There are always misconceptions about concepts and technology that come out from time to time. There have been a lot of beliefs that people have about digital assets that aren’t quite true.
Many of these misconceptions have affected investors today, especially with these investors coming into the market with the wrong idea about cryptocurrencies. Below, we’ll look into some of these cryptocurrency myths and debunk them.
Myth: Cryptocurrencies Primarily Help to Facilitate Illegal Activities
One of the earliest misconceptions about cryptocurrencies was that they could only be used to facilitate illicit activities. Sadly, this myth has endured to this day. Many people believe that digital assets are only good for illegal activities and crimes, and this is simply not true.
To be fair, the myth has some background and merit. When digital assets started, they actually were being used as a means for criminals and traffickers to pay. These illegal entries capitalized on cryptocurrencies and their private nature to send money to each other without being traced. Since digital assets also got a bit of traction, it was easy for these people to convert their coins to cash and get paid.
Silk Road started as the prime example of this. The platform started as a channel for sending and receiving drugs, but it soon proliferated into a massive cesspool of illegal activity. Bitcoin was the only acceptable means of payment at the time, so it remained linked with Silk Road when it eventually became mainstream.
Still, all of this is a myth. The aspect of cryptocurrencies that was alluring to criminals is their privacy. So, it is important to distinguish between the transaction and the cryptocurrencies themselves. Digital assets aren’t criminal by nature - the people who used them for illegal activities were the ones at fault.
In fact, research has shown that the share of cryptocurrency transactions that are being used to facilitate illegal transactions has been consistently dropping for years.
Myth: There is No Value to Cryptocurrencies
This is another myth that has sadly proliferated over the past years. Many cryptocurrency critics have slammed digital assets for seemingly providing no value, but this isn’t true.
Like the first myth, this one also has some merit. Cryptocurrencies can indeed be difficult to analyze - or even place in a category. In the United States, there is no legal framework for cryptocurrencies yet. Agencies like the Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS) still don’t have a structured guidance sheet that covers cryptocurrencies. This means that investors still haven’t been able to properly treat their cryptocurrencies. So, it’s understandable that many believe cryptocurrencies are simply a fad.
However, this myth has been put to bed. Cryptocurrencies have been getting more popular, and more people are interested in holding them. At the same time, companies that deal with cryptocurrencies are attracting big players in the finance space and more. So, it’s a growing market.
In fact, some research has shown that Bitcoin, in particular, has some intrinsic value. Most cryptocurrencies are produced through a mining process that consumes resources, and these are real costs that are incurred.
With adoption rising, cryptocurrencies have shown that they indeed do have value. Regulators are free to catch up or not, but cryptocurrencies remain highly valuable and reliable to those who would like to use them.
Myth: Cryptocurrencies Will Make You Rich in Short Time
This is one of the most enduring cryptocurrency myths in the world today. It is one of the reasons why most people eventually start using the assets in the first place. Many people see the performances of meme coins and other assets, and they incest heavily with the belief that they will be lucky to get big gains too.
While cryptocurrencies can offer short-term gains, most people who enter the market looking for these gains tend to lose a lot of money. So, it isn’t a foundational fact about cryptocurrencies that they deliver big gains in such a short period.
Instead, cryptocurrency investors should approach these assets the same way they approach traditional stocks and bonds. You should be in for the long haul because that is ultimately what helps you to accumulate your gains. Anyone who enters the market believing in quick money will probably be disappointed at the end of the day.
Myth: Cryptocurrencies Are a Scam
This is obviously not true. There have been many digital assets that launched and eventually flamed out, even after mass hysteria. But, this doesn’t mean that cryptocurrencies are a scam.
Every day, you hear stories about how cryptocurrencies help people earn money, make a living, and much more. So, there is no way that digital assets can be a scam. Anyone looking to make money with these assets and grow is welcome.