“Lack of knowledge – that is the problem.” – W. Edwards Deming
Cryptocurrencies were rolled out in 2009. Since then, they have been attaining popularity. Many humans reckon it as a reliable and secure way of trading, while others doubt that sooner or later it will fade away, for sure. Meanwhile, multiple tales have been circulating in regards to its reliability, safety, and legitimacy. Naive investors, with little knowledge of cryptocurrency, either feel intimidated in investing or become a victim of prevailing myths. It’s because they get perplexed by the mystifying attributes of crypto.
Get Yourself Equipped With The Right Knowledge
Below, I’ve shared some of the most widespread myths and facts about crypto that every investor ought to know before falling for this hype!
- Myth: Crypto Is A Fraudulent Scheme
Fact: Any new technology somehow comes across some struggles in the beginning. But it does necessarily mean that it should be discouraged. Today, many enterprises are heading towards Fintech. They have recognized it as a valid means of exchange.
But Beware! many fraudsters are relentlessly making cracks to delude you. They will try hard to dupe people with their delusive schemes. However, they can’t take you to the cleaners unless you’re striving your best to keep yourself protected from being misled by them. Further, if the enterprise doesn’t show up with a Google search, then it’s time to have a doubt!
- Myth: Crypto Is Real Money, It Can Be Used As Payment
Fact: Digital currencies such as Bitcoin and Ethereum were introduced to make payments without leaning on traditional modes including currency notes, credit or debit cards, or checks. Today, humans are using them in used in real estate, international transfers, payment gateway systems, virtual assets, and the selling of art.
But it can be exorbitant, plus slow in conducting transactions using cryptocurrency. A single Bitcoin transaction takes approximately 10 minutes to be validated. The second-most digital currency, Ethereum processes transactions a shade speedier, yet has sky-high fees.
On top of that, wild swings in most cryptocurrencies’ values make them an erratic medium of payment.
- Myth: Crypto Will Supersede The FIAT Currency
Fact: Ruchir Sharma, Morgan Stanley’s Chief Global Strategist, has stated concerning Bitcoin, that it could end the dollar’s reign. Or at least it could pose a glaring threat to the greenback’s supremacy. Additionally, a Financial Times headline ominously suggests thatBitcoin’s rise reflects America’s decline. Digital currencies are not backed by anything but the faith of the users who own them. The dollar, on the other hand, is backed by the U.S government and investors still rely on it, even in hard times.
- Cryptos Aren’t Regulated
Fact: At the start of its journey, there were no laws or regulations set forth to regulate digital currency. And people were on the lookout for its ban. Nonetheless, over time, governments started to find ways for its regulation rather than ban it straight away.
Today, renowned technology giants such as Amazon, Microsoft, Starbucks, PayPal, Twitch, and Dell are now accepting cryptos including Bitcoin or Ethereum as a payment option. These companies are influential enough to make world governments open to working with cryptos rather than putting a stop to it.
- Myth: Crypto Is Illegitimate
Fact: Anything that is not regulated cannot be regarded as illegitimate. For instance, a group of friends invented a form of currency that they use only between themselves. It might be anything, and would not be counted as illegitimate just because it’s not regulated.
Now, let’s look at the situation of the South African Reserve Bank. The bank is making efforts for cryptos to draft their laws and regulations. Though currently it’s not being counted as legitimate, it doesn’t make it illegitimate either!
- Myth: Crypto Is Used For Delinquent Motives
Fact: One reason people are afraid to use crypto is that they think since transactions can be anonymous, it is created for criminals to run nefarious businesses there. But it’s not the case. And luckily a report from Chainalysis specifies that about 1% of crypto is being used for illicit ventures. However, cryptos can and will be undoubtedly used for illegal endeavors, and the same can be said for all other currencies.
- Myth: Crypto Doesn’t Reveal Identities & Hacked Effortlessly
Fact: Crypto transactions and revealing the identities of folks are impressively onerous to be traced. People suspect cryptos substantially help criminals conduct nefarious businesses. They think that so because transactions can be anonymous, and since law enforcement cannot smoothly trace buyers and sellers, there’s a high chance their use is dominated by illicit enterprises.
But because all transactions are stored on the blockchain, it doesn’t make tracing impossible. However, any skilled hacker can deftly get into the information available on the blockchain and uncover the identity of a person.
- Myth: Cryptos Are Only Used By Folks With Riches
Fact: That’s not true. People who don’t have much money also get benefited from this technology. They use it in non-financial transactions as well as regular purchases. If a dollar seems too much for some, Bitcoin seems enough for many.
- Myth: Cryptos Are Not Secure
Fact: The protection of cryptos relies essentially on the blockchain. A blockchain records and secures the transaction information with stable encryption technology that is hard to break. The encryption makes it almost impossible to alter the information recorded in the blockchain to purloin crypto.
It’s all about how the digital currency is being accessed and stored. One can send cryptocurrency to the other person without any worry. But the software and platforms used to access and store crypto can be painlessly tampered with or hacked by swindlers.
- Myth: Crypto And Blockchain Are Interchangeable
Fact: Firstly, let me make it clear that both are different terms. A blockchain is a shared, invariable ledger that enables the process of storing transactional records and tracking assets in a business network, while a cryptocurrency is a tradable digital asset that exists either digitally or virtually and is secured by cryptography.
Although there are some exceptions, each cryptocurrency has its separate blockchain and cannot be traded on other blockchains. For instance, you cannot trade Bitcoin on an Ethereum blockchain or vice versa.
- Myth: Crypto Is Adverse For The Environment
Fact: Bitcoin is extremely computer-intensive! A Bitcoin is created by the process of ‘mining’. It takes as much electricity to create a single Bitcoin, as it does to power an average American household for two years! If people want to use bitcoin for a large portion of the commerce world, they should be prepared to experience a gigantic shortage of energy.
- Myth: Crypto Is An Infatuation, It Won’t Last Long
Fact: When the internet came into existence, many predicted that it won’t last long. Since its inception, most cryptos like Bitcoin have steadily attained value. The digital currency has recently turned out to be one of the world’s most circulated currencies.
However, the government of China has recently banned digital currency because of the outcomes that mining causes to the environment, plus criminals using cryptocurrency for fraud and money laundering.
Some people who have experienced using this technology are satisfied. They don’t encounter any kind of fraud, while some are confronted by it, perhaps because of a lack of knowledge. Since it is a new technology and still, in its discovery phase, humans are vigilant of this pseudo technology.
I hope, by now, you must have acquired a profound awareness of cryptocurrency misconceptions and won’t regret this if you plan to put money into it in the future.
Be Clear-Headed! And ensure to do good research to get aware of every single truth regarding the ingenious technological innovation before you make up your mind to invest in it.