8 Biggest Crypto myths in 2022
If you have been an average media connoisseur for the past decade or so, then there’s no way you have not heard at least a bit about the cryptocurrency’s siege and fall, however that doesn’t quite indicate that you know all that there is about crypto or that you can give other people advice about investing in it. There’s no easy way to put it, but it is, indeed, true that up to some extent the mainstream information channels have not really given the public adequate facts about the purpose of crypto and have even stirred up a lot of drama in both the financial and the political sector.
Before dropping the facts, we shall first acknowledge that there’s a difference between the information spread by the mass media anchors, the regular crypto users and of course, the It-boys of Silicon Valley who are shamelessly preaching the Crypto Gospel, as though their support for the new Web3 financial messiah is the legitimate discipleship crypto would need, in order to reincarnate the decentralized model of conduct.
The main purpose of the first crypto coins was to enable borderless payments with lower transaction fees and to create a decentralized financial system which is backed up by the very people who are using it and not monopolistic banking firms. Although, as of today, this goal may not be fulfilled due to the way the ordinary masses have turned crypto into a potential stream of passive income, the tables could still get turned, in order for crypto to be used as a viable payment option just like any fiat currency.
Continue reading to find out what the greatest misconceptions about crypto are, how they’re holding it back from international adoption and what harm have they caused on both ideological and empirical level. The following myths will give you a better understanding of the basic tenets of crypto and the reasons behind the lack of trust people have in this new form of digital currency.
An overly complicated premise
Yes, the way cryptocurrencies function may be new and hard to understand, especially for elderly people, who are not familiar with the modern technology in general, but that doesn’t mean that it was created only for younger generations to benefit from. The lack of awareness has turned into denial of everything regarding crypto, which is also the reason why many believe that only those who are very well educated in the field of tech are fit for taking part in this digital ecosystem.
Let’s face it, fiat currencies have, too, came across complicated for those who were used to exchanging seashells for consumer goods way back at the dawn of human civilization. As soon as you find out that the crypto network is backed up by something called “the blockchain” and nothing that you hear about it from other people or mainly news outlets can be referenced to previously attained knowledge, it instantly becomes a red flag.
It is important to note that the people who are involved in the “technological upkeep” of the websites and applications you can buy and sell crypto from are always one step ahead of making the experience more user-friendly. So, next time you want to argue that this new form of digital coins is just too hard to understand, make sure you know exactly how it works or at least what the foundational premise of crypto is in the first place.
Conclusion: Crypto won’t appear that complicated, as long as you do your research on it.
You have to be rich, if you want to invest in cryptocurrencies
Don’t jump to conclusions about the prices of crypto as soon as you hear about its increased value from the news. It is false that only the wealthy can afford participating in the crypto market. Of course, the more you can invest, the better, but nobody can stop you from purchasing very small amounts of any crypto coins. As long as you are interested in getting your feet wet in this decentralized world, you can choose how much you can spend on the cryptocurrency of your choice.
As it has become more and more popular to buy and respectively sell Bitcoin because of its rise in value, people are left with the impression that as a user you have to purchase 1 BTC and no less. It is obvious that making such a great investment is equivalent to putting a downpayment on your house’s mortgage. Well, guess what, 1 BTC consists of 100 000 000 Satoshis, which means that you can buy an X amount of Satoshis that you feel comfortable with at the very moment of your purchase decision.
The statistics show that as of 2021 more than 300 million of the world’s population owns and uses cryptocurrency, which indicates that more and more people want to keep up with these financial advances and the solutions they offer. Even the freshman creators of altcoins (other crypto coins beside Bitcoin) still want to uphold the idea that cryptocurrencies are meant to be used by people of all backgrounds and from all over the globe.
Conclusion: You can buy crypto in fractions, therefore you can invest even $20 on your desired crypto, depending on the exchange’s policy.
It can’t be used as a payment method
It won’t be a lie if it’s said that crypto still hasn’t reached it’s goal to be treated as regular money, however it is only people’s fault that that hasn’t become reality yet. A big chink of crypto users are only interested in creating a passive income for themselves by trading, instead of demanding they should use their assets to purchase everyday items and services.
But no hope should be lost because thanks to many entrepreneurs who want to make their businesses inclusive of crypto, you can now buy groceries, event tickets, coffee and even socks. More and more companies are partnering up with the infamous BitPay app, which enables their clients to shop with Bitcoin or other cryptocurrencies.
The number of crypto users is growing by the day, which can only mean that more businesses will start accepting crypto as a payment option. And so far it has become apparent that it is totally possible to further implement crypto in more industries, which will make the masses stop doubting its value.
Conclusion: The increased popularity of crypto makes more merchants and service providers start accepting it like fiat currencies.
Crypto is used for illegal activities
One of the main reasons people favour the way the crypto markets function is because they offer anonymity. For instance, if you want to buy BTC you need to have a hot wallet, which basically consists of your private and public keys. These two very important passwords are made up of numbers and letters, which in Bitcoin’s case are encrypted with the SHA-256 hash function. That means that on the Bitcoin blockchain only your public keys will be visible and no personal information is used as part of that distributed ledger.
The privacy granted by the Bitcoin network could be exploited for purchasing illegal substances or hiding assets, but that doesn’t mean that all crypto users abuse the system for illicit activities.
Conclusion: Only 0.15% of all cryptocurrency transactions are related to illegal activities.
Cryptocurrency is bad for the environment
It is obvious that since cryptocurrencies are a form of digital assets, then they are bound to rely on computers and the Internet to function, which on the other hand are completely useless, if there’s no electricity. And although this is a great concern for those who don’t live in more developed countries and aren’t assured of having stable electricity, this problem is very relevant, especially for crypto miners.
Cryptocurrencies like Bitcoin which use the Proof of work mechanism have to be mined, in order for Bitcoin transactions to be validated and the blockchain to be simultaneously updated. Crypto mining requires a lot of computing power, so that you can successfully unlock blocks and keep the blockchain going. Every miner, who wants to do well on the network has to use very powerful computers and special mining rigs, all of which consume a lot of electricity, which is why countries like Georgia, where the electricity costs are low, are the perfect place for those who want to get into Bitcoin mining, for example.
We all know that most of the world’s electricity nowadays is produced in not so environmentally friendly ways, which hinders nature consequently. High energy consumption due to mining will come at a high cost not only for those involved in crypto but for the entire planet, too. Luckily, renewable energy resources are becoming more advanced and have therefore proposed a better solution to higher demands of energy.
Solar panels are probably the most used because of their convenience and affordability. However, it is expected that in the near future renewable energy resources will be more advanced and reliable, especially for those who need to be constantly plugged in.
Conclusion: Only mining is harmful to the environment, that’s why more cryptocurrencies have started using a more electricity efficient consensus mechanism – Proof of stake, combining it with renewable energy use.
It is a money-making pyramid scheme
People are used to being controlled and taken advantage of, that’s why they believe that greedy con artists are behind the crypto market. Yes, there have been multiple crypto entrepreneurs who have tried to cheat the people by promising them big returns on certain investments and have afterwards disappeared into thin air. Just like the creator of OneCoin Ruja Ignatova managed to win many investors’ trust, but had become one of FBI’s most wanted fugitives because of running away with their money.
There are such exceptions, indeed, but you have to ultimately focus on the benefits of crypto and the approved by the users crypto related services. At the end of the day there will always be scammers among those who are working hard enough to sustain a network which is meant to serve all the people participating in it, not just a few who are insatiate for fame and wealth.
Conclusion: There are crypto financial frauds, but their fake promises for greater returns are what shows their true intentions.
The blockchain technology isn’t secure
The only people who would think that the blockchain is a breeding ground for scams, are those who simply haven’t even made the effort to search more about the purpose of this technology and it’s importance in other fields, too. In fact, the traditional financial system is more prone to experiencing hacker attacks and leakages of significant information. In the blockchain all data is encrypted, yet everyone has access to it and the way all unlocked blocks are connected to the previous blocks by creating the so-called chain makes it almost impossible to disturb the network’s work.
If criminals can trust the blockchain when dealing with their unlawful businesses then everyone should be able to rely on the blockchain with their crypto transactions.
Conclusion: All transaction data on the blockchain is encrypted, therefore it’s harder to get hacked.
Cryptocurrencies can’t be regulated
It is true that people with more libertarian views created and continue to endorse cryptocurrencies because of their decentralized nature there is no trusted third party involved in the mix. However, more governments have started to acknowledge the rise of crypto and want to make sure that everything regarding the cryptocurrency markets is under their control so that no other person or corporation is being unfairly treated.
China is a great example for extreme regulations even when it comes to crypto. In fact, mining crypto and mainstream cryptocurrencies in general have been banned in the world’s largest economy and other countries like Qatar, Egypt and Morocco.
In most countries you have to pay additional taxes every time you want to take out the profit you’ve made from selling crypto. Although crypto exchanges are legal in the US, they still have to abide by the Bank Secrecy Act and provide records to governmental authorities.
Conclusion: Due to the constant rise of interest in crypto, many governments have started to impose regulations, which are supposed to weed out the fraudsters.
*The given information covers fundamental facts about cryptocurrencies and is not intended for higher educational purposes.
Zornitsa is the Editor-in-chief at Coinlabz. She is involved in researching the impact of blockchain technology and the way crypto is transforming peoples’ perceptions of finances.