When cryptocurrencies were first introduced, people had a lot of issues trusting their pragmatic use in daily life. However, as the technology advanced and evolved, it started gaining popularity. And hence, over the past decade, blockchain has shown a steep rise in its markets. The customers transitioned from traditional methods of payment to digital ones.
However, misunderstanding, misinformation, and misconceptions have created a repeated narrative about cryptocurrencies that have created a bubble of myth and fiction. Busting a few common myths here to relieve the skepticism with cryptocurrencies.
These are the most common myths about cryptocurrencies according to Immediate Edge.
Bitcoin is Blockchain and vice versa
Bitcoin was the first cryptocurrency launched over the blockchain. Thus, it became a popular notion that two terms are interchangeable. Clearly, you must have a clear understanding of the two distinct concepts to debunk this myth. Blockchain is a distributed ledger that records all the transactions in a chain as a block. On the other hand, Bitcoin is a type of digital currency that enables online transactions made on a peer-to-peer basis, with no involvement of any third party.
What triggered this misconception was the fact that blockchain has been the platform that shot Bitcoin to popularity. However, there are other cryptocurrencies, like IOTA, that are not blockchain-enabled, but acrylic networks for security.
Cryptocurrencies are for illegal practices- Scam or a Ponzi scheme
Cryptocurrencies have been associated with various unlawful activities over the digital web. This arose due to the decentralized and pseudo-anonymous nature of the blockchain. Though this is perfect breeding grounds for criminals, people living in economically unstable economies also prefer such nature of the market.
Digital currency transactions have made easy and global accessibility of products and commodities, like medical supplies, drugs, and contrabands. Fiat currencies have had far more illegal practices associated with them, like bank robbery, money laundering, drug trafficking, etc.
A tax-free crypto sphere
Cryptocurrencies are not regulated by most jurisdictions around the world but are controlled by the system. However, the governments consider this as a commodity owing to blockchain’s asset-backed nature. Therefore, like any other asset, this is also taxable.
Currently, the tax regulations are subject to jurisdictions. For instance, in the USA, taxes are calculated based on the total income of the holder. And the rates are applied according to the slabs available.
Since blockchain is transparent and all the transactions are stored over it as a public record, evading tax is almost impossible.
Vulnerability to cyber attacks
Owing to the relatively young existence of blockchain and cryptocurrencies in the market, many people speculate about its vulnerability to hacking and cyber-crimes. However, cryptographic standards and protocols have operated flawlessly over all these years, revealing no signs of theft or scam.
Nevertheless, the market is also swarmed with trading websites, exchanges, and wallets involved in crypto. These are subject to becoming targets by hackers. So, for those users who pay less attention to security, like not using two-factor authentication, or encrypting private keys, vulnerability to fraud increases manifold.
Cannot be used for payments
The introduction of wallets, trading apps, and websites has diversified the use of cryptocurrency beyond the barriers of mining only. Today, digital currencies can be used to trade- buy, sell or exchange digital currency, and buy and sell goods and services. Further, cryptocurrency has entered in many innovative ways in expanding the business- tokenization, asset-based NFT marketplaces, smart contracts for real estate, litigation, and other unimagined verticals.
Transport, automation, travel, vacation, accommodation, food and restaurants, and many more realms have graciously started accepting payments in cash. Further, crypto has enhanced the choice of making payments, making them swift and secure over the blockchain.
Myths and fads will keep perturbing your investment thoughts in cryptocurrency as long as cryptocurrency and the traditional finance management systems are two separate entities. As the two would start blending into each other, the hybrid space will provide an unmatched amplitude of opportunities that are yet to be explored. So, as a stakeholder, it is your responsibility to stay alert and increase your prospects to various multitudes.
Hernaldo Turrillo is a writer and author specialised in innovation, AI, DLT, SMEs, trading, investing and new trends in technology and business. He has been working for ztudium group since 2017. He is the editor of openbusinesscouncil.org, tradersdna.com, hedgethink.com, and writes regularly for intelligenthq.com, socialmediacouncil.eu. Hernaldo was born in Spain and finally settled in London, United Kingdom, after a few years of personal growth. Hernaldo finished his Journalism bachelor degree in the University of Seville, Spain, and began working as reporter in the newspaper, Europa Sur, writing about Politics and Society. He also worked as community manager and marketing advisor in Los Barrios, Spain. Innovation, technology, politics and economy are his main interests, with special focus on new trends and ethical projects. He enjoys finding himself getting lost in words, explaining what he understands from the world and helping others. Besides a journalist, he is also a thinker and proactive in digital transformation strategies. Knowledge and ideas have no limits.