False, but true in a way. The heat in hot peppers comes from a chemical called capsaicin, and most of the capsaicin is contained in the pith, the white material that holds the seeds in place. The seeds actually contain very little. So, you could remove just the seeds from a pepper and affect the heat not at all, but because most people remove the pith along with the seeds, they get the desired result. Although, hot peppers are supposed to be hot, so why would you do this? Another mystery!
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Kitchen Myths 