Cryptocurrencies have expanded aggressively since their inception. Platforms will guide you with the best cryptocurrency trading strategy for a beginner. Undeniably, most cryptocurrencies incur obscure attributes, which makes digital currencies unique from fiat currencies and the conventional monetary system. If you are ready to trade crypto, you can visit this page.
The absurd attribute of cryptocurrencies is a bit challenging for people to understand who are not that tech-savvy. So, although there are many rumors and false facts regarding cryptocurrencies, let’s bust the top six myths about cryptocurrencies.
(i) Cryptocurrencies only Have a Use in Illegal Activities
Cryptocurrencies were known to be used as a tool for illegal activities such as money laundering, drug trafficking and so on. However, cryptocurrencies now have a legitimate purpose. Cryptocurrencies are now widely used in the global money market as a currency.
More countries are taking cryptocurrencies more seriously and adapting to the new technology. Also, cryptocurrencies can be accepted as a mode of payment for goods and services; some merchants have adopted bitcoin as a means of accepting payments.
Bitcoin mining was seen as an easy way to earn extra cash from home, but unfortunately, it’s more complicated than ever. Numerous challenges are associated with mining bitcoins, such as increasing difficulty level and electricity consumption, making it hard for new miners to join the sector, which is why it is not accessible anymore; try out cloud mining instead. However, bitcoins are now used as a means of payment on e-commerce sites and to pay for legal products such as doctor bills. In addition, several digital goods can be exchanged using cryptocurrencies.
(ii) Cryptocurrencies are ‘Legal Tender’
Cryptocurrencies do not have intrinsic value and hence cannot be used as legal tender per a few reports. The spot value of BTC is determined by their supply, demand, and viability. Because of this, cryptocurrencies can become legal tender.
Financial institutions only provide certain services to the fiat currency holders, such as converting fiat into digital currencies and transferring money from one account to another. But on the other hand, with cryptos, no single party can have complete access to your financial information; you can even make transactions while keeping your identity private.
Although the US government does not recognize cryptocurrency as a legal tender, some countries have accepted them to be used as a form of payment, including Japan.
(iii) Digital Currency is the Same as Cryptocurrency
The terms cryptocurrency and digital currency are entirely different in their meaning and usage. Therefore, they are entirely decentralized in their usage and exchange system, unlike digital currencies, which involve a central authority for their transactions and mining process.
(iv) Digital Currencies Don’t Have Value
People often compare the ratings and value of cryptocurrencies with fiat currencies such as USD or EUR. Cryptocurrencies are not backed by any physical commodity like gold or silver. Therefore, investors often doubt the reliability of digital currencies. But there is a reason why their values are increasing day by day.
The cryptocurrency market is increasing, and investors are trusting in cryptocurrencies as they have started to comprehend the potential of blockchain technology that supports the digital currency market. Despite the present volatility in the market, Bitcoin and other cryptocurrencies have generated enormous profits for their users; in short, they have a massive real-time value.
(v) Cryptocurrency Lack Security
There is a common misconception that cryptocurrencies lack security and can be hacked. On the contrary, cryptocurrency has a more robust security system than most financial systems today. All a user needs to have is a secure cryptocurrency wallet and cryptocurrency addresses, which give an edge over fiat currencies. In addition, cryptocurrencies have various security measures installed that make them more secure than most online transactions people do on a daily basis.
(vi) Cryptocurrencies are Harmful to the Environment
Cryptocurrencies have been criticized for their high power consumption. As the most popular cryptocurrency, Bitcoin has an extensive calculation system and hence requires a lot of energy to keep it running. It is said that Bitcoin consumes thousands of times more electricity than a regular currency.
But critics should understand that cryptocurrencies are still in their initial stage, and once the technology matures, there will be an improvement in their energy consumption levels. Moreover, cryptocurrencies are not only limited to bitcoins.
Many digital currencies have gained worldwide popularity because of the functionalities and services they offer to users. It has become a trend to invest in bitcoins, but new investors should be aware of the risks and challenges they face while dealing with digital currencies.