The cryptocurrency industry is lucrative, but sometimes it takes you for a wild ride. A few coins have crashed and burned after the recent market fall. However, there’s no doubt that the cutting-edge technology that underpins cryptocurrency will alter the way that people see money and finance.
But there are several myths floating around regarding cryptos. Let’s bust them one by one.
1. Cryptocurrencies are only used for criminal activities.
No, they are not. Just like fiat currency, anybody can use cryptocurrencies for transactions, whatever the reason. It’s a stereotype that cryptocurrencies are only used for criminal activity. Many people think this way due to the unregulated nature of digital currency.
But governments in several countries have taken steps to regulate cryptocurrency. Cryptocurrencies just enable transactions between two parties, and they are being used by individuals and businesses on a large scale.
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2. Cryptocurrencies can replace fiat currency.
That’s over-ambitious and somewhat utopian. Although cryptocurrency can enable and facilitate many difficult transactions, particularly international money transfers and transactions in the digital/metaverse space, it cannot effectively replace fiat currency as a default mode of payment.
If you are wondering why not, here are the reasons:
-The “transaction fee” associated with facilitating transactions on cryptocurrencies is far more than the cost of using the current banking infrastructure.
-Transactions are slow. Since every transaction must be validated and is subject to the number of crypto validators or “miners” on a blockchain, it can take a couple of minutes (sometimes more than 10 to 15 minutes) for one transaction to go through.
-Cryptocurrencies are prone to sudden price changes, making them volatile.
3. Crypto is a “big bubble”
For years, people have been referring to cryptocurrencies as a bubble that will eventually burst and cease to exist. It’s true that the crypto market and many coins have crashed several times, but that doesn’t mean that the underlying technologies behind cryptocurrencies and NFTs are going to disappear. And when it comes to market crashes, every asset class is prone to that.
It should be noted that crypto as an industry is worth billions of dollars and has many use cases for businesses as well as for individuals. They are prone to sudden movements, but they are useful as they solve a host of problems in the real world.
4. Crypto transactions are anonymous
To be honest, crypto transactions are pseudo-anonymous, meaning that they can be tracked down if needed. Crypto enables anonymity in terms of your personal details like your name, address, and contact information.
However, transactions made on Blockchain are recorded with the sender’s and receiver’s crypto-wallet addresses. In many countries, authorities have made KYC mandatory for exchanges, which means your wallet address will be tracked down eventually.
5. Cryptocurrency is a scam and prone to hacks.
It’s true that you can be lured into cryptocurrency scams and, in the case of mishandling of cryptos, you can get hacked. There’s no denying that. But you have to understand that legitimate cryptocurrencies are not a scam. There is a capable infrastructure behind the scenes that records all the transactions, known as blockchain. If you buy and sell crypto sensibly, from trusted exchanges, there’s no scam in this process.
Moreover, you should have a basic understanding of crypto. Please keep your “keys” safe and sound to avoid hacks. See, all you have to do is follow best practices to keep your assets safe.
With sensible usage and regulations, crypto can be a win-win for everyone. And it can propel innovation forward.
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