As Bitcoin and cryptocurrencies gain more popularity, some people have dedicated their time to bring it down with lies. While some of them tell these lies out of ignorance, others do this intentionally because they are totally against the underlying fundamentals. Here are 4 common lies Bitcoin and crypto sceptics preach.
Firstly, they argue that Bitcoin and cryptocurrencies are used for money laundering and the financing of terrorism. Now the big question is what cannot be used to finance terrorism? Fiat can be used to finance terrorism so can stocks or any other asset. Fiat has been used for years to finance terrorism and no government ever bothered to ban fiat due to its application in financing terrorism.
Similarly, sceptics say Bitcoin and cryptocurrencies can be used for money laundering, but this is not totally the case. In fact, recently, it has been seen that it is easier to use fiat for money laundering than it is for Bitcoin or cryptocurrencies. Last week, we saw the hack of over $400 million NEM from a Bitcoin exchange. Following this hack, the stolen coins were quickly tracked and blacklisted making withdrawal impossible by the hacker. This is the power of blockchain in play and with the increasing regulations by some governments, not only can money laundry be detected via such techniques, it can also be blacklisted if it gets in the hands of the bad guys. A new software by Bitfury called Crystal has also recently been launched with the aim to track and blacklist certain wallets known for illegal activities.
Also, Bitcoin sceptics often refer to Bitcoin and cryptocurrencies as a Ponzi scheme. To address this point, it’s good to first look at the definition of a Ponzi scheme. According to US financial regulator Securities and Exchange Commission, Ponzi schemes are a kind of pyramid scheme which operate on the “rob Peter to pay Paul” principle. Let’s assume Bitcoin is a Ponzi scheme, this means stocks are one of the oldest Ponzi schemes, so is gold and of course the “almighty dollar”.
The original reason for Bitcoin’s creation was to combat trustless monetary policy and resistance to seizure by governments. Referring to Bitcoin as a Ponzi scheme is same as referring to the entire financial system as Ponzi schemes.
Furthermore, people argue Bitcoin cannot be used as money. Bitcoin replacing fiat as money could be several years away but the underlying principle of Bitcoin being used as a medium of exchange is already a reality. Increasingly, we are seeing corporations accept Bitcoin as a medium of exchange from Amazon to KFC Canada, Reddit, Microsoft, Expedia and Shopify just to name a few. It’s just a matter of time before your local corner store accepts Bitcoin.
Nevertheless, there is the big argument of Bitcoin being too volatile to be used as a medium of exchange which is a valid claim but with the introduction of layer-two solutions such as the lightning network, it can be expected to see a payment layers on top of base Bitcoin Protocol which should see it even more favourable for payment.
Lastly, critics argue Bitcoin has no intrinsic value because fiat currency can be used for payment of taxes and salaries while gold has an industrial application. However, Bitcoin evangelists see an intrinsic value in Bitcoin, they argue it’s permissionless, less costly digital means of payments makes it valuable. Also, Bitcoin and cryptocurrency can help provide solutions to many developing nations experiencing hyperinflation.
What are your personal thoughts on cryptocurrencies and these 4 Common lies Bitcoin and Crypto sceptics tell themselves? Do you think more people will get educated and see the bright side of cryptocurrencies and Bitcoin? If so when?
Let us know your thoughts in the comment section below.