Cryptocurrencies have witnessed tremendous growth in popularity since the introduction of Bitcoins in 2009. With Best Online Broker hitting a new all-time high price record in 2021, it seems that investing in cryptocurrencies can turn out to be highly profitable.
However, it is not a good idea to invest in cryptos unless you have a thorough knowledge of the technology and its possibilities. They are somewhat obscure, and you may find difficulties predicting the wild fluctuations. But the misconceptions can add to the confusion unnecessarily. So here, you will get to know about the top myths and the corresponding facts for better decision making.
Myth #1: Digital currencies are for illicit purposes only
Perhaps, the most common myth about cryptocurrencies is that only money launderers and drug dealers use these currencies. Although the first use of the currency was indeed for a dark web market, the use of cryptocurrency is never limited to illicit purposes. In fact, cryptos have proved the worth and potential to solve the problems arising in traditional banking procedures in every segment.
Companies executing blockchain analytics have proved that illegal activities in cryptocurrency are equal to or lesser than the proportion in the traditional banking system. There will be KYC procedures and Anti- Money Laundering policies to ensure that the standards are in place to prevent criminal activity use of the currencies.
Myth #2: Bitcoin is a bubble
Many people buy Bitcoin as a speculative investment seeking high-profit amounts. But that doesn’t make BTC a bubble. Bubbles are economic cycles triggered by unsustainable rises in market value. The bubble will eventually pop as the investors realize that the prices are much higher than the asset’s fundamental value.
- Bitcoin has successfully completed multiple price cycles over the course of 12 years and has recovered each time from the down curves to achieve new heights. Boom and bust cycles are common to any new technology. So, it is more like the nosedive of Amazon stock from $100 to $5 overnight during the nineties, only to become the world’s most valuable company in subsequent decades. It’s not a bubble impact.
- Major BTC investors feel that oscillations in Bitcoin’s price form a pattern typical of the young markets. BTC will surge and recede with smaller swings and linger durations between the changes until the price settles into relative stability.
Therefore, don’t be judgmental about the present low pricing of BTC and invest instead on to pave the way for immense profit.
Myth #3: Bitcoin has no real-world use
Many financial institutions believe that Bitcoins are of no use when it comes to working as a mediation between banks and payment processors.
Bitcoin has got popular as “digital gold” as it has
- Become the inflation-resistant store of value.
- Bitcoin is scarce, but you can transfer ownership through simple emails.
- As Bitcoin transactions happen in an open blockchain, it is easier fr authorities to track illicit activities than to detect them over traditional financial systems.
BTC can turn out to be more useful than fiat currencies anytime, with a little organized approach from the central authorities of every country.
Myth #4: Digital currencies harm the environment
The recent withdrawal of using BTC as a mode of the transaction by Tesla has created ripples globally, questioning the impact of crypto mining on the environment. Some financial institutions firmly believe that cryptocurrencies take up huge amount of energy and consumes computational power when it comes to the validation of Bitcoin transactions.
Although the mining firms do need a massive amount of energy to power up the mining rigs, the environmental impact actually depends on the source of energy and not the quantity. If it is possible to power the mining operations with sustainable energy sources, the environmental impact will be definitely lower.
Final Words
Out of the box of crypto myths, it is to be noted that cryptocurrencies are becoming an increasingly popular means of exchange in many global major countries. Based on certain important parameters, it can be stated that Bitcoin will never rob you of your hard-earned money anytime in the future. It is time to know and embrace the facts instead of the myths and think progressive to integrate cryptocurrencies into maximum transactions.
