One of the earliest cryptocurrency myths is that it redefines digital money. And even though it has been in existence for over a decade, many people don’t know its worth. They regard cryptocurrency as a relatively new currency.
History of Cryptocurrency
Are you aware that digital currencies are one of the most expensive yet lucrative investment options? Most especially bitcoin, which is presently worth 32,981 USD. Before the advent of cryptocurrencies, gold and company stock were the most popular forms of investment among business owners.
Cryptocurrency is quite easy to purchase or obtain online. Nowadays, you can easily convert BTC to USD. One fact about human behaviour is that when something new enters the market, false information easily manipulates people’s thoughts.
Since the public debut of digital currency, there have been countless cryptocurrency myths. You might have heard some from various sources. Some novices believe in these cryptocurrency myths and as a result, they are dissatisfied.
Here are some of the most frequent cryptocurrency myths, along with an assessment of facts to help you decide if they are true or not. Perhaps you don’t seem to understand what I’m trying to communicate. Let’s get to know what cryptocurrency means.
See also: Environmental Hazards of Crypto Mining
How Does Cryptocurrency Work?
A cryptocurrency is a digital or electronic money that is encrypted to prevent counterfeiting and double-spending. Many cryptocurrencies use blockchain technology. Blockchain technology is a distributed ledger enforced by a global network of computers.
Cryptocurrencies are distinguished by the fact that they are not issued by any central authority. This makes them potentially impervious to government intervention or manipulation.
Now, let us discuss some cryptocurrency myths.
10 Myths about Cryptocurrency
You can only use digital currencies for illicit activity
One of the most common cryptocurrency myths is that they are only used for illicit activities. Although history has shown that criminal organizations and people have indeed made use of digital currencies. Also, they indeed use cryptocurrency for bad purposes. However, note that governments and the international community are cracking down on criminals and organized crime using bitcoin.
Moreso, some nations implement bitcoin anti-money laundering and counter-terrorist funding measures. Agencies and teams are set up to prevent the use of cryptocurrencies in these criminal activities. For example, the national cryptocurrency enforcement team (NCET) in the United States, investigates and prosecutes illicit use of cryptocurrency.
Due to these measures, most people carry out the majority of bitcoin transactions with good faith and lawful intent.
Digital currencies have no value
Value is a subjective term. An individual, group, or culture may place value on something that another discards. For example, the first cryptocurrency, Bitcoin, was priced at thousandths of a penny immediately after its inception in 2009. Then, its popularity grew even further, reaching $69,000 per Bitcoin in 2021.
Bitcoin’s increase in value shows how society’s views of an asset can be critical in determining its worth. Ethereum, the blockchain ecosystem that supports the ether (ETH) cryptocurrency, provides the foundation for non-fungible tokens. Decentralized financial applications and other technological developments in digital asset ownership are also parts of Ethereum’s extract.
Although ETH does not have the same economic worth as Bitcoin. However, its usefulness and potential make it more valuable to create financial goods and services based on its blockchain and smart contracts. Cryptocurrencies are popular among investors and businesses for a variety of purposes. These purposes include finance, investing, and venture capital.
Therefore, the saying that “digital currencies have no value” is one of the cryptocurrency myths. Besides, cryptocurrency dollar value, like many other assets or currencies, varies in response to consumer and investor attitudes, supply, demand, and economic conditions.
Cryptocurrencies aren’t protected
The blockchain is the foundation of cryptocurrencies. A blockchain is a distributed database protected by highly difficult-to-crack encryption techniques and technologies. Previous transaction information is stored in new blocks and encrypted when transactions are placed into blocks on the blockchain.
The chain grows with each new block. A community of automated verifiers must agree with the data recorded in the transactions. Changing information on the blockchain to steal bitcoin is extremely difficult due to the blockchain’s complex encryption.
Moreover, the flaw is in how cryptocurrency is accessible and kept, such as in bitcoin wallets or centralized exchanges. It is safe to transmit bitcoin from one user to another. However, the systems and software used to store and access it can be compromised.
You can use several safe strategies to keep your cryptocurrency secure. For example, you can store your crypto asset keys in cold storage rather than on exchanges. When you’re ready to use it, use a secure connection on a non-mobile device like a computer to send only the amount you wish to use to your hot wallet.
Contrary to cryptocurrency myths, crypto mining is the process of verifying transactions and producing new blocks in the blockchain. It is not the process of creating a token. And the reward for creating a new block is cryptocurrency.
Cryptocurrencies are a scam
Cryptocurrencies are scams is a cryptocurrency myths most people agree with. Cryptocurrencies are a widely recognized form of payment at several businesses and merchants. People accept cryptocurrencies in personal transactions, and governments are attempting to regulate them. Most digital currencies don’t have any programming, coding, or the purpose to steal your money.
On the other hand, people devise schemes to defraud you of your cryptocurrencies or money. For example, many initial coin offerings and unregulated financing for new cryptocurrency ventures have proven to be frauds. Other cryptocurrency fraudsters may persuade you to accept unconfirmed transactions while disguising as government authorities. Then, they request that you pay your obligations in bitcoin.
While it is hard to avoid the possibility of becoming a victim of a scam, education and awareness can help you lessen your risks.
So, cryptocurrencies are not a scam. It is just one of the cryptocurrency myths.
Cryptocurrencies will eventually replace fiat money
Cryptocurrencies are newer than fiat currencies, which have existed for millennia. Around the year 1000 CE, China is considered to have created the first fiat money. This sort of money is widely used in industrialized countries.
To replace fiat currency, individuals would have to choose cryptocurrencies over the money they are familiar with and understand. It is conceivable, though, after the worth and purchasing power has been established.
Governments and administrators find it difficult to abandon fiat money because of the established laws for collecting taxes and funding government-sponsored programs and services. Social programs that people rely on will expire if taxes are not collected. Other government funds may even dry up.
Furthermore, due to the decentralized structure of cryptocurrencies, there would be no mechanism to regulate inflation through monetary policies. Central banks’ contemporary powers for combating inflation and unemployment while supporting economic development have taken more than a century to develop. Complete decentralization of money via cryptocurrencies would have unforeseeable economic consequences.
This is because blockchain and cryptocurrencies lack built-in instruments for affecting inflation, employment, or economic growth, new monetary policies and tools would be required. So, from now on, debunk the cryptocurrency myths that crypto will replace fiat money.
See also: Disadvantages of NFTs
Criminals use cryptocurrency
One of the most common cryptocurrency myths is that criminals use cryptocurrency. In 2013, at the Silk Road Raid event, the usage of millions of dollars in Bitcoin for drug and human trafficking was revealed. To avoid such tragedies, cryptocurrency is yet to be regulated. However, in a few countries, the government requires certain procedures for trading cryptocurrencies to prevent such illegal usage of digital currency. This is one of the many cryptocurrency myths floating around the world.
Indeed, nations like India implements the KYC (Know Your Customer) policies for everyone who establishes a bitcoin wallet.
By requesting bitcoin holders to provide or upload verification ID online, authorities can compile data on them. KYC also incorporates a fingerprint verification step for extra security. As a result, the use of Bitcoin in illegal markets and casinos is no longer a statistic.
The only valuable cryptocurrency is bitcoin
Here is another cryptocurrency myth. Bitcoin is without a doubt one of the most well-known cryptocurrencies in the world. You may find many Bitcoin ATMs in any location in the United States. Have you ever come across a website, ATM, game, or mining firmware that provides cryptocurrency other than bitcoin as a delivery option?
However, bitcoin is not the only valuable cryptocurrency in existence. Cryptocurrencies with lower transaction fees, such as Litecoin and Ethereum, are gaining popularity among the general public.
Ethereum recently attracts the attention of high-end investors because of its enhanced liquidity ratio and transfer value. The top ten most important cryptocurrencies in the world are listed below, according to market capitalization:
- Ethereum or ETH: Currently, 1 ETH = 2060 USD approximately.
- Litecoin or LTC: Litecoin was introduced as the alternative to bitcoin. Its value is only 71 USD.
- Polkadot (DOT) is a cryptocurrency that is based on the notion of parallel blockchains.
- Cardano, or ADA, has a market capitalization of around 10 billion.
- Bitcoin Cash: This is a permissionless, open-network form of Bitcoin.
- Stellar is an open network for investors to perform peer-to-peer cryptocurrency transactions.
- Chain link is not to be confused with Blockchain. It is a cryptocurrency similar to Ethereum that uses the smart contract principle.
- Binance Coin, or BNB, is a cryptocurrency designed specifically for commercial transactions.
- Monero or MXR.
- Tether or USDT.
It is pointless to calculate a cryptocurrency’s value solely on its market price. The reason for this is that a cryptocurrency’s worth is independent of its market value. However, it depends on whatever currency piques the interest of the public, investors, and business owners.
Ethereum is the next cryptocurrency to compete with Bitcoin. This is according to certain financial and business research reports. Now that you already know that there are other cryptocurrencies apart from Bitcoin. The saying that the only valuable cryptocurrency is Bitcoin is also one of the various cryptocurrency myths.
The threat of “hacking” is endless
The fear of “hacking” is one of the key fears that scare prospective investors away from bitcoin investing opportunities. Cyberattacks, or the internet’s vulnerability to hackers, are no longer rare. Small hackers begin by breaking into other people’s social media accounts.
Skilled and hungry hackers can acquire direct access to your financial accounts. Accounts such as your bank, PayPal, wire transfer account, or Bitcoin wallet account. Above all, Bitcoin, Cryptocurrency, and Blockchain are all relatively new technologies. No experienced hacker will be able to decipher such a high-end technically complex blockchain of the ledger.
Moreover, only a quarter of the world’s population has grasped the concept of cryptocurrency since it was introduced. There are few participants because it is relatively new to the public. Meanwhile, the danger has vanished.
Yes, your crypto wallet can be hacked but only when you give out your information. Therefore, debunk any cryptocurrency myths that all your cryptos will suddenly disappear in a moment.
Transactions with cryptocurrency leave no trace
Here is one of the most ridiculous cryptocurrency myths. It’s a common misunderstanding that criminals use cryptocurrency to carry out illegal actions without arousing suspicion. People believe this fallacy because cryptocurrency is heavily reliant on blockchain technology, which is well-known for its anonymity.
Blockchain technology, on the other hand, not only recognizes and validates each transaction but also archives it automatically. The problem with cryptocurrency myths is that the myth-spreader only knows a portion of reality. Moreso, the concept of cryptocurrencies is still unknown to many people.
Cryptocurrencies are a gimmick
It is impossible to predict where cryptocurrencies will be in a few decades. However, the technology and companies cryptocurrency inspires will undoubtedly continue to increase and improve.
Nowadays, financial organizations and consumers are interested in decentralized finance solutions. Authorities are seeking ways to link cryptocurrencies to a more stable asset. Also, some businesses are heavily investing in Bitcoin and other alternative coins. Big firms use blockchain technology to investigate methods to merge the physical and digital worlds.
Tokens are generated for any item and ascribed a value. The virtual and real worlds are colliding, and cryptocurrencies will almost certainly be involved. Thus, whenever you hear someone say cryptos are going to end someday, just laugh it out. It is one of the cryptocurrency myths.
Cryptocurrency myths and facts will continue to disrupt your ability to invest. This is as long as the cryptocurrency business pokes its head into the world’s traditional financial system.
There’s no doubt that cryptocurrency is the future of the financial world. However, you should always debunk cryptocurrency myths and research all its truths before dabbling into it full-time. Subscribe to our newsletter to keep track of more cryptocurrency-related posts. Thanks for your time!