Well done, I wish I knew half of what's written here. I bet it took quite some time to summarize all the information into one, summarised post. I'll keep this thread bookmarked and use it as an insight for real life Bitcoin discussions, to answer your questions that I do not know how to explain correctly.
Good riddance on the merit requirement too, you'll soon become Sr Member.
Topic: Myth vs Facts and My Assumptions about Bitcoin - page 2. (Read 810 times)
Good job BlackStar, I don't know how long it took you to summarize all this from few references into a topic that is quite interesting to discuss. I really appreciate your effort.
Money cannot be separated from the way humans transact to fulfill their need, from barter, fiat money, non-cash transaction to Bitcoin which has changed world civilization. Bitcoin has made transactions easier, faster, and of course quite safe.
My assumption is that the world population will favor a faster technology, cheap and safe. The history of a bitcoin will continue, no business in the history of the world has been able to increase 40-45 thousand times in 10 years.
Money cannot be separated from the way humans transact to fulfill their need, from barter, fiat money, non-cash transaction to Bitcoin which has changed world civilization. Bitcoin has made transactions easier, faster, and of course quite safe.
My assumption is that the world population will favor a faster technology, cheap and safe. The history of a bitcoin will continue, no business in the history of the world has been able to increase 40-45 thousand times in 10 years.
But I can understand the whole point of RBF and that is to allow double spending [only one confirmed transaction] and allow us to pay more fees to get fast confirmation for the same transaction.
Not sure if that's a typo or you've misunderstood, but RBF is only possible on unconfirmed transactions, not transactions with one confirmations. Also note that although your replacement transaction might end up paying the same addresses the same amount, just with a higher fee, the new transaction is very much a brand new transaction with its own transaction hash, and is not "the same transaction".However, regarding the issue of double spending or redirect a transactions to other wallets (own wallets or other people's wallets) it will certainly be a threat to anyone who makes buying and selling transactions without involving escrow
If you wish to accept 0 confirmation transactions, then you need to ensure RBF is disabled. If you receive an RBF enabled transaction, you should wait for a minimum of 1 confirmation. 
RBF in general? Loads of times. RBF to essentially cancel a payment and send coins somewhere else? Only once or twice since I'm generally very careful about where and when I send bitcoin and I don't often encounter a scenario when I would want to redirect a payment to an entirely different address.
How to do it will depend on the wallet software you use. Some, such as Electrum, give you options to bump the fee or "cancel" the transaction by double spending it back to your own wallet, but if you want to do something more complicated than that then you'll need to delete the transaction from your wallet and create a brand new one from scratch or use an external tool to create a transaction to import in to Electrum for signing.
I always activate RBF for every transaction that uses an electrum wallet, this is important as an effort to anticipate if there is a mempool congestion. I've tried it many times so far and I find this feature very useful. However, regarding the issue of double spending or redirect a transactions to other wallets (own wallets or other people's wallets) it will certainly be a threat to anyone who makes buying and selling transactions without involving escrow, 0conf transactions allow transactions to be canceled or redirect a payment so that awareness about the possibility of a scam is needs to be improved by whoever does it. Traders need to get at least 1 confirmation to make it safe in most cases.How to do it will depend on the wallet software you use. Some, such as Electrum, give you options to bump the fee or "cancel" the transaction by double spending it back to your own wallet, but if you want to do something more complicated than that then you'll need to delete the transaction from your wallet and create a brand new one from scratch or use an external tool to create a transaction to import in to Electrum for signing.
Thanks for explaining too, but I wouldn't do anything quite complicated unless absolutely necessary for the learning process or under certain circumstances.
Although from the start I used a wallet that has the RBF feature but I really haven't tried it until now. I found the possibility of double spending based on what I've read about the functionality of the RBF feature so we are always advised to stay aware of 0conf transactions when trading between users as it is not secure, but I really don't know how it works.
RBF is described in BIP 125, which you can read here: https://github.com/bitcoin/bips/blob/master/bip-0125.mediawikiEvery time you spend bitcoin, each input in your transaction contains a 4 bit value known as nSequence. It was initially intended to be used to allow users to replace transactions in the mempool with a new transaction with a high nSequence value, but posed issues to both bandwidth and memory due to the fact no additional fees were required to replace transactions, and so it was disabled years ago. More recently, the nSequence value was repurposed for other uses. One of those uses is in relation to time locking transactions, and another one of those uses is for RBF. If you (or your wallet software) sets nSequence to either 0xffffffff or 0xfffffffe, then RBF is disabled. If you set it to any other value, RBF is enabled.
If RBF is enabled, then after you have made a transaction but before it has received its first confirmation, and it is still unconfirmed, then you can easily replace that transaction. If you spend any of the inputs from that original transaction in a new transaction, and the new transaction pays higher relative and absolute fees than the original transaction, then the original transaction will be evicted from the mempool and replaced with your new one. This allows you to make the same transaction again but with a higher fee, but also allows you to change the transaction entirely and redirect the coins to different addresses.
But I can understand the whole point of RBF and that is to allow double spending [only one confirmed transaction] and allow us to pay more fees to get fast confirmation for the same transaction.
Anyway, for other users I hope you are not afraid to comment and give your opinion because this is a good thread to learn and hone your knowledge about bitcoin. Besides your knowledge can be useful for me it can also make you understand it more correctly. Let's discuss.
Sorry o_e_l_e_o, have you ever done it?
RBF in general? Loads of times. RBF to essentially cancel a payment and send coins somewhere else? Only once or twice since I'm generally very careful about where and when I send bitcoin and I don't often encounter a scenario when I would want to redirect a payment to an entirely different address.How to do it will depend on the wallet software you use. Some, such as Electrum, give you options to bump the fee or "cancel" the transaction by double spending it back to your own wallet, but if you want to do something more complicated than that then you'll need to delete the transaction from your wallet and create a brand new one from scratch or use an external tool to create a transaction to import in to Electrum for signing.
-snip-
If RBF is enabled, then after you have made a transaction but before it has received its first confirmation, and it is still unconfirmed, then you can easily replace that transaction. If you spend any of the inputs from that original transaction in a new transaction, and the new transaction pays higher relative and absolute fees than the original transaction, then the original transaction will be evicted from the mempool and replaced with your new one. This allows you to make the same transaction again but with a higher fee, but also allows you to change the transaction entirely and redirect the coins to different addresses.
Under certain conditions, RBF will really help anyone who wants their transactions to be confirmed faster, especially when the mempool is congested. This feature can also be used multiple times as long as the transaction still doesn't get 1 conformation, which I think is quite helpful. But about redirecting transactions to other addresses after the first transaction on broadcast, I haven't tried it until now. Maybe I'll test it in the future, but of course it should hit my wallet too.If RBF is enabled, then after you have made a transaction but before it has received its first confirmation, and it is still unconfirmed, then you can easily replace that transaction. If you spend any of the inputs from that original transaction in a new transaction, and the new transaction pays higher relative and absolute fees than the original transaction, then the original transaction will be evicted from the mempool and replaced with your new one. This allows you to make the same transaction again but with a higher fee, but also allows you to change the transaction entirely and redirect the coins to different addresses.
Sorry o_e_l_e_o, have you ever done it?
Although from the start I used a wallet that has the RBF feature but I really haven't tried it until now. I found the possibility of double spending based on what I've read about the functionality of the RBF feature so we are always advised to stay aware of 0conf transactions when trading between users as it is not secure, but I really don't know how it works.
RBF is described in BIP 125, which you can read here: https://github.com/bitcoin/bips/blob/master/bip-0125.mediawikiEvery time you spend bitcoin, each input in your transaction contains a 4 bit value known as nSequence. It was initially intended to be used to allow users to replace transactions in the mempool with a new transaction with a high nSequence value, but posed issues to both bandwidth and memory due to the fact no additional fees were required to replace transactions, and so it was disabled years ago. More recently, the nSequence value was repurposed for other uses. One of those uses is in relation to time locking transactions, and another one of those uses is for RBF. If you (or your wallet software) sets nSequence to either 0xffffffff or 0xfffffffe, then RBF is disabled. If you set it to any other value, RBF is enabled.
If RBF is enabled, then after you have made a transaction but before it has received its first confirmation, and it is still unconfirmed, then you can easily replace that transaction. If you spend any of the inputs from that original transaction in a new transaction, and the new transaction pays higher relative and absolute fees than the original transaction, then the original transaction will be evicted from the mempool and replaced with your new one. This allows you to make the same transaction again but with a higher fee, but also allows you to change the transaction entirely and redirect the coins to different addresses.
This kind of myth's is not totally avoidable or new since people think negative on new things discover especially if we talk about finance and investment.
Of course, because we can't really convince a blind person to believe that the shirt you're wearing is green. So is the situation where we tell people to believe in bitcoin when they don't know what bitcoin is. They won't believe it until they find out.Bitcoin is semi anonymous or pseudonymous, all transactions are transparent on blockchain but might not be linked to people that make the transaction.
But people can use bitcoin anonymously or can also prefer to maintain privacy.
I can understand your point but in practice we can prove that most people don't care enough about privacy especially if they use a centralized exchange.But people can use bitcoin anonymously or can also prefer to maintain privacy.
How about replace-by-fee (RBF), this is double spend. For example, I transfer bitcoin to someone with RBF enabled, if the transaction is not yet confirmed, I can double spend the coin by either cancelling the broadcasted transaction back into another address on my wallet with a higher fee, or by sending it to another new address on another wallet with high fee. But this only applies to transactions in which RBF is enabled.
The reason it is recommended to accept transaction that has been confirmed to avoid scam.
Although from the start I used a wallet that has the RBF feature but I really haven't tried it until now. I found the possibility of double spending based on what I've read about the functionality of the RBF feature so we are always advised to stay aware of 0conf transactions when trading between users as it is not secure, but I really don't know how it works. The reason it is recommended to accept transaction that has been confirmed to avoid scam.
Instead of being on a beginner's board, why don't you move this thread to a bitcoin discussion board? I think you will get a lot of quality posters there especially those who care enough about bitcoin.
Thanks, I've considered your suggestion and now the thread is on the bitcoin discussion board.-snip-
I'd like to point out that I've been hearing this statement from different users ever since 2014 that I got involved with bitcoin and they will repeat it in the future too. Funny thing is that if they bought bitcoin in 2014-2015 instead of nagging they would have bought it at about $400 and now the price is about $40,000 which is 100 times higher.
Funnier thing is that those who are nagging today and not buying bitcoin will complain in the near future when price is $400,000!
They want to buy, but they are afraid of loss and potential lower price. They are not people who know much about how the bitcoin market works while they want to make big profits from it. But really, that's the funniest part about being unlucky. I'd like to point out that I've been hearing this statement from different users ever since 2014 that I got involved with bitcoin and they will repeat it in the future too. Funny thing is that if they bought bitcoin in 2014-2015 instead of nagging they would have bought it at about $400 and now the price is about $40,000 which is 100 times higher.
Funnier thing is that those who are nagging today and not buying bitcoin will complain in the near future when price is $400,000!
This doesn't mean the coins have been spent twice, though. I can create thousands of different transactions which all spend the same outputs, but only one of them will ever confirm.
That is true. The transaction is never confirmed on blockchain. But I think people need to be notified, for not to be thinking once a coin appeared on their wallet, that the transaction can not be double spent. But in relation to blockchain and confirmation, bitcoin is not spent twice. I'm a new user who knows bitcoin since 2020. I don't have much knowledge about bitcoin, but that doesn't stop my interest to read a lot about it. So I dedicate this thread to test my knowledge so far about bitcoin based on a myth that I often hear in the community.
It doesn't matter, as long as you want to learn, knowledge is still very possible to be improved. You'll get it, that's a guarantee.Bitcoin is just like all other digital currencies; nothing new
Nearly all other digital currencies are centrally controlled. This means that:
My assumption: Bitcoin's decentralization has answered all doubts about why this currency is different from other digital currencies. The average digital currency is a centralized currency which has become the basis of the difference between the two.
This is a form of resistance from any government or organization that doesn't like bitcoin. They can say that because they don't want people to use or adopt a decentralized payment system that is not controlled by a central authority like bitcoin. You know that the government will never agree to bitcoin because they can't control it so they will definitely think of various ways to make it competitive in the future like the CBDC plan.Nearly all other digital currencies are centrally controlled. This means that:
- They can be printed at the subjective whims of the controllers
- They can be destroyed by attacking the central point of control
- Arbitrary rules can be imposed upon their users by the controllers
My assumption: Bitcoin's decentralization has answered all doubts about why this currency is different from other digital currencies. The average digital currency is a centralized currency which has become the basis of the difference between the two.
So far, the government has only been able to regulate users without actually being able to prevent their use as investment or trading assets. Although some countries seem to be quite strict with “crypto ban” regulations like China but that will never be able to stop this thriving bitcoin.
OP, unfortunately I don't have anything at the moment to appreciate your efforts but I'll be back and I will. This is a very well crafted thread in my opinion.
How about replace-by-fee (RBF), this is double spend.
This doesn't mean the coins have been spent twice, though. I can create thousands of different transactions which all spend the same outputs, but only one of them will ever confirm.Really, the entire term "double spend" is a misnomer. Even if a transaction is confirmed, and then a 51% attack rolls that transaction back and sends those coins to a different address, then from a blockchain point of view they have still only been spent once since the previous transaction no longer exists in the main chain.
Great writeup!
But, yeah, avoid saying that it's backed by it, 'cause it brings confusion.
Unlike gold, bitcoins are:
And a brand new feature: Their possession can be divided with multi-sig!- Easy to transfer
- Easy to secure
- Easy to verify
- Easy to granulate
It is not correct to say that Bitcoin is "backed by" processing power.
While I get your point, it is correct to say that it's backed by processing power. Backed by, besides pegged to, means that it's supported from. And Bitcoin is supported from computational power.But, yeah, avoid saying that it's backed by it, 'cause it brings confusion.
Bitcoin will only enable tax evaders which will lead to the eventual downfall of civilization
Even if it did, I honestly prefer having a decent percentage of people evading taxes than be forced to use a currency of a system that is designed to corrupt at some point in the future. I mean, who's going to protect me from the mess coming? Just stick to Bitcoin, which is a better type of sound money, and sleep easy. 
Concerning the early adopters.
It can be said that they were unfairly rewarded. But that is the reward of an early bird who catches the fattest worm. Meanwhile, if bitcoin was to be a perpetual failure, the early adopters would have also lost hugely.
In crypto, the early adopters always have high returns. So, bitcoin being the king is not an exception.
It can be said that they were unfairly rewarded. But that is the reward of an early bird who catches the fattest worm. Meanwhile, if bitcoin was to be a perpetual failure, the early adopters would have also lost hugely.
In crypto, the early adopters always have high returns. So, bitcoin being the king is not an exception.
Early adopters are unfairly rewarded
I'd like to point out that I've been hearing this statement from different users ever since 2014 that I got involved with bitcoin and they will repeat it in the future too. Funny thing is that if they bought bitcoin in 2014-2015 instead of nagging they would have bought it at about $400 and now the price is about $40,000 which is 100 times higher.Funnier thing is that those who are nagging today and not buying bitcoin will complain in the near future when price is $400,000!
The kind of people who say that expect the State to solve their problems instead of taking the initiative to solve them themselves. As if getting into mining in 2011 or buying Bitcoin had no merit. They dream of equalizing what is not equal, because if today all the wealth were distributed equally among all the inhabitants of the earth, tomorrow there would be rich and poor again.
Nor do they want to learn that Bitcoin was created precisely to free us from the clutches of the State (and central banks), not to depend on it.
Quote
Lightweight (SPV) wallets will blindly trust the miners
Not completely blindly though. A SPV client will still verify everything there is to a bitcoin block header and also can fetch merkle trees and verify existence of a transaction in a block. They can also connect to multiple full nodes and monitor the situation with the bitcoin network (forks, stale blocks, reorgs,...) and know whether the block it has are still part of the chain or not.Quote
meaning if 51% of miners printed infinite coins or spent the same coin twice then lightweight wallet users would happily accept these fake bitcoins as payment.
This is not a light-wallet specific problem. A 51% attack affects full nodes and SPV clients the same. And invalid transactions ("infinite coins") are not part of the valid chain anyways and both full nodes (by full verification) and SPV clients (by querying multiple nodes and following the longest header chain) will recognize it.Quote
Early adopters are unfairly rewarded
I'd like to point out that I've been hearing this statement from different users ever since 2014 that I got involved with bitcoin and they will repeat it in the future too. Funny thing is that if they bought bitcoin in 2014-2015 instead of nagging they would have bought it at about $400 and now the price is about $40,000 which is 100 times higher.Funnier thing is that those who are nagging today and not buying bitcoin will complain in the near future when price is $400,000!
Good job _BlackStar, I think I deserve merit your post. Anyway, 2 of all the points you raised in the thread are still very much felt today especially about ponzi schemes and pyramid schemes. I think the ordinary people still needs to learn more about bitcoin and compare it to ponzi investments and other pyramid scheme investments so they can determine whether bitcoin is worth equating with these two scam investments or not.
I have found people who have a mindset about bitcoin in real life and I have also had the opportunity to tell them about the basic knowledge of bitcoin investing and what bitcoin is. But I never force them to believe because basically bitcoin is just a scapegoat between two scam investment schemes.
Instead of being on a beginner's board, why don't you move this thread to a bitcoin discussion board? I think you will get a lot of quality posters there especially those who care enough about bitcoin.
I have found people who have a mindset about bitcoin in real life and I have also had the opportunity to tell them about the basic knowledge of bitcoin investing and what bitcoin is. But I never force them to believe because basically bitcoin is just a scapegoat between two scam investment schemes.
Instead of being on a beginner's board, why don't you move this thread to a bitcoin discussion board? I think you will get a lot of quality posters there especially those who care enough about bitcoin.
Unlike electronic fiat currency systems, bitcoins are:
Bitcoin is semi anonymous or pseudonymous, all transactions are transparent on blockchain but might not be linked to people that make the transaction. - Potentially anonymous
- Freeze-proof
- Faster to transfer
- Cheaper to transfer
But people can use bitcoin anonymously or can also prefer to maintain privacy.
Bitcoin requires certain properties to be enforced for it to be a good form of money, for example:
How about replace-by-fee (RBF), this is double spend. For example, I transfer bitcoin to someone with RBF enabled, if the transaction is not yet confirmed, I can double spend the coin by either cancelling the broadcasted transaction back into another address on my wallet with a higher fee, or by sending it to another new address on another wallet with high fee. But this only applies to transactions in which RBF is enabled.- Nobody ever created money out of nothing (except for miners, and only according to a well-defined schedule).
- Nobody ever spent coins without knowing their private key.
- Nobody spent the same coin twice
- Nobody violated any of the other tricky rules that are needed to make the system work (difficulty, proof of work, DoS protection, ...).
The reason it is recommended to accept transaction that has been confirmed to avoid scam.
My assumption: Doing tax evaders with bitcoin is possible because bitcoin can be spent pseudonymously or with a high degree of anonymity. But in many cases the government may detect tax evaders and investigate possible evasion because the lifestyle does not match the financial statements they receive. I've also created a thread on this, so maybe you can also find some opinions on how rules and evaders are hard to do.
Even if tax evasion is possible using bitcoin, it is because it is possible while using fiat.I have no smerit left, I would have merited your post.[/list]
This kind of myth's is not totally avoidable or new since people think negative on new things discover especially if we talk about finance and investment. But what good thing here is we have venue like bitcointalk to discuss such many topics where people can get enlightenment on how this one really works and correct what they think wrong about bitcoin like they think its a ponzi or other forms of frauds.
Myth vs Facts and My Assumptions about Bitcoin
I'm a new user who knows bitcoin since 2020. I don't have much knowledge about bitcoin, but that doesn't stop my interest to read a lot about it. So I dedicate this thread to test my knowledge so far about bitcoin based on a myth that I often hear in the community.
Before you read and comment on this thread, let me say first that this is a learning endeavor which may be very important for all beginners in this forum to know [including me]. I've read it a few times and it can broaden my knowledge to learn more about bitcoin, but I'm sure many beginners have never heard of it. All content in this thread is available here. I've just picked up a few key points that I think I still hear a lot to this day, so here are my assumptions about the myths going around.
Index of Content
- Bitcoin is just like all other digital currencies; nothing new
- Bitcoins don't solve any problems that fiat currency and/or gold doesn't solve
- Miners, developers or some other entity could change Bitcoin's properties to benefit themselves
- Bitcoin is backed by processing power
- Bitcoin is illegal because it's not legal tender
- Bitcoin will only enable tax evaders which will lead to the eventual downfall of civilization
- Early adopters are unfairly rewarded
- It's a giant Ponzi scheme
- Bitcoin is a pyramid scheme
- Bitcoin was hacked
- References
Bitcoin is just like all other digital currencies; nothing new
Nearly all other digital currencies are centrally controlled. This means that:
- They can be printed at the subjective whims of the controllers
- They can be destroyed by attacking the central point of control
- Arbitrary rules can be imposed upon their users by the controllers
My assumption: Bitcoin's decentralization has answered all doubts about why this currency is different from other digital currencies. The average digital currency is a centralized currency which has become the basis of the difference between the two.
Bitcoins don't solve any problems that fiat currency and/or gold doesn't solve
Unlike gold, bitcoins are:
- Easy to transfer
- Easy to secure
- Easy to verify
- Easy to granulate
Unlike fiat currencies, bitcoins are:
- Predictable and limited in supply
- Not controlled by a central authority (such as The United States Federal Reserve)
- Not debt-based
Unlike electronic fiat currency systems, bitcoins are:
- Potentially anonymous
- Freeze-proof
- Faster to transfer
- Cheaper to transfer
My assumption: All the advantages that exist in bitcoin we can find from how bitcoin innovation is explained. The bitcoin innovation differs from the fiat system in that it is not the same as other assets such as gold, fiat currency and electronic fiat currency systems. One of the easiest things to find is transaction fees and they are not controlled by any central authority.
Miners, developers or some other entity could change Bitcoin's properties to benefit themselves
Bitcoin's properties cannot be illegitimately changed as long as most of bitcoin's economy uses full node wallets. Transactions are irreversible and uncensorable as long as no single coalition of miners has more than 50% hash power and the transactions have an appropriate number of confirmations.
Bitcoin requires certain properties to be enforced for it to be a good form of money, for example:
- Nobody ever created money out of nothing (except for miners, and only according to a well-defined schedule).
- Nobody ever spent coins without knowing their private key.
- Nobody spent the same coin twice
- Nobody violated any of the other tricky rules that are needed to make the system work (difficulty, proof of work, DoS protection, ...).
These rules define bitcoin. A full node is software that verifies the rules of bitcoin. Any transaction which breaks these rules is not a valid bitcoin transaction and would be rejected in the same way that a careful goldsmith rejects fool's gold.
Full node wallets should be used by any intermediate bitcoin user or above and especially bitcoin businesses. Therefore anybody attempting to create bitcoins with invalid properties will find themselves being rejected by any trading partners. Note that lightweight wallets and web wallets do not have the low-trust benefits of full node wallets. Lightweight (SPV) wallets will blindly trust the miners, meaning if 51% of miners printed infinite coins or spent the same coin twice then lightweight wallet users would happily accept these fake bitcoins as payment. Web wallets blindly trust the web server which could display anything at all.
Miners are required to choose between multiple valid transaction histories. A coalition of more than 50% of miner power is able to (at great expense to themselves) rewrite transaction history, so miner decentralization is necessary to keep transactions irreversible. Miners burn a lot of electrical power in the mining process so they must constantly be trading their bitcoin income in order to pay bills. This makes miners utterly dependent on the bitcoin economy at large and therefore gives them a strong incentive to mine valid bitcoin blocks that full nodes will accept as payment.
Influential figures in the community (such as developers, politicians or investors) may try to use their influence to convince people to download and run modified full node software which changes bitcoin's properties in illegitimate ways. This is unlikely to succeed as long as counterarguments can freely spread through the media, internet forums and chatrooms. Many bitcoin users do not follow the bitcoin forums on a regular basis or even speak English. All appeals to run alternative software should be looked at critically for whether the individual agrees with the changes being proposed. Full node software should always be open source so any programmer can examine the changes for themselves. Because of the co-ordination problem, there is usually a strong incentive to stick with the status quo.
See also: Full_node#Economic_strength See also this blog post: Who Controls Bitcoin?
My assumption: In the first paragraph above it seems pretty clear that the idea of developers and miners changing bitcoin properties for their own benefit is never true. I don't have a lot of assumptions and knowledge about this as I don't know much about developers or miners, but a 50% hash power attack would be really tough because of the competition so the fear is very vague.
Bitcoin is backed by processing power
It is not correct to say that Bitcoin is "backed by" processing power. A currency being "backed" means that it is pegged to something else via a central party at a certain exchange rate yet you cannot exchange bitcoins for the computing power that was used to create them. Bitcoin is in this sense not backed by anything. It is a currency in its own right. Just as gold is not backed by anything, the same applies to Bitcoin.
The Bitcoin currency is created via processing power, and the integrity of the block chain is protected by the existence of a network of powerful computing nodes from certain attacks.
My assumption: Created does not mean backed. Bitcoin will still be decentralized by itself without being backed by anything. Gold is one of the closest assets if one wants to compare it about backed.
Bitcoin is illegal because it's not legal tender
In March 2013, the U.S. Financial Crimes Enforcement Network issues a new set of guidelines on "de-centralized virtual currency", clearly targeting Bitcoin. Under the new guidelines, "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." Miners, when mining bitcoins for their own personal use, aren't required to register as a MSB or Money Transmitter.
In general, there are a number of currencies in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, BerkShares, game currencies like WoW gold, or Linden dollars, is not illegal.
My assumption: Bitcoin is not illegal as a currency but you have to comply with your government regulations if you want to use it as a means of payment. Every country has different regulations regarding bitcoin, but most of them don't make it illegal. El Salvador is one of the countries that have adopted bitcoin as a legal currency.
Bitcoin will only enable tax evaders which will lead to the eventual downfall of civilization
Cash transactions offer an increased level of anonymity, yet are still taxed successfully. It is up to you to follow the applicable tax laws in your home country, or face the consequences.
While it may be easy to transfer bitcoins pseudonymously, spending them on tangibles is just as hard as spending any other kind of money anonymously. Tax evaders are often caught because their lifestyle and assets are inconsistent with their reported income, and not necessarily because government is able to follow their money.
Finally, the Bitcoin block chain is a permanent record of all transactions, meaning it can be mined for info at any time in the future making investigation, tracing of funds, etc much easier than with other forms of payment.
My assumption: Doing tax evaders with bitcoin is possible because bitcoin can be spent pseudonymously or with a high degree of anonymity. But in many cases the government may detect tax evaders and investigate possible evasion because the lifestyle does not match the financial statements they receive. I've also created a thread on this, so maybe you can also find some opinions on how rules and evaders are hard to do.
Early adopters are unfairly rewarded
Early adopters are rewarded for taking the higher risk with their time and money. The capital invested in bitcoin at each stage of its life invigorated the community and helped the currency to reach subsequent milestones. Arguing that early adopters do not deserve to profit from this is akin to saying that early investors in a company, or people who buy stock at a company IPO (Initial Public Offering), are unfairly rewarded.
This argument also depends on bitcoin early adopters using bitcoins to store rather than transfer value. The daily trade on the exchanges (as of Jan 2012) indicates that smaller transactions are becoming the norm, indicating trade rather than investment. In more pragmatic terms, "fairness" is an arbitrary concept that is improbable to be agreed upon by a large population. Establishing "fairness" is no goal of Bitcoin, as this would be impossible.
Looking forwards, considering the amount of publicity bitcoin received as of April 2013, there can be no reasonable grounds for complaint for people who did not invest at that time, and then see the value (possibly) rising drastically higher.
By starting to mine or acquire bitcoins today, you too can become an early adopter.
My assumption: It is clear that anyone who dares to take the risk of investing early will be rewarded for what they have invested. But not all early adopters could get the huge profits they are today if they spent their bitcoins instead of keeping them. Remember how much bitcoin for 2 pizzas price? But of course it's never too late to adopt bitcoin even though it's currently $40K or more. Bitcoin is a risky investment but well worth the return. There are no guarantees, this is just a habit that has happened in the history of bitcoin.
It's a giant Ponzi scheme
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.
A Ponzi scheme is a zero sum game. In a Ponzi scheme, early adopters can only profit at the expense of late adopters, and the late adopters always lose. Bitcoin can have a win-win outcome. Earlier adopters profit from the rise in value as Bitcoin becomes better understood and in turn demanded by the public at large. All adopters benefit from the usefulness of a reliable and widely-accepted decentralized peer-to-peer currency.
It is also important to note that Satoshi Nakamoto, creator of bitcoin, has never spent a bitcoin (other than giving them away when they were worthless) which we can verify by checking the blockchain.
My assumption: Since I know about bitcoin in 2020 then I never got any guarantee that bitcoin will guarantee a bigger return. However, price fluctuations as well as the influence of supply and demand have made holders benefit. This is not a ponzi scheme and one needs to take a closer look at what bitcoin really is before they determine that this is a ponzi scheme.
Bitcoin is a pyramid scheme
Bitcoin is nearly opposite of a pyramid scheme in a mathematical sense. Because Bitcoins are algorithmically made scarce, no exponential benefit is derived from introducing new users to use of it. There is a quantitative benefit in having additional interest or demand, but this is in no way exponential.
My assumption: Bitcoin doesn't need this way to get a lot of users. Each user can get their own profit according to the amount of investment they want to make. You may be recruited by people who have business interests in the name of bitcoin like many investment platforms today where you become a referral member of people who take advantage of your member status. Bitcoin doesn't require this as you are free to make any purchases based on your current financial capabilities, P2P or centralized exchanges are a great place for you to buy and invest in bitcoin.
Bitcoin was hacked
In the history of Bitcoin, there has never been an attack on the block chain that resulted in stolen money from a confirmed output. Neither has there ever been a reported theft resulting directly from a vulnerability in the original Bitcoin client, or a vulnerability in the protocol. Bitcoin is secured by standard cryptographic functions. These functions have been peer reviewed by cryptography experts and are considered unlikely to be breakable in the foreseeable future.
It is safe to say that the currency itself has never been 'hacked'. However, several major websites using the currency have been hacked, often resulting in high profile Bitcoin heists. These heists are misreported in some media as hacks on Bitcoin itself. An analogy: just because someone stole US dollars from a supermarket till, doesn’t mean that the US dollar as a currency has been 'hacked'.
Most bitcoin thefts are the result of inadequate wallet security. In response to the wave of thefts in 2011 and 2012, the community has developed risk-mitigating measures such as wallet encryption, support for multiple signatures, offline wallets, paper wallets, and hardware wallets. As these measures gain adoption by merchants and users, the number of thefts drop.
My assumption: Bitcoin are not hacked, but hackers manage to hack users or trading platforms due to weak security systems or security practices by users. Usually hackers take advantage of this weakness to steal bitcoins either from users or trading platforms, so this is another risk that users need to be aware of so that they can practice good security for their bitcoin. The best ever recommended standard for storing bitcoin is a hardware wallet.
References
1. https://en.bitcoin.it/wiki/Main_Page
2. https://en.bitcoin.it/wiki/Myths
3. https://bitcoin.org/en/
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