Explains: The 3 Biggest Bitcoin Myths

 Bitcoin Well Explains: The 3 Biggest Bitcoin Myths

Most people's first exposure to Bitcoin was a headline. Bitcoin crashes. Bitcoin used by criminals. Bitcoin is a Ponzi scheme. And if that's all you've seen, skepticism is a rational response.

But before you write it off, let's make sure you're working from accurate information — not recycled talking points.

In this video we break down the three biggest myths that keep people from taking Bitcoin seriously:

Myth 1 — Bitcoin isn't backed by anything (spoiler: neither is the dollar, and hasn't been since 1971)

Myth 2 — Bitcoin gets hacked all the time (the protocol has never been successfully attacked — not once since January 2009)

Myth 3 — Bitcoin is just a fad or a Ponzi scheme (there's a fundamental difference between a fad and a protocol — and Bitcoin is infrastructure)

We're not here to convince you of anything. Just to make sure the information you're working with is accurate.

📩 z.addair@bitcoinwell.com

Chapters:
 00:00 Intro & Week in Bitcoin 

01:58 The Headlines That Shape What You Think About Bitcoin 

03:47 Myth 1: Bitcoin Isn't Backed by Anything 

04:18 What Is Your Money Actually Backed By? 

05:48 What Happened in 1971 

06:45 What Actually Backs Bitcoin 

08:03 Myth 2: Bitcoin Gets Hacked All the Time 

08:55 What Those Headlines Are Actually About 

09:49 How Secure Is Bitcoin Really? 

0:44 Myth 3: Bitcoin Is Just a Fad or a Scam 

11:37 The Difference Between a Fad and a Protocol 

12:30 Bitcoin Is Infrastructure 

13:15 The Numbers Don't Lie 

13:35 The Lindy Effect 

14:00 Why These Myths Keep Spreading 

15:21 The Real Summary 

15:57 Which Myth Did You Believe the Longest? 

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Transcript

SPEAKER_02 0:04

Hello internet. This is Zach and you're listening to Explains on the Bitcoin Well Podcast Channel. The show where we get deep into the history of money and how Bitcoin works. It's been an exciting week for Bitcoin as the US government makes moves to integrate crypto into the greater economy, and Bitcoin itself decouples from traditional markets. Or in other words, Bitcoin number go up while traditional markets number go down. Reclaiming 74,000 USD, it certainly feels like we're on the verge of a new bull run to me. Of course, no one can really predict these things, which is why we always focus on consistent buying regardless of what the markets do. But with corporations now buying up to three times more than the daily new Bitcoin supply, it looks like a big move to the upside is coming. Moving on to the topic of today's video, we wanted to step back from the normal history and technical details of Bitcoin, taking a pause to look at some of the biggest myths that surround Bitcoin. Things people have been saying for over a decade, and the story never really seems to change, even as Bitcoin proves itself year after year. So this is a good one to share with friends and family that just can't seem to take Bitcoin seriously, and that continue to call Bitcoin a scam or a Ponzi and ask, but what backs Bitcoin? Anyway, this one's for them. Or you if you're wondering. So thanks for listening, and as always, please email me at z.adair at bitcoinwell.com. I will always respond to any questions, comments, concerns. And uh everyone have a great rest of your week. I will catch you next time. Bye. When you hear the word Bitcoin, what's the first thing that pops into your head? For most people, it's just a headline. Bitcoin crashes.

SPEAKER_01 2:16

This one time Bitcoin went from six cents all the way to 36 cents and then it crashed down to 21 cents. Bitcoin used by criminals.

SPEAKER_04 2:28

This is a 15 billion dollar cryptocurrency fraud scheme. The U.S. attorney's office and the FBI say it was operated out of a call center. What you're looking at right there in Cambodia.

SPEAKER_02 2:40

Bitcoin. It's a Ponzi scheme. Would you describe it as a Ponzi scheme?

SPEAKER_01 2:44

Yes. It's a Ponzi scheme.

SPEAKER_02 2:46

Maybe it's something a coworker said or something you half-watched on the news three years ago, and you never had the time to look into it. And let's be honest, even if you're interested in learning about Bitcoin now, there's probably still a voice in the back of your head saying, This is a scam. Don't be an idiot. I get it. That voice is loud and it's not stupid. It's a rational response to years of sensationalized coverage designed to make you feel that way. And we live in a world where money and the economy are mostly top-down controlled scams, including the dollar. So why wouldn't Bitcoin just be another scam in a long list? So before we go any further, we need to clear the air. Today we're tackling the three biggest myths that stop people from taking Bitcoin seriously. Not to convince you of anything, just to make sure you're working with accurate information. Let's get into it. Myth one Bitcoin isn't backed by anything. This is the number one criticism from traditional finance. You've heard it. Bitcoin has no intrinsic value. The big problem with Bitcoin is it's not money and it's not really currency. It's just a digital token and it has no actual value other than the fact that people believe it has value. It's not backed by gold, it's not backed by a government, it's just made-up internet money. And on the surface, that sounds like a devastating critique. So let me ask you a follow-up question. What is your money backed by? What is the intrinsic value of a dollar? Seriously, sit with that for a second. Because most people have never even thought about it. Well, firstly, intrinsic value is just a nonsense term. Nothing has value in and of itself. Value comes from people choosing to value something. Things have intrinsic properties that we may value, but there is nothing in the dollar or Bitcoin that makes it automatically valuable if people don't choose to value it. People may say, well, what about water? Surely that has intrinsic value. Oh yeah? What is it? What is the value of a bottle of water to someone who has filtered tap water on demand or owns a lake full of fresh water? What is the value of that bottle of water to someone dying of thirst in the desert? Value changes and shifts depending on the person and the situation. Markets used to highly value horses as a means of transportation. How many horse dealerships do you see these days? Did horses used to have intrinsic value and lose it? Or did our desire for fast and easy travel mean we chose to value cars over horses? And cars have no intrinsic value, as we'll just as quickly move on to jetpacks or teleporters from Star Trek given the chance. So what about the backing argument? Well, as we've already discussed in our episode about gold, up until 1971, the US dollar was backed by gold.

SPEAKER_03 5:56

I have directed Secretary Connolly to suspend temporarily the convertibility of the dollar into gold or other reserve assets, except in amounts and conditions determined to be in the interest of monetary stability and in the best interest of the United States.

SPEAKER_02 6:11

You could, in theory, exchange your dollars for physical gold at a fixed rate. The whole point being it gave the dollar a tangible anchor to something that couldn't be printed at will. So the only reason to back something with something else is to ensure a low stock-to-flow ratio, meaning to keep inflation as low as possible. But, partly thanks to Nixon, the dollar and no other currency on Earth is backed by gold, meaning there is no restraint on the amount of dollars that can be printed. Now ask the same question about Bitcoin. What backs it? What keeps Bitcoin from being printed to infinity and inflated like the dollar? For one, mathematical scarcity, a hard cap of exactly 21 million coins written into the code that no government, no central bank can override. For two, energy. The network is secured by an enormous amount of real-world computing power, making it extraordinarily expensive to attack. And three, its utility, the ability to send value to anyone on earth at any time without asking permission from a bank, a government, or anyone else. So the next time someone tells you Bitcoin isn't backed by anything, turn the question on its head. Because the dollar isn't backed by anything, and Bitcoin is backed by an unchangeable hard cap of 21 million coins, which is more than the dollar could say even when it was backed by gold. And if someone tells you Bitcoin has no intrinsic value, remind them that intrinsic value doesn't exist. But what does exist is the intrinsic properties inherent in a neutral, uncontrollable, unmanipulatable money that people are starting to value at increasingly exponential numbers. Myth 2. Bitcoin gets hacked all the time. We've all seen the headlines. Hundreds of millions stolen in massive Bitcoin hack.

SPEAKER_00 8:13

A retired couple in Morgan County says their account was wiped out by a scam involving Bitcoin.

SPEAKER_02 8:18

Exchange lose customers' funds.

SPEAKER_05 8:20

Two MIT educated brothers are facing serious charges for allegedly pulling off a major crypto crime.

SPEAKER_02 8:27

And if you've seen enough of those, you've probably concluded that Bitcoin is fundamentally insecure and probably already broken. But here's the truth. Not once. Since the first block was mined on January 2009, the underlying network has operated without interruption and without a successful attack on the protocol itself. So what are those headlines actually about? Let me use an analogy. Imagine you take your physical gold and hand it to a sketchy guy in an alley to hold it for you. Then he gets robbed. Did gold get hacked? No, you just trusted the wrong middleman. That's what's happening in every single one of those headlines. What gets hacked are exchanges, companies that hold Bitcoin on behalf of their customers. What gets stolen is Bitcoin sitting in centralized custodial accounts controlled by businesses with security vulnerabilities, inside jobs, and poor practices. The network itself, untouched. People also get compromised through phishing scams, weak passwords, malware, and social engineering. That's a human problem, not a Bitcoin problem. And it's exactly why self-custody matters. Now let me give you a sense of what it would actually take to hack Bitcoin at the protocol level. Your Bitcoin is secured by a private key, a 256-bit number. That's a number with 77 digits. The number of possible combinations is so large it's almost impossible to visualize. There are more possible private keys than there are atoms in the observable universe. If every computer on Earth guessed around the clock, it would take longer than the current age of the universe to crack a single wallet by brute force. Bitcoin the Protocol is a mathematical fortress. The only real vulnerability is human error, trusting the wrong custodian, using weak security practices, not holding your own keys. Which again is why self-custody is so important. But that's the vulnerability, not the math. Myth 3. Bitcoin is just a fad or a scam. This one has been around since Bitcoin was worth just a dollar. Tulip Mania.

SPEAKER_00 10:54

Bitcoin's not the first, somewhat say, obscure investment to drive investors wild, not by a long chalk. In the 17th century in Holland, tulips became so popular an entire business could be bought with them. Beanie babies. It's like a Bitcoin is beanie babies.

SPEAKER_02 11:12

A Ponzi scheme that's one bad day away from going to zero. And look, I understand the instinct. Bitcoin has had dramatic price swings. It's been pronounced dead hundreds of times. It generates the kind of irrational enthusiasm that historically precedes a crash. But here's a distinction that I think is genuinely important, and it changes how you should think about this. There's a difference between a fad and a protocol. Fads are consumer products, pet rocks, fidget spinners, NFT profile pictures. They explode in popularity, generate enormous cultural buzz, and then fade within just a few years because they don't solve a real fundamental problem. They're entertainment, they're novelty. Protocols are different. TCPIP is what the internet runs on. SMTP is how email works. HTTP is the foundation of the web. These technologies don't follow the hype cycle of consumer products because they're not products, they're infrastructure. They solve foundational human problems, they embed themselves into the structure of how things work and they grow for decades. Bitcoin is a protocol for value. It solves a foundational human problem. How do you store and transfer purchasing power across time and space without trusting a third party that can inflate, confiscate, or censor it? That's not a novelty. That's one of the oldest problems in human civilization. And the numbers back this up. Over 1.2 billion transactions processed globally. Estimates of over 70,000 nodes worldwide, adopted by major corporations, institutional investors, Wall Street ETFs, and sovereign nations. 17 years of continuous operation without a single day of downtime. There's a concept called the Lindy effect that I think applies here. The idea is simple. The longer a non-perishable thing survives, the longer it is likely to keep surviving. Every year that passes without Bitcoin dying, it becomes more deeply embedded as permanent global infrastructure. The probability that it disappears tomorrow is lower today than it was five years ago, and it'll be lower still five years from now. The FAD narrative had a shelf life, and that shelf life has expired. So if the data is this clear, why do these myths keep showing up? Why do respected journalists and credential economists keep repeating them? A few reasons. First, established interests. The legacy financial system, banks, payment processors, asset managers, they have trillions of dollars invested in the status quo. Bitcoin is a direct challenge to that system. It's not in their interest to help people understand it clearly. That's just incentives. Second, media sensationalism. Fear generates clicks. Outrage generates engagement. Bitcoin works perfectly for 5,000th consecutive day. It's not a headline that gets shared. Bitcoin crashes, experts warn of collapse. That gets shared constantly. The incentive structure of media pushes toward the negative. Third, and this one is worth sitting with, paradigm shifts are uncomfortable. Bitcoin forces you to rethink what money actually is, where it comes from, who controls it, why do we trust it? Most people have never seriously asked these questions. And when someone forces the question, the instinct is to dismiss it rather than do the uncomfortable work of reconsidering something that you've assumed your whole life. That's just human nature. Bitcoin isn't unbacked. It's backed by math, energy, and consensus, which compares favorably to a dollar that's backed by government decree and a printing press. It isn't constantly getting hacked. The protocol is a mathematical fortress, and the headlines are about human custodial failures. And it isn't a fad. It's a 17-year-old protocol that keeps growing, keeps embedding itself into global infrastructure, and keeps not dying despite hundreds of predictions that it would or that it already has. You don't have to be convinced yet, that's fine. But now at least you're working from accurate information instead of recycled headlines. If this was useful, subscribe. We do this every week. And drop a comment which of these myths did you believe the longest? I'm curious. See you on the next one.