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Friday, April 16, 2021

Myths and Facts about Bitcoin


by guest columnist
 Lucie Komárková

I have to buy a whole bitcoin

It is possible to buy any fraction of bitcoin. One bitcoin is divisible into one hundred million parts. These smallest units are called satoshi, after the person or group of people who started Bitcoin. Assuming a world population of 7 billion people, about 300,000 satoshi fall on each person – that amounts to 0.003 bitcoin. As about 4 million bitcoin out of the total 21 million had been in the first few years, there are about 220,000 per person.

There will probably come a time when we will not convert the value into dollars but into satoshi. And probably the amount we consider expensive for bitcoin today will be much higher in the future.

Bitcoin is a facilitator of illegal activity

Bitcoin promotes some types of illegal activity. In each country, illegal activity means something different. Some forms of illegal activity are often called „crimes without victim”. Then there are the “crimes” that may seem completely absurd to us. In Venezuela, for example, it is illegal to receive outside help[MJ1] . Is it a crime to buy the necessary medicines or food illegally, when it is running short in your country? It should be noted that the lack of food and medicine was caused by government interventions, which Venezuelans are trying to circumvent by paying in cryptocurrencies. In many countries, it is not possible to legally buy certain literature, such as the Bible

Bitcoin helps women in Afghanistan break free from the harsh regime. Women in Afghanistan, and not only there, face inequality and persecution. They do not have the opportunity to open their own bank account or start a business. They all need the consent of their fathers or spouses. Code to Inspire is an organization that helps women in Afghanistan to integrate into society. It teaches them how to program [MJ1] and use cryptocurrencies, which frees and empowers them. Thanks to these skills, they can start their own business activities or save money on a trip to a freer country.

As we shall see in the last section, Bitcoin is not completely anonymous. It is significantly harder to track than a wire transfer, but easier to track than a back-alley cash transfer. It all comes down to the cost of de-anonymizing the transaction. When terrorism is concerned, no cost to counter it is too great, and terrorists know that. For this reason, it makes no sense for them to be using a means of payment that leaves a permanent record, and which can be traced if sufficient resources are devoted to it. On the other hand, it makes perfect sense for Bible smugglers, or small-scale drug dealers to employ Bitcoin, given that law enforcement won’t be able to command enough resources to trace their transactions given their crimes. It’s simply not worth the investigators time and resources. Any physical currency that, unlike Bitcoin, is completely anonymous, to some extent stable and provides sufficient liquidity can be used for this purpose. 

Bitcoin can be easily stolen

Bitcoin is protected by asymmetric cryptography. This means that only those who own the private keys have access to the bitcoins. By entering the private key, the user proves that he has the right to spend bitcoins. Bitcoins can be lost only in the case of mishandling one‘s private keys, such as when someone else gets to them.

If you lose your bitcoins through an attack by hackers on the stock exchange on which you traded, it is necessary to realize that at that moment they  were not even your bitcoins, because you did not have private keys to them. If you don’t have private keys to your bitcoins, they are not yours. In that case, the technology is not to blame for thefts, but careless users are.

Bitcoin is just a plaything for geeks

Bitcoin is used as currency. In the beginning, Bitcoin was used only by IT enthusiasts, geeks and nerds. However, that time is long gone.  For example in the Czech Republic was established  the first café in the world that accepts only bitcoins as early as 2014, and similar projects became soon popular worldwide[MJ1] 

Bitcoin is a tool in the fight against censorship and totalitarianism.In Europe and developed countries in general, we do not feel the need to own cryptocurrencies, as do people in countries where hyperinflation destroys their life savings, governments censor payment and information flows, and banking services are not available or are difficult and costly to reach. Therefore, despite their current volatility, cryptocurrencies are a safe haven for citizens of countries such as Venezuela, Turkey, Zimbabwe or Cyprus.

In developed states, Bitcoin is used as a store of value and protection against inflation and devaluation of money. However, it is not only in the underdeveloped states where cryptocurrencies are an option to break out of the system. They are also used by people who do not want to use non-anonymous banking services with high fees and a long transaction processing times. They are also used by those who want to  free themselves of hard-to-see taxation – inflation (taxflation), with which the state finances things with which citizens often disagree.

Bitcoin is anonymous

Bitcoin is pseudonymous. The extent to which  users can be anonymous depends on their habits . Until someone associates your identity with your bitcoins, you are anonymous on the network. You step out of anonymity, for example, when you verify yourself on stock exchanges or exchange offices. The exchanges are governed by the Know Your Customer and Anti Money Laundering laws. To maintain anonymity, it is important to acquire and use cryptocurrencies anonymously.

The easiest way is to buy them for cash in ATMs that are not in the areas monitored by the camera system. Another option is to buy cryptocurrencies from a street vendor using Local Bitcoins. Or in a decentralized exchange like Bisq. It is also advisable to keep to yourself how many bitcoins or other cryptocurrencies you own. This will make it difficult to try to trace your identity. Another sensible step is to use a VPN or Tor to obscure your real IP address.

Jillian Godsil
Blockchain Advocate, Founder, Conference Chair, Women in Blockchain Advocate, Keynote Speaker, Crypto Journalist, Broadcaster, CEO, Writer, Homelessness Advocate, Former European Parliament Candidate, Law Changer, Mother, Choir Member, Hill Walker, Dreamer

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