Debunking the Misconceptions: Top 6 Myths About Crypto

Jay Crypto

Blogger

When a new technology is introduced, many people may consider it hostile and unsafe because they are unaware of its implications, especially when it is disturbing and replacing the traditional ways of doing things. The same goes for cryptocurrency. When crypto was first introduced, people had different kinds of concerns related to the safety and security of digital assets. Crypto is decentralized -- it does not require centralized banks and other financial institutions for making transactions and trading – and it is also subject to certain risks such as volatility, under-regulations, and scams. Moreover, people considered it a risky and unsafe option for investment because they couldn’t understand the complex nature of blockchain and decentralization.

Some common myths about crypto

As crypto has evolved and become more accessible, many stability and regulation issues have already addressed, but there are still some misconceptions and myths about cryptocurrencies. Here are some of these myths that still exist about crypto and need to be clarified.

1. Digital Assets lack Intrinsic Value

It is a common misconception that digital assets lack intrinsic value because they are not backed by any tangible asset like gold or government guarantee. However, it is critical to remember that several other factors ensure its intrinsic value. Cryptocurrencies are built on blockchain technology, which is itself a revolution in the old financial system. This technology may not be backed by any tangible asset, but it already solved many real-world problems like independence from centralized financial institutions. Also, many fiat currencies like the US dollar and the British pound are not backed by any tangible asset or gold. It is only government faith that makes them valuable and a trusted form of payment. As cryptocurrencies evolve and move towards stability and regulation, we can predict that they will be trusted by governments and authorities soon, making them more intrinsically valuable. Furthermore, cryptocurrencies are not dependent on or controlled by any financial institution, enabling them to resist hard economic times. Decentralization also provides security to your valuable assets as it is almost impossible to manipulate the data on the blockchain. You can transfer assets to any part of the world with an internet connection and a device and carry out any trades without the involvement of a third party. This decentralized nature of cryptocurrency gives it intrinsic value as it provides solutions to the issue which the traditional financial system is facing.

2. Crypto Isn’t Real Money

The second myth about crypto is that it is not real money. When people think about money, fiat currency – government-backed currency – comes to their mind. However, crypto is also a real form of currency, although a relatively new one as compared to fiat currency. The idea that “ crypto is not real money” stems from the fact that crypto doesn’t have tangible existence and is not a reliable source of payment. Well, that is not necessarily correct. Indeed, crypto doesn’t have a tangible form, yet it is a reliable source of payment nonetheless, and some countries have even legitimized it as legal tender. Businesses across the world have started to accept crypto as a payment method. Users can pay for the purchases they make by scanning a code or directly sending crypto to their wallet addresses. Since the first purchase with crypto when a programmer named Laszlo Hanyecz bought a pizza with 10,000 Bitcoin, crypto as a payment method has evolved a lot and some companies have even started to offer crypto debit cards to carry out purchases with cryptocurrencies.

So crypto is a real form of money, and even though it is not yet widely mainstreamed as a payment option, it is well on its way to becoming a legitimate source of payment in the near future.

3. Cryptocurrency is a bubble

Some people consider crypto a speculative investment and expect high returns or believe that it is a bubble that will eventually burst. Crypto, however, is going to be an important part of our financial life in the near future. Crypto gained recognition in 2009 when the first cryptocurrency Bitcoin was launched. While crypto has seen some major price fluctuations like the upward trends in crypto prices during the covid-19 period, crypto isn't necessarily a bubble. In fact, crypto has a promising future and will become more stable and regulated in the upcoming days.

4. Cryptocurrencies are only for tech-savvy people:

No, cryptocurrency is not just for tech-savvy people. Although some basic knowledge of technology is necessary to carry out trades, crypto isn't just for those people who are blockchain experts. Many user-friendly exchange platforms let users buy, sell, and trade cryptocurrencies by following just a few steps. Indeed, if someone is not familiar with crypto at all, there are many online tutorials, guides, and explanatory videos for the newbies.

5. Cryptocurrencies Are Harmful to The Environment

Verifying and validating transactions on the blockchain indeed require a lot of computer power, but that doesn’t mean that cryptocurrencies are bad for the environment. We know that miners must use high-power computers that consume more energy to solve complex mathematical problems to validate transactions. As crypto prices peaked, the mining competition also became fierce, and according to Blockchain.com, Bitcoin's hashrate reached 172M THs -- 233 times greater than in 2016.

However, as crypto has evolved rapidly , 39% of the energy used by miners is mostly generated by renewable resources such as hydro, wind, and solar. Research conducted by Arc investment concluded that “Bitcoin is much more efficient than traditional banking and Bitcoin mining is even helping to reduce greenhouse gas emission on a global scale.”[provide citation]

6. Digital Currencies Are Used Only for Criminal Activities

While there have been some incidents when people used crypto as a payment source on the dark web and black markets, crypto has come a long way since then, and according to a report by Chainanalysis in 2021, only 0.34% of total tractions of crypto were for illicit activities.

Conclusion

There are a lot of myths surrounding the crypto space that are not entirely accurate and need to be clarified. As crypto and blockchain technology are still in their infancy and evolving each day, people need to be more educated about digital assets to make the right investment decisions.