Bitcoin: 6 totally false myths everyone thinks are true

11bitcoinmyths04 Mar 2014 / Business Insider – It’s a little hip right now to pile on and say that Bitcoin is over in light of the Mt. Gox scandal, but it’s not over at all.

Let’s take a couple steps back to reestablish some of the fundamentals on how and why Bitcoin works, and cast aside clunky myths that aren’t grounded in reality.

1. Bitcoins are worthless because they aren’t backed by anything.

False! Just because there’s no vault full of gold maintaining Bitcoin’s value doesn’t mean it’s worthless. Bitcoin has value because people say it does.

It might sound like a cop-out, but consider the subjective theory of value, which argues that a thing has value when it serves someone’s purposes. As an anonymous digital currency, Bitcoin serves a purpose for many people.

2. Bitcoin is illegal.

Bitcoin is completely legal in the United States. In March 2013, the U.S. Financial Crimes Enforcement Network issues a new set of guidelines on virtual currency, determining that “a user of virtual currency is not a Money Services Businesses (MSB) under FinCEN’s regulations and therefore is not subject to MSB registration, reporting, and record keeping regulations.” Simply put — you don’t need anyone’s permission to use Bitcoin.

This post lays out various Bitcoin legalities in countries around the world.

3. Bitcoin is untraceable.

Bitcoin is completely traceable by design. These are financial transactions facilitated by open-source software running over the Internet. You should assume none of it is private.

Every single Bitcoin transaction that gets made, whether it’s to buy illegal drugs on the Silk Road or alpaca wool socks from a Massachusetts farm, is recorded at You probably should use Bitcoin the same way you use the Internet at the office — intelligently….. Read more

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