- Bitcoin is something similar to other electronic money, nothing new.
All existing electronic money is linked to national currencies and is fully controlled by the state. Money in your accounts may be blocked or confiscated. One of the main differences between Bitcoin and all other currencies and electronic payment systems (EPS) is its decentralization. You can’t:
“Prepress” – the number of coins is known in advance, 21,000,000-and they appear in the network strictly according to a pre-known algorithm;
Destroy-all computers in the network replace a single center, and the integrity of the block chain is protected from various types of attacks by this large computer network
Change the source code without the consent of the majority of the community – both the conditions for the appearance of the number of coins, and any other rules.
Block or arrest – bitcoins are controlled only by someone who has direct access to the wallet. To arrest a Bitcoin wallet, you must first arrest its owner.
- Bitcoins do not solve problems that gold and / or Fiat money cannot solve
The main functions of money and its internal content are a measure of value, a means of circulation, accumulation and payment. Gold and Fiat money, as monetary units, in all positions are inferior to the opportunities that Bitcoin and other cryptocurrencies can offer.
As a means of communication:
Unlike gold, bitcoins are easy to store, they are randomly divided into very small parts, and they are quickly sent.
Unlike Fiat, bitcoins are more reliable – they can’t be faked, they don’t wear out, and they don’t need to be reissued.
All transactions in BTC are transparent and can be seen by anyone connected to the Internet. Therefore, the completed payment can not be disputed, justifying that “the money did not come”.
As a means of accumulation and saving:
Cryptocurrencies have predictable and decreasing emissions
They do not have a regulatory center. To open an” account ” in the Bitcoin network, you do not need any documents or permissions.
You can always keep your bitcoins under direct control, for example in a home safe.
For Bitcoin, there are no state borders – it can be instantly transferred to any point in the world where there is an Internet connection.
- Bitcoins are not secured by anything, their value depends on the amount spent on their generation of electricity or computing power
When we say that a currency is secured by something, we mean that it is linked to the exchange rate with some “reference” asset. The computing power spent on generating bitcoins, kilowatts of electrical energy can not be used to determine the security of their value. The value of bitcoins is based only on how much they are valued by people, and the higher the price, the more people will try to generate them, which in turn will lead to an increase in the complexity of generation and, as a result, to an even greater difficulty of mining.
The truth is that nothing is secured, including government currencies and gold. The cost and value of classical monetary units depends on several factors, the most important of which is the trust in the Issuer (the Central Bank), the belief that it will fulfill its obligations. But state defaults (refusal to pay the national debt) occurred even in large economies.
Gold in the eyes of people for thousands of years has a value in itself and does not require security. The situation is similar with bitcoin – its security is only how valuable it is for people who are ready to accept It as an exchange equivalent. The General law of supply and demand works here. The main factor determining the value of Bitcoin is its distribution and use in the economy of different countries of the world.
- Bitcoins are illegal because they are not recognized as means of payment
For illegal means of payment in Russia, there is a concept of money surrogates. Cryptocurrencies do not currently belong to this category. It is incorrect to call them illegal.
Following the fundamental rule ” everything is allowed that is not forbidden”, all over the world, Bitcoin is used as a means of payment. In many countries, cryptocurrencies are already officially recognized as “private money” or a financial asset that is subject to the General rules of financial regulation.
By and large, Bitcoin is a convenient unit of account, just like any other currency that is equivalent to the cost of certain things.
- bitcoins are a form of financial terrorism, because They only harm the economic stability of the state and the state currency
The claim that Bitcoin was created for terrorist purposes and the destruction of the economy, to harm the state foundations, is completely untrue.
Terrorism is a form of violence, and it is planned and aimed at achieving certain goals. Cryptocurrencies are only one of the financial instruments, the use of which depends on whose hands they are in.
Bitcoin technology provides alternative solutions to many financial security issues. If used correctly, it can contribute to the development of any business and the economy as a whole.
- Cryptocurrencies will only facilitate tax evasion, which will cause serious damage to the global economy
Now, even with a large number of transactions passing through the wallets of cryptocurrency users, the amounts that can be considered as profit and the basis for claiming taxes from it are in most cases extremely small in comparison with the same turnover in national currencies.
To say that this is a way to avoid paying taxes, as well as that it will lead to the fall of civilization – is fundamentally wrong. The responsibility for this, just as with “normal” currencies, lies with specific people, not technology.
Legislators in all countries are working on options for taxing transactions conducted with the help of Bitcoin. In some European countries (Germany, the United Kingdom, the Netherlands, etc.), transactions with cryptocurrencies are subject to the same taxes as in other currencies.
- Bitcoins can “print” each, therefore they are useless
The complexity of Bitcoin mining is currently too great, in addition, it is increasing.
As you know, bitcoins are mined not one by one, but in blocks, and the reward for a block is halved after every 210 thousand blocks extracted. And if in 2009 the block size was 50 BTC, now it is 25 BTC, and in 2016 it will be 12.5 BTC.
Due to the introduction of innovative developments of mining equipment, the total network performance has increased many times along with the complexity. At the moment, a personal computer is not able to provide the necessary computing power. For profitable mining, investments are already needed, measured in hundreds of thousands and millions of rubles.
The usefulness or uselessness of a cryptocurrency is determined not by the fact that it can be printed or minted by everyone, but by whether this cryptocurrency will be used by people in everyday life.
- Bitcoins are useless because they are based on unverified / unproven cryptography
Unverified and unproven concept of “cryptography” – in itself is an absurd statement. The SHA-256 and ECDSA algorithms that are used in the running Bitcoin network are well-known industry encryption standards.
- The first users were unfairly rewarded by bitcoins
The first users of the Bitcoin system were rewarded for using and testing a technology that was not yet necessary and incomprehensible to anyone. They received this reward for taking on the risks of losing not only time, but also personal funds. There is a lot of injustice in this world and the remuneration of first users hardly needs to be discussed.
Now about 2/3 of the 21 million of all coins are mined and held by users. If you become the owner of bitcoins in the near future, a little later for someone you will also be considered one of the “first users”.
- 21 million coins will not be enough for all the needs of humanity
You probably forget that one Bitcoin represents 100 million indivisible units.
21 million coins is just over two quadrillions (2099999997690000) of the maximum possible units. It is assumed that by the time the last Bitcoin is mined, parts of the coin will be in circulation – millibitcoins (mBTC) and microbitcoins (µBTC). However, a denomination with coefficients of 1:10, 1:100, and so on is also possible.
- Bitcoins are stored in wallet files, just copy the wallet and get more coins!
Bitcoins are not stored in wallet files, they are stored in a global distributed network, and the wallet is only a means of accessing this network. The wallet.dat file, which is created when installing the wallet, contains private keys that give you the right to dispose of your coins only to you.
Knowing the public address of the wallet (where the coins are sent) will not make anyone the owner of the wallet, no one can dispose of other people’s coins.
- Lost coins can’t be replaced, which is bad
To date, we know about a large number of lost coins that will most likely never be used again. But why do you think it’s bad?
Coins are lost if the user has lost access to their wallet – the wallet.dat file where private keys are stored. In most cases, this is the user’s fault.
Remember that the security of your coins is in your wallets and under your responsibility.
Why is there no mechanism to replace lost coins?
Because to distinguish between lost coins and coins that are not currently used (temporarily, or are in cold storage), – impossible. Losing coins is an unpleasant situation for the user, but it is not a negative for the crypto economy. In this case, the lost coins act as an additional plus of the deflationary model – the fewer coins there are, the more expensive one bitcoin Will cost.
“Lost coins make everything else a little more expensive. Think of them as a gift to everyone.” Satoshi Nakamoto
- Bitcoin is a giant pyramid scheme
Pyramids are created in any currency. Do not confuse the technology with various projects on the Internet that can accept Bitcoin as deposits and are financial pyramids. And people who are greedy for fast money, believing in unrealistic promises, for some reason blame the technology, and not those who deceived them.
You also don’t need to see cryptocurrency as just a source of income. Vitcoin is primarily a means of payment, it is a technology, a way to generate new coins, and every transaction, every wallet is part of one huge system.
All this has nothing to do with the concept of “financial pyramid”. There is no regulatory center that is interested in generating revenue, there are just people who are building a new economy.
- the idea of bitcoin will not work because there is no way to control inflation
Inflation is simply a planned or natural increase in prices over a period of time, which is usually the result of currency depreciation. This is one of the foundations of the modern credit economy, built on a constant increase in the amount of money.
Why and who should control inflation if the ways of issuing bitcoins and Fiat currencies are completely opposite? The credit economy is not the only possible model.
The key point here is that bitcoins cannot be devalued by a sharp increase in inflation by any person, organization, or government, since there is no way to arbitrarily increase the supply.
In fact, due to the growing popularity, it is more likely that the scenario of increasing demand for Bitcoin will lead to a constant increase in the exchange rate and deflation. Deflation in the crypto economy is a decrease in the cost of goods, when a smaller number of coins can buy a larger number of goods and services.
- the Bitcoin Community is geeks, anarchists, conspiracy theorists, and the gold standard
At the very beginning of the formation of Bitcoin, this was indeed the case. Satoshi did everything possible to maintain political neutrality, but his comments on technological solutions showed libertarian feelings and hacker thinking in him.
The Creator of the first mining systems, Yifu Guo, who has worked with bitcoin for a long time and knows It from the inside, reflected these sentiments in an interview, saying that their original slogan was “it’s better to go too far than do too little”.
“Bitcoin, if we can explain it correctly, is consonant with the libertarian point of view. Although I’m better at writing code than talking” ” – Satoshi Nakamoto
However, real “sharks of capitalism” – retail chains, it corporations, venture funds, and even some banks-came to the cryptocurrency business when they sensed an opportunity to earn money. Therefore, in recent years the number and influence of real cryptoanarchists steadily decreases. And it is not known whether this is a good thing. After all, new ideas are best developed by enthusiasts, not administrators.
- Anyone with sufficient computing power can intercept network management
As the number of generating nodes increases, it becomes more difficult to do this.
Even if we assume that someone will be able to take control of the network, the opportunities that they will get will be so insignificant and incompatible with the huge cost of doing so that the reasons for such an attack can only be ideological.
Under no circumstances will he be able to use someone else’s bitcoins. The attacker can only cancel their own recent transfers, as well as freeze other people’s transactions. This very expensive attack is not worth such small advantages, so there is no rational economic reason to carry it out.
Even now, the purchase and maintenance of equipment capable of carrying out such an attack will cost at least 150-200 million dollars and will constantly consume up to 50 megawatts of electrical power – this is the consumption of a large industrial enterprise.
- Points of sale that accept bitcoins are not possible, since it takes 10 minutes to confirm the transfer
If payment for the product is sent via electronic or banking systems, it may take several minutes or several days. In addition, the Bank can cancel the operation and the transaction will not occur at all. But even these circumstances did not prevent the formation of online Commerce.
In fact, Bitcoin wallets usually wait for 3 to 6 confirmations before the coins become available for transactions, meaning they will have to wait for about an hour. If the payment is made on the spot, then when using bitcoins, the seller already understands the irreversibility of the transaction and does not need to wait for the required number of confirmations.
Many online stores use a prepayment system. The client can top up the account and then spend bitcoins from it.
In addition, payment gateways have been created that help you instantly receive confirmation of payment receipt from another country so that you can quickly send the goods. Payment gateways act as an intermediary that confirms this transaction and speeds up the entire process. When using such gateways, the seller receives the currency of their country to their account, not the Bitcoin.
Additionally, the Coinbase payment gateway offers Bitcoin users to make purchases at many online stores that accept MasterCard plastic cards.
- After the extraction of 21 million coins, no one will generate units, confirming the translations
When the generation costs cannot be covered by the block creation reward, miners will be able to profit from the transfer fee. It is expected that for more than 100 years, which will pass until the issue is almost completely reset, the turnover in the Bitcoin network will be more than sufficient to ensure that miners are rewarded with commissions alone.
Also, bitcoin holders will be interested in generating new blocks, since if the generation is stopped, their coins will become useless.
- No built-in cancellation mechanism of payment, and that’s bad
The inability to cancel a payment is a built-in fraud protection mechanism. The responsibility for care when sending, trust in the recipients, as well as the responsibility for the security of your bitcoins, lies solely with you.
Organizations like PayPal have a responsibility to prevent fraud. If you buy something on eBay and the seller doesn’t send you the item, PayPal withdraws money from the seller’s account and returns it to you. This strengthens the economy of eBay, as buyers are aware of the limitations of their risk and make even risky purchases.
Let’s say you agreed to sell your product or purchase bitcoins, transferred money (sent the product) to a fraudster who sent you coins, but then canceled this transaction.
If you have bitcoins, they are only yours. If you allow the payment cancellation mechanism, it will allow another person to collect your funds. Either you have full control over your funds, or fraud protection, but not both at the same time.
- Quantum computers will violate the security of the Bitcoin network
Yes, theoretically, it is possible. Quantum computers that can do this do not currently exist. If they are created, if the security of the Bitcoin network is threatened, developers will be able to transfer the network to post-quantum cryptography. This will cause some interruptions to the network, but after a while it will work in the same mode.
Keep in mind that cryptography is used not only by cryptocurrencies, but also by all online stores, payment systems, exchanges, and most importantly, banks. In other words, the entire modern financial system will be under threat. Due to their flexibility, cryptocurrencies will be able to overcome the crisis faster than others.
- The generation of bitcoins is energetically costly and harmful to the environment
A large amount of electrical energy is needed to maintain the necessary computing power for Bitcoin mining. But don’t exaggerate. The power consumption of the entire Bitcoin network does not exceed the needs of a small city with a population of 100 thousand people.
If you compare the production of bitcoin, for example, with the development of deposits of any minerals, as well as with any consequences of human activity, this process can be called one of the most economical and environmentally friendly on the planet.
Do not forget that all modern financial systems, such as numerous server rooms and branch networks of large banks, consume no less energy. However, no one accuses them of violating environmental regulations.
- store Owners will not be able to set prices in bitcoin for goods due to the unstable exchange rate
Owners of stores and retail outlets, large Internet resources, mainly use payment gateways for accepting bitcoin, which conduct transparent conversion of payments from Bitcoin to national currencies and back. Sellers set the price of the product in the currency of their country.
Buyers of goods make payments in bitcoins, which are converted into this currency, which does not affect the cost of the product – sellers always get the desired result, regardless of the bitcoin exchange rate and its volatility. Some sellers, such as Overstock, keep part of the cryptocurrency revenue for themselves, thus taking on the risks of volatility.
- bitcoins can be liquidated by governments because They are illegal (like Liberty Dollar) and because they are used by criminals.
You can’t liquidate bitcoin, because It doesn’t have a centralized management mechanism: there is no single information repository and centralized management, and there is no point of refusal (prohibition) this could lead to the failure of the entire network; no government can order the liquidation of the cryptocurrency.
Maximum forceful government intervention may look like a ban on the use of cryptocurrency for payments in a particular country; this unpopular in all respects method is unlikely to be widespread.