Not a single field in the current world is free of myths and misconceptions. People often share their conceptual thoughts with others, and these vague statements get stronger with time. In this way, a strong misconception takes place in the mind of people that prevents them from gaining the courage of going against the rest of the world.
When it comes to a relatively newer platform like crypto, there is no doubt that it is also full of misconceptions. As a result, most of us often get suspicious while trying it out.
This guide will enable you to recognize the five commonest misconceptions about crypto and avoid them. If you want to know these, continue reading…
1. Cryptocurrency is Not Legal
Most people often eliminate crypto from their list just because they think that it is illegal. According to them, for people who deal with black money and are related to the dark web, cryptocurrency is just for them. However, the fact is not fully negotiable and true to some extent. Just like other newer inventions, criminals were also the early adopters of cryptocurrency. An Australian study shows that more than 25% of people use crypto for illegal purposes worldwide.
Although crypto has a subtle connection with the illicit side, telling it completely illegal is not right. From investment to payment, crypto is completely legal. People with illicit purposes still use crypto for the same as people with legitimate purposes. The use has become more liquid, traceable, and instantaneous. In this way, the 2020 record of illegal activity using cryptocurrency has become less than 1% with a transaction volume of $10 billion.
So, you can get your hands on any crypto as long as it is regulated. Always opt for safer and well-known cryptocurrencies like Bitcoin, Ethereum, Bitcoin Cash, XRP, etc. in case you are skeptical. Visit eToro vs. Trading 212 and explore which broker is safe, who offers lower spread, etc.
2. Digital Currencies are Valueless
From the beginning, cryptocurrency has proven tough to get categorized. Users, as well as investors, were skeptical about how to deal with this digital asset when it comes to tasks like daily transactions, paying taxes, etc. These together made people think that crypto is just a trend that will fade away like other trends.
But, the reality has changed with time. In the present day, cryptocurrency not only has proven those thoughts wrong but also minimizes the dangers of these things happening. Along with gaining high recognition, crypto has successfully shown its value to the world. Like other types of currencies, cryptocurrency also gets used and exchanged for several services.
3. Using Crypto is Harmful to the Environment
Some also question the impact of crypto on the environment. According to them, creating and exchanging crypto like Bitcoin, Ethereum, Dogecoin, Litecoin, etc. requires a large number of mining operations. The mining operation is a time-consuming computerized operation that uses electricity as the base. As a result, it needs high computerized power that causes lots of waste of electricity. However, the concern is apt, the advantages of crypto are myriad.
On the other hand, if we compare the process of crypto exchanging with modern banking and financial services, the graph of the first one will not be massively different from the second one. Banks and other financial industries also use high computerized technology and lots of electricity every day. So, when it comes to crypto, the advantages always win over the waste.
4. Crypto is Similar to “Real Money”
While crypto is similar to “real money” in that you can spend it, send it, et cetera, cryptocurrency by design is a true digital currency that is designed to make your payment experience easier and smoother using blockchain technology.
With cryptocurrencies like Bitcoin, Ethereum, Dogecoin, you can exchange heavy amounts between several countries without using the conventional methods like bank transactions, debit cards, credit cards, etc. It assures a safe and quick transaction between two parties without any interference from a third party.
But, in reality, the payment is not always quick nor free. The largest cryptocurrency, Bitcoin, takes 10 minutes for the transaction to get validated and an additional $20 per transaction, which is quite expensive for most of us. Many other cryptocurrencies also take either lots of time or lots of transaction fees add up. You can visit oanda vs forex.com for getting more detailed info about several crypto platforms, their rules, and safety.
Another problem with using crypto as your regular payment medium is its instability. Crypto, which is equal to 10 cents today, can get doubled or tripled up tomorrow, and can also cost 2 cents the next day. The continuous fluctuation in price, therefore, doesn’t always make it a great option for daily payments. Despite this, so-called stable coins do exist and they are pegged to the price of the USD, for example. Stable coins alleviate issues with price instability but not necessarily transaction fee costs.
In time many more fast and nearly free to send/receive cryptocurrencies will be developed, and it’s likely even existing crypto like Bitcoin will receive upgrades that make it an extremely viable way to buy or sell, send and receive money.
5. Cryptocurrency Will Fade Away In Time
According to many people, crypto is nothing but a fad that will surely fade away with time. Therefore, they do not take any risk of using it. Although, it may or may not conserve as a speculating investment vehicle yet it is inevitable that it is accelerating transformative modifications in the world of finance.
With the growth of technology, we can notice that people are making more stable and powerful financing plans. Central banks of different countries are searching for ways to create digital versions of their currencies as well. Several countries like China, Japan, Sweden, and the Bahamas have already started experimenting with their currencies.
Thus, standing in this time, predicting a world with digital currency is not absurd. Hopefully, the day is not far when small to heavy transactions via digital currency will be normal for all countries and people. From making a payment in the grocery to buying a house depending on crypto will be the new norm. Therefore, it is a complete misconception that crypto is a fad that will disappear with time.
Hopefully, you have already found how wrong you were thinking about crypto so far. Now, when you know these myths, you won’t have any problem in your upcoming crypto trading mission. Try to justify the truth behind the facts, avoid unproven statements, be safe, and enjoy your crypto trading journey.
About the Author:
George Rossi is the Chief Market and Broker Analyst at brokertested.com. Prior to being recruited by brokertested.com, I served SVS Securities as Chief Market Analyst for two years. Earlier, he joined Morgan Stanley in Nov 2013 as Research Analyst. George is a well-rounded financial services professional experienced in fundamental and technical analysis, global macroeconomic research, foreign exchange and commodity markets and an independent trader.