7 Biggest Misconceptions About Bitcoin, Picked by 6 Crypto Experts
‘Why Bitcoin?’ Bitcoin is private Bitcoin is a technology, not money Bitcoin is a (cheap) payment mechanism Bitcoin uses a lot of energy Bitcoin can be compared to old technologies Mainstream media’s portrayal of Bitcoin is trustworthy
What is the biggest misconception regarding Bitcoin? This seems to be a broad question, as industry professionals point at various things. However, one thing is for certain - there are a lot of misconceptions.
Cryptonews.com had talked to several of the major players in the field of blockchain and cryptocurrency on this year’s Baltic Honeybadger conference held in Riga, Latvia, held this September, uncovering 7 biggest misconceptions currently surrounding Bitcoin, in their opinion, and in no particular order.
Watch the interviews or read a quick summary below:
7 misconceptions about Bitcoin
1. ‘Why Bitcoin?’
Among the first questions that should be asked and answered is not only “what is Bitcoin,” but also “why Bitcoin,” finds Samson Mow, Chief Strategy Officer (CSO) at the U.S.-based blockchain company Blockstream. He told us that, while people look into what this coin is, they “just don’t understand why Bitcoin, […] they don't really think about ‘the why’, and ‘the why’ is answering the questions like ‘why it exists in the first place and where it fits in the grand scheme of things.” He seems optimistic about it, though, saying that we’re getting closer to people understanding the reason behind Bitcoin and what it's needed for.
On the same note, Mow said that there is a shift in how people see money. If we observe the way in which people are talking about it, he says, “they're making a differentiation between fiat and money.” Ten years ago, people would have just said ‘money’, but now they say ‘fiat’, which Mow sees as an improvement and as a sign of people “smartening up and realizing that the world is not what they thought it was,” given that “money is money, [and] fiat is an inferior form of money.”
2. Bitcoin is private
Some of the many fallacies about BTC that Chief Technology Officer (CTO) of crypto security specialist Casa, Jameson Lopp, has noticed going around is that it’s mainly used by criminals, but also that it’s mainly anonymous. “I think a lot of people don’t understand how difficult it still is to actually secure it and to use it privately,” the CTO told us, stressing that some don’t see a need to learn more about it, saying: “There are a lot of people right now who have access to good financial infrastructure and they don’t really see much incentive for them to educate themselves and better understand it.”
3. Bitcoin is a technology, not money
There are indeed many opinions going about the Cryptoverse and beyond about what BTC is or is not, but Bitcoin Core developer and entrepreneur, Jimmy Song, chose as the biggest misconception about the coin the belief that it’s a technology and not a money. "People think that by building a better mousetrap, they have a better Bitcoin, and that's just not the case." There are things that are different between money and technology, and “you don't want to make constant changes with money as you do with technology,” said Song.
4. Bitcoin is a (cheap) payment mechanism
While others might not agree, one of our interlocutors says it’s neither cheap nor is it a primarily payment mechanism. Dan Held, Director of Business Development at Kraken , finds the biggest misunderstanding to be that BTC is “a cheap way to pay for coffee, that it's a cheap payment mechanism, that it was meant to disrupt Visa.” He explained that maybe sometimes in the future when the price stabilizes and a lot of people start using BTC, “then maybe it transitions to that medium of exchange.” Held said that this misconception has not only “led to a big misalignment in expectations,” but also “largely damaged Bitcoin's narrative, it caused a civil war to happen, and has caused the press to say ‘BTC is dead and it's not doing anything because people aren't paying their coffee with it', whereas when we look at gold, it's worth USD 7 trillion and no one uses it to pay for anything."
On the other hand, Pierre Rochard, founder of Bitcoin Advisory, a firm that specializes in Bitcoin's economics and software engineering, focuses on what he finds to be a significant distinction – that Bitcoin is primarily a savings technology, and secondarily a payments technology. While people try to minimize how much BTC they spend, they try to maximize how much government currencies they spend. He explains that people don’t think of fiat as savings, but payments technology, and they want to quickly get rid of it, as “you don't want to hold EUR or USD because of the inflation they're gradually losing their value,” especially over a longer period of time. So people either put them into an interest earning savings product / buy stocks or bonds, or they buy things with it. Governments contribute to this as they “deliberately make money inflationary, to discourage people from saving and encourage them to invest and consume.”
"BTC does the opposite,” Rochard says, “as it's trying to incentivize you to hold bitcoin for a long term and to be very picky about what investments or what consumption decisions you make."
5. Bitcoin uses a lot of energy
Chief Information Officer (CIO) at blockchain technology group Bitfury, Alex Petrov, names energy usage as one of the biggest misconceptions. “People think that Bitcoin consumes a lot of energy,” says the CIO, which “is not true because it’s a more optimal system.” As it doesn’t have intermediaries, offices, and etc., “it is a more efficient, more secure system which is solving the same problem in more efficient way, consuming less resources and electrical energy.” He adds that people forget that “the entire bank system, all ATM machines, entire financial system right now is consuming many times more [energy].”
6. Bitcoin can be compared to old technologies
There’s also an opinion out there that Bitcoin simply cannot be compared to the old technologies, but that they are, if not apples and oranges, then at the very least on completely different levels. Petrov believes that people “are trying to reevaluate Bitcoin from the position of their previous experience,” attempting to find analogies and compare their old technologies to the new ones. But those technologies aren’t “even close […] Bitcoin is absolutely different,” says Petrov.
7. Mainstream media’s portrayal of Bitcoin is trustworthy
Media often doesn’t know what it’s talking about, is what many people believe. Discussing the lack of incentive for people with access to good financial infrastructure to educate themselves, Lopp says that they will believe “whatever the mainstream media tells them. That would probably be the case for foreseeable future."
Petrov also says, referring to his argument that the current financial system spends more energy than BTC, that the energy argument is “very common, especially in a mainstream media,” which “try to paint it from a wrong angle,” he says. “People who don’t understand the technical background, who don’t understand having a tool that’s working, who don’t touch the technology, are just making not true predictions,” claims Petrov, adding: “You should try to use the technology, to better understand [it] and then you can build better conclusions.”
Meanwhile, Vitalik Buterin, co-founder of Ethereum, recently also shared his opinion on what the biggest misconception about crypto in general, and certain coins in particular is, saying for Bitcoin that: "On the Bitcoin side for example, like this idea that 2% inflation is this thing that’s wrecking the economy and the next… And the next big step for progress would be turning humanity into a type one civilization that roams the stars is to get rid of existing fiat currencies and replace them with this 21 million fixed supply kind of thing. I think that’s crazy."