10 things About Cryptocurrency that are not true!
The crypto space is evolving at such a rapid pace that there is a lot of confusion and uncertainty around it. There is an abundance of information online about cryptocurrency, but not all of it is true. These mythological tales have people confused and reluctant to accept the new world, let alone invest in the space. And, so we wanted to put the record straight and banish the crypto mythical aura for good!
1. Crypto transactions are anonymous
Many people are under the impression that cryptocurrency transactions are anonymous. This is not true, cryptocurrency such as Bitcoin uses a public ledger which tracks every single transaction such as how much was sent from one address to the other. Each transaction on the public ledger is linked to a specific address, which is essentially an identity. Providing that this address is associated to a real person, then it is possible to trace the identity of each transaction. Most cryptocurrency exchanges have a very strict KYC process, which involves verifying your identity and address before any transactions can take place and so it is very difficult to obtain cryptocurrency without proving your identity, therefore eliminating anonymity.
2. Cryptoassets are used for money laundering
Unlike cryptocurrency, money laundering is not a new concept, we have seen people launder money for years in every country around the world — just because cryptocurrency is a new concept does not automatically mean that it supports illegal activity. While there might be some cases that slip through the net, generally speaking, the strict cryptocurrency KYC process, helps to control money laundering. B21 has partnered with Coinfirm, the leading regtech company,and anti-money laundering (AML) platform for blockchain. Coinfirm’s AML platform will make it possible for B21 to identify funds from risky or illegal sources and assess risks connected to dealing with contributing wallet addresses serving Bitcoin, Bitcoin Cash, and Ethereum.
3. Cryptocurrency is illegal
Cryptocurrency is not yet ‘officially legal’, however, this does not make it illegal. This subject also depends on geographic location, countries such as China, Columbia and Ecuador have banned cryptocurrency and do consider it to be illegal! However, others including Japan, Australia, Malta and Gibraltar are actively regulating cryptocurrency. By regulating the space these countries are showing their support for cryptocurrency and their intention of making it part of the future.
4. Regulation is the enemy
Regulators are trying to make the industry safer, they are trying to make it easier for investors to invest by ensuring that they are protected. Here at B21, we are in full support of the regulatory framework that Gibraltar has put in place. We hope that more countries and jurisdictions follow Gibraltar, and that more cryptocurrency companies become regulated, this will make the crypto world a safer and more attractive space for everyone.
5. Tokens and coins are the same
Often tokens are referred to coins and coins as tokens! There is in fact, a clear difference between coins and tokens. Coins are essentially a digital currency that have their own blockchain and act only as a store of value, such as Bitcoin (BTC), which can be stored over a long period of time to gain interest or used to pay for goods online. Bitcoin’s only function is to act as a form of money.
Tokens do not have their own blockchain, they are created on existing blockchains such as the Ethereum network for example. All tokens that are built on the Ethereum network are referred to as ERC-20 tokens, such as the B21 token. The majority of tokens are designed to be used with a decentralised application, once they are created the tokens are used to access features of that application. For example, the B21 tokens will be used to settle fees on the B21 investment platform, they will also be used by investors to incentivise and reward referrals to the platform.
6. All cryptocurrency is the same
Often when people think of cryptocurrency they automatically refer to Bitcoin because it was the very first cryptocurrency and so they presume that every other cryptocurrency is exactly the same as Bitcoin, where the sole purpose is acting as a store of value. This is not the case. Every cryptocurrency is different, Ethereum for example, was created in 2014 with the main objective of operating smart contracts rather than to act as a form of money. While Ripple was created in 2012 to be used as a payment system and currency exchange. There are currently over 2000 crypto assets available within the crypto space, a number that is growing daily and each and every one of them has different uses, values, blockchains and purposes.
7. You don’t have to pay taxes on your cryptocurrency income
This also depends on your location, in the US for example, the Internal Revenue Service (IRS) labels crypto as a property and not as a currency when it comes to tax purposes. If you have made a return on your investment then you are expected to report capital gains, and any income paid in crypto is subject to income and payroll tax. In Switzerland, residents must pay income tax, wealth tax and profit tax on their cryptocurrency holdings yearly, and in the UK cryptocurrency is subject to capital gains tax. It all depends where you live and so if you have invested in the space it is up to you to do your own research on this.
8. Crypto equals blockchain
While all cryptocurrencies are built on the blockchain, it is important to note that cryptocurrency and blockchain technology are two separate things. Bitcoin, the very first cryptocurrency introduced blockchain technology to the world, but cryptocurrency is in fact just, one use case of blockchain technology. Blockchain enables peer-to-peer transactions to be recorded on a distributed ledger through a decentralised network, every business and industry can use blockchain technology to store records, manage transactions and more.
9. Crypto has no value
One of the biggest myths about cryptocurrency is that because cryptocurrency is not tangible it has no real value. A cryptocurrencies value is determined by supply and demand in the same way that any fiat currency is. While the value of each specific coin fluctuates from day to day, just because you can’t physically hold cryptocurrency in your hand does not mean that it has no value.
10. Crypto ‘won’t catch on’
We tend to have this view that if everyone is doing something then it must work, but if no one is doing it then ‘it simply won’t work! And, that is why we are often opposed to new concepts that are out with what we class as the ‘Norm’!
But, if you take the time to look outside your comfort zone and conduct your own educational research, you will see that cryptocurrency has already ‘caught on’. Other than the self-made cryptocurrency millionaires, the rate that governments, businesses and institutions are adopting crypto is a clear sign that this is a concept that is around to stay! It is already possible to book a holiday, buy property and pay your bills with crypto and it is only a matter of time before you will be using it to pay for everything else.
Check out our ‘Did you know’ channel on B21 Life for true cryptocurrency facts ;-)
