Although Bitcoin has gone mainstream, cryptocurrency remains shrouded in myth. Here are the five biggest myths about cryptocurrency, debunked.
1. Crypto is too risky
Scams, fraud, Ponzi schemes, and money laundering have existed for ages. The most popular method of committing all of these is still cash, which is untraceable.
Cryptocurrency regulations have come a long way. On May 22, the US House of Representatives passed the FIT21 Act, which aims to determine whether cryptocurrencies are commodities, currencies, securities, etc.
There are safer and less safe ways to invest in crypto. The safest way is via exchange-traded funds (ETFs). You don’t have to open a new account if you already have stocks in a portfolio, and there’s no learning curve.
2. Crypto is untraceable
Because cryptocurrency operates on a public blockchain, anyone can trace transaction history. You can send and receive it without revealing personal data, but the blockchain records crypto addresses forever. People link crypto addresses with exchanges whose Know Your Customer protocols reveal personal information.
3. Crypto has no real value
We’ve all heard crypto is a bubble, but there have been real estate bubbles in the past too. Bitcoin has been a medium of exchange for a long time. Companies like Tesla, AT&T, and AMC accept Bitcoin and altcoins as payment. Leading financial institutions such as BlackRock now offer different types of crypto products.
4. Crypto is not a credible investment option
Blockchain technology, on which cryptocurrencies run, is decentralized and highly secure. This can make them resistant to censorship and fraud. Cryptocurrencies have shown the potential for significant returns. People have become millionaires trading meme coins. Some investors view them as a hedge against inflation, particularly Bitcoin.
5. Crypto is bad for the environment
While Bitcoin mining is energy-intensive, that doesn’t go for all cryptocurrencies. Pi Coin is mined on smartphones. After moving to proof-of-stake (PoS), Ethereum’s energy use dropped by more than 99%. While PoS still uses a hashing algorithm, validators do not compete. The network randomly selects them based on the amount of staked ether. Competing uses a lot more energy than choosing one semi-trusted validator to hash the info in a block.