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Summary
- Over the years, cryptocurrency usage has gained tremendous popularity.
- Cryptocurrency’s journey to become investors' favourite has been a difficult one, which is often surrounded by ambiguity, myths, and misbeliefs.
- People often think cryptocurrencies are used for illicit activities, involve scams, and are a fad whose craze will vanish soon, which might not be the case.
In recent years, cryptocurrencies have become one of the biggest buzzwords across the world. It has gained unprecedented popularity as an increased number of investors are drawn towards it and they are turning it into a favourite.
Can’t Miss Reading: Seven Things to Know Before Investing Your Money in Cryptocurrencies
However, the journey of this new-age currency has not been as smooth as it seems. It has been marred by numerous myths, rumours, and misconceptions, labelling it as a mere speculative transaction and an environmental disaster.
Must Read: A look at top 5 cryptocurrencies in New Zealand
Source: Copyright © 2021 Kalkine Media
This article would cover some of the most common myths pertaining to cryptocurrencies.
Cryptocurrencies are used for illegal activities
One of the most prevalent misconceptions about the cryptocurrencies is that it is used for illicit activities. Anonymity and confidentiality of transactions are the main reasons behind this myth.
While, many a time, the digital currency is being used for fraudulent and illegal business activities, one must take into consideration that it is the transaction that could be illegal and not the cryptocurrency.
Also Read: Seven unbelievable facts about cryptocurrencies
Cryptocurrencies are used only for speculation
Many investors and new entrants in this field think that cryptocurrencies are used only for speculative purposes, which is not true. While these digital assets may be used for speculation just like regular paper currencies, most of the transactions pertaining to digital currencies are related to investment purposes, funding of anti-corruption efforts, protests, etc.
Do Read: How Cryptocurrencies as Form of Payment can Potentially Benefit Consumers & Businesses
Bitcoin is the only cryptocurrency
Another common myth prevalent among people is that cryptocurrency is nothing but Bitcoin. While Bitcoin is the most popular and the largest cryptocurrency in the market, there are as many as 6,000 other cryptocurrencies in the digital asset market.
However, the crypto market is dominated by the top 20 cryptocurrencies, which form nearly 90% of the total market. Some of the other very popular cryptocurrencies include Enthereum, Ripple, Litecoin, Cardano, Stellar, Neo, and many more.
Trading in cryptocurrencies is banned in all the countries
While it’s true that countries like China, Russia, Vietnam, Bolivia, Columbia, and Ecuador have banned the use of cryptocurrencies within their shores, there are many countries that have recognised trading in digital currencies, such as the US, Canada, Australia, EU nations as well as G7 nations.
Cryptocurrencies lack security
As the use of digital currencies is gaining popularity among investors around the world, cyber criminals have taken the advantage of frangibility in crypto wallets and other aspects related to the cryptocurrency space.
While frauds and thefts can happen anywhere, it is the encryption and cryptography embedded in blockchain which makes the transactions safe, secure as well as transparent, thus lending robustness to the cryptocurrency.
Cryptocurrencies cause wastage of energy
Cryptocurrencies involve several mining operations that use a lot of computational power, thus requiring large amounts of electricity.
However, the value of mining a digital currency outweighs the real-world cost associated with that mining operation. Also, it is pointed out that presently, banking, and financial systems also make use of huge amounts of electricity to operate daily.
Cryptocurrencies are a craze, will fade away soon
Generally, traditional investors perceive that these digital assets are just a fad whose sheen will wane soon. However, this might not be the case.
As technology matures, the use of paper currency will pave the way for digital payments, thus ushering in digital currencies. Digital tokens representing money are touted as the future, which would greatly ease electronic transactions.
Must Read: Why Is Goldman Sachs Calling Cryptocurrencies A New Asset Class?
Cryptocurrencies are always prone to scams
Another widespread myth about cryptocurrency is that it is prone to scams and attracts a lot of hackers. One must remember that scams and money swindles can happen in traditional financial systems too.
Nonetheless, tech-savvy, and cautious investors do a lot of research and follow a cautious approach while investing in digital assets and safeguarding their crypto wallets.
Read: What advice to follow before purchasing bitcoin and other cryptocurrencies?
Investing in cryptocurrency requires huge amount of capital
Many potential crypto investors do not invest in these digital assets thinking that they are too expensive and would involve huge amount of money.
However, this is not the case as there are many low-priced cryptocurrencies like Ripple XRP, Stellar Lumens, Basic Attention Token, Enjin Coin, and Tron, etc., available in the market. Even small traders and beginners can experience the charm of investing in the crypto market through them.
Interesting Read: Which are top 10 cheapest cryptocurrencies to keep an eye on?
Dealing in cryptocurrency is complicated
Another prevalent misconception about cryptocurrencies is that the whole investment process is complicated, which otherwise is not the case. Trading in cryptocurrencies is like trading in shares and securities. There are many crypto exchanges that offer a simple and hassle-free trading platform like Binance, Coinbase, and Gemini, among others.
Must Read: Look at the top 8 cryptocurrency exchanges operating in New Zealand
