Cryptocurrencies have been in existence for over a decade; they’ve become one of the most popular phrases in recent years worldwide. It has exploded in popularity as a growing number of investors flock to it, making it a favourite. Cryptocurrencies passed the $1.3 trillion barriers in early 2021, making them the best-performing asset class and the world’s fifth-most circulating currency in terms of value during the previous decade. According to experts, Bitcoin has been dubbed the “digital gold” of the digital age as it helps to boost the digital economy and usher in the fourth industrial revolution. Cryptocurrencies as an asset class had a +195 per cent growth in value between 2020 and 2021. This outperforms traditional commodities and financial markets like the S&P 500 Stock Index and the JSE Top 40 Stock Index. On the other hand, Gold saw year-over-year rises of no more than 25% during the same period.
In India, Cryptocurrency fever has spread beyond the cities to tier 2 and 3 towns. As of now, more than 1.5 crore Indians own Cryptocurrencies valued at more than Rs 1,500 crore. If you’re considering investing in Cryptocurrencies, you must avoid the myths and disinformation that surround the subject. However, everything comes at a cost. The path of this-age currency has not been easy as it appears. It has been tarnished by a slew of myths, rumours, and misunderstandings, with many people dismissing it as a speculative transaction and environmental disaster. While not all of them are completely incorrect, a little understanding does not go a long way and often leads to confusion.
So, to clear things out, here are 10 facts that debunk some popular Cryptocurrency Myths:
Myth 1- Cryptocurrencies Are Prohibited:
This is something you might hear once in a while in a conversation regarding Cryptocurrencies and Bitcoins. The claim that Cryptocurrencies are illegal money isn’t accurate, but it’s also not entirely false even. Algeria, Bolivia, Ecuador, Russia, Trinidad, and Tobago have all banned Cryptocurrency. On the other hand, the United States, the European Union (EU), and the Group of Seven (G7) countries have made Cryptocurrencies legal tender. Former Indian Finance Minister Arun Jaitley stated in his 2018-19 budget that Blockchain Technology will be investigated to promote and secure safe digital transactions. India has not yet issued an official ban on Cryptocurrency transactions. However, in India, Cryptocurrencies are thriving.
Also Read: Safe Tips For Smart Crypto Investing
Myth 2- It’s Completely Anonymous:
When people are learning about Cryptocurrencies for the first time, they frequently misinterpret the level of anonymity it offers. Because the concept of “pseudonymity” is unfamiliar to most people, it obscures rather than clarifies the capabilities of Cryptography. Cryptocurrencies aren’t the same as traditional currency. Bitcoin, the mother of all Cryptocurrencies, is pseudonymous rather than anonymous; it does not reveal the user’s data during the transaction. Notwithstanding, regular people can track identities across the Blockchain and there are sophisticated instruments that provide Blockchain forensics for illegal activities to various governmental and financial institutions.
Other coins offer significantly more anonymity; Monero and Dash, for example, are centred on anonymity. Nevertheless, using Crypto on specific exchanges typically necessitates the submission of personal information, and many assist governments in the detection of fraudulent conduct.
Myth 3- Only One Blockchain Exists:
The fact that each Cryptocurrency has its Blockchain but it’s not the only one. Because each Cryptocurrency is written uniquely, it has its Blockchain, which records transactions by adding a new “Block” of data to the “chain”. The time it takes to do so varies by Blockchain; Bitcoin’s Blockchain takes 10 minutes to complete while Ethereum’s takes 10-15 seconds. Blockchains, on the other hand, differ in type depending on their intended purpose and industry; some are public while others are private and they can be open-source or closed-source. Bitcoin, for example, aspires to be digital cash but Ethereum enables developers to create peer-to-peer applications that don’t rely on intermediaries and run on its Blockchain. Their applications are vastly dissimilar. As a result, you won’t be able to conduct a Bitcoin transaction on the Ethereum Blockchain because the two Blockchains don’t connect. It’d be like trying to pay for a meal in the United States using rands from South Africa. To pay, the restaurateur would want you to convert your currency into US dollars.
Myth 4- Too Risky:
There’s no denying that trading Cryptocurrencies is risky but that’s part of the appeal and why so many people have chosen to do so. However, it’s not correct to say that it is overly dangerous. There are risks in trading Cryptocurrencies, just as there are in trading any asset, but there are also things you can do to mitigate them, your risk management strategy remains the same whether you trade forex or Cryptocurrencies. You’ll still use stop losses and maintain a risk-to-reward ratio; the only difference is that the price will most likely fluctuate a lot more, making it appear riskier than it is.
Also Read: Is Investing In Crypto Right For You?
Myth 5- Should Be Owning A WHOLE Coin:
You may believe that Bitcoin is prohibitively expensive and that you cannot afford to purchase even a single unit. We, like humans, enjoy having complete control over our possessions. We want to live in our own home, drive our car, and eat a full plate of food. When we want to share something with others we feel embarrassed. That is precisely why many of us believe we should also have one Bitcoin or ten or perhaps one hundred? We double-check the cost, whether ten thousand dollars is equivalent to 0.1 Bitcoin. The prices rise to $20,000. You can afford to purchase 0.05. it makes no difference if you are holding all coins, to become wealthy in the future you do not need to own even one Bitcoin even if your current budget just permits you to trade 0.01, 0.001. or 0.0001 Bitcoins, it’s still a fantastic investment.
With “cheap coins” you could potentially get caught. You analyze the costs of various tokens and purchase the ones that are the least expensive. That way, instead of owning a millionth of the expensive coin, you hold a million tokens of the cheap coin. However, keep in mind that just because you have a million dollars in your pocket does not mean you are a millionaire. It’s extremely unlikely (but not impossible) that a coin you bought for one cent today will be worth ten dollars in the future. That wild 1000x more investment from others, which in turn resulted in 1000x more faith in the project. And only a small percentage of coins receive that kind of investment and care.
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