When something enormous and potentially disruptive emerges in the world for the first time, speculations are entirely unavoidable. Regardless of Bitcoin's rising volatility, the cryptocurrency frenzy does not seem to slow down anytime soon. Neither does the furor surrounding blockchain, the technology behind the invention of cryptocurrencies like Bitcoin.
Nevertheless, there is perplexity and myths wraparound Bitcoin and other altcoins. As these coins continue to rise in popularity, demand, and value, the rumors associated with them also increase. If you are going to join the cryptocurrency market, it is essential to apprehend what you are getting into completely.
Such myths and rumors are likely to misguide many people, and it is essential to do significant research and separate the truth from mere assumptions. Let us look at some of the popular myths and misconceptions barring the adoption of Bitcoin and cryptocurrencies in general. The article is written with the help of Immediate Edge data.
Digital assets do not have any real-life value.
Cryptocurrencies cannot be seen or held physically. For this reason, many people assume that they do not possess any real value in life. The fact is that most of these cryptocurrencies are decentralized and are not issued by any government or financial authority body. For this reason, their value is determined by the interplay between supply and demand.
From an economic point of view, an asset has value when it is scarce and has utility. Scarcity means it has a limited supply. In Bitcoins case, it has a finite supply of 21 million tokens. More than 90 percent of all Bitcoins have been mined already, and they're the only remaining minable pool for bitcoin miners to share contains about 2 million BTC tokens only.
Most experts think that this feature of Bitcoin makes it even more attractive than most other assets, even gold. There is no need to be concerned about the Bitcoin rush, like in the case of gold. Most people think that BTC has no real value, which is so untrue. Bitcoin is a store of value and a means of payment. Furthermore, it is superficially divisible, which means you can easily buy an item as small as candy as you can purchase an oversized item like a car.
Cryptocurrencies are illegal
This is another strong rumor affecting the adoption of cryptocurrencies. Although they are not legal tenders, it does not make them illegal. The stern warnings given by central monetary authorities may create the impression that digital assets are unlawful. However, their claims most of the time are fallacious, especially when it comes to establishing the legitimacy of crypto assets.
Lately, central banks worldwide have explored the idea of developing their digital currencies due to the disruptive undulation of cryptocurrencies. However, CBDCs are unlikely to outshine cryptocurrencies because they will not meet the requirements of crypto assets as an autonomous form of currency, wholly separated from the domineering fancies of authorities, banks, or corporations.
Although anonymity and decentralizations are features that criminals fancy, it is good to know that there are also law-abiding individuals who require such features, especially in politically and economically unstable areas.
Cryptocurrency users easily evade tax.
Many people argue that cryptocurrency transactions can easily escape taxation, unlike cash transactions. However, it is essential to note that cryptocurrency transactions are powered using blockchain technology, an immutable decentralized public ledger available for everyone to see. Every cryptocurrency transaction is recorded on the blockchain and can be easily viewed by anyone. Since the distributed ledger is open to the public to see, all these transactions can easily be considered and accounted for.
Most people are under the false premise that all BTC and cryptocurrency transactions are incognito. Many government bodies have created formal relationships with top crypto exchange platforms to track an address to its designated owner.
Cryptocurrencies are not safe.
With the rise in popularity of digital currencies over the years, there has been a substantial rise in crypto-related crimes and scams. In many instances, crypto exchange platforms have been the main targets of these criminal attacks. However, in other cases, these hackers take advantage of faulty wallets and other cryptocurrency industry elements.
Even though hacking attempts, theft, and fraud can occur, investors should understand that cryptography and the mining systems used in blockchain are solid to be hacked, unlike crypto exchange platforms or users vulnerable to wicked actors.
There are quite many ways cryptocurrency holders can use to secure their digital wealth. At the same time, it is vital to understand that many governments have expressed their interest in blockchain technology. One key reason behind this is that blockchain technology is widely viewed as a secure tool with a great deal of potential locked in it.
Cryptocurrencies are bad for the environment.
There is a big reason for individuals to be concerned about the effects of cryptocurrencies on the environment, even though they are not physically tangible. With cryptocurrencies such as Bitcoin and Ethereum on the rise, so are these coins' mining activities. Increased mining activity needs increased computation power which needs an ample supply of energy.
However, it is essential to know that the value of mining a digital asset massively supersedes the cost of mining in the real world. Besides, cryptocurrencies such as Bitcoin, which are infinite in supply, will not be mined forever, and electric consumption will significantly be reduced. Moreover, traditional financial institutions also operate through electricity every day for lighting and computer systems, and paperwork.
Regardless of all these misconceptions and myths, the value of Bitcoin has dramatically rallied since surpassing its 2017 all-time high of $20,000. The world's largest cryptocurrency is currently trading at a market price of $50,584.29 and established a new all-time high of $58,330 on February 21. Additionally, many cryptocurrencies have been launched, and they are becoming increasingly popular with investors. Demand for crypto assets is expected to surge, and with more users understanding and appreciating them, their value will only rise.