Personal Finance

Six Common Myths About Cryptocurrency

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I n the last decade, cryptocurrencies have turned the world upside down. It is one of the single hottest topics on everyone's mind these days. Bitcoin has been in the news non-stop, reaching new heights and breaking records seemingly by the day.

But, on the other hand, crypto sounds complicated and mysterious, but don't let that scare you off! For those who want to understand the crypto market and make an informed investment, here are six common myths about cryptocurrency that should be debunked once and for all.

Hub of Illegal Activity

Even though the price of cryptocurrencies is increasing, and more people are using them to send and receive payments, many still assume that cryptocurrency is only used for illegal activities. The perception that cryptocurrencies relate to criminal activity, primarily stemming from its back connection to the dark web, exists in the public imagination.

On the other hand, less than 1% of all bitcoin transactions involve money laundering, according to an analysis by blockchain forensics companies FDD and Illicit. As cryptocurrencies become more mainstream, the misconception that they are only used in illegal activity will become less and less valid.

Prone To Hacking

When you hear about any crypto network being hacked, you might think the sky is falling. Many people are skeptical about crypto's Blockchain because they fear it can be hacked. And there have indeed been high-profile heists from exchanges and individual users storing tokens on their machines.

But here again, cryptocurrencies employ valuable features found in other forms of secure digital storage, namely, encryption and decentralization. Moreover, to ensure that no single entity can amass enough computational power to control the network, more emerging cryptocurrencies are adopting a fancier way of achieving consensus in the network: proof-of-stake (PoS.)

Unpredictable Future

It is a mystery many individuals don't know how to solve. If the government could quickly shut down the exchanges, wouldn't that have already been done? However, things are changing because more and more governments realize that there's no reason for panic. The point is that cryptocurrencies cannot be stopped from being used.

They are decentralized, which makes them impervious to government bans or regulations. In effect, the only way to indeed regulate the cryptocurrency market is to regulate each digital exchange on which it is traded in the first place.

No Value

There are plenty of myths about cryptocurrency and its value. Some say it is worthless; some claim it has no value. Yet, cryptocurrencies are the future of money. With cryptocurrency's increasing popularity and demand, many people support cryptocurrencies and believe in their potential.

Stagnated Bubble

The crypto space is always full of hype. Many people believe cryptocurrencies will remain a bubble. They have no basis and have no way to secure an economic foundation on which to operate. In the future, cryptos will be traded on real-world exchanges and tied to stock exchanges -the way the old economy functions. Allowing this to evolve will pave the way for the integration of cryptocurrency into our current market.

Cryptocurrencies are challenged with a great deal of volatility and quite a few scams. As with any investment, it is crucial to do extensive research before one gets involved in the market. Several projects have already been established which show promising signs of success. These projects are trying to fix the gap and ensure that cryptocurrencies become as stable and reliable as possible.'

Untraceable

When it comes to cryptocurrencies in general, a pervasive myth is widely accepted. Ironically, this mistaken belief that cryptocurrency is untraceable is one of the most damaging to the cryptocurrencies' success.

The truth is Blockchain, and all its other counterparts use unique, advanced technology that allows for a secure way of transferring money and other things, free from the prying eyes of the government and any other malicious individuals or entities. Many cryptocurrency beginners don't realize that bitcoin and crypto, in general, can be tracked.

Some methods have been devised to discover the identity of those who own or use bitcoin and cryptocurrencies. Aside from crypto's reputation as the digital currency, it has always been associated with confusion. And while some are genuine and representative of the truths behind cryptocurrencies, others are just plain false.

Therefore, even though you are aware of some common myths about cryptocurrency, it is always best to research them before investing.