Busting the top 5 misconceptions about cryptography

Although the cryptocurrency sector has expanded tremendously since the publication of the Bitcoin (BTC) whitepaper in 2009, occasional setbacks and deeply rooted myths have turned away many potential investors and prevented the industry from spreading faster.

With this in mind, Coinphony has compiled several of today’s most common misconceptions about digital assets, along with facts and details that shed some light on them and reveal why these myths may not be entirely accurate.

Myth 1: Encryption is only used for illegal activities

Although the belief that cryptocurrencies are used for illegal activities or even in financing criminal organizations is not far from the truth, the argument that this is their sole purpose could not be further from it.

Indeed, according to String analysis In a biannual report on crypto-crime published in August 2022, cryptocurrency fraud revenues fell by 65% ​​in one year. Furthermore, every form of money, since its inception, has been used in crime in one way or another.

Myth 2: Encryption has no value

While there are certainly digital assets that are doomed to fail, many of them have value, even if their monetary value can fluctuate over time. As a reminder, Bitcoin was only worth a few cents after its launch in 2009, but it soared to an all-time high of $69,000 by the end of 2021.

However, in addition to talking about decentralized financial assets (DeFi) in terms of financial gain from selling them, cryptocurrencies such as Cardano (ADA), Ethereum (ETH), and Polygon (MATIC) – to name a few – also have value in their portability. use and potential. In short, it is all about individual perceptions of “value”.

Myth 3: Cryptocurrency is a short-lived fad

Many skeptics are sure that digital assets are just a passing trend and fiat money will soon prove its superiority over the new asset class. However, the cryptocurrency has actually been around for 13 years and has even survived active attempts to ban it, such as in China.

Meanwhile, other countries are looking at ways to integrate crypto into their operations, such as experimenting with central bank digital currencies (CBDCs), and some, like El Salvador and the Central African Republic (CAR), have taken a few steps forward and adopted Bitcoin as legal tender.

Myth 4: Cryptocurrencies are dangerous to the environment

Proof-of-work (PoW) cryptocurrencies like Bitcoin are already taking a lot of energy, especially as their popularity increases, but the impact is less than many pundits think. In fact, BTC accounted for only 0.1% of global greenhouse gas emissions in 2022.

In addition, there are cryptocurrencies that require less energy – proof-of-stake (PoS) assets, such as Ethereum (ETH), Cardano, and EOS (EOS), where participants, instead of mining, validate block transactions based on the number of their stake coins. .

Myth 5: All cryptocurrencies are a scam

In times when crypto companies are going bust and their CEOs are being arrested and/or indicted, it is not easy to trust the rest of the pack. But as with the stock market, some companies will inevitably turn out to be run by dishonest people.

However, anyone looking to invest in cryptocurrencies needs to do their own due diligence, carefully study the digital asset they are interested in and the crypto markets in general, and then make an informed decision about which one to trust.

The Bonus Myth: It is too late to invest in cryptocurrency

Although it may not seem that beginners can start investing in cryptocurrency at any time, certain periods seem to be more suitable for building stocks, including bear markets and market bottoms, according to experts.

For example, it is better for beginners to buy Bitcoin when its market capitalization represents 0.1% of global wealth and its price is still less than $17,000 than it was during ATH when it was trading at around $70,000.

When one turns from a beginner to an expert, they can better navigate the cryptocurrency landscape and judge for themselves the right time to buy or sell various digital assets.

Top 5 Crypto Forked Misconceptions appeared first on Coinphony.

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