Virtual currencies had a rocky start since society did not trust this new financial system that differed from traditional and conventional money. We were accustomed to dealing with actual currency, so the thought of being able to utilize and exchange with intangible currency sounded improbable. The world of cryptocurrencies, on the other hand, has not vanished; it has evolved and exponentially grown through time.
There are a lot of misconceptions concerning these well-known virtual currencies. Some people still have doubts about this financial system because they believe it has criminal elements.
What do you think the situation is? Yes, there is still a lot of disinformation regarding cryptocurrencies, which contributes to a high level of skepticism. Many individuals do not understand how the world of cryptocurrency works as a result of the misinformation that exists, which is rapidly diminishing. As a result, they believe erroneous misconceptions. Here are some of the most common myths about the industry.
- 1. The Only Crypto Asset That Matters Is Bitcoin
- 2. Digital Money Is Harmful to the Environment
- 3. The Most Common Use of Cryptocurrencies Is for Illegal Purposes
- 4. Cryptocurrency Has No Intrinsic Value
- 5. Cryptocurrencies Are Vulnerable To Cyber Attacks
- 6. Blockchain Is Bitcoin, and Bitcoin Is Blockchain
- 7. Only the Best Developers can create blockchains
- The Final Word
1. The Only Crypto Asset That Matters Is Bitcoin
We all know that Bitcoin was the first cryptocurrency, and as a result, it is the most widely held cryptocurrency. The fact that it has the maximum liquidity in the crypto world is why it is still the most likable choice for a novice to invest. The easier it is to sell a cryptocurrency at a market price, the higher the liquidity ratio. However, it would be a mistake to believe that it is the only crypto asset that matters.
Although Bitcoin has the highest market value, other cryptocurrencies have begun to gain popularity. According to recent statistics, Ethereum’s economy has reached new highs regarding transfer value and market capitalization.
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2. Digital Money Is Harmful to the Environment
There is reason to be concerned about the environmental impact of digital currency. As the popularity of cryptocurrencies such as bitcoin and ether has grown, so has the number of mining operations all around the world. Each of the various mining rigs needs a significant amount of processing power, which necessitates a considerable amount of electricity.
It’s important to remember, though, that the benefit of mining a cryptocurrency virtually always outweighs the real-world cost of completing that mining operation. Furthermore, many cryptocurrencies, like bitcoin, have imposed strict limits on the number of tokens that can be mined.
Individuals will no longer be able to mine new tokens or coins after this moment, and the cost of the processing power needed to generate that money will be drastically lowered. Don’t forget that the contemporary financial and banking system, from office lighting to computer servers to electronic payment networks and asset exchanges, uses a lot of electricity on a regular basis.
3. The Most Common Use of Cryptocurrencies Is for Illegal Purposes
For a long time, cryptocurrency has been tied to unlawful activities on the dark web. Although they are employed in some illegal activities, the belief that they are used chiefly is incorrect.
To put things in perspective, the dark web had around $829 million worth of Bitcoin transactions up until 2019. Although this may appear to be a large number, it represents only 0.5 percent of all Bitcoin transactions.
To put it another way, the use of cryptocurrencies for unlawful purposes is no different than the use of any other cash. It is significantly less frequently utilized for illegal activities than other popular currencies such as the US Dollar.
4. Cryptocurrency Has No Intrinsic Value
The most common misconception about cryptocurrency is that it has no real value. It also exposes a blunder in our notion of value. People believe that fiat currencies have value because they are supported by a country’s governments and goods. However, the value is determined by the demand and supply of the country’s population.
As a result, cryptocurrencies are believed to have no actual value because they are backed by no natural object. It’s a virtual and ethereal currency that doesn’t exist in the real world. The value of cryptocurrency is determined by its use as a medium of exchange — in other words, supply and demand choose its value. As a result, a cryptocurrency will have value as long as people are ready to buy and trade it.
5. Cryptocurrencies Are Vulnerable To Cyber Attacks
Cryptocurrencies are traded on platforms similar to those used for ordinary trading. Bitcoins have never had a network or blockchain attack since their inception in 2009. Over the years, the protocol and cryptographic standards have operated flawlessly, and the system has revealed no signs of money theft or flaws.
On the other hand, websites, wallets, and exchanges that trade in cryptocurrencies might get targeted. However, security measures have evolved dramatically in recent years (encryption of private keys, 2-factor authentication, cold offline wallets), reducing the probability of an attack.
6. Blockchain Is Bitcoin, and Bitcoin Is Blockchain
Doesn’t it sound like a tongue twister? Because bitcoins and blockchain technology are synonymous, both terms are used interchangeably. In layman’s words, blockchain technology enables bitcoins, which are the digital currencies that will allow peer-to-peer transactions. You could be forgiven for assuming that, as bitcoins rise in popularity, blockchain technology is vital for all cryptocurrencies. IOTA is a cryptocurrency that does not use a blockchain and instead relies on directed acyclic networks for security.
7. Only the Best Developers can create blockchains
Anyone can access and modify the original bitcoin protocol because it functions on an open source. The bitcoin blockchain is forked in this way. In some way or another, all the cryptocurrencies that exist in the market are versions of bitcoins. For a long time, there was a misconception that top developers could only create blockchains. Anyone may split the bitcoin blockchain and create their own cryptocurrency using websites like forkgen.tech.
The Final Word
What were your thoughts on these cryptocurrency myths? Do you believe any of them to be true? Many people have heard these falsehoods and are afraid to use or invest in cryptocurrency as a result. If you’re one of them, forget about it and dive into the realm of cryptocurrency to learn about all of its benefits.