Bitcoin myths (and facts)

Bitcoin is the original cryptocurrency and remains the most famous digital currency in existence.

But like any other celebrity, Bitcoin's fame has unfortunately subjected it to its fair share of rumours.

Finder surveyed 1,000 Australians through our Consumer Sentiment Tracker to find out which Bitcoin myths and misconceptions were most widely believed. We asked respondents eight true or false questions about Bitcoin and amazingly just 2% were able to answer all questions correctly. It seems there's no shortage of Bitcoin misinformation out there, so we're here to set the record straight.

Top Bitcoin myths and misconceptions

Finder's research found the most common misconception is that Bitcoin is not taxed, with 59% falsely believing this to be true. The second-most popular myth is that Elon Musk invented Bitcoin, which is believed by 56% of Australians.

Myth 1: Bitcoin is not taxed

The top misconception held by respondents is that Bitcoin is not taxed, with an overwhelming 59% believing this to be the case.

Like any investment, you are required to claim any profits made from cryptocurrency as income. When you sell it, you'll need to pay capital gains tax on your earnings. It's important to be conscious of what you need to report to the ATO. Check out Finder's cryptocurrency tax guide for more details on paying tax on Bitcoin.

Baby boomers (72%) are the generation most likely to believe Bitcoin is a tax-free investment, while those in gen Z (48%) are the least. South Australia (65%) is the most likely state to believe this statement.

Myth 2: Elon Musk invented Bitcoin

Another commonly held myth is that Musk invented Bitcoin, with an incredible 56% of Australians believing this to be true. The myth was born online through mere speculation and despite Musk denying it the rumour has lived on.

In reality, Bitcoin was conceptualised and developed by an anonymous user under the alias Satoshi Nakamoto. Nakamoto believed money shouldn't be controlled by a centralised government or bank, so set out to develop a decentralised digital currency. While nobody knows exactly who or what Nakamoto is, there's no doubt they have changed the landscape of currency forever.

The data shows men (62%) are more likely than women (51%) to think the Tesla founder is also the pioneer of Bitcoin. Gen X (61%) is also particularly susceptible to this belief.

Myth 3: There is an unlimited number of Bitcoin to be mined

More than two in five Australians (44%) believe the supply of Bitcoin is unlimited.

However, unlike regular currency, Bitcoin's supply is finite. Because of the way its code is designed, Bitcoin is limited to a maximum supply of 21 million. Currently there are around 19.8 million Bitcoin in circulation, with each new block released every 10 minutes.

That might sound like we're nearing the end of Bitcoin's supply. However, because the number of Bitcoin in a block halves every four years or so, experts estimate Bitcoin will continue to be mined well into the 2100s.

Gen Z (51%) is the most likely to believe Bitcoin's supply is unlimited, compared to baby boomers (34%). Those from New South Wales (47%) and Queensland (47%) are the most likely to believe Bitcoin's supply is inexhaustible.

Myth 4: Bitcoin has been around for more than 15 years

Another Bitcoin misconception held by Australians is how long it has been in existence, with 44% believing it has been around for more than 15 years.

Bitcoin was actually first released in 2009, around 12 years ago. At the time it was worth virtually nothing, and most of the world took no notice in the digital coin until years later. Needless to say, if you had the foresight back then to invest in Bitcoin you would be doing very well today.

Men (48%) are more likely than women (40%) to think Bitcoin is more than 15 years old, while gen X (48%) and millennials (47%) are the most likely generations to believe this myth.

Myth 5: There are less than 100 different cryptocurrencies

Nearly 2 in 5 Australians (39%) believe there are less than 100 cryptocurrencies in existence.

In reality more than 4,000 cryptocurrencies are in circulation, and the number is growing. Apart from Bitcoin, some of the most popular cryptocurrencies include Litecoin, Ethereum and Ripple. Most recently, Dogecoin surged in popularity as the first meme-based cryptocurrency.

Baby boomers (52%) are the most likely to believe there are less than 100 cryptocurrencies in existence, while those in gen Z (27%) are the least likely.

Myth 6: You can't use Bitcoin to buy things

Another myth about Bitcoin is that its value has not practical use. Close to a third of Australians (31%) believe Bitcoin can't be used to buy anything.

The truth is there are thousands of businesses across Australia that accept Bitcoin as a form of payment. There are Bitcoin ATMs and debit cards that make it easy to convert your Bitcoin to cash and spend them like any other currency. Online retailers such as Microsoft also are starting to accept Bitcoin as a form of payment, while platforms such as Living Room of Satoshi even allow you to use Bitcoin to pay household bills.

Baby boomers (34%) and South Australians (33%) are the most likely to believe the misconception that Bitcoin can't be used to purchase things.

Myth 7: Bitcoin is a physical currency

One in five Australians (22%) falsely believe Bitcoin is a physical currency.

Unlike traditional currencies, cryptocurrencies like Bitcoin are built on a digital ledger known as a blockchain, which means they only exist online. The Bitcoin network is also decentralised, which means it is not controlled by a government or central authority.

Some investors believe that owning cryptocurrency can diversify your investment portfolio because it exists outside typical investment markets, where the stock market, foreign exchange market and commodities are closely interconnected.

Surprisingly, millennials (31%) are the most likely to believe Bitcoin is a physical currency, followed by gen Z (25%).

Tips for Bitcoin beginners

Don't jump in blind. Investing in cryptocurrency is different to investing in traditional stocks, so it's important to do your research before investing. You don't need to know all the technical ins and outs, but it's important you understand how to trade securely and how it differs from traditional stock trading. If you're new to Bitcoin but eager to get into the market, check out Finder's guide to Bitcoin for beginners.

Keep your Bitcoin safely stored in a wallet, which is a digital platform that stores your private keys for transactions. While there is no shortage of Bitcoin wallets, it's important to choose one with a simple interface, security features and private key control.

Find a competitive exchange platform. Make sure to find a cryptocurrency exchange that suits your needs. If you're a beginner for example, try to find an exchange with a simple and user-friendly interface like the Finder app. When comparing options you should also look at exchange rates, fees, payment methods and the selection of cryptocurrencies available.

Written by

Sophie Wallis

Analyst

Sophie Wallis is a senior insights analyst with a passion for data storytelling. She spends her time turning complex data into digestible stories and uncovering new consumer trends. When she isn't working, you'll find her planning her next overseas holiday or bingeing on a big novel. Sophie has a Bachelor of Economics from the University of Melbourne. See full bio