Common Bitcoin Misconceptions

By
Updated: July 21, 2014

Since Bitcoin is a revolutionary open source technology sometimes things can get a little confusing. Often the media does not even understand Bitcoin when they are reporting on it and spread a lot of misinformation and confusion.

Even Bitcoiners themselves sometimes do not do the best job explaining things in a way that people can understand. Here are few common misconceptions.

In order to get Bitcoins I need to be a miner. I need to buy lots of mining gear so I can get a lot of Bitcoin.
bitcoin miner
Mining  is a very important part of Bitcoin. However it is not necessary for you to mine bitcoins in order to possess, use, or send Bitcoins. Miners are rewarded (paid) in Bitcoin but really the easiest way to get Bitcoin is to buy some in your local area or offer goods or services and take payment in Bitcoin.

Mt.Gox showed that Bitcoin is not safe.
bitcoin saftey
Mt. Gox was a Bitcoin exchange. In fact is was the biggest exchange for a long time. However Bitcoin does not need any exchanges to function. As a matter of fact Bitcoin was designed as a P2P (peer to peer link) which means that you do not need a third party to process a transaction. Exchanges are a convenience. It can make it easy to change Fiat(link) into Bitcoin, however when doing so you need to take into account that you are opening yourself up for some risk. What if the exchange is hacked? Or just your account is hacked?! Also remember if you are going to use an exchange, that is fine and is normally no problem, however unless you are day trading (link) You need to take your Bitcoins OFF THE EXCHANGE and store them on your computer and in cold storage (link) in order for them to be more safe than on an exchange. Mt. Gox also shows that in the Bitcoin economy “too big to fail” does not exist. Imagine if ONE of the big banks failed, what would that do to the dollar or euro?

Wow, a Bitcoin is worth 600$ what if I want to buy something that is 10$?

A bitcoin can be divided down to 8 decimal places. 0.00000001 BTC is the smallest ammount and named “Satoshi”

What if someone hacks Bitcoin? Someone hacked Mt.Gox so you can hack Bitcoin. Bitcoin is digital, anyone can counterfeit it since it is digital.
mtgox bitcoin
You can not “hack” Bitcoin. You can hack a website, server or even hardware, but not Bitcoin. If you had a very extreme amount of mining power then you could try a 51% attack but you would need to hold over 50% for a sustained period of time in order to pull off a “double spend” and you would only be able to do this while you had this amount of the mining power, so it would not be permanent damage to the network. Bitcoin works on a public/private key model (link). If someone hacks your computer and gets your private key, then they could have control over (steal) the bitcoins that go with that address. Same thing goes for an exchange, mining pool or any other third party service.

–What you need to know–

Let´s be honest. Bitcoin is complex, but just because it is complex does not mean that you can not learn how to use it. With Bitcoin you are the only one responsible for your coins. There is nobody that will secure, watch or take care of your Bitcoin for you. This is also a big advantage. no longer are the days where you need a bank to do all the “complex” things with your money, you can do it all yourself, you have total control. No longer do you need to pay for overpriced bank services, the trade off? You are responsible. The best way to learn is to download a wallet and read the white paper white paper and start getting familiar with both.