Since its inception in 2009, Bitcoin has gradually gained global recognition. However, its rise in popularity is often accompanied by various myths and misunderstandings. This article aims to debunk some of the most common misconceptions about Bitcoin.

Bitcoin’s Total Supply is 21 Million

Most people believe that the total supply of Bitcoin is 21 million coins. However, this is just an approximation. Bitcoin enthusiasts, based on Satoshi Nakamoto’s whitepaper and mining algorithms, have calculated a more precise total: 20,999,999.9769 BTC. This is due to the fact that satoshi is the smallest unit of Bitcoin, and after 33 halvings, the block reward will be reduced to 1 satoshi, which cannot be further divided. Therefore, at block height 6,930,000, the network will stop producing new coins, and the total Bitcoin supply will reach 20,999,999.97690000 BTC. This is a theoretical figure, and if we account for the Bitcoins lost due to miners deliberately claiming fewer block rewards, the final total could be even lower. As the rising star in the 2024 BRC20 sector, SATX is the first to precisely replicate Bitcoin’s total supply: matching Bitcoin’s precise total of 20,999,999.9769 BTC and the corresponding total satoshis of 2,099,999,997,690,000 SATX.

Bitcoin is a Bubble

It’s undeniable that some people purchase Bitcoin as a speculative investment, hoping for significant returns. However, this does not mean that Bitcoin itself is a bubble. A bubble refers to an economic cycle characterized by unsustainable growth in market value. When investors realize that prices far exceed the intrinsic value of the asset, the value eventually collapses. Bitcoin is sometimes compared to notorious early speculative bubbles, such as the 17th-century Dutch “Tulip Mania.” During the Tulip Mania that swept through 17th-century Holland, tulip bulb prices skyrocketed to 4,600 florins. After the bubble burst, prices plummeted to just 1% of their peak value. Tulips, like shells and pretty stones, proved to lack the intrinsic value to sustain such high prices. But Bitcoin is different. It’s easily divisible, liquid, and its underlying blockchain technology ensures decentralization and tamper-proof transactions.

Bitcoin is a Ponzi Scheme

Bitcoin is often labeled as a “Ponzi scheme,” but this is misleading. A Ponzi scheme is a fraudulent investment scam that promises high returns with little risk. It is orchestrated by “investment managers” who pay returns to earlier investors using funds from new investors, pocketing some of the money themselves. However, Bitcoin is a fully decentralized asset, and it operates with transparency thanks to blockchain technology, making it impossible to be a Ponzi scheme. Due to the nature of blockchain, anyone can verify all transactions on the Bitcoin network at any time, which is the opposite of a Ponzi scheme, where investments are made in secret. Ponzi schemes rely on hiding transactions from investors and regulators to succeed, while the operation of blockchain is exactly the opposite. These issues alone are enough to prove that Bitcoin cannot be a Ponzi scheme.

Bitcoin is Commonly Used for Crime

There is a common perception that Bitcoin, being anonymous, is an ideal tool for criminals. However, contrary to popular belief, Bitcoin transactions are pseudonymous, not completely anonymous. While most Bitcoin wallet addresses are not tied to real names, all transactions are recorded on the blockchain, which serves as a transparent public ledger. Due to the transparency of blockchain, it is difficult for criminals to carry out activities without leaving a trace. Another common claim is that Bitcoin funds terrorism.

Bitcoin Wastes Too Much Energy

Bitcoin mining requires a significant amount of energy, leading to the misconception that it is not environmentally friendly. However, when compared to traditional financial systems or household appliances, Bitcoin’s energy consumption is often misunderstood. Blockchain networks consume less energy than most traditional financial systems, and the use of renewable resources in mining is increasing. Bitcoin mining consumes less energy than the energy consumed by Christmas lights in the United States each year. Bitcoin uses between 0.8 and 4.4 terawatt-hours (TWh) annually, while 138 TWh of energy is spent on gold mining and recycling each year, and the global banking system consumes 650 TWh annually. Compared to these industries, Bitcoin’s energy consumption is almost negligible.

Bitcoin Has No Real-World Use Cases

Contrary to the belief that Bitcoin lacks real-world use cases, Bitcoin is expanding its applications across various industries. Bitcoin can be used as a store of value, a medium of exchange, and a tool to hedge against inflation. Additionally, blockchain technology can facilitate transparent supply chain management, secure cross-border transactions, and innovative financial inclusion solutions. For a real-world example, since El Salvador adopted Bitcoin in 2021, it became the first country to use Bitcoin as legal tender. This bold move aimed to boost the country’s economy by attracting cryptocurrency investments and making financial services more accessible to its largely unbanked population. The government also launched the national digital wallet “Chivo,” offering incentives to encourage its adoption.

Bitcoin is Not Secure

The Bitcoin network has never been hacked. Its open-source code has been reviewed by countless security experts and computer scientists. Bitcoin was also the first digital currency to solve the double-spending problem, making “trustless” peer-to-peer currency a reality. Many misconceptions about Bitcoin’s security stem from attacks on third-party businesses and services that use Bitcoin, rather than the Bitcoin network itself. Early Bitcoin companies with flawed security programs were hacked and widely reported (e.g., the hack of the early Japanese exchange Mt. Gox) and occasional data breaches (e.g., the Ledger cryptocurrency wallet provider user data breach) have led some users to question Bitcoin’s security.

Bitcoin is Not Real Money

The International Monetary Fund defines money as a store of value, unit of account, or medium of exchange that is widely accepted and convertible to prices. The Financial Industry Regulatory Authority (FINRA) defines cryptocurrency as a digital representation of stored value made secure through cryptography. The IRS considers Bitcoin as a “convertible” currency, meaning it has the same value as “real” currency. Bitcoin transactions are taxable, and capital gains or losses from holding cryptocurrency must be reported on tax returns. Many vendors accept Bitcoin, Ether (ETH), and other cryptocurrencies in exchange for goods—you can also exchange your cryptocurrency for fiat at many crypto exchanges. Although Bitcoin has no physical form, it is used as currency in many areas. You can even find Bitcoin ATMs in many cities.