Bitcoin and cryptocurrency have both gained a lot of popularity among different investors and people interested in finance. But as much as people are interested in cryptocurrencies, they are also misguided by wrong information making rounds on the internet. This misinformation primarily arises from the fact that people do not know how Bitcoin actually works.
All unanswered questions related to the working of cryptocurrency and Bitcoin have led certain myths to circulate about it. We will try to debunk all of these myths one at a time, which will help clear out the doubts related to the working of cryptocurrencies.
Source: cnn.com
Contents
1. Cryptocurrency has no Real-World Value
The biggest and probably the most commonly circulated myth about cryptocurrency and primarily Bitcoin is that it has no real-world value. People consider fiat currencies as the main means of gathering wealth and do not give due credit to cryptocurrencies. But this cannot be further from the truth because cryptocurrency does, in fact, have real-world value.
If you are still feeling unsure about the actual value of cryptocurrency, you should look up institutional investment in Bitcoin and other cryptocurrencies. In the coming time, Bitcoin is more likely to be used as a normal means of payment and transactions if big corporations have anything to do about it. The truth is that Bitcoin is just as valuable as fiat currency.
2. Your Transactions will be Anonymous
Many people believe that the transactions and investments in Bitcoin and other cryptocurrencies are completely anonymous. But you will be surprised to know that cash will leave behind less of a trail than investing in Bitcoin or crypto will. All the transactions related to Bitcoin and other cryptocurrencies are stored on the network. Moreover, these records are public, so the data of each transaction is visible to anyone who is interested.
Privacy is protected in the sense that names are not directly attached to the transaction details. However, that does not mean that the real-world identity of the investor cannot be found out with the help of these records. So if you think that money laundering will be easier with the help of cryptocurrencies, it is not the case because each transaction is traceable.
Source: time.com
3. Mining is Bad for the Environment
Another myth circulating for a long while that has been accepted as a fact is that crypto mining is bad for the environment. Many environmental activists were against crypto mining practices because they led to vast amounts of energy wastage. The large system of network which was used to keep mining cryptocurrencies did, in fact, affect the environment by excessive use of fossil fuels. But all of it changed to a large extent with China’s crackdown.
Earlier, China was the hub for crypto mining, but following its crypto crackdown, the mining practices were severely altered and have been reduced to almost half than what was before. The space left behind after this crackdown has been filled by miners located all across the world but mostly in the US. Since the regulations related to the environment are stricter in the US, mining now is less likely to impact the environment adversely.
4. Cryptocurrency will make you Lose Money
Since people do not understand how Bitcoin and cryptocurrency work, they are inherently insecure about whether or not their money will stay safe. Anyone who is insecure about their money bases their claim on the fact that this network can be hacked, and all the investment can be stolen by third parties. One thing to be noted here is that Bitcoin has never been hacked and works like any other medium of investment.
Any investor who is looking to put money in cryptocurrency needs to be aware of the trends and the price volatility to understand the risk as well as the possible returns. Due to price volatility, losing money is a real concern, but that is the case with any investment. Crypto is not any more risky than the currently prevalent ways of investment in the market. Knowing about cryptocurrency and bitcoin will be a good approach, especially from experts like bitcoineranew.com/de.
Source: paybito.com
5. Crypto is for Money Laundering
This myth has led to a lot of people withdrawing their interest from the crypto market. People have been calling cryptocurrency illegal and a source for money launderers to get away for a long time, but that is not the case. Certain countries like Russia and Algeria have also banned cryptocurrencies altogether.
Cryptocurrency does not trigger money laundering, nor is it illegal in the majority of the countries. Not paying taxes on your crypto investments will probably be a bad idea. While cryptocurrency laundering is a thing, it is not related to investors getting duped but comes from the ability of the users to remain anonymous with their crypto transactions.
6. Counterfeiting Cryptocurrency is Normal
Probably one of the best features of cryptocurrency is that it cannot be counterfeited. There is only a limited quantity of Bitcoin currently in circulation, which makes it extremely difficult to counterfeit and also prevents any possibility of inflation. If you are still not convinced, consider the name of cryptocurrency. Crypto itself refers to cryptography which talks about the impossibility of counterfeiting currency.
Since money is involved, it is natural that people will be afraid of getting duped. However, you cannot spend money on a single Bitcoin twice because all transactions are irreversible, and double spending is not possible. This one practice of eliminating double-spending altogether has successfully put a full stop to the problem that is counterfeiting.
Source: prescouter.com
The Takeaway
Now that you have seen what the most common myths about bitcoin and other cryptocurrencies are, you can easily choose whether or not to invest in crypto yourself. Rather than believing in misinformation, the best approach is to see for yourself and then decide whether or not you would like to get involved. Based on your vigilance, risk tolerance, attitude towards investments in the long term and returns, you can choose a way to participate which suits your best.
