The public is now misinformed about cryptocurrencies in a number of ways. Since Bitcoin’s inception, there have been several modifications made to these networks, giving rise to a wide variety other cryptocurrencies. Because of this, the technical elements of these assets may appear intimidating, which may cause stories and falsehoods to spread widely.
The cryptocurrency business is badly impacted by misconceptions in a number of ways. As a result, it is the duty of every cryptocurrency user to dispel these myths whenever they encounter them. Here are the top 10 crypto myths you need to know.
1. Fad: False beliefs about cryptocurrency
People still think that the bitcoin industry as a whole is a passing trend. It was a common misperception fourteen years ago, when there were very few projects in operation. Remarkably, it is still a myth perpetuated by negative coverage.
There’s a news piece on Bitcoin and its dwindling market every other quarter. The idea that the market is nothing more than a hollow shell is strengthened by this unfavorable coverage. The actual circumstances, however, are somewhat different.
Source – Bitcoin Obituary
The market for cryptocurrencies is a thriving and rapidly developing area of technology. It helps a wide range of market participants, including consumers and developers. We also can’t deny that cryptocurrencies are developing to the point where they are made specifically for certain uses. As such, they have become a crucial aspect of various sectors.
2. They remain unidentified.
The idea that cryptocurrencies are totally anonymous is among the most persistent and ancient ones. This misunderstanding is the result of several circumstances. To begin with, not all networks demand an ID.
Due to a lack of demand, there weren’t many blockchain forensic businesses in the past. People thus started to think that activities carried out on open blockchains like Bitcoin cannot be tracked down.
This myth has often been shown to be untrue. Although public blockchains such as Bitcoin do not need your identity, they do record every transaction you make going back to the beginning. To learn more about your identity, these transaction information may be paired with additional data, such IP addresses.
The majority of cryptocurrencies lack anonymity. But there is a subset of currencies known as privacy coins that use technology like zero-knowledge rollups to make it considerably harder and more expensive to figure out who owns an account and what transactions have occurred in it. to carry out.
3. Cryptocurrency is unsupported.
The notion that cryptocurrencies are unsupported is the result of an ignorance of what makes them valuable. The demand for Bitcoin and many other assets is higher and they have a large following. There are other expenses related to the production process of every coin.
These elements, together with cryptocurrencies’ improved accessibility and usability, make it evident that the value of cryptocurrencies varies depending on the project. There are several varieties of cryptocurrencies in use today, some of which derive their value from more conventional sources. Stablecoins is the name given to these particular coins.
Stablecoins often use fiat money or commodities like gold as collateral. To maintain their value, several stablecoins use other cryptocurrencies. To attain equilibrium, the latter makes use of smart contracts as well as modifiable reserves and supplies.
The use of a cryptocurrency is often what determines its worth. Because these blockchain assets fulfill a defined function within the network, they are referred to as utility tokens. Ether is a prime example of a coin that gains value via practical use.
A utility token on the Ethereum network is called ether. This coin has several uses, one of which is as the main method of paying gas and network fees. Interestingly, the market is crowded with comparable developments that provide value and cater to certain needs.
4. Virtual money opposes banks.
One may argue that the primary objective of the first cryptocurrency ventures was to free individuals from centralized financial institutions. However, in the last 14 years, this opinion has drastically evolved. Many cryptocurrency initiatives regarded banks as ideal clients rather than as competitors as the sector grew.
Initiatives such as Ripple started with the financial sector in mind. Banks will be able to move value across borders with their XRP utility token thanks to RipplNet. Because of the blockchain P2P framework, banks have already saved millions of dollars using this structure.
Source – Google – RippleNet
The blockchain industry is still expanding and working with the conventional banking industry. Banks are increasingly providing custody services to cryptocurrency users who want to keep their currencies in a secure setting.
Integration of cryptocurrency with banking has advanced significantly in recent years. Users may now spend cryptocurrencies using cryptocurrency debit cards in the same way as they would with any other debit card. The industry as a whole benefits from this structure as it increases accessibility and usefulness without raising user technical requirements.
5. Only illicit uses are allowed for cryptocurrency
Among the simplest myths on this list to debunk is the idea that cryptocurrencies are only for illicit purposes. A large portion of this myth dates back to the early days of the dark web, when the main currency were cryptocurrencies like Bitcoin.
Before they were taken down, networks like Silk Road assisted millions of people in carrying out criminal operations. Dread Pirate Roberts, the owner of the website, was given a life term in prison for his involvement in the market.
Myths surrounding cryptocurrency
Fiat money has emerged as the preferred form of payment for criminals worldwide in real-world scenarios. It is used significantly more often on a daily basis than cryptocurrencies have ever been able to. Nevertheless, there is no need to publicize these evident features since they do not raise media ratings.
Cryptocurrency is used by certain criminals. Still, this little user base represents less than 1% of the market. Despite being easily disproven, this myth continues to be popular among those seeking to restrict or limit access to digital assets.
Cryptocurrencies are mostly used for legitimate objectives, such asset storage and transaction cost reduction. The usage of cryptocurrency has many benefits nowadays. Therefore, it’s a little absurd to say that blockchains are only used by criminals, especially because businesses like IBM have been running public and private blockchains for years.
6. Coins are disliked by governments
This notion is only partly untrue since several countries have adopted anti-crypto policies. This isn’t the majority, however. Outside of China, the biggest economies in the world have thriving blockchain sectors.
Governments are starting to accept the idea of using blockchain assets as reserves and as a clever method to save expenses and boost productivity. El Salvador, for instance, adopted Bitcoin as legal money and has been steadily increasing its SAT ever since. In El Salvador, Bitcoin may be used to pay for anything, including taxes and cab fares.
The decision to recognize Bitcoin as legal money has increased traveler traffic and given rise to the sizable cryptocurrency community known as Bitcoin Beach. Numerous additional nations have since considered designating Bitcoin as legal tender due to its effectiveness and the growing need for a reserve currency that is resistant to inflation. This hypothetical situation demonstrates how nations would lose their competitive edge in the majority of important sectors if they do not embrace blockchain technology.
7. Technical expertise is required to use cryptocurrencies.
It’s not necessary to be an expert in technology to utilize cryptocurrency. If your smartphone has a banking app, you already possess the necessary technological know-how to begin using cryptocurrencies right now. Utilizing digital assets like Bitcoin, Ethereum, and EOS doesn’t need a lot of technical knowledge.
Networks even exist that make it easier for anybody to create blockchains and tokens. The emerging industry standard is these plug-and-play network block builders. As a result, there are more blockchains than ever before and more individuals may engage in the creative industry.
Naturally, learning the ins and outs of several cryptocurrencies on a technical level is beneficial. This comprehension gives you a stronger knowledge foundation and makes it possible for you to determine the project’s actual worth more precisely.
If you don’t comprehend cryptocurrencies, you shouldn’t trade or invest in them. The good news is that market currencies only utilize a small number of standard infrastructure settings. Making better educated investing selections may be aided by being knowledgeable about these consensus processes and their benefits and drawbacks.
8. Cryptocurrency lacks regulation.
Globally, the framework governing cryptocurrency markets is becoming more and more restrictive. Indeed, in several nations, the legal codes include very little—if any—information on cryptocurrency limits. This is not typical, however, since the majority of nations have already regulated their markets in some way.
Typically, big CEXs (centralized exchanges) were the first to be subject to these laws. To operate lawfully in the US, big CEXs like Coinbase need to get numerous licenses. These regulations cover every possible regulatory problem, including money laundering, custody disputes, and tax avoidance.
The global markets were shook by significant hacking and losses, which prompted the strengthening of CEX rules. Advocates have been pleading with policymakers to shield consumers from these kinds of schemes ever since Mt. Gox declared bankruptcy ten years ago. It is now quite difficult to open and run his CEX in many areas of the globe due to these limitations.
9. Myths regarding cryptocurrencies: Not taxed
Another common misunderstanding that might lead to problems is the idea that cryptocurrency transactions are tax-free. In most nations, this idea is not true. To make sure you don’t miss any deadlines, check the tax laws and speak with your local accountant.
Users of cryptocurrencies may not be required to report or pay taxes in certain countries. Countries that encourage the tax-free usage of cryptocurrencies include South Korea, Denmark, Italy, and Singapore. Users of cryptocurrencies are increasingly often required to pay capital gains tax on their transactions. Developed nations like the United States are more likely to have this structure.
Virtual currencies are subject to currency taxes in certain jurisdictions and asset taxes in others. There may be big variations between these methods. Regretfully, taxes eat up to 20% of trade revenues in certain nations. For these reasons, among others, it is crucial to understand local tax legislation.
First and foremost, you want to avoid future tax delinquent issues. It’s also possible that certain legal loopholes exist. For instance, if you reinvest the money within a certain time frame, you may not be required to pay capital gains tax. Speak with a tax expert for more precise information.
10. It’s challenging to keep cryptocurrency secure
It may seem practically impossible to secure your bitcoin holdings from hackers due to the frequent bad publicity around cryptocurrency losses. In actuality, it is rather simple to guarantee the security of cryptocurrencies. You can reduce the likelihood of having your bitcoin stolen by taking a few crucial precautions.
Source – Trezor
You have to exercise caution with what you own. Never boast online or in public about how much bitcoin you hold. Numerous articles on the internet discuss how thieves and hackers target people’s assets based on their postings on social media.
Furthermore, there are still some who attempt to take our possessions via traditional means. These folks pose a serious threat. They most often target ostentatious people who claim to have modest cryptocurrency holdings. Remember that passkeys are only really helpful if you are not required to give them to someone at gunpoint.
physical wallet
Specifically, for traders, the ideal solution is a hardware wallet that at least holds your tokens in cold storage, but you may not need to go that far. These are low-cost, very efficient deterrents against hackers.
The primary benefit is that the transfer cannot be completed without pressing a physical button. Because hackers are unable to hit physical buttons without a physical device, cryptocurrency is protected. Consequently, it is imperative that all traders use this inexpensive strategy.
The Greatest Myths About Cryptocurrencies in 2024
Now that 2019 has here, the virtual currency sector is booming. Even after 15 years, there are still a lot of myths that mislead inexperienced consumers. Now that you are aware of these myths, you can contribute to enlightening the public and promoting future use of cryptocurrencies.
