Myths About Cryptocurrencies That You Should Know About

• Toshendra Kumar Sharma
• October 17, 2020

Are you one of those who find cryptocurrencies confusing? In this article, we will clarify commonly judged misconceptions about Cryptocurrency. So let’s get started.

 

Table of Contents

 

• Overview 
• Myths About Cryptocurrency 
• The Verdict 

 

Overview 

 

The advent of cryptocurrencies has taken the world by storm. Despite its popularity, people do not have a solid understanding of how cryptocurrencies work, and they find them confusing. Let’s start from the basics and understand what cryptocurrencies are. Cryptocurrency is a virtual currency, or we can define it as a medium of exchange that employs cryptographic protocols to ensure the safety and authenticity of transactions. Such virtual money works on the concept of the underlying technology, Blockchain, that is not regulated by any authority, and this is the reason why cryptocurrencies and their transactions are completely secured. But sadly, the concept of Cryptocurrency is still in its infancy and is generally misunderstood, contributing to the circulation of several misconceptions surrounding it.

 

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Myths About Cryptocurrency 

 

Now, without further delaying, let’s explore the misconceptions surrounding cryptocurrencies.  

 

1. Bitcoin is the only crypto asset that matters. 

 

We all know that Bitcoin is the first-ever Cryptocurrency because of which it is the most widespread cryptocurrency people own. The reason why it is still the most likable Cryptocurrency is due to the reason that it has the highest liquidity in the crypto space.domain and the higher the liquidity ratio, the easier it is to sell a cryptocurrency at market price. But believing that it is the only crypto asset that matters would be a mistake. 

 

Although the market capitalization of Bitcoin tops the list, other cryptocurrencies have also started gaining public attention. According to the recent reports, Ethereum’s economy hits new milestones in transfer value and market cap. 

 

2. Cryptocurrency is an illegal form of digital money and used for criminal activities.

 

This is one of the biggest myths that cryptocurrencies hold. Although crypto-assets can be used for several purchases such as food and clothing, it is a belief that people use Cryptocurrency generally to make illegal purchases. The wider range of people believe that it is easier to buy illegal objects with Cryptocurrency than other payment systems. Undoubtedly it is true that crypto assets were previously used in some illicit activities, but the assumption that they are mainly used for such criminal purposes is entirely wrong. It is used considerably less commonly for illicit activity as compared to major currencies such as the US Dollar.

 

3. Cryptocurrencies are easily hackable 

 

Another misconception surrounding digital assets, such as cryptocurrencies, is that they are easy to hack. Although crypto-related exchanges have proven vulnerable to hackers in the past, to state they can be hacked easily is entirely false. These are difficult to hack because of its underlying technology, Blockchain, which ensures that hacks are unlikely. Crypto transactions are secured as transactions are stored in blocks of encrypted data. 

 

4. Crypto exchanges are not taxable

 

Crypto-based exchanges are assumed to be tax-free, but this is not true. Such exchanges need to register and pay tax on their earnings. As there are no central authorities or banks involved with crypto transactions, but that does not mean they are not taxable. There is plenty of confusion regarding certain aspects of how cryptocurrencies are supposed to be taxed. Cryptocurrencies are in the eyes of the IRS, and it has a new tax form out for all crypto traders. Last year, the IRS sent letters in order to amend or pay fines on unreported crypto profits to around 10,000 taxpayers that were connected somehow with crypto assets.

 

5. Assumptions that Cryptocurrencies will be banned 

 

The majority of the people fear investing and trading with Cryptocurrency because they believe that cryptocurrencies are unregulated and will be banned in the near future. But it is also important to consider that many countries, including U.S., India, and others, have taken a positive step towards cryptocurrencies. Instead of leaning more towards crypto restriction, countries are keen on learning regulations, which indicates that Cryptocurrencies are here to stay. 

 

The Verdict 

 

From the above discussion, you must have gained a clear understanding of the myths and why they are unreal. While few still hesitate and do not accept Cryptocurrency as payment, they are various popular retailers such as Microsoft, Overstock, KFC Canada, and others that accept cryptocurrencies for their respective purposes. Apart from the points that we have mentioned, keep in mind there are several other myths that exist too. 

 

If you want to understand all the ins and outs of Cryptocurrency and become a Certified Cryptocurrency Expert/Trader, Blockchain Council, a globally recognized online organization, can help you learn the fundamental and technical aspects of cryptocurrencies. 

 

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