Since the advent of cryptocurrencies in 2009, the industry has gone through many stages of adoption. First, it was popular among computer developers in chat rooms, then it became known to people in tech sectors and investors before propelling itself into mainstream media following the boom in 2017. Now, as many people continue to become familiar with cryptocurrencies, there have been many misconceptions along the way. We’re here to straighten these out and delve into the 8 most common crypto misconceptions.
#1 Crypto Is Here To Replace Fiat Money
While this would be great, imagine a world where the value of your earnings isn’t defined by politics and banks deciding to print money, this is not going to happen any time soon. Cryptocurrencies offer an alternative monetary system that gives the banked and unbanked of the world access to financial services. Many countries still operate with cash, particularly the less developed ones, and crypto is not going to replace that overnight. Fiat isn’t going anywhere, think of crypto as a more independent, convenient equivalent that revolutionised the financial system.
#2 Bitcoin Has No Value
Many big names have come out and said that Bitcoin has no value (Warren Buffett being one of them). That’s a tough one to argue as the entire market capitalization of Bitcoin is worth roughly $250 billion. As with many stocks and commodities, the value is determined by supply and demand, as is the case with Bitcoin, and any other cryptocurrency for that matter. Bitcoin ticks all the boxes of what a currency should hold, and offers a viable and valuable payment solution.
#3 Crypto Is Anonymous
This is a common misconception and one that is worth ironing out. Looking at Bitcoin as an example, while the cryptocurrency’s transactions aren’t logged with any personal information, they are logged with a wallet address. And if you know someone’s wallet address, you would be able to track their transactions. Therefore, Bitcoin is actually ‘pseudonymous’, meaning that transactions are recorded under a “disguise”, in this case an alphanumeric wallet address.
While this is the case for most cryptocurrencies, there are a few in the industry that focus on completely private transactions. Monero and Zcash are examples of this, as they ensure that their transactions are not only heavily encrypted, but untraceable too. If you are looking for a completely anonymous payment method, Monero and Zcash would fit the bill.
#4 Bitcoin Is Blockchain
One of the top contenders on our list of 8 most common crypto misconceptions is that Bitcoin is blockchain. This is not true, rather Bitcoin is built on blockchain technology. Blockchain is the infrastructure on which Bitcoin operates, and is incredibly universal. The technology can function far outside of the cryptocurrency, or financial for that matter, industry and is currently being used in industries like renewable energy, supply chain management, and farming. The technology has a wide use case and is another incredible asset to emerge from the advent of cryptocurrencies.
#5 Crypto Is Untaxable
This is not true. Depending on your jurisdiction, crypto is taxed differently. Some countries, like Germany, tax differently depending on whether you are buying or selling, while other countries tax crypto as a capital gain (the US, UK, and Australia). A few lucky exceptions are the Netherlands, South Korea and Liechtenstein, which all do not charge tax on cryptocurrencies. It is up to you to find out in your country what the tax regulations are and follow accordingly.
#6 Bitcoin Isn’t Legal
Again, this is another misconception that simply isn’t true. Bitcoin is a perfectly legal payment service that allows users to send money quickly and cheaply across borders. Bitcoin, and cryptocurrencies in general, got a bad name for being used to fund illicit activities or purchases, however this does not make the currency illegal, rather what it is being used for. Drug cartels make millions of dollars, this does not make the dollar illegal.
#7 Crypto Can Be “Shut Down”
The thing about cryptocurrencies is that they (most of them) operate off of decentralized networks. This means that no single entity is in charge, or has the power to freeze or take away your funds. Bitcoin will never be shut down due to the large number of operators on the network and passionate developers that ensure the smooth and innovative functioning of the ecosystem.
#8 Crypto Is Only For The Tech-Savvy
While the crypto industry might sound overwhelming, it isn’t as complicated as you might imagine. Cryptocurrency allows users to send money internationally much faster and cheaper than any other fiat option. While crypto is digital, and Bitcoin has been referred to as “magic internet money”, the process isn’t much more different to your internet banking. Only that it’s not operated by a bank, no one can control your funds, and you can do with it what you please.
8 Most Common Crypto Misconceptions Solved
Oobit has designed their platform to make using cryptocurrencies as easy to use as fiat. Users can instantly purchase a very wide range of cryptocurrencies with their debit or credit card, store the coins in their own personal hyper secure wallet, and then sell, spend, and send them as they desire. Crypto is not designed for the tech-savvy, it is designed to be used by everyone, so that anybody, anywhere, can have access to a decentralized financial system. Now that we’ve debunked these 8 most common crypto misconceptions, are you ready to enter the exciting world of cryptocurrency? If you’d like to learn more, here are some great courses to get you started.