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As cryptocurrencies have gained widespread attention in recent years, more and more individuals are stepping into the crypto world. However, like any emerging technology, some common myths and challenges can deter newcomers or lead them astray. Kevin Plumpton, a leader in the Anti-Money Laundering and Counter Financing Terrorism field, the Pioneer of KYCMATIC, and the CEO of the global financial crypto-fiat ecosystem Kyrrex debunks some of the most prevalent myths surrounding cryptocurrencies and address the key challenges faced by those entering the crypto space.
To highlight the existing challenges it is significant to firstly address the existing myths and debunk them accordingly.
Myth #1: Cryptocurrencies are just a fad and if not a fad, then a scam
One of the most common misconceptions about cryptocurrencies is that they are a temporary trend that will eventually fade away. However, cryptocurrencies have proven their resilience over time. Bitcoin for example exists for over a decade. The crypto market continues to evolve and innovate, indicating that cryptocurrencies are here to stay. The dynamics of crypto development can be recognized by their implementation in various fields and causes ā investors and enterprises have begun holding cryptocurrencies for use in finance, investment, venture capital, and many others. People are accepting them in personal transactions, and governments, in their turn, are working to find ways to regulate them. The regulation aspect makes some people suspicious of the safety of crypto usage. Here one should understand that most cryptocurrencies have no programming, code, or malicious artificial intent that works to take money from you. However, people have created scams to try and trick you out of your cryptocurrency or money. For example, there have been many initial coin offeringsāunregulated fundraising for new cryptocurrency venturesāthat turned out to be scams. In other cryptocurrency scams, someone might try to get you to accept unverified transactions, or call you pretending to be government officials and ask you to pay your debts in cryptocurrency. Yet scam is possible with any type of investment or financial transaction, does not matter digital or not, knowledge, cautiousness and expertise will prevent crypto users from potential threats.
Myth #2: Cryptocurrencies are only used for illegal activities
One of the oldest and most pervasive myths about digital currencies is that they are most commonly used for illicit activity. While it's true that digital currencies have been used by individuals with nefarious goals in mind, as well as by criminal organizations, the same could be said of any form of money used throughout history. Cryptocurrencies offer numerous advantages, including faster and more secure transactions, decentralized control, and accessibility. Many established businesses and organizations now accept cryptocurrencies as a form of payment, further dispelling this myth. It's important to note that governments and the international community are cracking down on cryptocurrency use by criminals and organized crime. Besides, today, many countries have adopted cryptocurrency anti-money laundering and countering the financing of terrorism measures.
Myth #3: Cryptocurrencies are not secure
Together with a fear of not having enough tech expertise that prevents many people from stepping into the crypto industry, there comes another one. The concern about crypto security creates a barrier to diving into the crypto world. The core solution to combat it is education. Today, educational resources and communities provide valuable support for newcomers seeking to understand and navigate the crypto space. While some technical knowledge is helpful, user-friendly platforms and wallets have made it easier for individuals without extensive technical backgrounds to buy, sell, and store cryptocurrencies. When it comes to security, one should remember that the blockchain is a distributed database secured with encryption techniques and technology that is very difficult to break. As transactions are entered into the blocks in the blockchain, previous transaction information is recorded in the new blocks and encrypted. The chain continues to build on each previous block, and a community of automated verifiers has to agree that the information recorded in the transactions is valid. The encryption, linked blocks, and consensus mechanisms make it nearly impossible to change information in the blockchain to "steal" cryptocurrency. The weakness lies in how cryptocurrency is accessed and stored, such as in cryptocurrency wallets or centralized exchanges that facilitate transactions. It is entirely possible to send cryptocurrency from one user to another without worry, but the platforms and software used to store and access it can be hacked or tampered with. The key value of a crypto project for the end-users and investors is full confidence in usersā safety of funds. In 2021 Kyrrex received the highest Virtual Finance Asset (VFA) Class 4 license from the Malta Financial Services Authority (MFSA). That is to say that Kyrrex stands for the safe crypto market.
There are some very safe methods you can use to ensure your cryptocurrency is safe. For instance, you can keep your crypto asset keys off the exchanges and in cold storage. When you want to use it, transfer only the amount you want to use to your hot wallet through a secure, wired connection on a non-mobile device like a personal computer.
Myth #4: All cryptocurrencies are the same
There are around 18,000 cryptocurrencies and 300 million crypto users across the globe. The term cryptocurrency applies to a variety of coins, systems, and networks, many of which have different properties, ownership structures, and levels of volatility. Many newcomers are persuaded that Bitcoin and crypto are one and the same when in reality this is a misconception. Bitcoin has been existing for almost a decade, whereas the wider crypto world is still in its infancy. From a broader perspective, cryptocurrencies are startups and should be treated as such by investors. The solution is to broaden your understanding and study the crypto landscape before you make a move. Think about each particular cryptocurrency as such: is it, as a project, solving a particular problem or is it just hype?
With myths and threats there also come challenges that crypto newcomers may face at the beginning of their journey. First of all, they should be ready for the volatility and market uncertainty. The truth is that the market can be highly volatile which will unavoidably lead to significant price fluctuations. While this is clearly a challenge, it should not prevent the newcomers from stepping into the industry, but serve as a reminder that it is crucial to handle all crypto investments with a long-term perspective, estimate and hold your risk strategy and invest only this amount of resources that you are ready to afford to lose. Other than that, one should prioritize the security of investments by taking care of the privacy of their wallets. Choose trustworthy platforms, and do not forget about two-factor authentication while keeping the private keys secure.
Of course, when we talk about security we cannot dodge the legal aspect. The regulatory landscape of cryptocurrencies depends on the region and keeps evolving. While in the beginning it can be complicated to navigate through all legal issues while meeting the existing regulations, understanding the key points, staying informed about upcoming updates and timely searching for legal advice will save you time, money, and nerves.
With the legal aspect, comes a general lack of understanding. Many newcomers suffer from information overload while not understanding where to search for reliable information sources. As in each tech industry, crypto assumes to have a unique set of terminology and concepts to understand. However, the solution can be found in getting engaged with the local and global communities and seeking advice from more experienced crypto peers while continuously expanding your network. The consequent knowledge expansion will broaden your vision and create the potential to become a valuable asset to the crypto community while making a significant input in revolutionizing various industries and contributing to global financial empowerment.
Debunking myths, self-education, and a responsible understanding of the existing challenges together with the proper amount of patience and responsible investment practices will step by step turn your crypto journey into success.
Author bio
Kevin Plumpton is CEO of the global fintech ecosystem and cryptocurrency exchange Kyrrex.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.