Crypto Myths Debunked
There is still a widespread lack of knowledge and trust toward crypto, and this is a great environment for misinformation.
There are still plenty of myths surrounding the crypto space — Is it bad for the environment? Is it used for illegal activity? Is it even legal? In this article, we will try to dispel these misconceptions for the iBetYou community.
Myth #1: Cryptocurrencies don’t have real value
The biggest misconception about digital assets is that they don’t have real value. To ease up the understanding of the concept, let’s think of Bitcoin as gold. All fiat is pegged to gold, and all cryptocurrencies are not pegged, but connected to Bitcoin.
But — why does Bitcoin itself have value?
Why is gold valuable now, or why did it become valuable at the beginning? Because there is only a certain amount of gold in the world, it is rare. — And, there are also only 21M Bitcoins in the world, and almost 19M Bitcoins have already been mined. So, as the asset gets lower in quantity, its value increases.
Thanks to their restricted supply and increasing demand, cryptocurrencies have a store of value and can function as a unit of exchange.
Myth #2: Cryptocurrencies aren’t secure
Security concerns came along with the “emergence” of decentralization, but contrary to what most people think, the Bitcoin network, the first cryptocurrency ever made, has never been hacked.
Instances of “crypto hacking” in the news are typically the result of security breaches on third-party businesses and services that use crypto, emphasizing the importance of carefully selecting which crypto exchange to use. What is true is that cryptocurrencies are, as yet, unregulated or with little regulation in many countries.
Myth #3: Cryptocurrencies are used for illegal activities
Cryptocurrencies have been known to be exploited for criminal acts, but in fact, most crypto transactions are conducted with legitimate and legal intentions.
Research shows that transactions involving illicit addresses represent less than 1% of all cryptocurrency transactions. Of that small percentage, scammers make up the majority of the crimes — not money laundering, human trafficking, or terrorism.
This is significantly lower than the 2–5% of global GDP that is laundered annually.
As crypto usage is growing, the regulations put in place to govern it are getting tighter. Governments all over the world are cracking down on cryptocurrency use by criminals and organized crime, with many countries adopting measures to combat the use of cryptocurrencies in money laundering and terrorism financing by employing specialist agencies and teams.
Myth #4: Cryptocurrencies are bad for the environment
The shocking carbon footprint of some cryptocurrencies has received a lot of attention. The amount of electricity it takes to mine Bitcoin annually can power small countries like Malaysia, Finland, and Sweden.
Why?
Because many cryptocurrencies rely on a Proof of Work system that requires large amounts of calculations (hence, computer processing power) to mine a single token.
However, it’s important to note that not all cryptocurrencies are bad for the environment. The increasing awareness of crypto’s environmental impact has led to various cryptocurrencies exploring renewable energy-based mining or migrating to a Proof of Stake system that is far less energy intensive. Ethereum is one such example and aims to reduce its overall energy consumption by 99.95%.
If you’d like to check, here’s a list of environmentally-friendly cryptocurrencies.
Myth #5: Cryptocurrency is a good investment for everyone
Let’s move onto a more “positive” myth. Ever since crypto, NFTs, and P2E games exploded on the market, it’s become impossible to escape hearing about crypto. One of the most visible outcomes of this situation is that “NFT“ was Collins Dictionary’s word of the year 2021.
We all know someone who’s made money from crypto, and hearing about it from so many people paints the picture that investing in crypto is the ultimate get-rich-quick scheme.
But the truth is, many are putting their money into crypto without fully understanding what they’re doing. Yes, it’s possible to get rich by investing in crypto, but it’s also very possible that you could lose all your money. After all, crypto is infamous for its extreme volatility — just take a look at Luna’s epic crash to $0 when it was worth more than $100 at one point, or for an easier way, check out recent crypto exploits and losses that shook the market.
It’s important to know that all investments carry some risk. You need to understand the risks and do a lot of research on what you are getting yourself into before investing in crypto rather than treating it like a get-rich-quick scheme.
Myth #6: It is too late to invest in cryptocurrency
Market downturns can be intimidating, especially when they’re as severe as the recent crypto crash. That said, they can also be a smart buying opportunity because prices are lower. If you’ve been on the fence about investing in crypto, now is one of the most affordable times to buy.
While nobody knows for certain what the future holds for cryptocurrency, there’s reason to believe prices will bounce back eventually. Those who have been tracking the crypto market for more than a few years are starting to see familiar patterns re-emerge. Cryptocurrency is repeating a cycle of all-time highs (ATH) being followed by a sell-off and a crypto winter where prices and interest in cryptocurrency are relatively low. This is often followed by a rebound and a new ATH being reached. So, if you’re thinking about investing in crypto, a crypto winter is the best time to start.
It’s clear that “magic internet money” is here to stay and has already transformed the financial world. With all the new industries emerging around blockchain technology, it looks like the crypto space has a bright future. If you are looking for more blockchain-related content, follow us on Medium!
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