When cryptocurrency had gradually gained traction in the past couple of years, it has prompted lots of speculations, rumours and questions from the general public. More often than not, critics misconstrue crypto as a trend or a fad, a speculative tool and other misconceptions that can potentially dishearten new investors.
Just like any other technology, delving deeper into the world of cryptocurrency will require you to investigate and uncover the truths behind these speculations. To get you started, here are the top crypto myths that should be debunked:
Myth #1: Cryptocurrencies are mainly used for illegal activities
Among the misconceptions surrounding cryptocurrency, this is the most prevalent one. A huge chunk of the population believes that Bitcoin and other altcoins are mainly used for illicit activities such as terrorist acts, drug dealing and money laundering. One of the reasons behind this myth is that transactions done using cryptocurrencies are anonymous, allowing criminals to get away and hide from authorities.
Even though it’s true that some attributes of cryptocurrencies are ideal for people to conduct their criminal pursuits, it was the transactions that are harmful, not the crypto itself. Keep in mind that these crimes can be carried out with fiat currencies as well.
Moreover, some global digital asset exchanges are taking action to prevent criminals from misusing cryptocurrencies. Know-your-customer (KYC), know-your-transactions (KYT) policies and anti-money laundering (AML) are now in place to discourage users who carry ill intentions.
Myth #2: Digital currencies can be counterfeited
Unlike fiat currency, cryptocurrency can never be counterfeited since each digital currency operates on its unique code secured by cryptography. In addition, they depend on blockchain technology that prevents cybercriminals from partaking in fraudulent operations such as double-spending or duplication.
For instance, if a hacker attempts to generate two or more transactions from the same operation, the network will easily detect it as fraud which can result in a system crash. And if a user attempts to double-spend a bitcoin, they would require the power of millions of supercomputers to succeed, which is practically impossible.
Myth #3: Blockchain technology is solely for digital assets
Aside from serving as the digital ledger of transactions in cryptocurrencies, blockchain technology also has real-world uses. Today, blockchains can be found in a wide range of industries and are giving long-term solutions to problems.
For example, blockchain technology is now being used for copyright and royalty protection. Since the copyright laws on music and other types of content are becoming less secure, blockchain will strengthen these ownership rights. It will guarantee that the creators get their fair share from the purchased content by providing transparency of royalty distribution data.
Another real-world use of blockchain technology is digital voting. With blockchain, electorate and voter fraud can be effectively eliminated. Because of the transparency it provides, regulators can immediately notice if any changes occurred within the system.
Blockchain can also be used for medical recordkeeping. Aside from keeping patients’ records secure, the patient will possess a key to their records which allows them to control who gains access to their data. This means that the HIPAA laws will be enhanced which aims to protect the sensitive health information of each patient.
Myth #4: Cryptocurrencies are a scam
If you’ve tried diving deeper into crypto and its uses, you may have heard that they are nothing but a scam. However, this myth is mostly rooted in the fear of most potential investors in crypto’s high volatility. Aside from that, there are illegitimate exchange platforms filled with questionable transactions and offers.
This is why you should approach every investment with healthy scepticism and thorough research. You must always take extra precautions when investing your digital assets, especially if you’re a new investor.
For instance, to avoid becoming a victim of a crypto scam, be careful not to make transactions on imposter websites. Always look for a small lock icon on the top-left corner of your screen near the URL bar to ensure that the site is secure.
Moreover, avoid downloading fake cryptocurrency apps that scammers have created to trick investors. Observe if there are any misspellings, incorrect logos and strange-looking interface before you start trading and selling.
Remember that in the world of cryptocurrency, it pays to be smart and watchful.
Myth #5: Cryptocurrencies are not for the general public
Another crypto myth that remains prevalent to this day is that digital currencies are only for the tech-savvy. Since the world of cryptocurrency is full of jargon and complex concepts like HODL, blockchain and decentralized finance (DeFi), it’s not just for anyone.
Most people believe that you have to be well-attuned to technology before you can grow your digital investments. However, this is not entirely true. If you are a person who knows the basics of investing and digital currencies, you can start trading and investing.
Keep in mind that crypto is not only focused on the technology sector but can also be seen in finance, among other things.
Because more companies and merchants are accepting cryptocurrencies as a payment method, anybody can take advantage of them to buy goods and services. This includes Shopify, Microsoft, Paypal and Etsy, among others. Besides, you won’t have to go through verifications and long lines before a transaction can be processed.
Myth #6: Cryptocurrency transactions cannot be tracked
This crypto myth came from the fact that the blockchain technology used by digital currencies offer the anonymity feature. However, blockchain records and verifies every transaction carried out in cryptocurrencies. The blockchain also saves the complete information of every transaction such as the time and address where it took place.
Because of this, it proves that digital currencies are safe, even if you’re just a new investor. So, with these crypto myths debunked and uncovered, always stay up-to-date and be well-informed about crypto assets and investments.