6 popular cryptocurrency myths, debunked
With the advance of cryptocurrency, it has become common to see media outlets and financial institutions spreading misinformation and FUD. These allegations, however, aren’t based on facts but on the interests they’re trying to protect, which aren’t the people’s. Here are the most frequently seen myths and false accusations about crypto and the facts that prove them wrong.
Bitcoin and cryptocurrency are freedom, and freedom is the enemy of control. Now, the ones that hold that control grow nervous as they see it threatened. Whenever a no-coiner embraces crypto, central banks lose some of their power, as money is their only tool to rule over the people.
With their money rendered useless, they had to find another weapon, and they did. Like all modern wars in the era of information, central banks wage war using pen and paper. They will spend every resource they have trying to convince you that crypto is bad for you, destroys the planet, or is a tool for criminals. All of it to disguise the true reason behind their fear: losing their power over you.
Luckily, we can fight misinformation with education. That is why we’ve compiled central banks and legacy financial institutions’ favorite negative narratives for you.
#1: Crypto is an evil tool used by criminals
“(Bitcoin) is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity.” The mouth that pronounced these words is none other than Christine Lagarde’s, the President of the European Central Bank (what a surprise). Janet Yellen, US Treasury Secretary, didn’t want to be left out either, stating that “cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”
Whether it’s after a ransomware attack, a drug bust, or a fraudulent scheme, the media seems to find a way to squeeze crypto into the picture. However, the reality is different.
A report from Chainalysis shows that criminal activity represented 0.34% of all cryptocurrency transaction volume in 2020, “only” $10 billion. Moreover, criminals using crypto is getting less common, as the number dropped from 2.1% in 2019.
The report also mentions that more than half of these recorded illegal activities using digital currencies are unrelated to terrorism, money laundering, ransomware attacks, and other significant crimes. The most common illicit activities are scams aimed at inexperienced users and crypto beginners.
The good news is that this type of fraud doesn’t pose any threats to national or personal security and can significantly reduce them with proper crypto education.
In fact, according to a report from LegalJobs in May 2021, fiat currency struggles with criminal activity much more than crypto does:
- Fiat Money laundering activities cost the world 2% to 5% of its GDP.
- The United Nations estimates that criminals launder around $800 billion to $2 trillion in fiat every year. Unfortunately, about 90% of this amount remains undetected today.
- Criminals launder 400 times more fiat money than cryptocurrency.
- Fiat anti-money laundering activities recover only 0.1% of criminal funds.
- 95% of fiat money laundering system-generated alerts resulted in false positives.
- Global fiat money-laundering statistics related to terrorist financing remained high in 2020.
- One of the USA’s most prominent fiat money laundering cases involved Wachovia bank, $380 billion involving a drug cartel.
However, this doesn’t gather much attention from financial institutions, even though data shows it is a much more concerning issue than Bitcoin.
On another note, naysayers conveniently forget to mention that blockchain technology provides a proper crime-fighting resource. Indeed, as soon as law enforcers find that a wallet is performing illicit activities, they can verify the origins of the funds, track them, and seize them as soon as they enter a regulated institution like centralized exchanges.
So not only is cryptocurrency not a tool for illegal activities, but it helps authorities save time and resources while fighting financial crime effectively. Digital money is actually solving many of the problems fiat currency poses regarding criminal activities.
#2: Crypto is an environmental disaster
This is an old one, as we’ve seen many articles and news raging against Bitcoin mining’s energy consumption. One of them from 2017 even claimed that it would dry the world’s entire energy supply by 2020. And I don’t know about you, but our refrigerator is still running.
Nevertheless, after Elon Musk’s statements and China’s crackdown on mining, it has resurfaced as a subject of criticism. However, there are many arguments to disavow these accusations.
Firstly, the primary economic driver for crypto mining is the cost of electricity. In other words, miners are by nature “cheap.” Crypto mining has been characterized as “ruthless in its drive for the lowest cost.” And since 2019, the cheapest form of electricity has been renewables.
This means that it is in miners’ best interest to rely on clean energy sources, as it would make them more profitable, and after the Chinese migration, that seems to be the case. In addition, Cambridge and IEA data show that Bitcoin carbon intensity peaked last year. Current estimates show that crypto mining “has commenced its aggressive march down to zero emissions. “In the worst case, emissions from Bitcoin in five years will be less than a third of its emissions today, and in ten years, Bitcoin will emit nothing at all.”
Time after time, the Bitcoin community has disavowed environmental FUD, providing ample proof that its energy consumption is insignificant compared to the global power grid and uses mostly clean, renewable energy. Michael Saylor even created a whole organization, the Bitcoin Mining Council (BMC), to fight misinformation and release precise energy usage and mix data.
In their first report, the BMC stated that the amount of power Bitcoin uses is an insignificant ~0.117% (189 TW/h) of the world’s total electricity. The network could run entirely on wasted energy. The report also estimates that of that energy, 56% is obtained from renewable sources.
Again, data shows that Bitcoin isn’t a threat to the environment but actually the opposite. It is a cleaner, cheaper, and more efficient alternative to the fiat system. Also, it rebalances the power grid and can turn pollution into wealth by recycling waste and pollutant materials into energy for mining.
#3: Crypto is a device to surveil, pressure, and take advantage of people
Probably one of the most nonsensical arguments on the list, some people claim that blockchain technology provides a platform for population control and surveillance.
Let’s be extremely clear: As we mentioned above, cryptocurrencies running on blockchain technology are fully traceable, and the information is accessible to everyone at any time. So yes, you can see the amount of money each wallet has at any time, where they send funds, and from whom they receive them. Nonetheless, critics fail to mention that unless you disclose your wallet’s address voluntarily, that information is entirely anonymous. Cold wallets do not require an input of your personal data to use them.
For crypto to be a tool to control, surveil, and take advantage of the rest of the population, elites would have to be able to manipulate and decide cryptocurrencies’ “monetary policy” (sound familiar?). That is not the case, as crypto has no owner. Most networks are community-run. Each node is equal to the other, regardless of who runs it. Like Jack Kriesel says in his article, “Bitcoin unleashes the sovereign individual,” Bitcoin doesn’t infringe upon people’s freedom; it empowers them to break free from the actual chains: the legacy banking system. Other cryptos are no different.
Knowing this, central banks are trying to use crypto to control you. Just listen to the General Manager of the IBS and arrive at your own conclusion about who’s trying to control whom:
#4: Crypto drives global economic destabilization and financial collapse
Crypto was built based on the principles of the free market. And just like any other asset in that scenario, the price obeys the fundamental laws of supply and demand. Or how Adam Smith originally put it, “the market regulates the behavior of its participants.” According to classical economics, there is no such thing as an “unregulated market.” Instead, there is state regulation and market regulation.
On another note, with El Salvador’s case as exhibit A, there’s no reason to believe that Bitcoin and fiat money can’t coexist. Even more so, crypto adoption stimulates the economy, creating wealth, jobs, financial inclusion, and driving foreign investment. Considering that, it’s hard to see possible destabilization scenarios caused by cryptocurrency.
Then there’s the argument from the Fed and central banks that stablecoins are posing systemic risks. But many are now reporting that this is false. In “Why Central Bankers Invoke Free Banking to Attack Stablecoin,” Nic Carter explains how financial institutions repeatedly omit successful historical instances of free banking –Scotland, Canada, Sweden, and Switzerland– in which bank failures were uncommon. Notes were mutually accepted by rival banks and traded at par.
Stablecoins offer everything that CBDCs hope to achieve but in an entirely bottom-up, free-market way. The only thing CBDCs provide that stablecoins don’t is an effective surveillance system for the government to keep an eye on you (remember this guy?).
Apart from that, central banks also claim that “crypto-assets are unlikely to catch on in countries with stable inflation.” Assuming that’s true, countries like Argentina, Ethiopia, Haiti, Iran, Nigeria, Syria, Turkey, and Venezuela with high and constant inflation — according to inflation rates by country — would be great candidates for stablecoins, as they would provide an alternative to their devaluating currencies. Central banks’ “program” in a set amount of inflation undermines any common citizens’ investments.
Crypto can preserve wealth for everyday people as well as the underbanked and unbanked. According to Gemini’s Cryptopedia research, the opportunities within crypto and DeFi to access financial services to ordinary citizens and the completely ignored (by financial institutions) unbanked and the underbanked are enormous.
Satoshi Nakamoto designed Bitcoin as a cryptocurrency independent from any financial institution to hedge against the very economic collapses it is accused of. A clear example of this is the 2008 hypothecary crisis caused by the negligence of banks and the Fed. After people lost faith in banks, cryptocurrency came up as a transparent, effective alternative.
It would seem that financial collapse was pretty popular long before crypto even existed. Trying to blame the failure of fiat money on it won’t change the fact that the legacy financial system is flawed at its core and needs to be reimagined or even replaced.
#5: Governments will ban crypto, driving it to zero
Claiming that national governments will ban cryptocurrency, forcing an imminent drop to zero, is simply nonsensical. No entity on Earth has the power nor the resources to accomplish such a feat. Crypto is money on the internet. For banning it, you’d have to shut down the world wide web. And as Bitcoin Magazine says in “Why you shouldn’t be worried about a Bitcoin ban,” this is potentially impossible. Legal Examiner, a portal for educating about blockchain in legal terms, also states this in their crypto guide for lawyers: “Cryptocurrency can function 24/7/365, and if it is completely decentralized, it’s incredibly difficult to shut down.”
As we said before, the cryptocurrency networks are community-governed. They have no owner, no controlling entity. Nobody can stop them nor close them down. This means that nobody can prevent you from interacting with Bitcoin, Ethereum, or any other blockchain.
Regulated entities are another story. Centralized exchanges, needing a license to operate and abiding by the laws of their respective countries, are subject to shutdowns. Indeed, the only thing governments can ban is these regulated companies that are a part of the crypto ecosystem infrastructure. But that’s it. Even if governments worldwide close down crypto exchanges, nothing will impede you from publishing a post in an internet forum, negotiating with someone else, agreeing on a price, and trading cryptocurrencies with them. And we’re not even mentioning DeFi.
Someone warning about a government crackdown on crypto demonstrates nothing but little understanding of the industry and how it works. Just like this US congressman, who’s unaware that no matter how much legal framework you wrap cryptocurrency around, that won’t change its rules, which are written in its core.
#6: Cryptocurrencies are uncontrollable, volatile assets with no intrinsic value
Legacy economists, financial authorities, and bankers’ favorite thing to say about crypto is that it has no intrinsic value. “It’s not backed by anything,” they repeat tirelessly as if that means anything.
Volatility is one of the reasons why the general public gets cold feet when diving into cryptocurrency. FUDsters know this, and they leverage this — somewhat understandable, for what it’s worth — fear to keep people away from financial freedom.
Some even argue crypto is nothing more than a speculative casino-like gamble to get rich overnight and express profound concern for the lack of regulation in the industry. Others have, quite unbelievably, tried to blame inflation on Bitcoin. As if central banks worldwide weren’t printing money like crazy.
No one can deny that cryptocurrencies are volatile. Of course they are, in the short term. But if you zoom out and look at the bigger picture, you’ll see a pretty clear trend upwards.
Crypto may have no intrinsic value as a currency, but it’s debatable to say the same thing about their networks. Is there truly no value in a global, private, secure, decentralized, and inclusive monetary system running on the internet? Nor on a public, open ledger, accessible to everyone, anywhere? If anything, crypto is the most valuable financial system ever invented.
This brings us to point number two, which is that, just like these alleged financial experts blast crypto for, fiat money has no intrinsic value either. Nor is it backed by anything — banks abandoned the gold standard almost a hundred years ago — other than the people’s trust in their issuing institution, as Dror Goldberg states in “Famous myths of fiat money.”
Almost every currency in the world follows the laws of supply and demand, which determine their value. That is why unrestrained money printing leads to inflation, first, and devaluation, second.
Thus, the fundamental difference between crypto and fiat currencies is not intrinsic value but available supply. Fiat money is variable, unlimited, and controlled entirely by one institution, the central bank that issues it. That said, if you save on fiat money, the value of your savings is and will forever be determined by the central bank’s decisions. If, all of a sudden, the government decides to print two trillion dollars out of thin air, be prepared for your savings to lose half their purchasing power. Yes, it works just like that. The government can print money at the people’s expense to finance their political agenda as they please. And the worst of all: It’s legal!
Don’t believe us? Just look at Visual Capitalist tracking of the US dollar purchasing power. Other fiat currencies are no different, as you can see in the charts below.
Bitcoin, on the other hand, has a limited supply capped at twenty-one million. That’s all there will ever be. Emission halves every four years, so you can calculate the future supply at any point in the future. Other cryptocurrencies may not have capped supply but are working in deflationary measures, like Ethereum. In any case, rules are all written in the code, and nobody can change the money supply for their benefit.
You’re presented with a dilemma now: You have to choose between two currencies. Neither of them is backed by anything but trust. Ask yourself, then: Who do you trust more? Bankers, governments, financial elites, or a community of people like you, where everyone is equal? Are you comfortable with a single entity having the power to voluntarily and at any time make a decision that will make you lose your life savings?
Volatility doesn’t sound that bad now, does it?
Closing thoughts
The crypto community has proven time and again that these narratives are not only false but that cryptocurrencies pose a solution for most of them. Furthermore — and ironically — , fiat currency seems to be a better fit for every one of these negative arguments.
Cryptocurrency is all about freedom, transparency, and inclusion. And at Titan, we’re convinced that its adoption is in humanity’s best interest. In this blog, we constantly dive into each of these narratives, analyzing the topics they address and providing ample proof to support our thesis: That cryptocurrencies are the way to a fairer, more inclusive, and more efficient financial system that will lead the world to a better society.
Titan is actively working to optimize mining and make proof-of-work cryptocurrencies more accessible and democratic. If you liked this story, make sure to subscribe to our blog and sign up for our weekly newsletter. You can also visit our social media through the links below. We’ll be glad to have you!
