Cryptocurrencies are a hot topic in the world of technology. If you want to talk about blockchain, bitcoin, or other cryptocurrencies with someone who doesn’t know what they’re all about, then you’ll need to do some research and learn more about it yourself first. It’s important that we understand the facts and myths around cryptocurrency. In this blog post, I will try to debunk 7 common myths that people have about cryptocurrencies!
Myth #01: Cryptocurrency is used to buy and sell drugs
Fact: It’s true that Bitcoin has been linked to drug-related transactions on the dark web, but this doesn’t mean that all people who use cryptocurrency are using it for illegal purposes. In fact, many investors are also putting money into cryptocurrencies because of their potential as a long-term investment or short-term trading strategy. This means that there will be no shortage in demand even if some traders decide to diversify out of other investments such as stocks or bonds. The more common you make your knowledge about blockchain technology and cryptocurrency so others know what they’re talking about when these topics come up!
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Myth #02: Cryptocurrency is unregulated
Fact: In fact, there are many regulations surrounding cryptocurrencies that help them function as a currency. For example, in the United States of America alone, there are three main regulatory agencies overseeing these currencies — the Securities Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and The Financial Industry Regulatory Authority (FINRA). Other countries around the world have similar organizations regulating this new form of money. It’s also worth mentioning that one can’t just start making up their own cryptocurrency without having government approval first either. So if anyone tries to sell you an idea for a new cryptocurrency, make sure you check with the government first and get their approval to create it!
Myth #03: Cryptocurrency is illegal
Fact: It’s true that cryptocurrencies are not recognized as a legal form of currency in all countries around the world yet, but I don’t believe they’re illegal — at least everywhere else besides North Korea. This means that if someone wants to invest or trade in this type of currency without breaking any laws, then they can do so by following certain guidelines set forth by regulatory agencies like FINRA. There might be some risks involved when trading these currencies because there are no guarantees about the future value or even what happens if your wallet gets hacked (which has happened more than once!), but it all depends on what you’re looking for in an investment or trading strategy.
Myth #04: Cryptocurrency is the future of money
Fact: It’s true that cryptocurrencies have a lot to offer, but it all depends on how they are used and regulated in each country before we can say for sure if this type of currency is going to take over from fiat currencies like dollars or yen. There are some countries out there that will only accept Bitcoin as payment until 2021 (for example) while other nations such as China forbid their citizens from trading in cryptocurrency at all! The United States has been slow to adopt these new forms of digital currency because they know any kind of regulation could dramatically change the way things work — not just with finances but also with politics too. When you think about what lawmakers do when regulating banks and the stock market, it’s no surprise they want to take their time with this too.
Myth #05: Cryptocurrency is a fraud
Fact: Unless someone has been specifically targeted for cryptocurrency scams or hacking while trading in these currencies, I don’t really think that cryptocurrencies are fraudulent as an investment strategy. However, there have been many cases where investors lost money when investing in ICOs that turned out to be scam projects and ended up having nothing backing them — more than $100 million worth of investor funds were stolen from one project alone (called Prodeum). This should serve as a warning: always do your research before committing capital because you never know what could happen!
Myth #06: Cryptocurrency is not backed by anything
Fact: It’s true that cryptocurrencies are often traded as intangible assets (meaning they don’t have a physical form like stocks, bonds, or precious metals), but this doesn’t mean these digital currencies can be used with no backing whatsoever. When you invest in cryptocurrency, it might come back to you in the same form of currency which means there is some kind of intrinsic value associated with them — even if it’s just perceived by others who want to buy and sell on their behalf. In reality, one could argue that Bitcoin has more backing than many fiat currencies because so much energy and time went into mining for Bitcoins before introducing them onto exchanges where they’re bought and sold.
Myth #07: Cryptocurrencies don’t have any value
Fact: Bitcoin has been around for over a decade now and yet there really hasn’t been an instance where we’ve seen its price go down too much during that time period — even when China banned all of its citizens from using cryptocurrencies earlier this year. The idea behind having “intrinsic” value with these digital currencies isn’t one-sided either; if people continue to feel confident about Bitcoins being worth more than $5000 each, then that’s enough to show it has value. Maybe the real question is whether or not cryptocurrencies are worth more than conventional fiat currencies, which have no intrinsic values at all. The US Dollar and Euro really only hold their purchasing power because everyone agrees they’re valuable — something we can’t say about Bitcoin since its supply is finite when compared with paper money.
In conclusion, cryptocurrency is largely unexplored in the global market. Thus, it can be useful for investors to consider investing resources into generating a further understanding of cryptocurrencies before they decide whether or not they are interested in either buying them or owning one.
If you’re seriously considering making an investment in Bitcoin or other virtual currencies then you should weigh the risks and benefits with utmost care as well as learn about its tax treatment within your county beforehand so that your decisions are fully informed.
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