Cryptocurrency has been rising in popularity lately, but it remains largely misunderstood by many traders to this day. You might have heard some rumors or others may have told you that investing in cryptocurrency isn’t a good idea. Or perhaps you’ve heard the opposite, that investing in cryptocurrency is guaranteed to make you a millionaire. Regardless of whether you’re pro-cryptocurrency or against it, we’re here to debunk 6 of the most common cryptocurrency myths.
Myth #1: Cryptocurrency doesn’t have any real monetary value.
This is one of the most popular myths about cryptocurrency. People think that because it is virtual or invisible, it has no value in the real world. Donald Trump once said that it “based on thin air”. This isn’t true. If you check out the current cryptocurrency rates, you’ll see that the value of cryptocurrency continues to rise. Scarcity, supply & demand, and utility add to the value of cryptocurrency coins as well. Bitcoin, Litecoin, and other cryptocurrencies are even accepted by many brokerages and other institutions as a valid funding method. Even though we can’t physically see cryptocurrency, this doesn’t mean that the coins don’t hold value. Otherwise, they would never be recognized and accepted for payments. Keep in mind that all other exchangeable currencies were once based on nothing as well.
Myth #2: Cryptocurrency isn’t safe.
Many investors worry that cryptocurrency is a big target for hackers and that it isn’t a safe place to store one’s money. With some cryptocurrencies, this may be true – there are scammers out there, but it is important to remember that each provider is different. Providers that use blockchain technology offer a much higher level of security. If one block is changed, it affects the surrounding blocks, which makes it much easier for the network to pick up fraudulent activity. Remember, even regular banks attract scammers. Cryptocurrency may even offer better security than a central bank, as fewer hackers understand how it works and that information isn’t used as often as one’s bank account number, for example.
Myth #3: Investing in cryptocurrency is a guaranteed moneymaker.
Cryptocurrency is a volatile instrument. This can be good for traders because it offers more chances to enter and exit the market. However, the sharp rises and dips in price make investing riskier. Even if someone you know personally has made a large profit from investing in Bitcoin or another cryptocurrency, this doesn’t mean that you will have the same luck. Of course, this is true for any trading instrument, it’s just that cryptocurrency is more volatile than currency pairs.
Myth #4: Transactions are anonymous.
Many traders believe that transactions made with cryptocurrency are anonymous, but this isn’t the case. Those transactions are kept on a public ledger and some government organizations have relationships with owners to keep track of it all. For example, it was recently discovered that several people using Bitcoin were using the currency to make illegal purchases. Your sending address can be tracked, although some providers are more laid back while others monitor this more carefully.
Myth #5: Only tech-savvy people can use cryptocurrency.
Learning to use cryptocurrency may seem intimidating to those that are used to traditional banking methods. This doesn’t mean that you shouldn’t invest the time to learn how it works, however, and you’ll likely find that it isn’t as complicated as it seems on the surface. There’s a ton of online information that can help traders learn to use cryptocurrency and how to invest successfully.
Myth #6: Blockchain will change the payment system forever.
Many people believe that the blockchain will replace traditional payment methods in the future. This is only half-true. The blockchain does offer security and it is efficient, so it is likely that it will become a more recognized and accepted payment method as time goes on. However, people will continue to use debit and credit cards alongside it. Bitcoin will not wipe out all of our current payment methods, it will only join them.
Hopefully, we’ve helped our readers to understand cryptocurrency a little more. It is important to understand that myths and rumors can come from misunderstanding, as many traders haven’t put a lot of effort into learning about these futuristic payment methods. If you hear something about investing in or using cryptocurrency, always do your own research to find out if it is fact or fiction.