Cryptocurrency is rapidly growing in our world today despite its ups and downs. Many are not involved in crypto because of rumors and myths about it.
In fact, less than 5% of the global population is involved in crypto as many nations of the world are yet to adopt it as a legal currency. This can be attributed to the difficult nature of these digital currencies.
In this post, we’ll look at the top myths about cryptocurrency you should know. Perhaps you might be interested in cryptocurrency when you know more about it.
What is Cryptocurrency?
Cryptocurrency is a digitally encrypted, decentralized currency that is not linked to or regulated by any government or central bank.
It is based on blockchain technology, which is a distributed ledger framework. Blockchain is a distributed ledger that is managed by a network of computers. It maintains an exact copy of the database and updates its records by consensus based on pure mathematics.
Bitcoin is the first cryptocurrency created which has led to the creation of others alike known as altcoins.
Cryptos are categorized as virtual or digital currencies. They were originally developed to provide an alternative mode of payment for online transactions.
However, cryptocurrencies have not yet been generally adopted or legalized by many nations and are actually too unreliable to be used as payment methods.
Top 5 Crypto Myths You Should Know
The fact that cryptocurrencies are somewhat obscure in nature and difficult to understand brings about myths and rumors regarding these digital currencies. Listed below are some of these myths.
1. Digital Currencies Are Only Used For Illicit Activities
In many part of the world, cryptocurrency is being seen as a tool for con artists/fraudsters. Although many have used it as a form of money launder, because of its decentralized nature, it serves many good purpose.
Money can be used in any form whether physical or digital for illegal activities. Regulatory bodies as well as some governments are tracking down such activities. For example, the Central Bank of Nigeria in 2021 banned activities regarding the use of crypto in financial institutions.
2. Cryptocurrencies Don’t Have Value
Many have the assumption that cryptocurrencies are valueless. People can only pay attention to what has value and digital currencies are not an exception.
Cryptocurrencies such as Bitcoin was value when it was launched in 2009. Its popularity continued to rise, and in 2021, it reached $69,000 per Bitcoin. Its rise in value demonstrates that how an asset is perceived by a society is essential in establishing whether it has value.
Several other cryptocurrencies alike such as Ethereum, Cardano, Litecoin, etc have proved to have value. Investors and enterprises have begun holding cryptocurrencies for uses in finance, investment, venture capital, and many others.
3. Cryptocurrencies are a Fad
The discussions about the authenticity and future of digital currencies are still ongoing. In fact, Microsoft co-founder, Bill Gates recently linked crypto & NFTs to the Greater Fool Theory. The recent collapse of UST that shook the industry has also led to may questions.
It is tough to predict where cryptocurrencies will be in the next few decades. However, the technology they introduced and the products they inspired will likely continue to be developed and refined.
While many crypto companies are already feeling the industry meltdown and has retrenched staffs, companies such as Binance & Kraken are recruiting more as they believed crypto’s future.
4. Cryptocurrencies are Scam
Cryptocurrency hasn’t been adopted by many people as they see it as a way of robbing them of their hard-earned money. Truth be told, some people have used tricks to scam people due to the obscure nature of crypto and because many are yet understand it.
Nevertheless, crypto has become an accepted means of exchange at many retailers and merchants. People are accepting them in personal transactions, and governments are working to find ways to regulate them.
If you must be involved in cryptocurrency, you’ll need to do research on how it works. The more information you have at hand, the more you get it right.
5. Digital Currencies are Bad for the Environment
Questions have being raised about the impact of crypto activities such as mining. Some cryptocurrencies make use of consensus mechanism that uses computational power and large amounts of energy to verify and validate transactions.
Bitcoin for example make use of the Proof-of-work mechanism which requires massive amounts of energy to power the mining rigs. This could add up to a total network energy consumption equaling that of some small countries.
However, the environmental impact greatly depends upon the source of energy the mining operations are drawing upon and the impact their energy use has on the power grid. If the energy is drawn from fossil fuel, then the effect is in carbon pollution. On the other hand, if mining operations are powered mostly by sustainable energy, the environmental impact is lower.
Is Crypto Worth Investing in Today?
The crypto industry has witnessed a significant meltdown in recent weeks. Bitcoin’s price is now half of what it was selling late 2021. The collapse of Terra’s Luna & UST really had a bad impact on all other digital assets.
Many crypto critics such as Bill Gates & Warren Buffet have publicly mentioned that crypto doesn’t worth it. Many traders and investors are also counting their losses.
However, Bitcoin and cryptocurrency in general have survived harsh periods like this before. Investors just need to make their research on these assets which may include small cap altcoins for them to make profit.
Averse-risk takers also believe that this is the time to buy crypto as it is expected to go up again. It is very important to be updated about the trends in the market. The crypto exchange or trading platforms to be used is also to be considered.
Whether cryptocurrency is safe or not depends on your perspective, how much you know about it, what you want to use it for, and how you control it.
Cryptocurrency is still in its developmental stages and can still be considered as a future currency. The enormous opportunities in crypto make it one to look out for. However, if you must invest in crypto, do your research and put what you can afford to lose.
Also Read- Where To Buy Top 2022 Cryptos in Nigeria