Since their introduction in 2009, cryptocurrencies have grown substantially in popularity. Some wagers are even using crypto for point spread wagering. Numerous myths and rumors surround these digital currencies due to their complexity.
Here are some of the most widespread misconceptions about cryptocurrencies, with supporting evidence to help you determine whether they are true.
Crypto Transactions Are Anonymous
Initially, it was difficult for mainstream investors to invest in bitcoin because it was linked to criminal activity and the dark web.
The myth claims that crypto has always been popular with criminals due to its anonymity and users’ ability to conduct secret transactions that banks, governments, and law enforcement cannot track.
The government disproved this claim when it recovered the stolen funds from the Colonial Pipeline hack. According to CNET, almost all cryptocurrency transactions are converted into fiat currency at the exchange point, at least temporarily.
Even though crypto transactions are not directly tied to identities, a paper trail is left.
In addition, all transactions are recorded permanently on a public blockchain, and the technology and methods used by law enforcement to track illegal cryptocurrency movements have become significantly more sophisticated.
Crypto Is Unregulated
Even though Coinbase is publicly traded and supervised by the SEC, most people believe that the currencies stored on Coinbase are unregulated. In actuality, the SEC announced that it was doubling the number of employees protecting cryptocurrency investors at the start of May.
According to NextAdvisor, President Biden signed a $1.2 trillion bipartisan infrastructure bill that included new crypto-related tax laws last year.
In addition, the article stated that the government is seriously considering creating its digital currency and that stricter regulations for Stablecoin are almost certain to be implemented shortly.
Digital Currencies Are Only Used for Illicit Activity
One of the oldest and most prevalent myths about digital currencies is that most of their users engage in illegal activity. Even though people with ill intent and criminal organizations have used digital currencies, the same could be said of any form of currency used throughout history.
Chainalysis, a company that helps police solve cryptocurrency crimes by analyzing blockchain data, estimates that the percentage of illegal cryptocurrency transactions will drop to 0.34 percent by 2020 (the most up-to-date report). There were only a few of these transactions, but 54 percent were fraudulent.
Crypto Transactions Are Anonymous
Initially, it was difficult for mainstream investors to invest in bitcoin because it was linked to criminal activity and the dark web.
The myth claims that crypto has always been popular with criminals due to its anonymity and users’ ability to conduct secret transactions that banks, governments, and law enforcement cannot track.
The government disproved this claim when it recovered the stolen funds from the Colonial Pipeline hack. According to CNET, almost all transactions involve the temporary conversion of cryptocurrency to fiat currency. Even though crypto transactions are not directly tied to identities, a paper trail is left.
In addition, all transactions are recorded permanently on a public blockchain, and the technology and methods used by law enforcement to track illegal cryptocurrency movements have become significantly more sophisticated.
Cryptocurrencies Aren’t Secure
The blockchain is the primary technology behind cryptocurrencies. A blockchain is a distributed database protected by highly secure encryption techniques and technology.
As new transactions are added to blocks in the blockchain, information regarding previous transactions is recorded and encrypted within the new blocks.
Each block adds to the chain, and a group of automated checkers must all concur that the transaction data is accurate. Encryption, linked blocks, and consensus mechanisms of the blockchain make it nearly impossible to alter information to “steal” cryptocurrency.
The flaw lies in how cryptocurrencies are accessed and stored, such as in cryptocurrency wallets and centralized exchanges that facilitate transactions. Transferring cryptocurrency between users is entirely secure, but the platforms and software used to store and access cryptocurrency can be compromised.
Cryptocurrency is an Environmental Disaster
Some individuals believe that mining cryptocurrencies are detrimental to the environment due to the required energy. True, not all blockchains are environmentally friendly, but not all blockchains are the same, and some are more eco-friendly than others.
There are blockchain types that are environmentally friendly because they have fewer stringent operating requirements. They are carbon negative and can be run on a laptop.
Digital Currencies Don’t Have Value
Value is a personal idea. A person, community, or culture may assign monetary worth to an object that another does not. In 2009, for instance, Bitcoin, the first cryptocurrency, was valued at approximately one-thousandth of a penny.
It grew in popularity, and by 2021, a single Bitcoin was worth $69,000. Its rising value demonstrates that how society perceives an asset is crucial in determining its worth.
Investors and corporations hold cryptocurrencies for use in finance, investments, and venture capital, among other applications.