Debunking Common Cryptocurrency Myths
Incoherent arguments, stale information, and inaccurate analysis have been used to dismiss cryptocurrencies and discourage people from investing.
Myths that cryptocurrencies are only used for illegal activities, lack intrinsic value, or are a fad and not secure come from misinformed ideas that can be easily debunked.
Cryptocurrencies are still in their early stages of development and adoption and they are expected to bring a financial revolution.
Since their introduction in 2009, cryptocurrencies have experienced massive growth, attracting investors worldwide. However, their “mysterious” nature and the difficulties in understanding how the blockchain works bring confusion that leads to multiple rumors and unsubstantiated myths. Consequently, incoherent arguments, stale information, and inaccurate analysis have been used to dismiss cryptocurrencies and discourage people from investing.
Below are some common misperceptions about cryptocurrencies and an examination of facts to debunk the myths:
Myth #1: Cryptocurrencies are only used for illegal activities
One of the oldest cryptocurrency myths is that it is a payment method for criminals engaging in illicit activity, including money launderers and drug dealers. While it’s true that criminal and criminal organizations use cryptocurrencies to complete their illegal transactions, the same can be said of fiat, which has been used throughout history. The overall value and number of cryptocurrency transactions associated with illegal activities are relatively low compared to its use as a valid form of payment and investment.
Myth #2: Digital currencies lack intrinsic value
The main concern here is that, unlike fiat currencies that are backed by the government, digital currencies are not backed by anything. To debunk this myth, we can argue that value is subjective since it involves a consensus agreement among people that a certain object is worth something. For example, the U.S. dollar is not backed by anything else other than the full confidence and credit of the U.S. government. Thus, all it takes for a digital currency to gain value is for the people to believe in its worth.
Myth #3: Cryptocurrencies are a fad
Some critics have argued that cryptocurrencies are in a bubble that will pop and disappear after some time. While it is difficult to predict the future of digital currencies, the technologies they have introduced and the inspired products will continue to be developed and improved. Remember several decades back when very few people found computers and the internet interesting? Nowadays, they have penetrated our social and work life and become integral to the point that we rely on them for our daily activities. As decentralized finance applications materialize, financial institutions and consumers are increasingly interested in these technologies. Governments are establishing control measures and ways of legally-recognizing cryptocurrencies to stabilize economies. These trends can be interpreted to suggest the potential evolution of cryptocurrency and its stability as a legal currency in the long run.
Myth #4: Cryptocurrencies, like most internet-based technologies, are not secure
With cybercrimes on the rise, many people fear engaging in internet-based transactions. Thus, critics and users have always asked how safe are these cryptocurrencies and why we should or shouldn’t trust a virtual currency.
Blockchain technology, the key technology in cryptocurrency, employs advanced security protocols to ensure it is secure. It uses encryption techniques and technologies that are hard to break. Besides, the distributed database involves blocks of chains and a community of automated verifiers who must agree to and verify the validity of transactions recorded.
However, a significant security risk is associated with how cryptocurrency is accessed and stored. For instance, the software used in cryptocurrency wallets can be tampered with or hacked. There are various safety methods you can apply to ensure the safety of your cryptocurrency, including using strong passwords, only connecting to the internet through secure networks, and selecting the most suitable crypto wallet.
Cryptocurrencies are still in their early stages of development and adoption. However, they are projected to bring about a revolution in money and finance. Visit the IFXI Medium blog for more informational articles on cryptocurrencies and blockchain technology in general to debunk the misconceptions affecting your decision to invest.
If you’re ready to invest, join Your Friendly Crypto Exchange now and start your crypto journey from a safe, reliable and easy-to-use place.
Disclaimer: The content of this article is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial and fiscal circumstances.
Although the material contained in this article was prepared based on information from public and private sources that IXFI believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and IXFI expressly disclaims any liability for the accuracy and completeness of the information contained in this article.
Investment involves risk; any ideas or strategies discussed herein should therefore not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial and fiscal objectives, needs and risk tolerance. IXFI expressly disclaims any liability or loss incurred by any person who acts on the information, ideas or strategies discussed herein.
