Cryptocurrency has become quite popular in recent years, and every year its popularity grows. This is the most relevant alternative today for online payments. There are many those who actively invest assets in digital currencies but some still prefer traditional currencies because they cannot understand the nature and value of digital assets. This situation gives rise to myths about digital currencies.
The most popular cryptocurrency is bitcoin, but today there are many other types of cryptocurrencies in addition to it, such as Litecoin, Ethereum, and others. Before converting traditional real currency into digital currency, you need to understand what the risks are when using cryptocurrencies and how to protect your investments.
Existing Myths about Cryptocurrency
Cryptocurrency can be described as a digital currency that becomes an alternative form of payment. It was created using encryption algorithms. The use of encryption technology means that cryptocurrencies function both as currency and as a virtual accounting system. To use cryptocurrencies, you need a cryptocurrency wallet. These wallets can be software that is a cloud service or storage on a computer or mobile device. Wallets are a tool used to store encryption keys that verify your identity and link your cryptocurrency.
As digital currency becomes more and more relevant, and important news is released on a daily basis, it’s time to examine some of the biggest myths and misconceptions that people tend to believe, and see if it has any merit:
- Cryptocurrency is a bubble. The main myth that surrounds cryptocurrency is that it is a scam that is not backed by anything real. Investment companies have started to acquire cryptocurrencies for use in finance, investment, venture capital, and many other projects. There are many financial and investment companies that manage cryptocurrency (digital) assets for quite impressive amounts.
- The perfect tool for criminal activities. The most relevant myth about digital currencies is that they are very often used for illegal transactions. Yes, indeed, dishonest businesses try to use cryptocurrencies for illegal transactions, however, this is true for absolutely all types of currencies. It is important to note that governments of a lot of countries are trying to find and apply tough measures against criminals who use cryptocurrency in the environment of organized crime. Many countries at the legislative level take effective cryptocurrency measures, which are aimed at combating money laundering and countering the financing of various kinds of terrorism.
- Cryptocurrency The technological basis is blockchain. It is a distributed database that is protected by encryption methods and technologies that are very difficult to break. When transactions are entered into blocks in the blockchain, information about the previous transaction is written into new blocks and encrypted. It is nearly impossible to make information changed in the blockchain to “steal” cryptocurrency due to consensus mechanisms, encryption, as well as linked blocks. The only weakness remains storage in cryptocurrency wallets or centralized exchanges, which can be hacked or counterfeited.
- Cryptocurrency replaces fiat currency. Crypto is relatively young compared to traditional money. For cryptocurrency to replace fiat currency, people would have to accept it en masse instead of the money they are used to and can understand. However, once value and purchasing power are established, it is possible that this could happen. But national governments will not be able to give up fiat currency because complete control over taxes will be lost and social programs from the government will not be able to operate.
Today, cryptocurrency is quite actively used for gambling in many online casinos, and every day there are more and more such online establishments. Slots Empire casino instant play can also be made through cryptocurrency.
A lot of people criticize cryptocurrency and do not believe in its value but the reality tells a different story. Some real facts about crypto can be found in the table below.
|Ups and downs||Bitcoin has gone through several price cycles for more than 12 years and each time has recovered to reach new peaks. As with any new technology, up and down cycles are to be expected.|
|Real means of payment||Bitcoin has a long history as a means of making payments to anyone in the world, all without a bank or payment system in the middle. And it is increasingly being used by large institutional investors as a gold-like hedge against inflation.|
|Inflation-resistant assets||In recent years, Bitcoin has become increasingly popular as an inflation-resistant savings vehicle very similar to gold, which has resulted in Bitcoin being nicknamed digital gold. A growing number of large funds and public companies (Tesla, Square, MicroStrategy) are buying millions or even billions of dollars worth of bitcoins to better manage their assets.
|Great competition||Although thousands of competing cryptocurrencies have been created over the past decade, Bitcoin has always been and remains the most valuable cryptocurrency by market capitalization by a significant margin.
It is also the most popular cryptocurrency, accounting for about 60% of the crypto market.
Whatever everyone’s opinion of cryptocurrency may be, and whatever the ultimate fate of crypto, the unique technological innovation behind it has changed the nature of money and finance. And this is a fact that no one can challenge.