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It seems that everyone is talking about cryptocurrency these days. These are the facts and myths about cryptocurrency that every investor needs to know.
Many will praise cryptocurrency for being an alternative to traditional currencies. Many will say that cryptocurrency is one of your best investments. Some people, however, believe that cryptocurrency will soon burst and it won’t be around forever.
What are the facts and myths about cryptocurrency? Are you a cryptocurrency investor or should you avoid it altogether? Continue reading to find out all about cryptocurrency.
Myth: Bitcoin and The Blockchain Are Interchangeable
Fact: Each cryptocurrency has its own blockchain (for the most part).
A lot of people aren’t sure what a blockchain is. This has created many myths about its nature. A Blockchain is a virtual ledger where cryptocurrencies can be built and traded. Although there are exceptions to this rule, each cryptocurrency is unique and can only trade on its blockchain. This means you won’t be allowed to trade Bitcoin on the Ethereum blockchain.
Keep in mind, however, that different blockchains work differently. The blockchain was created to make Bitcoin function like digital money in Bitcoin’s case. Ethereum, on the other hand, was created to enable developers to create peer-to-peer applications that don’t require an intermediary in order to function.
This is important because there are many cryptocurrencies. They each have their own blockchains and operate as distinct entities. Blockchain is not a cryptocurrency, but a platform that allows users to use it.
Myth – Cryptocurrencies aren’t Regulated
Fact: Cryptocurrencies are becoming more regulated each year
It was wild west when cryptocurrencies first emerged. There were no regulations or laws to regulate them. Some people were wary of cryptocurrency because they believed governments would crackdown and ban them instead of regulating them. As time passes, however, the situation has changed and governments are now looking into ways to regulate cryptocurrency, rather than ban it.
This is due to the fact that large businesses such as Amazon, Dell, Twitch, and Twitch now accept cryptocurrency payments. These companies have a lot to do in many countries, so governments around the world are more open than ever to accepting cryptocurrencies.
Myth: Cryptocurrencies Are Illegal in Areas That They’re Not Regulated
Fact: Cryptocurrency isn’t illegal just because it’s not being regulated
Unregulated does not make something illegal. You and your friends might invent a currency you can use between you. It could be anything, and it wouldn’t be illegal because it’s not regulated. It is, in essence, how it is now with cryptocurrency.
South Africa is an excellent example. Although the South African Reserve Bank is currently working to draft laws and regulations regarding cryptocurrency, it is not legal tender at this time. It doesn’t make them illegal, but it does mean that the SARB doesn’t support cryptocurrency.
It is important to remember that you can find plenty of information online to help you determine whether cryptocurrency is legal or not in your region. As with any legal issue, make sure that you only get your information from legitimate sources.
Myth: The Blockchain Is Only Useful For Cryptocurrencies
Fact: The Blockchain Has Many Uses
People often misunderstand blockchain’s true nature, yet again. The blockchain is more than a cryptocurrency wallet online. It’s a platform that can perform multiple functions. People are constantly coming up with innovative ways to enhance the functionality of the blockchain.
The fact that the blockchain can host contracts between multiple parties is a good example of how it can do more than just store and trade cryptocurrency. This can come in handy in many cases. For example, it can store the contract between the loan company. If desired, it can make loan payments automatically.
Myth: Cryptocurrency is Used for Criminal Purposes
Fact: All Currencies can be Used for Criminal Purposes. Crypto is no Different
Many people believe that cryptocurrency was created to finance criminal activity and criminal enterprises. This is false. Chainalysis reports that around 1% of crypto is being used illegally, which is a decline from previous years.
While cryptocurrencies are not able to be used for criminal purposes, they can be used in the same way as all currencies. It is impressive that crypto only 1% of illegal activity can be used, given how traditional currencies are used.
Myth – Cryptocurrency Makes You Anonymous
Fact: Cryptocurrency can make it harder to trace your identity, but not impossible
People associate cryptocurrency with criminal activity because they believe that crypto makes it anonymous. It doesn’t. Not entirely. Although cryptocurrency can make it difficult to trace transactions or discover an individual’s identity, it is possible to do so because all transactions are stored on the blockchain.
Cryptocurrency is one of the most secure methods to pay for your transactions. You can make transactions with cryptocurrency without worrying about hackers or other malicious forces gaining your information and discovering who you are.
It is important to note that a highly skilled hacker, or government agency, can still access the information on the blockchain and uncover a person’s identity. This is not done directly by hacking the blockchain, but rather through indirect methods such as password phishing that target an individual’s account.
Protecting your identity when using cryptocurrency is mainly down to basic Internet security procedures such as choosing a unique password and being cautious about what networks you access while using it. Also, don’t click on any suspicious links in emails.
Myth: Cryptocurrency Doesn’t Have True Value because a Commodity Doesn’t Back It
Fact – Cryptocurrency Doesn’t Have to be Backed by a Commodity To Have Value
This myth is one of the most common about cryptocurrency. However, the value of any currency is subjective. Some have claimed that crypto does not have an intrinsic value as it isn’t backed with a commodity like silver or gold, as many fiat currencies claim. This doesn’t account for the fact fiat currencies these days aren’t backed with commodities and the commodities don’t possess any intrinsic objective value.
The value that buyers and sellers give cryptocurrency is what determines its value. However, there are economic forces that can influence its value. For example, more cryptocurrency means less. However, cryptocurrencies like Bitcoin are more stable than fiat currencies, which can be constantly created.
Myth: The Cryptocurrency Bubble Will Burst Soon
Fact: The Cryptocurrency Market Has Steadily Increased in Value over the Past Decade
In 2010, the first cryptocurrency was discovered. Since then, many have steadily increased in value. Bitcoin is a great example. There have been highs and lows, but every currency can do the same. Is the cryptocurrency bubble about to burst? Recent evidence suggests that this is unlikely.
When discussing the alleged cryptocurrency bubble, it is important to remember that crypto has become the 5th most widely circulated currency in the world. It is quite remarkable that crypto’s value increased by 195% between 2020-2021.
Myth: Cryptocurrencies are only for criminals. Criminals are fickle
Fact: It’s not true
It doesn’t matter if some people use cryptocurrency to break laws. However, that doesn’t make them the wrong person to help fund organized crime. All of us use money, credit cards, and paychecks. These currency systems are also used by criminals. However, the fact that criminals have access to something doesn’t make it a bad thing.
Myth- The legal tender is not cryptocurrencies
Fact: This isn’t entirely true
Although it might not be legal to exchange cryptocurrency, the regulations for each state vary and depend on the transaction. It is legal tender when it is accepted, according to cryptocurrency regulations. Blockchain systems can also manage and improve transparency in government since many government organizations have adopted blockchain auditing as an official service.
Myth: Cryptocurrency can be Hackable
Fact: Blockchain is more secure than fitness trackers and banking apps.
The miners of the Blockchain system, like regular cryptocurrency, are placed in a confidential mode in which they can offer their skills to solve test transactions in compromising circumstances.
Myth: Only wealthy people would use cryptocurrency
Fact: People with lots of money think differently than those who have financial difficulties
However, cryptocurrencies have been accepted by more than a thousand businesses and can be used by people who don’t have much money. You can use cryptocurrencies for everyday purchases as well as non-financial transactions. Bitcoin is cheaper than a dollar for some people, but it is still too expensive for others. Accepting Cryptocurrencies by more businesses is not a social problem, as transaction fees for those who don’t use cash or have difficulty using them are either zero or minimal.
Myth: Cryptocurrency is bad for a plan
Fact: Many c use programmed software to perform business calculations, auditing, or accounting
Blockchain technology that ensures transactions are transparent and secure through cryptography doesn’t affect net business, logistic traders, or financial trades.
Myth: Cryptocurrencies cannot be used in a business
Fact: Blockchain technology is a great platform for conducting transactions and cash flow within businesses
It is able to handle cash flow and has many features. As with cryptocurrencies, it doesn’t require a third party to manage transaction code transactions. Cryptocurrencies make business administration easier.
Myth: The cryptocurrency potential is unlimited
Fact: Cryptocurrencies such as Bitcoin are mined and finite
It is hard to increase the power of the blockchain space once it has reached its maximum capacity. Processing power takes time and can be measured in hours, not days, weeks, or years.
Myth: Cryptocurrencies don’t make real donations, but they do make purchases. They are based upon an artificial medium that is best.
Fact: Bitcoin isn’t an artificial medium
It is an “electronic cash account” where each person receives their personal keys (wallets). The currency has real value because of the money earned and generated by trading cryptocurrency. Bitcoin Cash and all cryptocurrencies are lost to the void if they are not bought or sold.
Is Crypto Right for You?
There is no better way to make online payments digitally than with cryptocurrency. It is fast, simple, and convenient to make online payments once you know how it works. Because crypto is highly secure and safe, many people use it.
However, to become a serious crypto investor, you must first understand cryptocurrency and its economics. Although cryptocurrency can be a legitimate investment, it is not as simple as buying some and hoping that it will rise in value like a stock.
This is the best time to invest in cryptocurrency. Make sure to do your research before making a decision. You won’t regret doing this.
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