Top Cryptocurrency Myths - Deepstash
Top Cryptocurrency Myths

Top Cryptocurrency Myths

investopedia.com

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Key Takeaways

Key Takeaways

  • Cryptocurrency is mostly used for legal activities
  • Cryptocurrencies are safe if you follow a security protocol
  • Cryptocurrency is a digital asset

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#1 Digital Currencies Are Only Used for Illicit Activity

#1 Digital Currencies Are Only Used for Illicit Activity

2021 data of Chainalysis:

  • transactions related to illicit activities (0.15%)
  • transactions related to cryptocurrency scams (82%)

Most cryptocurrency transactions are conducted with legitimate and legal intentions.

Chainalysis. company that assists investigators in cryptocurrency crimes with blockchain data analysis.

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#2 Digital Currencies Don't Have Value

#2 Digital Currencies Don't Have Value

Value is a subjective concept. a person, community, or society may place value on an object that another puts in the recycle bin.  

This is a great example:

  • Bitcoin in 2009. $0.0009
  • Bitcoin in 2021. $69,000

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#3 Cryptocurrencies Aren't Secure

#3 Cryptocurrencies Aren't Secure

Blockchain technology. It is a distributed database secured with encryption techniques and technology that is very difficult to break.

The encryption, linked blocks, and consensus mechanisms make it impossible to change information in the blockchain to steal cryptocurrency.

Weakness. platforms and software used to store and access cryptocurrency can be hacked or manipulated

Safe methods to ensure your cryptocurrency is safe:

  • Keep your crypto asset keys in your cold wallet
  • Transfer only the amount you want to use to your hot wallet

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#4 Digital Currencies Are Bad for the Environment

#4 Digital Currencies Are Bad for the Environment

Some cryptocurrencies employ a consensus mechanism that uses computational power and large amounts of energy to verify and validate transactions. 

Mining farms requires massive amounts of energy. 

  • high environmental impact. if energy comes from fossil-fuel-powered grids
  • low environmental impact. if energy comes from sustainable energy

Blockchain technology is ever-evolving, with some taking steps to reduce their environmental footprints.

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#5 Cryptocurrencies Are a Scam

#5 Cryptocurrencies Are a Scam

Most cryptocurrencies have no programming, code, or malicious artificial intent that works to take money from you.

People have created scams steal your cryptocurrency or money. For example:

  • Unregulated fundraising for new cryptocurrency ventures—that turned out to be scams.
  • By trying to get you to accept unverified transactions
  • By calling you pretending to be government officials and ask you to pay your debts in cryptocurrency.

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#6 Cryptocurrencies Are Real Money

#6 Cryptocurrencies Are Real Money

The IMF defines money as a store of value, unit of account, or medium of exchange that is widely accepted and can be translated into prices.

The FINRA defines cryptocurrency as a digital representation of a stored value through cryptography.

The IRS define cryptocurrency as convertible currency, that has an equal value in real currency.

Accountants have been instructed to account for cryptocurrencies as intangible assets with an indefinite life and to measure any crypto assets at cost rather than value.

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#7 Cryptocurrencies Will Replace Fiat Currency

#7 Cryptocurrencies Will Replace Fiat Currency

Cryptocurrencies are new, whereas Fiat currencies have been in use for centuries. This would require a large number of people to adopt it. It may occur once value and purchasing power are established.

Fiat currencies are not easily given up by governments due to established tax collection and spending controls.

Modern tools for combating inflation and unemployment have taken more than a century to develop. The impact of cryptocurrency on a country's economy is unknown; new monetary policies and tools are required.

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#8 Cryptocurrencies are a Fad

#8 Cryptocurrencies are a Fad

Do you remember when the internet, computers, and email were only of interest to a small group of IT geeks? You're probably using it right now.

This technology will likely continue to be developed and refined.

  • DeFi applications are gathering the interest of financial institutions and consumers
  • Governments are exploring ways to implement legally-recognized cryptocurrencies pegged to an asset that is more stable in price
  • Businesses are investing heavily in Bitcoin and altcoins

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Why Is Cryptocurrency Not a Good Investment?

Cryptocurrency is still in its price discovery phase where an asset fluctuates until its value is established by supply and demand.

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Cryptocurrency is not a Hoax

  • Cryptocurrency is accepted by many merchants and retailers
  • Investors are buying it as part of an investment strategy
  • Governments are debating how to deal with them

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Why Is Cryptocurrency Not Safe?

Whether cryptocurrency is safe or not depends on your perspective

  • How much you know about it?
  • What you want to use it for?
  • How you control it?

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CURATED BY

cesargb01

Bolivian 🇧🇴 Engineering student ⚡⚙️

Because cryptocurrencies have grown in popularity in recent years, it is critical to be well informed on these new themes.

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