Cryptocurrencies have been around for less than a decade, and in that time, they’ve managed to become one of the most talked-about and misunderstood topics in the world.
From their origins to their eventual future, there are a lot of myths and misconceptions about cryptocurrencies. In this post, we’ll dispel some of the most common ones.
1. Cryptocurrencies aren’t backed by anything
Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units.
Cryptocurrencies are decentralized, meaning they are not backed by any government or financial institution. Instead, their value is based on the trust of the users who trade them.
2. They’re only used by criminals
Cryptocurrencies get a bad rap. And, to be fair, some of it is warranted. After all, they are digital and anonymous currencies that can be used for illicit activities.
However, that’s not the whole story. Cryptocurrencies are also used for legitimate transactions every day. In fact, more and more businesses are starting to accept cryptocurrencies as payment.
So don’t believe the myths. Cryptocurrencies are here to stay, and they offer a number of benefits that traditional currencies can’t match.
3. They’re not going to last
Many people believe that cryptocurrencies are a passing trend and that they won’t last in the long run. However, there are a few key reasons why cryptos will continue to grow and be around for years to come.
First of all, the blockchain technology that underlies cryptocurrencies is incredibly powerful and has a lot of potential uses outside of just digital currencies. The fact that it’s decentralized and secure makes it a tempting option for a lot of businesses and industries.
Second, the global market for cryptocurrencies is still in its infancy. There’s a lot of room for growth, and as more people become interested in digital currencies, the value will only continue to increase.
Lastly, cryptocurrencies are becoming more and more mainstream. You can now use them to pay for goods and services, which is helping to legitimize them in the eyes of the general public.
4. You can’t actually use them
While it’s true that cryptocurrencies are digital, that doesn’t mean you can’t use them. In fact, there are a ton of ways you can use them. You can use them to buy goods and services, you can use them to invest, and you can even use them to pay your bills.
The bottom line is that cryptocurrencies are here to stay. They’re a new form of currency that is quickly gaining in popularity, and there’s no telling where they will go from here. So if you’re looking for ways to make money online, cryptocurrencies are a great place to start.
5. They’re not regulated
Cryptocurrencies may be digital, but they’re not immune to regulation. In fact, they’re actually more heavily regulated than traditional currencies. Each cryptocurrency has its own set of rules and regulations, which are overseen by a governing body.
For example, Bitcoin is regulated by the Financial Crimes Enforcement Network (FinCEN), while Ethereum is regulated by the Ethereum Foundation. These rules and regulations are in place to protect investors and help keep the cryptocurrency market stable.
6. They’re not taxed
Contrary to what some people may think, cryptocurrencies are not tax-free. In fact, depending on your country of residence, you may be required to pay taxes on any cryptocurrency transactions you make.
For example, in the United States, any profits you make from trading or investing in cryptocurrencies are considered capital gains and are therefore subject to taxation. The same goes for any other country in the world – make sure to consult with a local tax specialist to find out more about how taxes apply to you and your cryptocurrency investments.
7. You can’t mine them anymore
Mining cryptocurrencies is a process that helps keep the system running. People who do this are rewarded with new coins for their efforts. However, due to the increasing popularity of cryptocurrencies and the rising difficulty of mining them, this is no longer a viable option for most people.
8. The price is too volatile
Cryptocurrencies are known for their volatility, with the prices of different coins constantly changing. Some people see this as a bad thing, while others see it as an opportunity to make money.
The truth is, volatility is just a part of the cryptocurrency world. It’s something that you have to accept and learn to work with if you want to be successful in this space.
There are ways to take advantage of volatility and make money regardless of whether the price is going up or down. If you’re smart about it, you can make a lot of money in the cryptocurrency market.
9. They’re not really anonymous
Contrary to what many believe, cryptocurrencies are not actually anonymous. In fact, every transaction is tracked and recorded on a public ledger. While the identities of the parties involved may not be revealed, the transactions are easily traceable.
10. They’re not environmentally friendly
Cryptocurrencies may be digital, but that doesn’t mean they’re environmentally friendly. In fact, the mining process that’s used to create new coins is incredibly energy-intensive and can be harmful to the environment.
Not to mention, all those computers that are used to mine cryptocurrencies are creating a lot of heat. This is causing problems for data centres, as they’re having to install extra cooling systems to keep everything running smoothly.
All of this just goes to show that we need to be careful about how we use cryptocurrencies and make sure that we’re not harming the environment in the process.
11. They’re a bubble
Many people think that cryptocurrencies are a bubble, and while it’s possible that they could be, it’s still too early to tell. Cryptocurrencies are still in their infancy, so they could go in any number of directions.
Some people think that the bubble will burst and cryptocurrency will become worthless, but others think that it could just as easily become mainstream and be used for everyday transactions. Only time will tell which prediction is correct!
Cryptocurrencies are definitely here to stay. So, it’s important that you separate fact from fiction when it comes to this exciting and rapidly-growing digital asset class. By understanding the true nature of cryptocurrencies, you can make informed decisions about whether or not they are a good investment for you.