Unpacking the Top Crypto Myths

Fredrick Awino

Since the introduction of the first cryptocurrency, Bitcoin, in 2009, crypto has experienced high growth. However, there are top crypto myths as some people do not understand the way it works. A widespread lack of trust and knowledge is the source of misinformation. Below I have discussed some of the top myths in the crypto world.

WARNING: Investing in crypto, or other markets, can be of a high risk for your savings. Do not invest money you cannot afford to lose, because there is a risk for losing all of your money when investing in crypto, stocks, CFDs or other investments options. For example 77% of retail CFD accounts lose money.

Myth 1: Cryptocurrency such as Bitcoin is Nonsense

Considering crypto such as Bitcoin as nonsense is one of the top cryptocurrency myths. In 2021, most of the serious players started getting interest in Bitcoin. For instance, Elon Musk mentioned Bitcoin on Twitter. After a while, Tesla purchased bitcoin for about 13 billion Norwegian Kroner. In Norway, most of the investors have highly invested in Cryptocurrency.

Myth 2: Cryptocurrencies Promote Illegal Activities

The fact that crypto commenced as a dark web does not make it a hub for illegal activities. The activities taking place in cryptos should not be ethically questioned. Chainalysis confirms that in 2020, just about 0.34% of the transactions accounted for illegal actions. This is a small percentage as compared to the banking sector.

If cryptos promoted illegal activities, then the top influential personalities would not have invested in them. The top personalities who have invested in cryptos include Bill Gates and Elon Musk. Therefore, currently, most people are resorting to using cryptocurrencies. The reason is that it is a store of value and safeguards against inflation.

Myth 3: Crypto is a passing fad

Technology has transformed almost everything in the current world. It has transformed the crypto space, work-life as well as personal life. Even though it is difficult to predict where it will be in the coming years, its transformation is already felt in the financial world. Besides, it has clearly shown the way daily investors interpretation of money.

Even with the transformation of crypto, it is unclear if it will replace traditional currency. We might be able to see it n the future. However, I believe that the future of crypto is bright. The reason is that governments are introducing robust regulatory structures. They are also considering implementing stablecoins.

Myth 4: Cryptocurrency does not Solve Problems that Gold or Fiat Currencies Could not Solve

Most people believe that cryptocurrency is not useful. They believe that it does not have the ability to solve complex economic issues. Gold and fiat currencies are the top forms of safeguarding value systems and popular exchange. However, with the implementation of cryptos, there is a new way to see money and even safeguard value. The cryptos have varied benefits.

Unlike fiat currencies and gold, cryptos transfers take place all over the world. It is done reliably, safely, and quickly. Moreover, they can be divided into different values. You just must choose the amount that you need. The transactions are also authenticated publicly.

Cryptocurrencies are a problem solver as it allows pseudo-anonymity. In this way, your personal data, as well as your privacy, are protected. Also, remember your funds cannot be frozen when third parties request. This is because you are in control of everything.

Myth 5: Digital Currencies do not have Value

Value is a subjective concept. This is because people value things differently. An example is Bitcoin. When it was first launched, it was valued at thousands of cents. However, in 2021, it was valued at $69,000 per Bitcoin.

The increase in value is an indication that the asset is accepted by society. Currently, they have considered that it has a high value. On the other hand, even though Ether is not highly valued like Bitcoin, it has the potential of having a higher value. The reason is that it develops financial services and products using smart contracts as well as the Ethereum blockchain.

Most people believe that cryptos do not have instinct value. This is because it is not backed with anything. Let’s take a look at this, the U.S dollar in 1971 left the gold standard. During that time, it was not backed with anything apart from full faith as well as the United States government credit. Although that was enough during that time when wars were fought with aircraft carriers and tanks, it is not the same currently. The reason is that currently, the treasury can simply print new trillions of dollars if they need.

Cryptos offer equal opportunities to everyone. Any person with an internet connection and cell phone can take part. Currently, a person in sub–Saharan Africa may sell ware to a person located in Chicago. Therefore, distance cannot affect trade. Thus, currently, we are in the early stages of witnessing the finance and money revolution.

Myth 6: Cryptocurrencies Are Not Taxed

While meeting new people and you tell them you are trading in crypto, they consider you as a person who does not pay tax. Unfortunately, that is not the case. The IRS considers crypto as property. It means that just like the other assets, it is taxed.

Furthermore, when you dispose of, trade, or sell your crypto holding, you pay taxes on the profits. Also, you can deduct the losses. It just takes place like ETF and Amazon. However, you have to remember that the tax rates depend on your length of holding the asset, filing status, and income.

Myth 7: You have to be tech-savvy to be in crypto

This is the biggest I have come across. When I meet some people and ask them if they can invest in crypto, their answer is usually that it is because they are not tech-savvy. Most of them believe that it is something, which is so difficult to understand. Thus, they miss the opportunities.

Myth 8: Cryptocurrency is Green and Clean

The papermaking process entails harvesting trees as well as several toxic dyes, inks, and chemicals. Metal in coins including silver and gold which turned to a modern currency is mined from the ground.

As for cryptos, they are just in form of digital blockchain. However, does this make them environmentally sustainable? Most people believe that they do not have any impact on the environment. However, that is not the case. The reason is that computer power needed in Proof of work mining consumes a lot of electricity. Annually, crypto mining consumes power that can be used in Sweden for a year. In short, it is destructive to the environment. It is because of this that New York passed a bill prohibiting crypto mining.

Myth 9: Cryptos are not Accepted as Payment Options

Cryptos was first launched in 2009. Since then, people investing in them have realized that they have a high value. Some of the big firms including Expedia, Dell, Fiverr, and Microsoft accept it as a form of payment. Even when traveling some traveling destinations and booking agents accept cryptos as a form of payment.


Author Fredrick Awino