We hear a lot about Cryptocurrencies every day on the internet or from others. But when we get any information we carelessly accept it. But some of it might be untrue or misconceptions we have about cryptocurrency. So today i am going to list the 10 common misconceptions about cryptocurrency.
1. The Cryptocurrency market is a bubble waiting to pop
This is simply not true and to back this false statement up if you look back to when bitcoin was at the height of its valuation, it then fell dramatically and people thought that it was the beginning of the end. However, they were wrong, it was merely a change which is pretty common in a number of financial markets. Bitcoin and other cryptocurrencies are still going strong today, despite the fall in price. The potential that many cryptocurrencies have in the real world is what is keeping them afloat so it is very unlikely that the bubble is going to burst any time soon.
2. Cryptocurrency transactions are anonymous
This a very common misconception that is peddled by marketers that are trying to convince unsuspecting people to invest in their new crypto coin, but just because they say their transactions are anonymous doesn’t mean it is true. If you go to sign up to any major cryptocurrency exchange platform like Coinbase, you are required now to provide photographic evidence of your identity, so this means providing an image of your passport or driving license. This is because governments have made a deal with these exchanges that allows them to operate as long as their users can be identifiable.
3. Cryptocurrencies are illegal
Again, this is not true, in fact, they are actually being accepted as a legitimate method of paying for goods or services in some of the major companies in the world, such as Microsoft or Airbnb. The people who are saying that they aren’t legal don’t understand how they work, and they are simply coming from a position of ignorance.
4. Only criminals use cryptocurrencies
Even though criminals can use cryptocurrencies, it doesn’t mean that they are the only ones to use them. Everyone can use them to pay for everyday things or professional services. Anyway, once you pop the hood and look deeper into how bitcoin actually works you will realize that it isn’t really the best thing for criminals to use. Back when Bitcoin was at its lowest in terms of value someone actually bought a pizza for the price of 10,000 BTC (I bet they wish they hadn’t done that now).
5. Blockchain is bitcoin
Bitcoin is a cryptocurrency that runs on blockchain but it isn’t the same thing. If you imagine bitcoin as a train, then the blockchain is the train tracks. Blockchain is what enables the peer-to-peer transactions to be recorded on a distributed ledger throughout the network, and it allows information to be stored in a decentralized way which is better than a centralized database.
6. Tokens and Coins are the same thing
I have heard people using the both of these terms as if they were the same thing, but unfortunately they are not the same thing and these people are confused. Blockchain has tokens and Initial Coin Offerings, or ICOs. Coins only have one use, which is the store of value, but tokens on the other hand have the ability to store many different levels of value that include things like property.
7. ICOs are scams that are run by criminals
Whenever you hear someone mention an ICO the immediate reaction is that of a negative vibe, because whenever ICOs are mentioned in the media they are only mentioned because of something bad that has happened. A lot of the negative press is due to the fact that it is still a market that is not totally understood, and so people’s immediate reaction is to assume that it is something to stay clear of. However there have been some genuine ICOs in the past that have managed to raise money to get a product or project launched.
8. Cryptocurrencies are different from other currencies
Although this might seem true, the truth isn’t as clear unfortunately. If we take a step back and evaluate what a currency actually is, then we will find out that it is a unit of measure and a way communicate value, and also how we pay for things. Cryptocurrencies also fit in these brackets too, because they are units of measure and are pegged against other currencies, and we can also pay for things with them.
9. Information on Blockchain isn’t public
Well ladies and gentlemen it is actually the opposite and why blockchain has had such rave reviews, and why it is being used as an alternative to storing sensitive documents on a centralized server somewhere. The whole point of blockchain is to keep records public to prevent things like fraud and criminal activity, but that doesn’t mean that anyone off the street can view private documents.
10. I invested in a cryptocurrency early so I’m guaranteed to make money
Unfortunately this isn’t true because if it was then everyone would be abandoning bitcoin and ethereum in their masses, and investing in coins that no one has ever heard of. The simple fact is that cryptocurrencies have to have a purpose for being here rather than being here for the sake of it, which won’t attract any value. Ethereum is valuable because of its ability to run smart contracts, and Verge is gaining more and more traction because of its privacy capabilities.
Let us know if they are any other misconceptions in the comments below.