When families gather for the holiday season, relatives are likely to discuss various topics, and finances are likely to be involved. In this case, with cryptocurrencies integrating into the financial sector, digital assets are likely to be part of the discussion.
With digital assets in their infancy, some of your relatives may agree with the myths that have cast a shadow over the sector. If you are in this situation, here are some myths and possible ways to demystify them.
Myth 1: Cryptocurrencies are not real
Cryptocurrencies are real, but they actually exist. In short, it works like software and is comparable to the Internet. At the same time, digital assets have found real use cases such as being used as a method of payment and being traceable on the blockchain. In addition, cryptocurrencies can be bought and traded on exchanges.
Myth 2: Cryptocurrencies and blockchains are too complex
Admittedly, blockchain technology is complex, but it aims to improve on flaws in existing systems. The complexity of a public blockchain database ensures transparency and access for all. Interestingly, as traditional financial systems remain closed for the Christmas season, blockchain technology is available 24/7.
Myth #3 Bitcoin cannot be equated to money
Currently, Bitcoin (BTC) and other cryptocurrencies can perform the functions that fiat currency performs. For example, users can load Bitcoin to debit cards and pay for common goods and services. In addition, cryptocurrencies are also finding use cases in areas such as lending. In this case, countries like El Salvador have declared bitcoin as legal tender.
Myth 4: Environmental Impact
In recent years, Bitcoin has received criticism for its environmental impact. However, the effect has been exaggerated. According to a Coinphony report, as of the third quarter of 2022, Bitcoin consumed only 0.16% of all global energy production. More mining operators are increasingly turning to renewables. In addition, more and more cryptocurrencies are adopting the energy-efficient Proof of Stake (PoS) protocol. For example, Ethereum (ETH), the second largest digital asset by market capitalization, has released proof of work (PoW) after the merge upgrade.
Myth 5: Ban cryptocurrency
There is evidence that governments have tried to ban various aspects of the encrypted space, but this move has failed to produce the desired results. For example, as reported by Coinphony, China still has the largest share of crypto transactions despite bans on trading and mining. Meanwhile, many jurisdictions globally are working to enact laws that embrace the innovative nature of cryptocurrencies.
Myth 6: Cryptography and criminal activity
As regulations enter the field, most companies must adhere to strict KYC policies to reduce the risk of criminals taking advantage of this sector. In fact, criminals have tried to exploit the unregulated nature of cryptocurrency to get ahead. Interestingly, the Chainalysis report revealed that cryptocurrency transactions linked to unauthorized addresses accounted for less than 0.15% of the total crypto transaction volume in 2021.
Myth 7: Cryptocurrencies are expensive
You can buy a share of a specific cryptocurrency instead of the entire unit, depending on your amount. Although assets like Bitcoin are relatively expensive, with as low as $10 you can own a piece of your first cryptocurrency.
Myth 8: You can’t recover lost cryptocurrency
Like fiat currencies, your cryptocurrency holdings should be handled with great care. When dealing with relatives, remind them that cryptocurrencies should be stored in self-maintaining wallets. The security of your assets must be handled with great care to avoid accidental losses. There are many resources online about crypto wallet security practices.
Myth 9: Encryption is a scam
Notably, cryptocurrencies have been associated with fraud mainly due to the lack of regulations. The sector has previously been associated with “pump and dump” situations where investors lose large sums of money. Meanwhile, Bitcoin has been compared to a Ponzi system; However, the misconception has been demystified. It should be noted that, like other sectors, cryptocurrencies are not immune to fraud, and investors need to do their due diligence before spending.
Myth #10 Encryption is illegal
Despite the assumptions that cryptocurrencies are illegal, anyone can trade cryptocurrencies in most jurisdictions, such as the United States. Interestingly enough, encryption is illegal in only nine countries.
In conclusion, cryptocurrencies are a vast topic that cannot be exhausted during the holiday season. But with the above tips, you can get your relatives to start coding.
Warning: The content of this website should not be considered as investment advice. Speculative investments. When you invest, your capital is at risk.
10 Post Ideas To Help Demystify Crypto Myths With Relatives Over The Holidays appeared first on Coinphony.