Cryptocurrency, with the launch of Bitcoin, came into being in the year 2009. Since then hundreds of cryptocurrencies have been launched. Many people have ridden this wave and become overnight billionaires or lost all their money in this process. However, many find cryptocurrency trading obscure and challenging to understand. Because of this, there are many myths about it that the common man prefers to stay away from it. Here are some common myths in no particular order and facts that will help you make informed decisions rather than simply staying away from them.
- Cryptocurrencies Are Used For Illegal Activities
One of the most popular myths about digital currencies is that it is mainly used for illegal activities. Though it cannot be denied that people or organisations with criminal goals have utilised digital currencies, it is so because they are on the lookout for ways to dodge federal agencies. Throughout history, it can be said that criminal organisations have used all forms of money that they can lay their hands on to achieve their goals. In the same way, cryptocurrencies have been exploited. The secrecy and the confusion around it was the reason behind it. Bitcoin is the first and the best cryptocurrency to invest in and has gained popularity. However, what should be noted is that it is not the cryptocurrencies that are unlawful but the activities it was being used for. Though there was a point when Bitcoin was used most in illegal activities, it now accounts only for a small percentage of the overall flow.
- Cryptocurrencies Are Not Safe
Due to the rise in popularity of cryptocurrencies, it has become a breeding ground for hackers. There have been several instances of accounts in digital currency marketplaces being hacked. Hackers have taken advantage of the flaws in the software platforms and are essentially not a problem with the cryptocurrencies but with the platforms that provide trading and transactions. Investors should choose wisely and look for a platform with advanced security features to protect their digital assets from hackers and miscreants.
Bear in mind that bitcoin mining and blockchain technology is encrypted using cryptography and are resistant to attacks.
- Cryptocurrencies Are Unregulated
Another common myth is that these digital currencies are unregulated. Though it greatly depends on the geographical location you are from, there are regulations. For instance, in the USA, it is federally protected by laws. Also, there are laws in place to prevent money laundering and criminal activities. In India, too, the cryptocurrencies and the exchange platforms are regulated by SEBI, Securities and Exchange Board of India.
- It is a Fad that will go out of Trend Sometime
Time witnesses what has happened to fads like computers, the internet, and email. What was once considered only fit for an elite tech crowd has become a staple for everyday life? While it is tough to predict the exact future of cryptocurrencies and their technologies, it is surely not a fad that will go out of fashion. Many governments and financial institutions are exploring ways to implement digital currencies legally. So it is likely to become an asset with a stable price.
- Digital Currencies will Replace Fiat Currencies
This is unlikely to happen in the near future, as these fiat currencies have been around for many centuries. For a fiat currency to replace digital currencies, people have to adopt it in a big way. Additionally, governments will not leave fiat currency as it is an established and controlled way of collecting taxes. It might take some time for cryptos to replace fiat currencies, but it is sure to coexist.
So these are some of the common myths, while there are many others doing the rounds. Always check the facts before believing them.