Cryptocurrency is a revolutionary form of digital money that has quickly become one of the most talked-about topics in the financial world. Unfortunately, due to its complexity and relative newness, there are a lot of misconceptions and myths that have been created about cryptocurrency. In this blog post, we’re going to take a look at the top 10 myths about cryptocurrency and debunk them once and for all! Get ready to learn the truth about this innovative form of digital money!
1) Bitcoin is used by criminals
Despite popular belief, Bitcoin and other cryptocurrencies are not primarily used for illegal activities. The anonymity of transactions, however, can make it difficult to trace and has enabled criminal activity in the past. Despite this, only a small fraction of Bitcoin transactions are related to crime. In reality, most Bitcoin transactions are used for legitimate business or investment purposes.
2) Cryptocurrencies are not backed by anything
Many people believe that cryptocurrencies have no backing or value, but this isn’t true. Cryptocurrencies are based on blockchain technology, which is a distributed ledger system that is secure and immutable. This provides a solid foundation for the currency, which is why it has become so popular. Additionally, the underlying technology behind cryptocurrencies allows them to be exchanged for other goods and services, giving them real-world value.
3) They’re too volatile to be a good investment
Cryptocurrency prices can fluctuate wildly, making them a risky investment. The price of Bitcoin, for example, went from $20,000 in December 2017 to around $4,000 in December 2018. Investors should be aware of this and approach the market with caution. But this doesn’t mean it’s a bad investment. Cryptocurrency is still a relatively new asset class and so its prices will be volatile as the market matures. As long as you’re prepared for the ups and downs, there are plenty of opportunities to make money in cryptocurrency.
4) They’re not transparent
Cryptocurrency transactions are not completely transparent. While some elements of the transactions can be tracked, a majority of them are anonymous and cannot be traced. This is why it is important to use reputable exchanges that are regulated and adhere to anti-money laundering laws. Despite this, cryptocurrency is still a relatively secure way of transacting.
5) They’re not easy to use
Cryptocurrencies are not as simple to use as traditional money, and require a basic understanding of how they work. However, this doesn’t mean they’re impossible to use. There are a number of resources and platforms that offer easy-to-follow tutorials on how to buy, sell, store, and transfer cryptocurrency. With the right guidance, anyone can learn to use cryptocurrencies.
6) They’re not secure
Cryptocurrencies may be thought of as being insecure, but the truth is that they can actually be more secure than traditional banking systems. The blockchain technology used to record and store cryptocurrency transactions is designed to be tamper-proof and can be monitored by users around the world. Additionally, many cryptocurrency wallets come with additional layers of security, such as two-factor authentication, to help protect user funds.
7) They’re a scam
Cryptocurrencies are not scams; in fact, they have been widely adopted by many individuals and businesses. The truth is that like any other financial asset, there are risks associated with investing in cryptocurrencies. However, these risks are largely related to market volatility and speculation rather than an actual scam. As long as investors conduct their due diligence before investing, they should be able to avoid fraudulent investments.
8) They’re not regulated
Cryptocurrencies are not regulated by any government or financial institution. This means that they operate in a largely unregulated environment and there is no guarantee of their safety or security. However, some countries are beginning to introduce regulations around cryptocurrencies, such as the United States, which has started to regulate cryptocurrency exchanges.
9) They’re not sustainable
Cryptocurrencies are not a sustainable option for long-term investments. While the value of many digital currencies has seen massive jumps in recent years, the volatility of the market makes them a risky option for investors. Cryptocurrencies also require a lot of energy to mine and process transactions, which can lead to environmental issues.
10) They’re a bubble
Cryptocurrency prices have been known to rise and fall quickly, leading some people to speculate that they are a bubble. However, it’s important to remember that the underlying technology behind cryptocurrencies is still relatively new and has the potential for huge growth over time. Therefore, while there may be some volatility in the near-term, cryptocurrencies are far from being a bubble.