Just the same as other fringe products or services, there are plenty of myths around cryptocurrencies. Being involved with cryptos isn’t just for computer geeks and crime syndicates trying to avoid the law. Understanding these myths will allow you to form a more accurate opinion. It’s easier to make informed decisions when your knowledge is sound.
- Cryptocurrency is illegal. It depends on the country. It’s legal in the United States, but there are other countries, such as Russia, that have judged it illegal. It’s unlikely the legal status will change anytime soon in the United States. It’s possible that it will become regulated, however.
- Bitcoin is the only relevant cryptocurrency. There are over 8000 cryptocurrencies. All have their strengths and weaknesses. Bitcoin, released in 2009, is the oldest and most well-known of them. Most of the other cryptocurrencies are less than three years old: Ripple * Helium * Dash * Dogecoin * Monero * Ethereum * Litecoin * Bitcoin Cash
- Only criminals have a use for cryptocurrencies. While cryptocurrencies continue to be used for illegal activity, cash is still king for illegal transactions. There are reputable retailers that accept cryptocurrencies, including Microsoft and Dell.
- I can get rich with cryptocurrency. The potential for profits does exist. People have gotten wealthy through increases in the value of cryptocurrencies. However, just as many people have lost a tremendous amount of money, too. It might happen, but you’re unlikely to retire on your cryptocurrency purchases.
- Cryptocurrencies are fiat currencies. Most of them are. That’s true. But so are the Euro and the US Dollar. All major world currencies have abandoned a gold standard. The US decoupled the value of gold and the US Dollar in 1933. The value of all fiat currency is based on the willingness of the public to agree that it possesses value.
- The government can shut down cryptocurrencies. The government could make cryptocurrencies illegal, but shutting down the system would be next to impossible. There’s no central server or location that houses a cryptocurrency system. The information is stored on the computers of every user.
- It’s easy to mine cryptocurrencies and make money. Entire companies have been built for the sole purpose of mining cryptocurrencies. It requires a tremendous amount of computer hardware and electricity to be successful. Unless you have several hundreds of thousands of dollars, you can’t even begin to compete.
- Cryptocurrencies are subject to hacking. Bitcoin merchants and wallets have been subject to hacking activities. However, Bitcoin itself has never been hacked. Other cryptocurrencies have similar security profiles. Insufficient security is always a potential problem with cryptocurrencies and cash. Protect your wallet and you should be fine.
- It’s impossible to trace cryptocurrency transactions. It’s not easy, but it can be done. Regarding Bitcoin, the blockchain ledger lists all the transactions that have ever occurred with Bitcoins. The challenging part is linking the wallet address with the owner
