Busting the most common misconceptions and myths about crypto

Just type the word cryptocurrency in your search engine, and you’ll get millions of articles. But how many of them provide reliable information? Unfortunately, many promote some common misconceptions or myths, and it’s best to put them to rest if you’re genuinely interested in the sector. 

Surveys show that blockchain and cryptocurrencies will be a high priority for private and organisational investors in 2023. This indicates that the market will witness major adoption and growth, encouraging investors to join the trend. And as the interest in the sector continues to expand rapidly, there’s also an increased need for education. For investors to make strategic decisions, they need to use reliable exchange platforms like Binance that offer information about Ethereum price and cryptocurrencies evolution and clarify some common misconceptions.

Only criminals use cryptocurrencies

While it’s true that some criminals use digital currencies for their availability outside the regulated financial sector and anonymity, cryptocurrencies don’t cause a rise in financial crime. Illicit financing, dark markets, bribery, money laundering and fraud have been part of our society forever, and fiat money has been used extensively for these purposes. 

If you want to join the cryptocurrency sector, make sure to get familiar with the ways in which you can prevent any criminal activity that could imply digital currencies. However, it’s wrong to presume that digital currencies were designed to enable criminals to engage in wrongful activities. 

All digital currencies are the same

There are thousands of cryptocurrencies and over 300 million crypto users worldwide, so the sector is more diverse than you could imagine. The term cryptocurrency is used to define a category of digital assets, networks, and systems based on blockchain, but they have different levels of volatility, ownership structures, and characteristics. 

Another common misconception among people who lack industry knowledge is that Bitcoin and crypto are one and the same, but in reality, Bitcoin is the first digital currency launched in the sectors. Bitcoin might have been around for a couple of years now, but the crypto ecosystem grew and witnessed the birth of numerous other successful crypto projects. You should look at cryptocurrencies as blockchain projects with unique goals. 

Before investing in a cryptocurrency, have a look at the sector and make sure you understand how it functions. Research the project’s developers, read its White Paper, and try to determine if it aligns with your goals. At the end of the day, it’s wise to approach the investment in the same way you are putting money into any other asset. Ask yourself the question Is this digital currency meeting my expectations on the market?

Investing in cryptocurrency guarantees high returns

Buying cryptocurrency isn’t a one-way street to riches. Some enthusiastic crypto supporters perpetuated this myth, but it’s far from the truth. There is no asset on the market to make you rich overnight. Due to the affirmations crypto bros make online, many beginner investors put their money into crypto projects thinking they’ll double their money. But investing in any kind of asset, including digital currencies, comes with the risk of losing your finances. 

In addition, people also have the misconception that mining crypto is a sure way to get wealthy. Not everyone can afford to mine cryptocurrencies because it’s an expensive endeavour. You cannot use your laptop to mine digital currencies; you need a high amount of computing power. 

Using digital currencies is expensive and difficult

Those who never engaged with the crypto sector have the misconception that using cryptocurrencies like Ethereum or Bitcoin is expensive and complicated. This is not the case because you can buy a portion of Bitcoin and Ethereum and invest safely in any digital currency without compromising your security. In addition, purchasing cryptocurrencies is far from difficult if you have some basic tech knowledge. You need to create a digital wallet and choose an exchange platform to purchase and trade cryptocurrencies. 

As cryptocurrencies have become more mainstream, you can purchase a wide range of services and products with digital currencies. You can also transfer cryptocurrencies from one wallet to another because the system functions similarly to an online bank. 

The US dollar backs all stablecoins

Given that most digital currencies are highly volatile, the demand for cryptocurrencies that swing less in value increased over the last few years, and this is where stablecoins have come into existence. Stablecoins attract investors because they are less volatile than other digital currencies and combine the stability of traditional financial transactions with the speed of online payment systems. Stablecoins are tethered to traditional currencies, and therefore, they experience minor price fluctuations. 

Some stablecoins are linked to the US dollar, but others are tethered to other currencies like the yen and euro or backed by commodities like gold and property. However, stablecoins aren’t connected solely to real-world assets; another kind of algorithm mechanisms can also back them. 

You cannot integrate digital assets into traditional financial ecosystems

Over the last few years, cryptocurrency exchanges, banks, and payment platforms proved that cryptocurrency and blockchain could work within traditional financial systems. Numerous platforms have added anti-money laundering and KYC features for digital wallets and digital currency accounts to take advantage of the benefits they provide in terms of cost savings, efficiency, and transparency. 

Digital currencies are anonymous

Blockchain and digital currencies have been created with privacy at the core, but they are transparent and open. While they might offer anonymity to the users, they also enable all network users to check transactions’ status. The network enables analytics providers to identify the transactions associated with criminal activity, and governments and banks can use the data to track high-risk trades. 

However, cryptocurrencies are secured with the help of a private key, and users cannot recover it by getting in touch with the developers. No one has access to the private key, so there’s no backup if they lose it. 

The public’s perceptions of digital currencies range from sceptical to enthusiastic. If you’re interested in the sector, it’s crucial to research it and get a hold of how it functions. 

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