The cryptocurrency industry has grown in popularity since the first coin (Bitcoin) came into the scene. The popularity of the cryptocurrency industry has also attracted criticism and myths, most of these are because a lot of people do not understand the ecosystem.
In this particular article, we will be exploring the four most popular cryptocurrency myths. Then we will explore the truths about these myths and misconceptions. As you read the facts behind the truth, you will know if the myths are valid or not.
Myth 1 Debunked – People Only Use Cryptocurrencies for Illegal Activities
This myth is one of the oldest myths about cryptocurrencies. One of the ways people carry out illegal activities is indeed through the use of cryptocurrencies, but that is not the main purpose of cryptocurrencies.
Moreover, cryptocurrencies are not the only type of money that people use for dubious activities. Over the years, people have been carrying out illegal activities with the use of other forms of money.
Most of the transactions that people carry out using cryptocurrencies are legitimate and legal. Currently, governments of the world are setting up systems to track the use of cryptocurrencies for illegal transactions.
These countries are setting up agencies and teams to fight the illegal use of cryptocurrencies for transactions.
For example, in the United States, the NCET (National Cryptocurrency Enforcement Team) is responsible for investigating and prosecuting people who use cryptocurrencies for illegal activities.
Myth 2 Debunked – Cryptocurrencies Have No Real Value
Worth and value are relative concepts. These concepts are subject to people, communities, and societies. The worth and value of something are the same as these factors give it. While some people will place value on something, other people will pour contempt on it.
For example, when bitcoin came onto the scene in 2009, it was below one dollar, and the cryptocurrency’s price began to grow as it started becoming popular. From less than a dollar, the price rose to $69,000 because of its popularity.
The rise in the worth of bitcoin shows how people perceived bitcoin to be a valuable asset. Their perceived value of the cryptocurrency has given it the price it has today.
Furthermore, Ethereum is a blockchain that fuels Ether and is the basic foundation of NFTs, dApps (Decentralized Applications), and other crypto advancements.
Ethereum may not be as expensive as Bitcoin in dollar value, but it has gained a lot of relevance because of its potential. Ethereum blockchain is the blockchain for most financial products and services development and smart contract.
Most cryptocurrency enthusiasts are now holding cryptocurrencies to use for investments, finance, and venture capital purposes. The price of cryptocurrency fluctuates following the alterations of demand and supply in the market at different times.
Myth 3 Debunked – Cryptocurrency Has No Security
The main technology behind cryptocurrencies is blockchain technology. Blockchain technology is a public distributed database with security encryption that is almost unbreakable.
As players enter transactions into the ledger, they are filled in blocks. The blockchain will record the former information of transactions into blocks as well as new encrypted details.
As the recording continues, new blocks will show up on the old blocks, linked by chains. For the system to record any transaction as valid, a group of automated players will have to verify that the transaction is valid.
The consensus mechanism, encryption, and chains linking the blocks make data alteration or stealing of cryptocurrency almost impossible.
Contrary to this cryptocurrency myth, the security issue with cryptocurrency is in the storage and access. Scammers can hack people’s wallets and move their cryptocurrencies.
Furthermore, cryptocurrency mining is not the process of creating new tokens. It is a process of adding new blocks and transaction validation in the blockchain network.
When a player creates a new block or validates transactions, the system rewards the player with a particular cryptocurrency.
To make sure that your tokens are safe, you should store them in a cold wallet. Then, when you want to make a transaction, you can send it to a hot wallet through a secure connection.
The amount you should send is the amount you will need for the transaction.
Myth 4 Debunked – Cryptocurrencies Have Negative Impacts on the Environment
It is a good thing to be concerned about the environmental effects of cryptocurrencies. Most cryptocurrencies like Bitcoin use a consensus mechanism to validate transactions.
The consensus mechanism uses a very heavy amount of mathematical power and a very high energy level to verify transactions on the blockchain network.
People have taken advantage of the rise in cryptocurrencies and have become miners with mining farms.
Mining farms have mining rigs that need a very large amount of energy. Most of these mining rigs consume energy that small countries use.
Now, do you see the high amount of energy required for mining?
However, the large amount of energy is dependent on the power source of the mining energy. Mining operations can use different power sources that may not be harmful to the environment.
If miners use electrical energy from fossil fuels, the effect of carbon on the environment will be less. The amount of energy will even be lower when you use sustainable energy for mining operations.
Moreover, all cryptocurrencies do not use a heavy amount of mining energy in transactional verification and validation. Blockchain technology and cryptocurrency are evolving daily, and a lot of innovations are currently in place to solve the issue of high energy consumption for mining operations.
These are the top four cryptocurrency myths today. A lot of people are more concerned because of the way the industry is getting lots of attention. These myths have been huge restrictions for people who want to invest.
Although cryptocurrencies are very speculative and volatile, they are not as dangerous as people say.
Understanding the cryptocurrency ecosystem will help you know what you should believe and not believe about this innovative technology. The crypto currency era is a good era that will change the entire face of the fintech industry, and how we transact and pay for goods and services.
If you are convinced that cryptocurrency is the future, then you should ignore some of these cryptocurrency myths and dive in as early as you can.
You are not late, we are still in the dawn of the blockchain and cryptocurrency era.