Cryptocurrencies have been around for over 10 years now. During that time, they've grown into a huge talking point. But despite their growing popularity, there still seems to be a few common misconceptions about cryptocurrencies.
Cryptocurrency is a complicated topic. Many of these misconceptions form because most people are still unfamiliar with how it works. They believe cryptocurrencies are scams, or only criminals use them. But some myths even persist under veteran cryptocurrency users.
So to set things straight, here are five common misconceptions about cryptocurrencies debunked right now.
1. Cryptocurrencies are Used Only by Criminals
Criminals have indeed used cryptocurrencies to avoid detection from banking services. But that doesn't mean everyone who uses cryptocurrency is a criminal. Although all sorts of people can use cryptocurrencies, most users are ordinary, working-class people who use their PCs to mine or exchange coins.
Most people see Bitcoin and other cryptocurrencies more as an investment or way to make money on the side. People also use cryptocurrencies to shop online. For instance, world-famous whistleblower WikiLeaks switched to cryptocurrency when banks wouldn't allow them to continue. Cryptocurrency lenders have even cropped up, allowing people to cash out their coins.
In the end, many cryptocurrency supporters want to see this technology replace the world's banking system. Whether that will happen or not, it's safe to say that cryptocurrencies aren't the realm of dodgy felons.
2. Bitcoin (and Other Cryptocurrencies) is a Scam
Wild rumors have been flying around about Bitcoin ever since its rise in popularity. A lot of people saw instant riches and cashed in, only to lose all their money because they didn't understand how cryptocurrencies work. So they forsake the whole idea and call it a scam, deterring others from ever looking into it.
Yes, cryptocurrencies are a volatile investment - they're high-risk and high-reward. But those who trade take the most significant risks. The ones who invest their money in steady cryptocurrencies don't see their money fluctuate as much.
The other side of this coin reveals the slew of actual scammers that have crawled out of the woodwork these past few years. Wherever there's money to be made, crooks will always find a way to trick someone into forking over their hard-earned cash. This is why it's so important to stay educated on how cryptocurrencies work and what the potential danger points are. There are also plenty of resources out there that describe popular cryptocurrency scams.
3. Cryptocurrency Transactions are Completely Anonymous
There's this widespread myth that trading in cryptocurrency is 100% anonymous. While cryptocurrency trading provides more anonymity in some regards - it's much more anonymous than banking systems - there are ways to identify people. Or, more accurately, their wallets.
Whether people use online or hard wallets, their transactions are all linked to their wallets. And others have ways of tracking someone's Bitcoin address through those transaction relays. So if anonymity is an issue, then it's essential to use other tools to secure wallets when buying or trading in cryptocurrencies.
There are tools like VPNs, for instance, that can replace IP addresses with one of a random server. What is a VPN (https://nordvpn.com/what-is-a-vpn/)? It's a service that encrypts and redirects network traffic through a secure server. This way, it also masks the user's IP address, enabling private browsing.
4. Cryptocurrencies are Dead and Going Nowhere
The media is always after all things sensational, and with something as big as cryptocurrency, there's always something sensational to report. Especially when considering many people don't know enough to dispute any claims. So you can find one article after the other about how cryptocurrencies are "dead" or "going to fail." It began when Bitcoin started getting popular, and it's still going strong.
While some individual coins may come and go, the technology as a whole is here to stay. So it's better to accept that and learn how it works.
5. It's Too Expensive to Buy Into a Cryptocurrency
Can coins be expensive? Heck yes. Is it necessary to buy a whole coin? Heck no. Cryptocurrency doesn't work as standard money does. It is possible to own a fraction of a coin, and it will be worth a few bucks.
The smallest unit of a Bitcoin, for instance, is called a Satoshi. And an entire Bitcoin is divisible by 10^-8. So no, it isn't too expensive, and it is possible to buy into cryptocurrency without having to take on a second mortgage.
The Bottom Line
Hopefully, this myth-busting post will help you get a few facts about cryptocurrencies straight. Being able to discern the truth from lies is vital when making decisions based on money. And it is even more essential for those looking to adopt a new form of digital currency.