For the past 10 years, there has been much talk around cryptocurrency and, with it being around for some time now, it is apparent that many people have their own opinion on the subject, leading to many cryptocurrency myths floating around.
Some think it’s the best thing and it is going to take over the traditional currency, whereas others don’t believe that it will last. This is fine, but many people have also got opinions on the topic from myths they may have heard from different people or even on social media. In our latest blog, we will go through 5 cryptocurrency myths to understand before investing and the facts behind them.
Cryptocurrency Myth – Bitcoin and the blockchain are interchangeable
Fact – Every Cryptocurrency has its own blockchain
The real fact is that many people don’t understand blockchain or what it is, which is where this cryptocurrency myth has derived from. Putting it in its simplest form, it is like a virtual ledger that currencies are built and traded on. When it comes to cryptocurrency, there are some exceptions as each currency has its own blockchain. This means that you would not be able to buy and trade Ethereum on a Bitcoin blockchain and the same the other way around – another cryptocurrency myth.
It is also important to understand that each blockchain functions differently. For example, Bitcoin was created to work as a form of digital cash whereas Ethereum works as an intermediary for developers to create peer-to-peer apps.
Cryptocurrency Myth – Cryptocurrencies are not regulated
Fact – Each year, more regulations are being put in place
This cryptocurrency myth has derived from some truth as when cryptocurrencies first started, it was a lawless playground, with no laws or regulations in place. This resulted in many people becoming cautious regarding investing as they believed that governments would ban cryptocurrency, rather than regulate it, although some countries did ban cryptocurrency trading. Fast forward to 2022, and there are more regulations in place and governments have now started to look at ways in which they can regulate it.
The reason why they are now being more regulated is the fact that many of the top companies, such as Amazon and Dell, are now accepting cryptocurrency as a valid payment method. This has encouraged more governments to rethink their original plans. So if you hear this cryptocurrency myth, you now know the truth.
Cryptocurrency Myth – Cryptocurrencies are illegal in countries where it is not regulated
Fact – Just because something isn’t regulated, doesn’t mean it’s illegal
Just because cryptocurrency isn’t regulated in some countries, it doesn’t mean that it is illegal – this is a common cryptocurrency myth. If you and your friends developed a currency that you use between yourselves, this isn’t illegal, it’s just unregulated. This is the same for cryptocurrency. If you are worried that it is illegal in your country, it is worth looking around online as there is a lot of information regarding this now.
A great example of this would be South Africa. At the moment, the South African Bank is working on creating laws and regulations for cryptocurrencies, but at the moment, it is not classed as legal tender. This doesn’t make it illegal, it just simply means that the bank does not support cryptocurrency yet. A lot of traders believe this cryptocurrency myth and this paves the way for error, miscalculated judgement and, in some cases, being more vulnerable to scams and fraud. As with anything, if you are not sure, do your research – our blog has some great tips and advice when it comes to trading.
Cryptocurrency Myth – The blockchain is only used for cryptocurrencies
Fact – The blockchain has many uses
A common cryptocurrency myth that people believe is that a blockchain is only useful for cryptocurrencies and that it’s just a wallet for cryptocurrencies. This is also because people don’t have a clue what blockchain is. Instead, a blockchain is a whole platform that provides a range of functions and new features are being recognised constantly.
One use that a blockchain has is that it can host contracts between more than two parties. This is especially useful if you are storing contracts between loan companies and the beneficiary as well as make the payments automatic. It really is a common Cryptocurrency Myth that the blockchain is only useful for storing and trading currencies.
Cryptocurrency Myth – Cryptocurrency is going to die soon
Fact – Cryptocurrency has been gaining value steadily over the past 10 years
A common cryptocurrency myth is that the bubble will soon burst. The first generation of cryptocurrencies were generated in 2010, and most of them have steadily grown and gained value during this time. A great example of this is the original currency, Bitcoin. Like with any sort of investment, there are going to be peaks and falls, just like the normal exchange market. So this cryptocurrency myth is false.
In actual fact, cryptocurrency is now the fifth most circulated currency in the world and between 2020 and 2021, the increase was over 195% which is very promising for investors.
There are many cryptocurrency myths out there and it can be easy to believe them if you have not already done your own research. If you are in doubt about investing in cryptocurrency, then don’t do it. Once you have done your own research and feel that you are comfortable investing, then the choice is yours. If you believe you may have lost money from investing scams, contact us today and we can help to recover your losses.