Misconceptions of the Bitcoin Newcomer
People tend to think of Bitcoin as a shady, unbacked commodity with no real worth. In a way, this is true, but a very negative way to look at it.
Bitcoin is, by definition, a decentralized public ledger of all transactions of all tokens called bitcoins. This ledger is called a blockchain, as it is unalterable, unless you had the power to break an enormous number of cryptographically strong hashes in tandem, whilst breaking just one is hard to do within reasonable amounts of time, space, and money. Transactions themselves are secured by asymmetric cryptography.
The creator of Bitcoin, Satoshi Nakamoto, is an unknown entity. He/she/they/it left the whitepaper and source code for all to see. That most certainly means that Bitcoin has been white-box audited, in which the code can be reverse engineered according to Kerchoff's Principle. In other words, the protocol/algorithm must be public, while your keys must be private. Being white-box audited doesn't mean that Bitcoin doesn't have any security flaws. Satoshi could've left a backdoor that was hidden in plain sight, similar to the case of certain CSPRNGs and modifying the entropy pool of a computer, Bitcoin could very well be exploited right now, we just don't know it. Once we did know, however, Bitcoin would be no more. We would likely hard fork, or split our protocol into two distinct ones, to undo the exploitation.
This covers the fact that Bitcoin is shady, but we can choose to trust it given our current cryptographic principles of security.
Bitcoin is not "unbacked", and yet it is at the very same time. This doesn't just go for cryptocurrencies, it also goes for governments and fiat currency. The people who are and can use Bitcoin are a very wide spectrum. We have the drug dealers we see on Bitcoin's FUD, the investors, the miners, the ransomware programmers, and the everyday people who buy a sandwich for a couple mBTC. Bitcoin, as of the moment of typing this sentence, is the most popular blockchain platform with the highest market cap. That might not remain the case in the future, Bitcoin might not be reliable because of long block times, mining difficulty making it unreasonable to validate, and finally, most of the Bitcoin network itself abandons usage, which decreases the network security. There could be many reasons for abandonment, such as innovative altcoins that appeal to the majority of the people.
When Bitcoin has a smaller user base, a token has less value. In the early days after the genesis block, nobody would heavily modify Bitcoin even though they could, because that would decrease its future potential value.
A common misconception is that Bitcoin is a scam. Technically, Bitcoin cannot be considered a scam. Given the open source-ness of it, there is no dishonesty, only complete transparency. It had lack of central control, and it is in complete control of the people in the network.
Bitcoin does not necessarily have a cheaper cost to send tokens. You have the option not to include a transaction fee, but your chances of having your transaction included in a block are extremely low if you don't. So, for all intents and purposes (so you don't lose your bitcoin), you're probably going to include a txn fee. The higher the fee, the higher chance and the lower time required to include into a block. There have been rare cases of Bitcoin transactions failing for no particular reason, resulting in funds lost for days until it is returned to the owner's wallet.
Contrary to popular belief, you CAN send bitcoins without the internet, or even without connecting to the blockchain itself. You can do this by sending bitcoins to a/multiple paper wallet(s) once, and give that wallet to the person you wish to pay. To verify the funds in the wallet, they simply need to put in the address of the wallet and view the amount. Using this method, you can send funds simply by sending the ECDSA private key to your recipient, without ever having to include a transaction fee. This is frowned upon, however. Most methods of communicating private keys require passing through an almighty central authority, and if the cryptography is weak, you effectively gave away your Bitcoin wallet to a complete stranger. Also, it's much easier just to hit "send" on your wallet client.
Bitcoin transactions are not anonymous. That's why the blockchain is referred to as a public ledger. However, just as how you can't sue an IP address but only a person, you can't take legal action on a Bitcoin address, only on the person controlling it. This can be found by the person registering on a government regulated exchange to associate the address with the person. To make your bitcoins slightly more anonymous, there are mixers, which in themselves are known to be dishonest.
Another thing to note is that Bitcoin has absolutely no intrinsic value, similar to fiat currency. We give it value because we agree upon a value for it. The blockchain is based on the notion of consensus. You can't just create bitcoins out of thin air unless there is buggy software. You can't mine valid blocks of the same height as a previous block because then you no longer have a blockchain. The network will reject your blocks. This is not always the case, as in the BTC - BCC (Segwit2x) chain split, and the ETH - ETC (TheDAO fund recovery) chain split. In this event, the protocol splits, because the consensus is split more evenly. If a single person split from Bitcoin, their newfangled blocks will have no true meaning, because nobody wants a currency that a single person controls.
Bitcoin is not bulletproof. As in every cryptographic application to date, it is hackable. "But what about the One Time Pad?" The OTP is not unhackable. You could always brute force it. While it is a futile effort, you could always succeed if you're lucky (as in VERY lucky). The same goes for Bitcoin. Let's say you're the luckiest man (or woman, I don't discriminate) in the world today, and you generate a new bitcoin ECDSA private key. You calculate the public key and create the RIPEMD-160 hash (your Bitcoin address). You deposit some funds that you acquired and look at your wallet client.
Something isn't right.
Why do you have 300 BTC? Must be some sort of bug.
You check multiple online block explorers.
300? Why this is insane! How could you have 300 BTC seemingly out of nowhere?
This is called a collision, and it is an example of how Bitcoin's cryptography is not completely unbreakable. You see, you just generated a public key that not only corresponds to your private key but also the public key of a rich bitcoin holder. Effectively, you have access to this person's entire supply of bitcoins, and they do for yours as well.
All you have to do is send it to another address you own, and you are now rich!
Right?
Well, according to statistics, probably not. The odds are stacked against you. By a lot.
The chances of you finding a collision and stealing someone else's funds is infinitesimally small, and nobody has or is expected to find one anytime soon. That's how cryptography works. It uses statistics to its advantage.
The same applies to block hashes. If you manage to create a beneficial transaction for yourself with the same block hash as the original, you're incredibly lucky. Has it ever happened? No. Will it ever happen? Probably not. Finding new block hashes below each difficulty level via partial collisions is more likely than you breaking a single block hash in a full collision.
Technically, a single hash has an infinite amount of preimages, they just have to be found in order to use them. And finding one is not easy by any means we have today.
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