Considering the fact that cryptocurrencies are still in their nascent stage, there’s bound to be plenty of myths and misunderstandings surrounding virtual currencies and the technology behind them. 

 

Clearing away the myths and misconceptions surrounding cryptocurrencies is extremely crucial, since they can deter genuine individuals who are interested in investing in this newfound technology. 

 

In this final chapter of this module of Smart Money, we’re going to take up some of the most commonly propagated myths and try to debunk them. This way, we can help create a more conducive and transparent environment. So, let’s begin. 

 

Debunking the top cryptocurrency myths   

Although there are plenty of myths and misinformation surrounding cryptocurrencies, in this chapter of Smart Money, we’ve chosen to concentrate on 6 of the most popular and widely propagated ones and debunk them. So, here are the 6 myths that have been floating around ever since cryptos first came into the picture. 

 

Myth 1: Cryptocurrency is illegal

This is one of the oldest myths surrounding cryptocurrencies. Just because cryptos have not been made legal tender in many countries of the world, people have started to believe in this myth of them being illegal. However, this is simply not true. Despite almost all the countries in the world not recognizing the currency as a form of payment for goods or services, cryptos are not illegal. 

 

Individuals in many countries are still allowed to own and trade in cryptocurrencies without the fear of legal prosecution. That said, there are quite a few countries that have outrightly banned cryptocurrencies. Only in those countries are cryptos considered illegal, and owning them or trading in them are legal offences. 

 

Myth 2: Cryptocurrencies are only used for illegal activities

Another major myth that needs to be debunked is that cryptocurrencies are used only for illegal activities like money laundering. While it is true that many individuals have been known to indulge in illegal activities and use cryptocurrencies as a form of money exchange, virtual currencies haven’t been created just to enable such activities. 

 

That said, fiat currencies are also used to conduct illegal activities too. So ultimately, the usage of cryptos depends on the user and their intentions alone. Labelling the entire cryptocurrency industry as having been created to enable illegal activities is not only wrong, but has to be discouraged as well. 

 

Myth 3: Cryptocurrencies can be obtained for free

Many individuals tend to think that cryptocurrencies, by their virtue of being fully digital currencies, can be obtained or are given out for free. This couldn’t be farther from the truth. Currently, there are two different ways to obtain a cryptocurrency - through mining and through staking. Mining cryptos are the most popular way to get your hands on a cryptocurrency. However, it is far from free or easy. 

 

The process of mining cryptos is extremely resource intensive. That’s not all. It requires the use of specialised and powerful equipment, which can be very expensive. And finally, the mining process uses a lot of electricity, which is also another major expense that miners would have to deal with. As you can see, mining cryptocurrencies is not as easy as it may seem and is definitely not free. 

 

Myth 4: It is not possible to use cryptocurrencies for purchases 

This is one of the many myths that have been propagated time and time again. Many strongly believe that cryptocurrencies have very little use cases outside trading. However, it is simply not true. Cryptocurrencies, with adequate backing from governments, can become an alternative currency that can be used to purchase goods and services. 

 

One of the many advantages of cryptocurrencies is that you can hold and transfer fractional units of the currency instead of whole units. This technically has the potential to be used for making purchases of goods and services. And considering the fact that it is quick and easy to transfer cryptocurrencies from your wallet to another using your smartphone, it could be possible to use them for purchases. 

 

Myth 5: Cryptocurrencies can be hacked

Considering the level of security measures that the blockchain technology uses, hacking cryptocurrencies is extremely hard, requires a lot of resources, and can still be thwarted. For instance, once a block is added to the blockchain, the data cannot be modified or altered in any way. 

 

And even if it were possible, the majority of the other nodes in the blockchain would have to approve the said change. Without this approval, no individual can hack into, get control of, or make any change to the cryptocurrency or the blockchain powering it. 

 

Myth 6: Cryptocurrencies will replace fiat currencies 

This myth has been propagated by cryptocurrency enthusiasts right from the time of its inception. However, replacing the traditional fiat currencies would take decades and would require the support and approval of all or a majority of the countries in the world. 

 

And considering that cryptocurrencies are not owned or controlled by any entity, it is highly unlikely to receive any support from governments throughout the world. And so, fiat currencies being replaced by cryptos is something that’s impossible at least for the next two to three decades.

 

Wrapping up

With this, we’ve come to the end of yet another module. We’ve successfully debunked some of the most popular and widely believed myths surrounding cryptocurrencies. Here’s some advice, always do your own research before jumping to any conclusions or believing in any of the cryptocurrency myths. 

 

A quick recap

• Despite almost all the countries in the world not recognizing the currency as a form of payment for goods or services, cryptos are not illegal. 
• The usage of cryptos depends on the user and their intentions alone and has not been created for encouraging illicit activities. 
• The process of mining cryptos is extremely resource intensive and can never be obtained for free. 
• Considering the fact that it is quick and easy to transfer cryptocurrencies from your wallet to another using your smartphone, it could be possible to use them for purchases. 
• Taking into account the level of security measures that blockchain technology uses, hacking cryptocurrencies is extremely hard, requires a lot of resources, and can still be thwarted. 
• Cryptos replacing traditional fiat currencies would take decades and would require the support and approval of all or a majority of the countries in the world, which is unlikely to happen in the near future.