Being presented for the first time back in 2009, cryptocurrencies have become one of the most popular things in this world. However, their complexity and uncertainty bring confusion among the crowds, leaving some rumors and myths behind. The following are some of the most common cryptocurrency myths floating around and the crypto facts against the myths that may help you decide if it is a great idea to start using digital currencies.
The biggest myth regarding cryptocurrencies is that they are usually used to commit any activities against the law, like money laundry and the funding for terrorism. While it is factual that electronic currencies have been misused by some criminal syndicates or individuals with malicious purposes, any form of money could also be used with the same intentions.
Most crypto transactions are done with legal and valid intentions. Also, it is essential to keep in mind that many governments and international communities across the globe have been taking action to eliminate cryptocurrency abuses by criminal organizations or anyone with an evil mind. For example, NCET (the National Cryptocurrency Enforcement Team) in the US was founded to investigate and report any crimes done with the crypto money.
Digital money has also been said to have zero value. The thing is, valuable or not is actually a concept that tends to be subjective. Every individual or community may put a value on a matter and/or an object that another dumps into a rubbish bin.
One of the examples, the oldest cryptocurrency, Bitcoin, was given values briefly after it was released back in 2009. Its fame then continued to grow, and eventually, in 2021, its value reached USD 69,000 for every Bitcoin—from what it used to be, which was a cent per thousand Bitcoin.
Just like the example above, cryptocurrencies toward dollar value keep fluctuating based on the investor and consumer demand, supply, sentiments, and economic situation—as other assets and currencies do.
One of the biggest blockchain companies, Ethereum, is the powerhouse of its cryptocurrency Ether (ETH) besides its other products such as DeFi (decentralized finance) apps, NFT (non fungible tokens), and many more. Unlike Bitcoin, Ether has not yet had any dollar value, but it is valuable enough to any companies using the products of Ethereum and smart contracts.
Next, still, from the list of cryptocurrency myths, there is a concern that the digital currency is not safe, or at least its security remains questioned. Even though it is true that the wallet where the crypto money is accessed and kept still faces the risk of being hacked, any transactions conducted through the entire system called the blockchain are almost impossible to be scammed or changed by other parties. Thanks to the very advanced technology of its encryption and blocks.
To reduce the worries, you can choose a safer method to save and access your crypto money in the wallet. Some of these are storing the money in cold storage and/or transferring it through a PC (personal computer) that uses a wired connection.
Yes, it has been admitted globally that the impact of the cryptocurrency can be harmful to the environment as its mining activity requires a considerable amount of energy (electricity). Bitcoin, the first and the most famous cryptocurrency on the planet, currently employs a massive mining operation, and its vast power has resulted in a carbon footprint.
The good news is not all cryptocurrencies are validated by energy-powered mining. Blockchain technology and the cryptocurrency itself are doing their best to evolve. That can also mean a reduction in any environmental footprints they cause.
Another crypto myth is that the digital currency itself is a scam. As mentioned in the first myth, some people or organizations with nefarious aims abuse electronic money to commit illegal activities. Nevertheless, it does not mean that the currency itself is a form of fraud.
If you are still afraid of using cryptocurrency as a commercial means, find some information about the currency and the scams involving it on the website of FTCCI (the Federal Trade Commission's Consumer Information). Anyone can be a crypto scam victim, but your knowledge can help you avoid any chances of the scam happening to you.
Are cryptocurrencies real money? That is one of the myths spreading in the sun. FINRA (The Financial Industry Regulatory Authority) has defined cryptocurrency as something that digitally represents a value stored via cryptography.
Meanwhile, the Internal Revenue Service perceives cryptocurrency as a currency that can be converted. It means, just like real money, any transactions, as well as capital losses or earnings of the electronic currency, must be reported on anyone's tax document.
Cryptocurrency is actually an intangible asset, meaning it is not whatsoever physical money. Whether or not an asset is valued as a legal tender, it should not influence the determination of financial authorities if it is considered real money.
While the crypto world seems to be only a trend or fashion, many people out there have already been super-rich because of the currency.
Not everyone is aware of cryptocurrency and has decided to use it despite its popularity since its first launching in 2009. Still, it is predicted that the virtual currency will go on to be developed within the following decades. Some tech giants are doing a generous amount of research to discover ways to combine the digital and the real worlds with blockchain technology.
Is it possible that the crypto money will soon replace the fiat one? Well, digital money is relatively new, while fiat money (coins and banknotes) has existed for many centuries. Historically, China was the first country to have introduced the very first fiat money thousands of years ago. Many developed countries followed the country after utilizing the barter method as a payment means for a long time.
Even if the governments decided to swap fiat currency with the digital one, it could take decades to settle with the new money. It is not an easy replacement as every country's tax and funding systems have been established for centuries.
We have listed the most widely known myths and facts about cryptocurrency there. There will always be cryptocurrency myths floating around, but the decision to use digital money remains in your hands.