Hackernoon logo#Debunked: 3 False Narratives Surrounding Bitcoin by@benhodlin

#Debunked: 3 False Narratives Surrounding Bitcoin

Ben Knaus has a passion for discerning the truth, even if decoupled from his opinions on matters. He believes most false narratives come down to one common flaw: lack of full education on the topic at hand. Bitcoin mining is one of the most sustainable industries in the world. Bitcoin miners are incentivized to use and create the cheapest energy in order to stay profitable. Bitcoin transactions are openly viewable and traceable, all transactions are open viewable. Bitcoin gives the unbanked access to financial inclusion, giving them the same access to the financial system as the richest, while giving them permission-less access to a financial system.
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Black Swan Digital assets Hacker Noon profile picture

Black Swan Digital assets

General Partner of a Digital asset PE Fund launching Jan 1 2022

Like most things these days, narratives drive the masses. False narratives, by definition, can be due to "insufficient or inaccurate information, or inaccurate assessment". Finding the root of false narratives can be as easy as touching your nose, but as hard as climbing Mount Everest. Call it what you want, but most in the Crypto Sphere call it FUD (Fear Uncertainty and Doubt). I believe most false narratives come down to one common flaw: lack of full education on the topic at hand.

My name is Ben Knaus and on Hackernoon @benhodlin. My background in the corporate world is in Renewable Energy and Private equity, specifically in Europe and North America. I've been lucky to hold a few Executive titles, and have always dealt directly with due diligence in multiple buckets. Internally I have a passion for discerning the truth, even if decoupled from my opinions on matters.

One snowy day I received a call from a friend asking about crypto. I told him i'd be careful, and then proceeded to regurgitate some broad brush sentences about crypto not having value etc. When the call was just about to end I promised to investigate it, just incase my arguments were flawed. Months later after many hours of analysis and re-formulating my hypothesis, I made my first Bitcoin Purchase for under $4,000, coupled with ETH for under $90. At that moment I felt conviction for the long term bullishness on the generational ecosystems I see forming. No matter the price action I'm here to stay.

So with the back story out of the way, let me break down a few repetitive narratives that are in my black and white opinion completely false.

1. "Bitcoin is only used for illicit activities"

Quite the contrary, most people assume that
Bitcoin transactions are private. In fact, all transactions are openly viewable
and traceable. Former CIA director Michael Morrell published an independent paper directly refuting the well-traveled narrative that Bitcoin is commonly used in illicit finances and came to two conclusions: "The broad generalization that Bitcoin is used in illicit finances is significantly overstated and Blockchain analysis is highly effective for intelligence and fighting crime. "

The former CIA director concluded that there is less illicit
activity in the Bitcoin ecosystem than there is in the traditional banking
system.


Chainalysis is a data platform who by their mission statement "create transparency for a global economy built on blockchains, enabling banks, business, and governments to have common understanding of how people use cryptocurrency."

Chainalysis recently concluded less than 1% of all crypto activity is
used for illicit activity. The traditional banking system has over 2% of total activity used for illicit actives. Every on and off ramp in and out of crypto exchanges/wallets in any first world country have AML (anti-money laundering) and KYC (know your customer) procedures in place. Making it very easy to track any nefarious funds, no matter how many times they change addresses.

2. "Bitcoin is bad for the environment"

The "Bitcoin is bad for the environment" is a tired one at best. We donโ€™t have an energy problem , we have an Energy distribution problem. Energy distribution and active network management are two things that many people lack understanding of. One of the core focusses my team worked on for years in the UK with our renewable network was active network management. Bitcoin miners like Whinestone, who happen to be the largest BTC miners in North America, actually help with ANM. They will shut down mining operations during high peak demand/usage and turn the miners back on in off peak hours. This in turn establishes a baseline for off-peak hours and actually ensures less energy waste in the network.

For every 100GW of energy produced in many countries only 40-55 GW are used. Bitcoin miners are incentivized to use and create the cheapest energy in the world in order to stay profitable.


The BMC (Bitcoin Mining Commission) recently found miners are using electricity with a 67% sustainable mix. Making Bitcoin Mining one of the most sustainable industries in the world.

If we compare Bitcoin to Physical banks, ATM's, and Gold Mining, BTC uses less energy than each of them. At the same time, Bitcoin uses more renewable energy than all 3 combined. I believe miners drive for profits largely incentivizes them to use more and more renewable energy. If we combine this incentive with the wasted energy and the ability for miners to add a baseline in Active network management and aid in high demand situations, we will ultimately waste far less energy.

3. "Bitcoin isn't used for anything"

In my opinion Financial inclusion is where Bitcoin is driving utility; Currently 31% of the world is unbanked. Bitcoin gives the unbanked financial inclusion, making sure the poorest people in the world have the same access to financial means as the richest, all while giving them access to a system that's permission-less , trustless and immutable.


Users can access a medium of exchange that moves value like email. Users can ; send peer to peer transactions instantly; earn interest; take out micro loans; access financial markets via synthetic stocks etc. We've recently witnessed the first domino fall in El Salvador making Bitcoin legal Tender. Over 70% of the country is unbanked and Jack Maller's Strike payments on the Bitcoin lightning network allows instant payments in BTC that can be converted to other currency instantly at the point of sale. Every citizen of El-Salvador is being airdropped $30 in Bitcoin to promote the transition.


Bitcoin is already used for cross border Remittances (the act of sending money for goods or services or as a gift). In late 2020 alone Bitcoin remittances to Latin America eclipsed $3Billion US dollars in one month. Companies like Western union and money gram prey on the poor who remit money back to family and loved ones abroad, sometimes charging as much as 40% of the total amount sent. With Bitcoin we move value exponentially cheaper than third party remittance entities. The average bank wire is $35. The average Bitcoin transaction fee as of 2021 is $2.46, the average western union fee is $25.

Store of value as a use case

Bitcoin is also viewed by many as a "Store of value". To value a volatile asset we must look at the annual low for the asset since it's inception. only one year out of the last 10 hasn't seen geometric growth for Bitcoin's annual low, pointing towards bitcoin as a very solid store of value thus far on a worst case basis annually. (See chart below: *Not depicted on the chart is the current 2021 low of $28,000)

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Michael Saylor the CEO of Publicly traded (NASDAQ: MSTR) MicroStrategy who now own 105,085 Bitcoin in their treasury sees Bitcoin as "Digital gold" , and a hedge against inflation because of its fixed supply and deflationary nature. Saylor views fiat currency as " a melting icecube " and views keeping his companies treasury in fiat irresponsible, because annually 5% of its buying power would be lost to inflation. Recently Capital group an investment management firm with over 2 Trillion assets under management bought 12% of MSTR, making them the 3rd largest shareholder behind Saylor, and Blackrock (9T USD assets under management).

With every passing day more and more new users are entering the Bitcoin network. Both Institutions and retail investors are showing peaked interest levels even after the may downward trajectory of the BTC price. With such new exposure overtime these false narratives will slowly fade to black. Bitcoin isn't perfect, but it's counterpart of reckless fiat printing, inflation, and over 90% loss of buying power isn't exactly creating a warm and fuzzy narrative itself.

Bitcoin is giving the unbanked a financial identity, all while operating the most secure financial network in the world by miners who are energy conscientious. Bitcoin has survived attacks from critics for over a decade, and that won't change.

Perhaps Bitcoin is at the cusp of developing into the worlds strongest narrative ; electing to put our money and faith in a mathematical framework that is free of politics and human error.

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