With cryptocurrency reaching new all-time highs, it seems like a great moment to examine some of the most common myths and misconceptions regarding cryptocurrency. Bitcoin, the first cryptocurrency, was introduced in 2009. There are hundreds of cryptocurrencies available now, with a total market value of over $2 trillion. Tens of thousands of cryptocurrency billionaires were created early this year as their prices skyrocketed at least on paper.
On the other hand, cryptocurrencies may turn out to be a gigantic speculative bubble that harms many inexperienced investors. Indeed, many Bitcoin fortunes have already vanished as a result of the current market drop. Whatever their final fate, the innovative technological breakthroughs that support them will fundamentally alter the nature of money and finance.
Myths about Cryptocurrency
1. Cryptocurrencies Are Ideal For Illegal Activity
Because of its connections to the black market, the general public perceives that cryptocurrencies are only utilized for online criminal activity such as drug purchases or sex trafficking. However, as previously stated, the blockchain is open to the public, and transactions may be traced eternally.
Recent results demonstrate that bitcoin is ineffective for the majority of illegal operations. According to a previous analysis by the blockchain forensics companies FDD and Illicit, fewer than 1% of all bitcoin transactions involve money laundering. Privacy tokens like Monero make it considerably simpler to engage in criminal operations, while more frequently used currencies are traceable from the moment they are used. For decades, criminals have used money.
2. Cryptocurrency is not safe because it can be hacked
Some people are skeptical about bitcoin’s blockchain because they fear it can be hacked. Many misunderstandings about Bitcoin’s security originate from assaults on third-party businesses and services that use Bitcoin rather than the Bitcoin network itself. In addition, high-profile breaches of early Bitcoin firms with flaws in their security measures have caused some users to doubt Bitcoin’s security.
A massive amount of processing power is used to safeguard the network. And the miners that power the network are dispersed globally, with nodes in over 100 countries, ensuring no single point of failure.
3. Cryptocurrencies are often shut down.
Many people still assume that the government can quickly shut down cryptocurrency exchanges. However, this is not the case. We have no clue where this notion originated, yet it isn’t easy to dispel. The fact is that cryptocurrencies cannot be shut down because there is no centralization. In reality, the decentralized currency is far more potent than government-run organizations, which may frighten many individuals.
4. Cryptocurrencies Are In A Stagnated Bubble
Bubbles are economic cycles that are distinguished by unsustainable increases in market value. Cryptocurrency has been around for a decade. It has only been public knowledge for less than a year during that decade. In their current condition, cryptos lack a secure foundation on which to operate. Fear-mongering, bogus ventures, and a general lack of understanding stop cryptocurrencies from reaching their full potential.
It is critical to research before investing in cryptocurrencies with a well-presented idea, a firm basis, and a renowned team behind them. As such initiatives come to life and allowed to exhibit themselves, the skeptics may change their minds.
5. Cryptocurrency is untraceable
This is a myth that has existed from the beginning of time and is entirely false. It’s also one of the most damaging misconceptions, casting doubt on bitcoin and blockchain transactions. This misconception most likely began and propagated when bitcoin was initially utilized as money by the criminal underground. They did, however, utilize regular money. Bitcoin was popular at the time because the FBI could not monitor it. However, bitcoin and cryptocurrencies, in general, can be tracked. Blockchains may also be completely traced. This technology, among other things, performs the verification of cryptocurrency transactions.
6. Harm the environment
This myth has grown in popularity as a result of the cryptocurrency mining process. Companies spend a lot of money on specialized equipment to mine cryptocurrencies, and this equipment uses a lot of power. This is what has given birth to the misconception that cryptocurrencies are harmful to the environment. However, Bitcoin consumes only 0.28 percent of the world’s total power usage, according to Digiconomist statistics.
7. Not safe investment choice
Initially, it was assumed that the bitcoin and cryptocurrency markets were too volatile to be considered secure investment options. This is no longer true. Because the nature of investing is volatile, with the value continuously changing, it is incorrect to single out cryptocurrencies. It’s crucial to remember that high stakes frequently come with massive rewards. Consider all of the bitcoin millionaires out there.
Myths are built on illogical comprehension. Therefore, before proceeding, a thorough grasp of the subject is required. Even though you are aware of some misconceptions, it is always best to research the subject/technology before trusting them.