November 26, 2020 | AtoZ Markets – Despite the slow but steady integration of crypto as an asset within the financial space, cryptocurrencies are surrounded by myths and misconceptions that limit the enthusiasm of potential adopters and restrict the scope of crypto.
Regardless of whether this is the fault of the 2017 boom in crypto popularity and virality within mainstream media, the relatively short existence of crypto as a whole, or the varied possibilities surrounding crypto as developments continue to be made, cryptocurrency remains deeply misunderstood by many.
Here are some of the most common myths surrounding crypto, and the facts to debunk them.
Myth #1: The primary use of cryptocurrency is for illegal activity
One of the most common myths surrounding crypto, and one that is often the belief of those who have had extremely little exposure to crypto, is the belief that the primary use of cryptocurrency is to conduct and facilitate illegal trade.
This is a misconception that does stem from truth surrounding the nature of crypto – the anonymity that it allows for, as well as its decentralisation and lack of regulation in use mean that cryptocurrency has been used for, and will continue to be used in the facilitation of illegal activity. However, there are a number of reasons as to why this is largely a myth that limits the adoption of crypto.
Firstly, consider that in 2019, just 0.5% of total bitcoin transactions were made on the dark web – the remaining 95.5% indicates where the main benefits of crypto are. Secondly, an important aspect of crypto is the transparency that it offers. As one of the key features of blockchain technology, each and every transaction made using cryptocurrency is visible to everyone, and tied to a particular username. Finally, regardless of the aforementioned factors, crypto is a relatively new currency – prior to 2009, traditional currencies played a significant part in illegal activity, as they continue to today.
Ultimately, the notion that crypto is more commonly used in regard to illegal activity (relative to traditional currency, and as the main method of use within crypto) is a myth.
Myth #2: Bitcoin is the only cryptocurrency of importance
The next myth, and one that might be even more common than the last, is the idea that Bitcoin is the only notable or important cryptocurrency in existence. If you don’t have a good idea about the variety, flexibility and potential within the crypto world, you might think the same way – improving your understanding of how many cryptocurrencies are out there is a crucial and eye-opening endeavour.
Whilst Bitcoin was the first cryptocurrency ever made, is the most recognised digital currency, and has a number of factors that demonstrate its importance and popularity within the crypto space, it is almost certainly not the only important cryptocurrency available. Unfortunately, Bitcoin does have downsides in comparison to other crypto currencies – slow transactions, higher difficulty when it comes to mining, and arguably fewer potential uses are just some examples.
With this in mind, altcoins such as Ether, Litecoin and others each have specific advantages, disadvantages and differences – ultimately, some cryptocurrencies are just more suited to some areas than others.
Myth #3: Cryptocurrencies have no real world use
The final significant myth that surrounds cryptocurrency is that many believe cryptocurrency has no real world use – whether this is in terms of having the capability to operate as a form of payment, or holding a viable place within the business world.
In a slow and steady process, the value and potential use of cryptocurrencies has been increasing, evident in the support from big companies such as Microsoft and AT&T. This perceived value will likely continue to increase, as cryptocurrencies continue to be included and solidified in business practice regarding their acceptance as currency, and regulations and rules continue to be developed.
A recent development that demonstrates the real world use of virtual currencies is PayPal’s entering of the crypto market, allowing for the buying and selling of Bitcoin and other cryptocurrencies. Not only has this action provided positive publicity for crypto, but it has also shared Paypal’s image of trust with the crypto market, and has provided facilitation in regard to the buying and selling of cryptocurrency.