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CRYPTOCURRENCY

Separating facts from fiction – crypto myths that need to be busted

Separating facts from fiction – crypto myths that need to be busted
The Siliconreview
19 July, 2022

Cryptocurrencies have become the talk of the town in the world of finance due to a variety of reasons. Some attribute this rapid surge in popularity to the diversification, security, and accessibility that cryptos provide. Others believe it has to do more with the transparency, privacy, transaction speed, and inflation protection associated with the crypto sphere. Regardless of what’s driving the crypto hype, the one thing we know for sure is they have caused quite a stir in the global financial market. 

But with fame, also comes a lot of rumors and theories that get spread around and eventually become accepted as truths. A common side effect of increased popularity is the inability to control the narrative. If there’s enough buzz around something, it’s only a matter of time until false information and misconceptions appear. And that’s exactly what happened to cryptocurrencies ever since they came to prominence. 

The fact that cryptos are relatively new on the financial scene and the underlying technology is rather complex and difficult to understand for the average population has also contributed to the general confusion that’s been fueling crypto myths for years. It’s no wonder people are having a hard time distinguishing facts from fiction and often fall prey to scams and fraud. So, it’s time to set the records straight once and for all and finally put these common crypto myths to rest.  

Cryptocurrencies have no real value  

One of the most common myths and the reason why so many people are reluctant about getting into crypto is the belief that they have no real value. As the name implies, digital currencies only exist in digital format. There are those who think you can’t place value on what you cannot touch, and since cryptos have no physical equivalent, they’re not valuable. 

But what people fail to realize is that value is a very subjective concept, meaning that the worth of any item, be it physical or digital, is determined by people’s perceptions. In other words, if someone believes a certain thing is worth something, its value will rise. 

Besides, cryptocurrencies have already proven they have multiple applications in the real world. They can be used as a medium of exchange, to purchase and sell goods, as a way to create decentralized applications, invest in innovative startups, or execute smart contracts. So, as long as there are enough people who are aware of these use cases, cryptos will not lose their value.  

Digital currencies have a negative impact on the environment 

Cryptocurrencies live exclusively in the digital realm. Since they are not issued or controlled by a central bank in physical form, how can there be any concerns about cryptos negatively impacting the health of the planet? The issue stems from crypto mining – the process of releasing new coins from the total supply and verifying transactions. While not all digital currencies involve mining, those that do require a vast amount of computing power and electricity to sustain the process. 

Given that mining has given rise to a massive network of computers spread all across the globe, using up a lot of energy and resources, concerns regarding the negative influence of digital money on the environment are largely justified. However, this doesn’t necessarily mean that cryptos are inherently bad for the environment. It all depends on the source of energy they use for mining. If they rely on energy from fossil fuels, then they contribute to global pollution. If they use energy from sustainable sources, there’s no reason to worry about cryptos affecting the environment. 

Investing in crypto is a game of chance 

Much has been said about the volatility of the crypto market, and most of it is true. There’s no way to accurately predict what will happen to Bitcoin in the future or forecast the ETH price in the coming months. There are many factors at play in the crypto market, so it’s difficult to guess how cryptocurrencies will perform at any given time. 

But just because investing in cryptocurrencies involves a rather high level of risk doesn’t mean that it’s one and the same as gambling. All forms of investment are risky, some more than others, so it’s not something exclusive to the crypto sphere. And just as with other investment options, one can significantly reduce risks and increase chances of success by doing diligent research and being cautious before making a move. 

Cryptos are a scam 

Given the rising popularity of digital assets, more and more businesses and organizations have started accepting cryptocurrencies as a method of payment. Even governments have taken note of their potential and although they are not yet recognized as legal tenders, many institutions are taking steps toward integrating crypto into their operations. This information should be enough to debunk the myth that cryptocurrencies are nothing more than scams. 

There are however certain people who will try to take advantage of the crypto hype to trick those who have a poor understanding of how digital assets work. Crypto scams and frauds are real, which is why you should do your research before getting involved in any crypto-related activity in order to protect yourself against malicious actors. 

Cryptocurrencies will overtake fiat money 

There’s no denying that cryptocurrencies have brought much-needed diversity to the financial scene and provide a variety of benefits for investors and average people alike. Add this to the widespread belief that the future is digital and you’ll get why some people talk about cryptocurrencies replacing fiat money in the future. 

If we put digital assets and fiat currencies side by side, we can’t help but notice a huge difference in their history. Fiat money has been around since ancient times, while digital currencies have only recently made their debut in the financial market. While we can’t completely exclude the possibility of cryptos overtaking fiat currencies at some point, there are many changes that have to occur in order to make the switch, so the chances of bidding fiat money farewell in the near future are very slim.