaction. Considering that electronic notarization services charge something like $ 10 per document, this would give an intrinsic value of around $ 10,000 per bitcoin.
While some other tangible commodities have intrinsic value, that value is generally much less than their bargain price. Consider, for example, that gold, if not used as a store of value inflation-proof, but only for industrial uses, it certainly would not be what it is today, since the industrial requirements of gold are much smaller than available. supply of the same.
-In any case, although historically intrinsic value and other attributes such as divisibility, fungibility, scarcity, durability, helped establish certain commodities as a means of exchange, it is certainly not a prerequisite. While bitcoins are accused of lacking 'intrinsic value' in this regard, they more than make up for it by possessing the other qualities necessary to make it a good medium of exchange, equal to or better than merchant money.
+In any case, although historically intrinsic value and other attributes such as divisibility, fungibility, scarcity, durability, helped establish certain commodities as a means of exchange, it is certainly not a prerequisite. While bitcoins are accused of lacking "intrinsic value"; in this regard, they more than make up for it by possessing the other qualities necessary to make it a good medium of exchange, equal to or better than merchant money.
Another way to think about this is to consider the value of bitcoin on the global network, rather than each bitcoin in isolation. The value of an individual phone is derived from the network to which it is connected. If there were no telephone network, a telephone would be useless. Similarly, the value of an individual bitcoin is derived from the global network of merchants, exchanges, wallets, etc. ... A bitcoins enabled the same as a phone is needed to transmit voice information through the network, a bitcoin is necessary to transmit financial information through the network.
Value is ultimately determined by what people are willing to negotiate: supply and demand.
#8 - Bitcoin is illegal because it is not legal tender.