Decoding the Many Myths of Bitcoin

Journal of Financial Planning: March 2025

Ivory Johnson, CFP^®, ChFC, is the founder of Delancey Wealth Management, LLC (www.delanceywealth.com). Mr. Johnson has a Bachelor of Science in finance from Penn State University, has been certified by the Digital Asset Council for Financial Professionals, and is a member of the CNBC Financial Advisor Council.

Greek mythology is the world’s first reported soap opera, a cosplay of folklore and life lessons jam packed with dopamine. Zeus was oddly temperamental, best known for exterminating the world’s population in nine days of flooding. There’s also that time he turned his wife into a fly and ate her, but the story of Pandora really takes the cake.

Zeus elevated his pettiness to new heights when Prometheus gave the humans fire. In response, he had Hephaestus make the first human woman out of soil and water. Chivalry must have thrived on Mount Olympus because the Gods showered Pandora, the name given to the first woman, with gifts that she was to put in a jar and never open. Unfortunately, she opened the jar, released all the evils unto the world, and gave us hatred, hunger, sickness, and war. Prometheus, for his efforts, was chained to Mount Caucasus so an eagle could peck away at his liver.

Bitcoin is itself a bit of an unwritten novel with enough twists and turns to pull a muscle—or, if you’re like Icarus, burn the wax off your wings if you ignore the volatility or forgo a process for managing risk in your positions. In the footnotes of digital assets, there are a series of myths that suggest Zeus will bind crypto to an eternally burning wheel, force the Fed to bear the weight of the world on its shoulders, or seduce consumers into pushing a boulder of inflation up a giant hill forever.

Early Mythology of Crypto 

There is no shortage of crypto tales, but if one were to go in chronological order, we might start with the notion that bitcoin is a hoax that will be unveiled the moment somebody hacks the blockchain. To be clear, bitcoin’s been in existence since 2009, and trillion-dollar scams are hard to come by. The tulip frenzy of the 17th century lasted just three years when information moved at a much slower pace and not with the velocity today’s machines offer.

Nevertheless, for bitcoin to be hacked, the assailant would need to control 51 percent of a decentralized blockchain that is self-policed by thousands of nodes, or miners, that must solve a complex mathematical calculation and have it approved by the other nodes before a transaction is verified. The main function of these nodes is to determine what transactions are valid and what blocks will be added to the chain. Nodes that pass along incorrect information, as determined by other nodes, can be suspended from the network or permanently banned. A 51 percent attack would require a person or group to break a mathematical operation used for storing information on the internet securely and privately, an algorithm known as SHA 256, which would have broader implications because it also protects passwords and communication between websites and servers. Said another way, bitcoin would not be the only victim. 

More importantly, a hacker would have to control more than half of the nodes and override existing protocols to control the blockchain. Instead of requiring a majority consensus to approve a transaction, the hacker would be the consensus. This would enable them to change an entry ledger on the blockchain and give themselves back the money they had spent earlier so that they could spend it all over again, something referred to as double spending. As the story goes, if the integrity of the blockchain is ever compromised, bitcoin investors might come out smelling like tulips.

That’s not to say it’s impossible. To “undo” a transaction from the blockchain, you just need to build a new, longer chain of blocks without that transaction in it. Given the age of bitcoin’s blockchain and the number of nodes, that is highly unlikely. One would have to outwork the other miners, which have an incentive to build the longest chain of blocks. A hacker would also have to acquire more mining power than all the other nodes combined, which is expensive. According to GoBitcoin, it would cost $137,152,799,477 as of the writing of this article to consummate the assault,¹ or $1,340,886 each hour to try, per Bitcoinist.com.² Hacking the bitcoin blockchain is not completely out of the question, but the odds are negligible due to the age, size, and structure of the blockchain and the cost to infiltrate it. 

Crypto and Crime Lords

The next myth would have us believe that bitcoin is a vehicle for illicit activity, although according to Forbes, only 0.43 percent of bitcoin’s volume came from illicit activities and only accounts for 0.27 percent of global black market activity.³ By comparison, 2–5 percent of global GDP, or $800 billion–$2 trillion in current U.S. dollars, is estimated to have been laundered globally in one year, per the United Nations Office of Drugs and Crime.⁴

Nevertheless, crypto laundering can be traced and analyzed with a higher degree of accuracy and speed thanks to the transparency of the blockchain as compared to traditional financial systems. In 2021, Colonial Pipeline paid $5 million as a ransom when a cyber-criminal gang took the pipeline offline, only for the feds to recover $4.4 million.⁵ Allegedly, the FBI got the “private key” to the criminal’s bitcoin wallet and transferred the bitcoin to a wallet it controls.

Bitcoin transactions are traceable because the blockchain is in the public domain. The identity of the parties is protected by a hash, but the hash is on the blockchain for all to see. The FBI cannot see information on a cold wallet, but it can connect a specific bitcoin address if that address belongs to a centralized exchange. Then it can subpoena the exchange to disclose the owner of that specific address because the user performed a KYC and submitted their personal information and ID when they opened the account. There is also address clustering, heuristic analysis, and chain analysis to help law enforcement track down criminals with the same vigor they’ve used to collect $394 billion in bank fines since 2000, now that we’re on the subject of bad behavior.⁶ 

Intrinsic Value of Digital Assets 

The bitcoin detractors are relentless, voicing their complaint that bitcoin has no intrinsic value. Never mind that trust is a component of goodwill, itself a function of intrinsic value, but they say bitcoin is not backed by a physical commodity (or government) and has no practical use outside of transactions. Advocates for the devil, and I hear there are lots of them, would opine that bitcoin is the only asset with a fixed supply, is censorship-resistant, and can be sent over communication channels. 

Intrinsic value aficionados must have a difficult time holding their nose to high-frequency trading, zero days to expiration options, stock buybacks, and global central banks that pump liquidity into the markets to inflate financial assets priced in diminished monetary units at the expense of consumers’ purchasing power. In any event, by the time bitcoin investors make it to the bottom line, an asset is worth what somebody else is willing to pay for it, EBITDA notwithstanding. 

Environmental Crypto Myths 

Rumor also has it that bitcoin is bad for an environment that was under siege long before 2009. The argument holds that proof of work, the verification process executed by nodes to ensure the security of the blockchain, requires significant energy relative to other industrial activities. These estimates vary depending on who you ask. The U.S. Energy Information Administration estimates that annual electricity use from cryptocurrency mining probably represents anywhere from 0.6 percent to 2.3 percent of U.S. electricity consumption.⁷ Bitfarm, a vertically integrated company that builds and manages data center infrastructure for bitcoin, suggests that mining only accounts for 0.1–0.2 percent of the world’s energy consumption.⁸ This is in contrast to others who claim bitcoin consumes as much electrical power as Poland.⁹

For what it’s worth, one study demonstrates that bitcoin uses less energy than the global banking system,¹⁰ and data centers that support artificial intelligence account for 1 percent to 2 percent of overall global energy demand, similar to what experts estimate for the airline industry.¹¹ There is, however, an important distinction between how much energy a system consumes and how much carbon it emits. Bitfarm believes that almost 60 percent of energy for bitcoin mining comes from sustainable sources, while other studies peg renewable energy use at 54 percent.¹²

One example would be the use of flare gas. CNBC reported on Giga Energy Solutions, a company that sets up bitcoin miners on oil wells that are powered by flare gas that would otherwise be burnt off.¹³ All things considered, bitcoin mining has an insignificant carbon footprint relative to other industries because miners have an incentive to mitigate energy expenses and their ability to physically relocate gives them greater access to hydro, solar, and nuclear power.

Conclusion 

There was a time not so long ago when bitcoin hecklers forecasted a hostile government that would ban cryptocurrencies out of spite. It turns out that cash rules everything and crypto got the money. For instance, the SEC’s former anti-crypto chairman Gary Gensler may be replaced by crypto advocate Paul Atkins, a former SEC commissioner whose appointment has not been confirmed as of mid-February. Similarly, PayPal co-founder David Sacks was nominated to be the AI and crypto czar, a new position, and Sen. Cynthia Lummis (R-WY) has introduced the BITCOIN Act, which proposes to supercharge the U.S. dollar and pay down the national debt by establishing a Strategic Bitcoin Reserve on the balance sheet of the Treasury to complement its gold holdings. Bitcoin doesn’t just have a seat at the table, it bought the table, ordered the take-out, and will probably tip the waiter.

Imagine if somebody created an instrument with $36 trillion in supply, no supply cap in sight (and expectations for exponential growth), had but one node, and 80 percent of it had been created in just the last few years.¹⁴ Then consider what we would think if 1 percent of American households owned 30 percent of this instrument.¹⁵ What would be the commentary? I just described the U.S. dollar, the degraded store of value bitcoin was created to remedy.

Any new mediums of exchange will have shortcomings and legitimate concerns, crypto included. As investors inevitably weigh all the competing equities and study the veracity of these concerns, they may come to the conclusion that the alternatives have their own flaws and will decide to take their chances with a decentralized network with no axe to grind and no unelected gatekeepers to swing it. There are few guarantees in life, but what we know to be true is that when supply goes up and demand stays the same, the value tends to go down. Bitcoin fixes that. 

Endnotes

1. Visit https://gobitcoin.io/tools/cost-51-attack/ to see the assumptions and hashrate used to calculate the cost of a 51 percent attack.
2. Verma, Keshav. 2023, November 3. “By the Numbers: What Would a 51% Bitcoin Hack Cost Today?” Bitcoinist.com. https://bitcoinist.com/by-the-numbers-what-51-bitcoin-hack-cost-right-now/.
3. Lindner, Ansel. 2024, September 20. “The Truth About Bitcoin: Busting the Biggest Myths.” Forbes. www.forbes.com/sites/ansellindner/2024/09/20/the-truth-about-bitcoin-busting-the-biggest-myths/.
4. United Nations Office of Drugs and Crime. n.d. “3 Stages of Money Laundering.” www.unodc.org/unodc/en/money-laundering/overview.html.
5. BBC News. 2021, June 8. “Colonial Pipeline: US Recovers Most of Ransom, Justice Department Says.” www.bbc.com/news/business-57394041.
6. Corporate Research Project. n.d. “Violation Tracker Industry Summary Page: Financial Services.” Accessed January 15, 2025. https://violationtracker.goodjobsfirst.org/prog.php?major_industry_sum=financial+services.
7. Morey, Mark, Glenn McGrath, and Hiroaki Minato. 2024, February 1. “Tracking Electricity Consumption from U.S. Cryptocurrency Mining Operations.” U.S. Energy Information Administration. www.eia.gov/todayinenergy/detail.php?id=61364.
8. Bitfarm. n.d. “Myth: Bitcoin consumes too much energy.” https://bitfarms.com/bitcoin-mining-facts-myths.
9. Digiconomist. n.d. “Bitcoin Energy Consumption Index.” https://digiconomist.net/bitcoin-energy-consumption.
10. Payless Power. 2024. “The Bitcoin Network vs. World Banking Energy Consumption.” https://paylesspower.com/blog/the-bitcoin-network-vs-world-banking-energy-consumption/.
11. Stackpole, Beth. 2025, January 7. “AI Has High Data Center Energy Costs—but There Are Solutions.” MIT Sloan School of Management. https://mitsloan.mit.edu/ideas-made-to-matter/ai-has-high-data-center-energy-costs-there-are-solutions.
12. SlamAI. 2024, January 18. “Bitcoin Mining’s Green Mile: 54.5% Sustainable Energy Use.” Yahoo Finance. https://finance.yahoo.com/news/bitcoin-mining-green-mile-54-181636923.html?guccounter=1.
13. Sigalos, MacKenzie. 2022, February 13. “These 23-year-old Texans Made $4 Million Last Year Mining Bitcoin Off Flare Gas from Oil Drilling.” CNBC. www.cnbc.com/2022/02/12/23-year-old-texans-made-4-million-mining-bitcoin-off-flared-natural-gas.html.
14. Aro, Robert. 2023, May 15. “How Much Did They Print?” Mises Institute. https://mises.org/power-market/how-much-did-they-print.
15. USAFacts. 2024, August 7. “Who Owns American Wealth?” https://usafacts.org/articles/who-owns-american-wealth/.