Top 5 Myths of Cryptocurrency You Should Know!
Cryptocurrency is a myth. Bitcoin has no real value! Crypto is a scam! It will collapse anytime… and the cliche continues to ring the ears. Naturally, it's not surprising to see any new change being opposed because of mediocre minds that lack efforts to adapt dynamic world.
Every new idea is initially opposed by a few, then supported once it proves its true potential.
Cryptocurrency's volatile nature, market risk, regulatory uncertainty, financial illiteracy, and lack of effort to understand the technology is the reason behind opposing forces.
Despite being criticized, crypto’s decentralized nature and the efficiency of its blockchain technology have proven strong resilience over a decade, which is hard to understand for crypto illiterates.
Cryptocurrency is assumed to be complex by many people and this creates some popular myths about Bitcoin and Cryptocurrency. For cryptocurrency to be truly understood, one has to break the Iceberg illusion of knowing it all and explore in depth before concluding the facts.
I bring you some popular myths and burst the bubble that hinders people from understanding cryptocurrency's true nature.
Myth 1: Cryptocurrency is not Real Money:
Crypto is virtual and does not even exist in the physical world. Hence, it should have no value as a currency or asset. Crypto and Blockchain are worthless!
It is so worthless that even governments are adopting blockchain and crypto technology to implement and create CBDC (Central Bank Digital Currency), which is a centralized cryptocurrency. Its use is similar to virtual money in bank accounts for everyday online banking.
Consider the US Dollar ($). Did you ever wonder how US Dollar gets its value? If you say it is based on the amount of Gold in reserves (or Gold Standard) then it was abolished in the 1970s.
US Dollar gets its intrinsic valued just on the faith and belief of people that it is honoured by Government for any underlying transaction.
Every fiat currency in this world is valued on just faith relative to the value of the US Dollar. Central Banks of every country print money and increase their reserves on balance sheets out of thin air. This provides the government with the ability to control and manipulate Geopolitics.
It's just our belief and trust in asset like Gold, Diamond, Rupee and Dollar will get us things we wish and want!! All valuation of currency especially the US Dollar, is based on faith and this faith dictates the world!
Myth 2: Cryptocurrency is used in Criminal Activity:
Cryptocurrency is criticized for criminal activities thanks to its anonymity, borderless transactions within seconds, and no restrictions by regulatory authorities. There is no denying that crypto is used in criminal activity.
Even fiat currency, gold is used for criminal activity.
On a broader scale, tracing crypto transactions is easier than fiat currency transactions or gold smuggling. Thanks to blockchain technology that links and stores every transaction in a unique hash code linked with the previous transaction on every device (node) operating on the blockchain network. This makes it immutable to hide or manipulate records.
Moreover, Majority of cryptocurrency transactions happen in exchanges that require KYC verification for every user. This makes cryptocurrency more transparent for law enforcement agencies.
Financial crimes occur across all asset classes. On a larger scale, however, cryptocurrency solves traditional financial loopholes that criminals exploit. According to Blockchain Company Chainanalysis, only 0.34% out of $14 Billion of cryptocurrency transactions in 2022 were accessed in criminal activities.
Myth 3: Crypto is a Bubble that will Implode:
From the financial and technological history lessons, every new technology is first explored, fails in loopholes, and is improved in a new way. Even crypto has been updating its technology with time.
The Indian Stock market scam in 1992, the Dot Com crash in 2001, and the subprime financial crisis in 2008 collapsed many startup ventures and companies due to the exploited loopholes of the system. The market imploded like a bubble and later improved over loopholes with time.
If the Stock market is trusted because of faith in the Regulatory bodies and still the market crash happens, cryptocurrency should have imploded in its first market crash itself in July 2011 and Jan 2012.
When the world thought Bitcoin was dead, it bounced back strong because of its fundamental principles and technology. Bitcoin has demonstrated its ability to hedge against geopolitical and economic risks posed by central monetary policies that can make or break a country’s economy.
Myth 4: Crypto is a Scam:
It is undeniable that scams happen in cryptocurrency investments with people. In 2022 around $ 5.9 billion of crypto got reported in scam transactions from people.
Scams happen everywhere in every field, unless you are aware and cautious of not falling into one.
Because cryptocurrency is a complicated technology, it is an easy way for scammers to make money. That is why, before investing, one should gain a better understanding of the crypto world.
Cryptocurrency is not a scam, but the source points that provide facilities like crypto exchanges and custodians should be watched and regulated for investor protection against scams.
Myth 5: Bitcoin causes Environmental Damage:
Every process in this universe needs a certain amount of energy. In the case of Bitcoin mining, one needs a powerful computer and processor that requires an exponential amount of electricity from power plants.
Only Cryptocurrency that uses Proof of Work (POW) mechanism (Bitcoin, Ethereum Classic) require exponential amount of electricity. Rest of cryptocurrencies operate on Proof of Stake (POS) mechanism are scalable and envoronmental friendly.
If power plants use thermal heat generation or coal burning, the energy source is to be pointed. Although Bitcoin mining may have used non-renewable polluting energy sources, the world is beginning to explore Greener Bitcoin mining methods through renewable energy sources.
The Bottom Line:
Cryptocurrency needs a reliable source of education and enlightenment from people who understand its working. Despite being volatile and in its infancy, cryptocurrency should be understood for its potential good use.
Regarding myths, it is up to you to either understand the technology and see its possibilities or to believe the cliches and remain crypto-illiterate.
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