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5 Crypto Myths Economists Want You To Believe So They Can Benefit

You know you want to invest in cryptocurrency but are scared of the myths.

Man covering eyes with hands. One hand has a dollar sign and the other says, lie.
Image courtesy of Canva

The truth is, there’s a lot of misinformation out there about cryptocurrencies, and it can be hard to separate fact from fiction. But don’t worry! We’ve debunked some of the most common myths so that you can make an informed decision before investing your money.

There are many reasons why some economists might not want you to invest in cryptocurrency, but I’m here for one reason only — to help you succeed!

So let’s get started with these myths.

#1: Crypto is just for criminals

Since its inception, all sorts of myths and misconceptions have plagued the crypto world, and one of the worst culprits has to be crypto being just for criminal activity. And that couldn’t be further from the truth! In fact, crypto can help fight crime because it allows people to make transactions anonymously without any need for identity verification or cash. Making anonymous transactions reduces fraud rates as there are no middlemen such as banks that could potentially steal your money in between transfers or charge you exorbitant fees, which would also require them to know who you are anyways. Crypto also helps keep our identities safer because it doesn’t have any centralized database where hackers could find out everything about you from just a username or email address.

For example, XRP is anonymous crypto, and it literally doesn’t have any personal information attached to it, so all crypto transactions can be considered anonymous. The anonymity is similar to crypto exchanges as they are decentralized, meaning they don’t require you to provide your details or any forms of identity verification. While this may make crypto seem like a haven for criminals, the fact of the matter is crypto also provides a lot of protection to legitimate users who may need their financial lives to be kept private.

Crypto is not just for criminals, and crypto can help fight crime. Crypto also helps keep our identities safer because it doesn’t have any centralized database where hackers could find out everything about you from just a username or email address. While this may make crypto seem like a haven for criminals, the fact of the matter is crypto protects legitimate users who need their financial lives kept private.

#2: Crypto is too hard to understand

Crypto was once just the domain of computer programmers, but now crypto is for everyone. Crypto has created a new economy that cuts out banks and governments as middlemen. Anonymous usage means no more fear of identity theft or credit card fraud. In addition, crypto makes it impossible for any government to censor your transactions or freeze your assets because they’re decentralized and not based in one country. It is an exciting frontier with unlimited potential, but you need to know what you’re doing if you want to get into it safely, so you don’t lose all your money on scams and Ponzi schemes!

You don’t need to know anything about crypto algorithms or crypto mining to get started with crypto. What you need to know is what crypto can do for you. Crypto facilitates anonymous transactions, cross-border payments, and value transfers for the internet. It stores your money in a digital “wallet” on your phone or computer, which means that nobody else has control over your cash, and you can’t lose it if someone else steals your credit card or identity. Crypto is digital money that allows for instantaneous, secure transfers of value anywhere in the world. It isn’t a fiat currency controlled by central banks and governments. Still, crypto exchanges are governed by regulations meant to protect crypto investors from fraud and theft, and crypto trading bots scam crypto exchanges out of crypto. Crypto is the future because crypto is the past, crypto can’t be censored, and crypto is all you need to participate in a free, fair global economy.

Crypto isn’t hard to understand, and you don’t have to. Much like you don’t have to understand stock details, you don’t have to with crypto coins. So don’t let them intimidate you.

#3: Crypto will be regulated out of existence

Regulation will not hurt crypto but help it. Crypto is a decentralized system of currency that has no central point of control. The crypto community believes crypto should exist outside the reach of government interference and manipulation. That’s why crypto was invented in the first place: to get away from government fiat money and the banks who print it at will, without any accountability whatsoever. But this also means that crypto is very vulnerable to bad actors who want to manipulate markets or steal coins by hacking exchanges (or even just mining). For crypto to survive and thrive, some form of regulation needs placement — otherwise, all you have is anarchy.

Lawmakers will discuss crypto regulation in the fall of 2021 when congress comes back in session. And that’s what crypto developers want: they know crypto needs management. Of course, from the comfort of their ivory towers, many economists have been moaning and complaining about crypto for years — so much so that it’s become a tired cliché. But this is just them playing dumb.

The crypto community needs to come together and work with crypto economists for crypto to survive. Somewhere between one side and the other is a compromise. The middle ground on regulations should be the endgame. And it doesn’t have to spell the end for crypto.

#4: Bitcoin, Ethereum, and XRP are the only investment options

Crypto is a hot topic for investors and traders. For the most part, it has been dominated by Bitcoin, Ethereum, and Ripple. However, several other coins have shown potential in recent months. Let’s explore a few that should be on your radar if you want to diversify your crypto portfolio.

Cardano (ADA)

Cardano is a newer coin that has been getting a lot of buzz lately. Its goal is to offer faster transactions than any other cryptocurrency with the same level of security as Ethereum. Cardano uses a new Proof-of-Stake algorithm called Ouroboros, developed by one of its co-founders, Aggelos Kiayias. Ouroboros allows for a more secure consensus protocol than Ethereum’s Proof-of-Work algorithm (although that is changing soon). The Cardano platform will also run decentralized applications (dApps) and smart contracts, just like Ethereum.

Litecoin (LTC)

Litecoin has been around since October 2011 and is one of the oldest coins in existence. Many believe it could be a potential successor to Bitcoin because of its similarities and differences. For example, it uses Scrypt instead of SHA256 for its mining algorithm, which means you need more memory to mine Litecoin than you would to mine Bitcoin. In addition, the maximum number of Litecoin is set to 84 million, while Bitcoins will only be 21 million.

Polkadot (DOT)

Polkadot is a relatively new token created by Gavin Wood, who also founded Parity and Ethereum. Polkadot will link together different blockchains to make the overall blockchain more scalable. As a result, it could potentially be more prominent than Ethereum.

Remember, I’m not a financial advisor. The point is to look out for other coins other than the big three. It can lead to burst gains to flow with your steady growth coins.

#5: Cryptocurrency will die because it isn’t backed by tangibles

Never forget that the USD is backed only by the fact the U.S. says, “we’re good for it.” The dollar hasn’t had backing since the early 70s, thanks to President Richard Nixon. Since then, the dollar has been nothing more than a fiat currency that people believe in.

So, as long as people use crypto, it’s backed in the same way. It’s not a different kind of backing or some particular sort of “blockchain collateral.” So, if you ask for my money back, you’ll get your Bitcoin back if I still have it.

Honestly, if you look at it deeply enough, the dollar was backed by gold. Well, why does gold have value?: Because we decided it did. Arbitrary valuation works for money, and people will create their ways of valuing things. Therefore, cryptocurrency will hold its value as long as people use it to conduct business.

So, with machine learning, A.I. development, and digitized society, why wouldn’t cryptocurrency hold its value as the world digitizes? When most people think of a computerized community, they imagine everything done through some electronic device. As long as we can conduct business digitally, cryptocurrency will remain valuable because we’ll still be using it. Just like with your cell phone or laptop, you can use cryptocurrency anywhere in the world as long as you have an internet connection.

How can economists cash in on the failure of cryptocurrency?

Those who possess massive investments in classical currency, gold, stocks, bonds, and any other type of financial asset have everything to gain from a system that will see the end of crypto.

The current system does not allow investment returns on currencies that are independent of the dollar. Any money that a banking institution does not control cannot be used to generate the same return as any “Class A” currency, such as the USD. Investors who hold massive stakes in these assets want to see cryptocurrency fail because this would mean the end of many investment avenues only available to them.

Many economists do not see cryptocurrency as any threat to fiat currencies, but this does not stop them from drawing parallels between bitcoin — or even gold — and pyramid schemes. These “professional” economic consultants have stated that money is only guaranteed if it is issued and backed by the government, claiming that no “private agency” will ever issue currency.

Conclusion

I hope this article has helped you understand some of the myths surrounding crypto pedaled by economists. In review, It is not just for criminals. Governments can’t regulate it out of existence. Bitcoin and Ethereum are not the only viable coins on the market. There are many crypto projects backed by something other than speculation, which means they have a future! As always, with any new technology or investment opportunity, please do your research before investing anything. Explore your options, and don’t let fear merchants derail your future.

Economists who are invested in other investments, namely stocks and bonds, struggle to see the potential for cryptocurrency. They believe it will never replace fiat currency because it does not have a centralized issuer or backing. It’s important to remember that many experts were skeptical about bitcoin when it was first introduced. Skeptics claimed there would be no market for such an abstract idea — yet now, people use crypto every day without even realizing its existence! The future of money is rapidly changing; if you want your business to stay ahead of the curve, then make sure you take advantage of these innovations.

What misconceptions did you find most interesting? What did I miss?

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