The popularity of cryptocurrency has grown immensely in the past few years. Undoubtedly, cryptocurrency is one of the best investment options available today. However, cryptocurrency is not a new concept. In fact, Bitcoin, one of the earliest known cryptocurrencies, was launched in 2009. Since then, many cryptos have come into space.
Even though cryptocurrencies have become an essential part of our economy, many people are unaware of them. They consider cryptocurrencies to be hazy, complicated concepts that bring many doubts and misconceptions about crypto existence that must be addressed.
Indeed cryptocurrency is complicated for those who are not much familiar with the digital world. In this article, We will discuss some common myths about cryptocurrencies. So here are the myths that we will discuss in this article about cryptocurrencies.
- Due to its complex nature, cryptocurrency is easily associated with myths.
- Nearly all cryptocurrencies are the same.
- Cryptocurrencies don’t have the value as real currencies
Common myths about Blockchain and Cryptocurrencies
Digital currencies don’t have any value
This is one of the common myths associated about cryptocurrencies. Many people consider crypto worthless due to their complex nature.
Value is a subjective concept that differs from person to person. The worth or value of something for an individual or entity depends on how they perceive it. Everyone understands this concept differently. If any object is helpful to them, they consider it a valuable asset.
Cryptocurrencies are less prevalent than traditional coins. Therefore, the value of virtual assets is different for everyone. This issue will persist until this currency is widely accepted and becomes a mainstream part of our economy.
The value of digital assets depends on their popularity. Digital currencies are less popular than traditional assets; for example, An asset’s price is determined by how society understands it and establishes whether it has value.
Bitcoin, the first cryptocurrency launched in 2009, was shortly valued at 10000 cents. Bitcoin’s current value is 19,070.4 USD. The price rise in bitcoin shows its popularity, and demand is growing daily.
1. Digital assets lack security
Cryptocurrency is based on one of the most secure technologies, Blockchain. Blockchain secures data by cryptography.
This information is added to the block, and once the block is filled, a new block is added with the previous block, and this way, a long chain is created, known as the Blockchain.
The encrypted technique behind cryptocurrency makes it difficult to break and steal. As the new transaction is added to a block, the previous transaction detail is shifted into new blocks and encrypted.
In this way, the chain continues to build with the cryptocurrency information, and a community of verifiers checks whether the information recorded on the block is valid. The technology behind blockchain encryption, the consensus mechanism, makes it impossible to change the information in the Blockchain.
However, the problem can arise in the storage and exchanges. These platforms and wallets can be tampered with and hacked, resulting in loss of funds.
2. Only used for illegal activity
Digital currencies emerge as a new revolution for the global network and economy. However, the popularity of digital assets also increases the chances of illegal activities.
Many people consider that digital currencies are only used for illegal purposes. However, this is not true, as other forms of currency have also been used for illicit purposes throughout history.
Many individuals and terrorist organizations use digital currency for wicked and illicit purposes. This problem can be solved if the central government regulates cryptocurrency.
In the past, criminal organizations have used crypto for illicit purposes and to accomplish their nefarious objectives. However, this can be somewhat curtailed if the government and the international community take action to stop the use of cryptocurrency for illicit activities.
3. All cryptocurrencies are the same
It is the biggest misconception that people keep in mind about crypto assets. There are more than 18,000 cryptocurrencies available worldwide. However, still very few people know about them other than Bitcoin.
In reality, Bitcoin is one of the cryptocurrencies that gained prominence in a shorter time. However, other cryptocurrencies are growing with time. Each cryptocurrency has different properties, ownership structures, and volatility.
4. Digital currency is bad for the environment
Digital currencies have different consensus mechanisms that impact the environment differently. Crypto coins use lots of computational power and energy to verify transactions.
Digital currencies use verification method mining to validate the transaction on the Blockchain. The mechanism used is solving complex cryptographic puzzles on the blockchain network. Yes, digital currencies require energy to support the extensive verification process.
So there comes confusion that cryptocurrencies are bad for the environment. Cryptocurrencies indeed use high power to verify transactions on the blockchain network.
However, the impact of cryptocurrencies on the environment depends on what source of energy mining operations use to power the system. So most mining operations that use natural energy sources to power the system will have zero or negligible environmental impact.
If sustainable energy resources support the mining operation, the impact of the energy will be less.
5. Blockchain crypto is gambling
Many people think investing in blockchain crypto is just daily gambling beyond the growing market. At the same time, there is no denying that cryptocurrencies are part of the highly volatile market, which has also seen a downfall many times.
However, cryptocurrencies are known for their long-term value, which can be understood by the different events that created enormous profits for investors.
6. Crypto trading can be challenging
There is a lot of confusion among people that cryptocurrency trading can be challenging. However, trading crypto is easier than people think. Buying, selling, and trading cryptocurrencies through the crypto exchange platform are accessible.
You need to open a trading account and activate it for transactions. You can also learn about crypto trading through different educational tutorials. But first, you should know what you are investing in and how it will impact your earnings.
These are some of the prominent myths about cryptocurrencies, and now Bitcoin has gained prominence over time. However, people still need to learn about the lucrative cryptocurrency world. Reading and researching to know about crypto can help you to clear these misconceptions. Also, understand the pros and cons before investing if you buy and sell cryptocurrencies.
Q. What is the biggest problem with Cryptocurrency?
Ans. One of the biggest challenges with cryptocurrency is its volatility. However, they have a high chance of value.
Q. How does Blockchain affect Cryptocurrency?
Ans. Blockchain exists in the decentralized computer network that keeps track of every transaction.
Q. What real-world problem does Blockchain solve?
Ans. Blockchain can solve the real issues that exist in the real world, such as security concerns and double-spending.
Q. How can I buy Cryptocurrency?
Ans. You can buy cryptocurrencies using an exchange platform. Some of the most common exchanges are Coinbase, Gemini, and Binance.
Q. How do I store Cryptocurrency?
Ans. Cryptocurrencies can be stored in digital wallets such as hardware and software wallets.