Cryptocurrency continues to experience significant development. As a digital industry, crypto certainly raises many questions for those who are not tech savvy. This gives rise to various issues and myths about crypto assets that are not proven to be true. In no particular order, here are some of the most common cryptocurrency myths, which turn out to be horribly wrong!
Only Used for Prohibited Activities
Digital currency being used for illicit activities is one of the oldest and most widely spread myths among people. Although this is not entirely true as there are also individuals or even criminal organizations that use digital currency for nefarious purposes.
A company that assists investigators in cryptocurrency crimes with blockchain data, Chainalysis stated that the number of cryptocurrency transactions related to illicit activities fell in 2020. Crime and organized crime use of cryptocurrencies continues to be minimized by the Government and the international community. Many countries have implemented anti-cryptocurrency money laundering and counter-terrorism funds. For example, in the United States, which has the National Cryptocurrency Enforcement Team (NCET), as the new FBI unit to prosecute and prosecute the criminal use of cryptocurrencies.
Digital Currency Has No Value
The value of an object is subjective, which means it is different in the eyes of each person, community or society. In addition, to determine whether an asset has value, the public can see it through the increase or decrease in the price of the asset.
For example, the ever-increasing price of Bitcoin has even reached more than USD 30,000 from what was previously only a thousandth of a cent. Or the cryptocurrency ether (ETH), which may not have a dollar value like Bitcoin, but its utility and potential provide more value to the company. Especially for companies developing financial products and services that use the Ethereum blockchain and smart contracts.
Unsafe Cryptocurrencies
The main technology behind cryptocurrencies is blockchain. Blockchain is a technology that is used as a digital storage system or bank data that is connected with cryptography that is very difficult to break into. All transactions entered into the block on the blockchain will be recorded without insurance. This system is almost impossible to change the information on the blockchain.
This system makes it very possible for users to send cryptocurrencies to other users without worry, but be aware that the platforms and software used to store and access them can be hacked or tampered with. Ensure cryptocurrencies are secure by storing crypto asset keys in cold storage and transferring only the amount you wish to use to a hot wallet. It is recommended to use a secure wired connection on non-mobile devices such as personal computers.
Digital Currency is Bad for the Environment
All aspects of the digital economy require energy, including digital currencies. Some cryptocurrencies use large amounts of computing power and energy to verify and validate transactions. Huge amounts of energy are used for mining rigs, adding to the grid energy consumption equivalent to that of a few small countries.
But when it comes to environmental impact, this is the impact on the energy sources used and their energy use on the electricity grid. If most electricity is powered by fossil fuels, then pollution is pollution. On the other hand, if mining is mostly powered by renewable energy, the environmental impact is lower. Digital asset investment pioneer CoinShares found that most digital currency activities are carried out using renewable energy.
Cryptocurrency Is Real Money
Money is defined as a widely accepted store of value, unit of account, or medium of exchange that can be translated into prices. Meanwhile, digital currency is a digital representation of the value stored through cryptography. Digital currency is seen as a currency that can be converted and has the same value in real currency.
Cryptocurrencies are intangible assets with an indefinite life and to measure any crypto asset at a cost in excess of value Digital currency is not recognized as legal tender by most governments. However, it meets the definition of money published by the recognized and official financial authority empathy.
Digital Currency Will Replace Fiat Currency
Fiat currencies have been around for centuries and many countries use this type of currency. Unlike digital currencies, which are relatively new. Governments use fiat currency to collect taxes and program funds and services that the government needs. Without tax collection, the social programs on which the people depend would be lost, and other government funds could dry up.
The system is centralized or centered on fiat currency and makes it difficult for the government to release it. Centralized system means that the currency is controlled by a certain entity, in this case the fiat currency is controlled by the government or the central bank. The central bank can control how much money is in circulation, increase or decrease it as needed to run the economy. Then the transactions carried out will involve third parties such as banks who will record and collect data.
This is the opposite when compared to a decentralized digital currency. With a decentralized system, a central bank is no longer needed. This will certainly change the world monetary system radically. In addition, blockchain technology and cryptocurrencies have no built-in tools to influence inflation, employment, or economic growth, new monetary policies and tools need to be created.
On top of all these differences, fiat currency and digital currency have the same benefit, namely as a medium of exchange. But the future is unpredictable, it is possible that digital currencies will replace fiat currencies in the future.
Cryptocurrency Is A Fad
Many things that were once considered attractive only to a small group of tech enthusiasts. But now they are staples of modern personal and work life, such as the internet. Likewise digital currencies, we cannot predict where digital currencies will be in the next few decades. However, it is likely that this technology will continue to be developed and refined.
Currently, decentralized financial applications are taking shape, gathering the interests of financial institutions and consumers. Governments are exploring ways to implement legally recognized digital currencies that are pegged to assets that are more stable in price, and some businesses are heavily investing in digital currencies like Bitcoin.
