The use of cryptocurrencies has increased over the past few years. The cryptocurrency market is thought to be rewarding, but it is also a wild ride. Cryptocurrencies are seen in various ways; everyone wants to know what it’s about, from tech enthusiasts to skeptics. Cryptocurrency is variably perceived as a speculative fad or technological advancement that will alter the structure of money, finance, and the banking system. Still, investors must distinguish fact from fiction to prevent costly blunders.
Here are some widespread myths regarding cryptocurrency.
● Cryptocurrency trading is complicated: Although many believe cryptocurrency trading is highly complex, this is not the case. In actuality, it is just as simple as purchasing a share on an exchange. One only needs to create an account and conduct transactions. Before investing in cryptocurrency, you must thoroughly understand what you are getting into.
Trading CFDs and derivatives enable you to predict the price changes of cryptocurrencies without acquiring any underlying coins. Trading cryptocurrencies entails making predictions about price changes using a CFD trading account or purchasing and selling the underlying coins on an exchange. If you believe a cryptocurrency’s value will increase, you can go long (or “buy”) or short (or “sell”) if you think it will decrease.
● Crypto has no real-world use: Let’s face it; cryptocurrency is more than just a fad. Our daily lives are being impacted by it more and more every day.
As a digital currency, crypto can help you with the following.
○ More rapid international payments: Today, bank-to-bank wire transfers nearly always cost $40 and take three working days. With the aid of cryptocurrency, the time can be cut down to minutes, with a possible fee of 1–3 dollars.
○ Smart contracts: Some cryptocurrencies have built-in Smart Contracts with protocols to facilitate, verify and enforce an agreement.
Apart from this, cryptocurrency can be used as a digital asset management system, and users can give people vehicles, houses, and other items much like cash.
● Cryptocurrency = Illegal Activities: The idea that digital currencies are primarily utilized for illegal activities is among the most well-known and pervasive fallacies. Many people wrongfully link cryptocurrency to criminal activity because of the unregulated nature of digital currency. While it’s true that both people and criminal groups have used digital currencies for destructive purposes, this can be said of any form of money that has ever been employed.
● Fiat Currency will be replaced by cryptocurrencies: While conventional currencies have been used for ages, cryptocurrencies are very new. People would need to choose digital currencies over fiat currency in large numbers for it to displace the familiar and understandable form of money. The established system of restrictions for tax collection and funding of government-sponsored programs and services makes it unlikely that governments will abandon fiat currency.
● It is not safe: Due to the decentralized, public nature of distributed ledger technology and the encryption process each transaction goes through, the blockchain technology that powers cryptocurrencies is inherently safe. With the proper restrictions, it can be as secure as fiat money in a bank, but when used carelessly, it can be just as safe as food next to a dog. Users’ perspectives, knowledge of the digital currencies, intended uses, and control over it all influence whether they believe it to be safe or not.
● It is illegal: While tax authorities, enforcement agencies, and regulators globally are still debating how to control cryptocurrencies, the legal status of cryptos varies from country to country, and most countries still believe in the decentralization power of cryptos. Check online about the rules in your country regarding cryptocurrency.
Ultimately, the future of cryptocurrencies — their value, security, and staying power — is still up in the air. But experts believe owning some crypto could create value over time. So don’t get concerned about a neverending list of myths; instead, learn about cryptocurrencies, and whatever your interest or motivation, make sure you understand cryptocurrency’s extraordinary volatility and risk factors before investing.
(written by Catherine S Thomas)