There is a lot of noise surrounding cryptocurrency these days. Unfortunately, much of that noise is filled with myths and misconceptions. In this article, we will debunk seven of the most common myths about cryptocurrency. Once you have read this article, you will have a better understanding of what cryptocurrency is and how it works!
1. Cryptocurrency is a scam.
Cryptocurrency is a legitimate form of currency. It has been around for several years, and has in fact, been making some strides. For example, you can now invest spare change in crypto, in what is known as micro investing.
Unfortunately, there are scammers that try to cash in on crypto’s popularity. Note that scams may come in the form of fake websites or mobile apps, emails or social media posts.Â
2. Cryptocurrency can be used to purchase illegal goods and services.
Crypto-currency cannot be used to purchase illegal goods and services because it is not legal tender in any country. In order to use cryptocurrency, you need to convert it into another form of currency first.
3. Cryptocurrency can only be used by criminals and terrorists.
Cryptocurrency can be used by anyone who wants to use it, regardless of whether they are a criminal or terrorist. Any person can open an account with an exchange, such as Coinbase, and purchase cryptocurrencies using their credit card or bank account information. They then have the option of converting those cryptocurrencies into other currencies if they wish.
4. Cryptocurrency is untraceable and therefore cannot be taxed.
There are several ways to track cryptocurrency transactions, including through blockchain technology. It records every transaction in real time on a public ledger called the ‘blockchain.’ The IRS has issued guidance stating that virtual currency should be treated like property for tax purposes (meaning you will owe capital gains tax on any profits you make from it).
5. Cryptocurrency is not backed by anything and therefore has no value.
Cryptocurrency is backed by blockchain technology, which is a secure and transparent way of exchanging information online. Blockchain technology is based on cryptography, a system of secure communication. As long as people continue to use cryptocurrency, it will have value.
6. Bitcoin is the same thing as cryptocurrency.
Bitcoin is just one type of cryptocurrency. It was created in 2009 when someone (or a group of people) known as Satoshi Nakamoto released a white paper describing how to create digital currency without any central authority controlling it.Â
The idea behind Bitcoin was that there would be no middlemen—people could exchange goods and services without having to go through a bank or other financial institutions.
7. Cryptocurrency is a completely new technology.
Cryptocurrency has been around for several years already and it’s based, as mentioned earlier, on blockchain technology. This technology has been in existence around the time Bitcoin was created.
Cryptocurrency continues to grow in popularity every day. You’d be surprised to know that many people are investing in it without a full understanding of cryptocurrency, much less the myths and misconceptions surrounding it. Now that you know the truth about these myths, you can make an informed decision whether or not to invest in it.