• You may learn much about cryptocurrencies by reading blogs and social media or finding out about them from friends.
• However, there are still many misconceptions and myths surrounding cryptocurrency.

Even though digital money has been around for quite a while now, people still fall for misconceptions believing they are facts.

This guide is for you if you believe Bitcoin’s value is “based on thin air” or if it is too volatile to have usage in the real world, just like fiat currencies. Or if you think cryptos are used only for illegal activities, like money laundering and scheming.

We’re sorting reality from fiction in this guide while avoiding reasonable risks. In no specific order, these are some of the most frequent cryptocurrency misconceptions.

Cryptos Aren’t Safe

People often want to find the best way to buy crypto but fear that digital tokens aren’t safe. Even though hackers or scammers can get your money, they can do so even if you use a bank account and only fiat currencies.

Bitcoin, being the first virtual currency to enable “trustless” peer-to-peer currencies a possibility, opened up the world to blockchain technology, which is a distributed public ledger protected with encryption that requires a huge amount of processing power to remain safe.

Security concerns inevitably accompany the allure of decentralization. Nevertheless, contrary to common assumptions, the Bitcoin network has never been hacked. But don’t get it wrong, blockchains can be hacked. Theoretically, suppose a hacker or a group of criminals get more than 50% of power over the blockchain. In that case, they can exploit the network by altering transactions, thus, stealing millions of dollars in crypto.

However, it’s nearly impossible to use this method regarding big blockchains. Nevertheless, there is still a possibility that a hacker uses a bug or a flaw in the system to their benefit. Still, it doesn’t mean blockchains and cryptocurrencies are naturally unsafe.

Crypto Market Offers High Returns

Considering Bitcoin as an example, no wonder people believe cryptos always offer high returns. Some believe it’s because virtual tokens aren’t safe or popular, so no one invests in them. Others believe that because Bitcoin skyrocketed in value, all other currencies do the same.

True, Bitcoin’s value back in 2010 wasn’t even a dollar; look at it now! However, you won’t get returns without a proper investment strategy that requires understanding everything about the asset you invest in, including the risks. Moreover, there is no guarantee that a crypto you invest in will increase in value significantly.

Today, crypto has almost become a traditional financial asset to invest in, and it’s likely to bring steady income rather than blow up like Bitcoin back in the day.

Cryptos Have No Real Money Value

It is likely the most common misconception concerning cryptocurrencies, given there is no physical asset to back them up — people who trade crypto trust in their intrinsic worth, which has been supporting the system since 2008. Digital money is here to stay as long as people believe in and comprehend its worth.

It’s Anonymous

Many believe that transactions are anonymous, while it’s false. The blockchain, a public ledger, keeps track of everything. There is pseudo-anonymity, but identifying people and their personal information in extreme circumstances is not as challenging as some think.

There is user anonymity, as with any other site, but not to a point when no one can track you. Analytics companies can map addresses on blockchains to discover transactions related to criminal behavior, such as money laundering or supporting terrorists.

Governments and banks utilize this data to detect high-risk deals. This myth leads us to the next one.

Cryptocurrencies Are Used Only For Illegal Activity

Once cryptocurrencies were introduced, many expressed concerns that crypto’s anonymity would lead to money-laundering schemes, avoiding taxes, financing terrorism, etc. However, people forget that blockchains are relatively transparent. You can see all transactions and who made them. Theoretically, if one can determine the wallet’s owner, one can determine who owns the money and what they use it for.

According to Chainalysis (an analytics company), the number of virtual currency operations tied to unlawful activity reduced to 0.15% of all cryptocurrency operations in 2021. 82% of the operations in this limited amount were crypto frauds.

It is vital to emphasize that most central governments and a variety of communities worldwide have ways to track down criminals and terrorists using crypto. Many nations have implemented cryptocurrency anti-money laundering and counter-terrorism funding measures.

Final Thoughts

A little more knowledge about cryptocurrency can go a long way toward assisting ordinary people in deciding if they want to delve into the virtual currency field and earn profit. Hopefully, these myths have helped you understand that cryptocurrency is not an illegal form of money that will be banned or forbidden in the future.

The reality is that it’s getting more and more popular. You can get services and goods by paying with crypto. Moreover, it will likely be accepted as a payment option in everyday life. Thus, you may consider investing in cryptocurrency after researching the topic.