It is often difficult to understand things that don’t exist in the physical world. And the more we move on to embrace the information technology era, the more such things appear and become quite tangible, day in and day out. For instance, take cryptocurrencies. Right now, this is a multi-billion dollar industry, yet who knows how Bitcoin looks? And if it doesn’t have an appearance, how do you prove that it exists?
Let’s try to explore the common myths about Bitcoin’s existence and see what it looks like.
- Myth #1. Bitcoin blockchain is absolutely anonymous
- Myth #2. Bitcoin doesn’t have a development team
- Myth #3. Bitcoin is not secure
- Myth #4. Bitcoin is dangerous to the environment
Myth #1. Bitcoin blockchain is absolutely anonymous
While this statement is commonly viewed as an advantage of this network, in actuality it appears that Bitcoin is not fully anonymous. First of all, let’s start with the fact that Bitcoin has a fully open blockchain. As a result, everyone can see quite a lot of details:
- Every transaction that was added to the network
- Sender’s and receiver’s addresses
- Input and output amount of the transaction (BTC)
- Value in dollars
- The number of transactions that were requested from this address
- The time when the transaction was requested
And other more sophisticated details as well. So anytime, anyone can access a full review of every Bitcoin address (that is, essentially a digital wallet).
Technically, this suggests an opportunity that if you know the person behind some BTC address, you can immediately see everything that they were doing on the network. For individuals who use cryptocurrency exchanges and pass KYC/AML procedures, the digital trail is even more obvious. Government officials have indirect access to cryptocurrency transactions of individuals by overseeing financial service providers. Therefore, Bitcoin can not be considered fully anonymous.
Myth #2. Bitcoin doesn’t have a development team
Since Bitcoin doesn’t have a central authority, a board of directors, and nobody knows if Satoshi Nakamoto even exists, some think that Bitcoin is not maintained by anyone at all. However, this is not true.
While indeed no particular company owns Bitcoin, it doesn’t mean that it’s a savage cryptocurrency just hanging out there in a digital space. Otherwise, Bitcoin would cease to exist as a result of some bug that no one would care to fix.
Truth is, on a deeper level Bitcoin operates thanks to numerous servers called nodes. These nodes are also mining BTC. Each node is a server or a group of multiple servers. Not only they are working to solve complex cryptographical problems to gain the reward in the form of much-anticipated coins. They are also packing transactions into blocks and write them into the blockchain. And to include each block that they put together, they need to use computational power and kind of “guess” hash codes with some predetermined condition, according to the latest level of difficulty, accepted by the network. Usually, the more zeros are at the beginning of the hash code, the harder it is to guess the required value because the computer has to go brute-force and iterate over billions of options within seconds.
Validator nodes act as multiple development teams for this crypto network. They ensure the fairness of the transactions by approving them, which results in the security of the blockchain and a bug-free environment. They also act as data centres by storing all the blockchain info.
Myth #3. Bitcoin is not secure
Cryptocurrencies in general, and Bitcoin in particular, are often called high-risk investments. It is true that due to the increased volatility, a person may lose their amount of money in a fiat currency equivalent if the market goes down. Someone may easily lose their crypto credentials or send the BTC to the wrong address, which is irreversible, and lose their investment that way. Hackers may breach the security system of a crypto services provider and steal Bitcoins from there, and it’s a risk, too. But the network itself has proved to be indestructible through all these years since 2009.
There are no cases recorded when the Bitcoin network stopped working when some blocks were injected with the malicious code or replaced. The blockchain works perfectly, just as Satoshi imagined it to be. Although, malicious actors try to find concealed ways in which to steal such an appreciated asset, which is even more dangerous. They want to make it look right on the surface but include some fraud underneath.
Myth #4. Bitcoin is dangerous to the environment
This statement was one of the reasons why even such a role model as Elon Musk doubted Bitcoin. His tweets were presumably stimulated by fights of social activists and mining farms of New York. His doubts also cost nearly 50% downfall of the market in May 2021. A lot of investors are considering the environmental harm a serious problem and a probable reason why they would stop using this cryptocurrency. But, is it all that bad?
Studies show that volcanoes emit more CO2 than humans. Since they are part of nature, it is wise to think that the Earth knows how to deal with something that has been leaving a heavy carbon footprint on its surface for millions of years.
What’s more, Bitcoin proponents also point out that the world’s financial system represented by numerous banking institutions consumes incomparably higher amounts of power than Bitcoin. Just imagine all the banks in the world, with all their offices, machines, personnel, and wire transactions running non-stop every day and night. Some Bitcoin mining farms work on renewable sources of energy, so if all of them would go green, Bitcoin would not be harmful to our environment at all.
So, essentially Bitcoin looks like a string of code multiplied among thousands of mighty computers that probably don’t even have a user interface. As long as users keep trying to process transactions, there will be something for miners to work with to create new Bitcoins. But, at the end of the day, people looking for ways to buy BTC and using the services of crypto exchanges for it, generate more value to these coins than mining.